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HRM 7th Sem.

Before Mid

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Human Resource Management


Before studying the Human Resource Management please re-call your memory for these terms:

Human Resource Management


The process of acquiring, training, appraising and compensating people with in any organization is
called Human Resource Management.

Functions of Human Resource Management:

Acquiring People
Training People
Appraising People
Compensating People

Acquiring People:
Selecting the most suitable person to perform various job activities is called acquiring people.

Training People:
Teaching employees various skills required to perform the job activities is called training people.

Appraising People:
To evaluate the performance of people and to give them feedback is called appraising people.

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Compensating People:
Providing financial and non financial benefits to the employees against their services or contribution
for the organization is called compensating people.

Importance of Studying HRM


We can understand the importance of HRM by studying these two approaches.

Resources Approach

Mistakes Approaches

Resources Approach:
Every organization consists of three important ingredients/factors including
Financial Resources
Physical Resources
Human Resources
Where human are considered to be the most important resource as they (Human) are going to manage
physical and financial resources as well, so studying about HRM practices contribute/develop the
managers knowledge about how to manage the human resources more effectively.

Mistakes Approach:
The basic knowledge about the HRM functions may provide the managers an insight/understanding
about managing people more effectively and they should be able to avoid various mistakes while:
Selecting the right person for the job
Designing and conducting the training programs
Evaluating the performance of employees and providing them with feed back
Designing various compensation plans for the members of organization

Role of HR Department
We can understand the role of HR department by studying the following terms:
Line Management
Staff Management

Line Management:

The relationship between two parties where one party has the right to make and impose the decisions
and the other party has to follow them, creating a supervisor-subordinate relationship.
Line manager is that person who has line function
Line Management/Line Function: the function of giving order to others
Line Authority:

Staff Management:

The relationship between two parties where one party may suggest the other party about various
aspects creating an advisory relationship
Staff Manager: the person who has the advice function is called staff manager.
Staff Function/ Staff Management: the function of giving advice to others
Staff authority:

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Employees Advocacy:
The rule of HR Department with in an org. where they suggest the other department and employees
regarding:
Recruitment and selection procedures that may help in selecting the right person for the job
Designing training programs to develop the employees to fulfill future requirements
Making evaluations and feedback to keep organization on right track
Designing compensation plans to retain the employees within the organization
Managing employees relations through negotiations and dispute settlements

Strategic HRM

Strategy:
Long-term action plan based on a critical evaluation of internal and external factors to create
competitive advantages.
Long term plan
SWOT analysis
i.
Internal SWOT: Strength and Weakness
ii.
External SWOT: Opportunity and Threats
Competitive Advantages

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Strategic HRM
Aligning/matching the HR functions with the overall strategy of organization by considering all the
legal and ethical issues.

High Performance Work System


Designing various policies and characteristics that are helpful in integrating various departments of
organization to improve its collective performance through an efficient use of HR.

Proficiencies Required for HR Managers

1.

Business proficiency ( skills/ state of being efficient)


Leadership proficiency
Learning proficiency
HR proficiency

Business Proficiency:

An insight/ understanding about internal and external environment of the business that may be helpful
for the manager s to design various policies for the organization

2.

Leadership Proficiency:

The managers should be aware about the basic techniques that how to provide others with guidelines
and to motivate them to follow those guidelines.
Indentify future directions for others

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Providing guidelines to follow those directions


Motivating other employees to achieve their targets by following the directions

3.

Learning Proficiency:

Managers should continuously monitor their external environment to identify various changes to keep
themselves updated about most recent trends. This will be helpful in adopting the changes which are
desired by the firm and to ignore various characteristics/changes which are not beneficial for the
organization.

4.

HR Proficiency:

The managers must have the knowledge about the basic HR functions including:
Acquiring People
Training People
Appraising People
Compensating People

Acquiring People

1. Employment Planning/HR Planning/ Personnel Planning:


The procedure of determining the human requirement of the organization that what kind of
individuals/people is required and how to hire them.
In this step it will be decided that how many people (quantity) and having which type of skills (
quality) are required for the organization.

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Methods of Employment Forecasting:


Trend Analysis:To determine the quantity of individuals by identifying past employment trends of the
organization to forecast the future, based on past trends.

According to this graph when we analyze the organization we see that in 2009 we hired 5
people but in 2010 we hired 10 people and in 2011 we hired 15 people. So according to this
trend we have to hire 20 people for the year 2012.

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Ratio Analysis:To identify the numbers of individuals required by determining the ratio b/w outputs and
human inputs.

Organizations keep data tables like this one in their records and then on the base of these
tables they decide their requirements.

Expert Analysis/Assessment:To determine the quantity of individuals required by the firm by obtaining opinion of experts
who have been performing similar kind of job for a longer period of time.
It is a subjective approach which is not easily justifiably as the opinion depends upon the
personal judgment of that expert.
If the organization has no past trends then trend analysis is not useable, if organization has no
eligibility to find ratios then ratio analysis is not useable, and on this situation the organization
will use expert analysis method by hiring to an expert.

Job Analysis/Position Analysis


The procedure to determine duties and responsibilities associated with a job and to identify the
skill requirements to be possessed by human/individuals to perform those duties.
Duties and responsibilities
Skill Requirements
Job: it is a set of activities performed for return/salary
American people use word Position in place of word Job.
Duties and Responsibilities/ Job Description
A list of duties/responsibilities and work activities to be performed by an individual
(incumbent) who is performing/assigned with that job.
Incumbent means job holder.
Skills Requirements/Job specifications
A list of human requirements and skills to be possessed by the incumbent to perform its
duties and responsibilities. For example education, experience, personality type, etc.

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Job Analysis Information

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Work Activities
Human Behavior/ Personality
Machinery/Tools/Equipment
Performance Standards
Job Content/Physical Environment
Skill Requirements/Job Specifications

Work Activities
Information regarding the activities and operations to be performed by the
incumbent/individual who is responsible to perform that job. It may include the routinely
and occasionally activities.
For example for a student attending a lecture is a routinely activity and to give
presentation is occasionally activity.
Human Behavior/ Personality
The information regarding the specific type of personality traits or the behavioral traits
required to perform the mentioned activities, like confidence, trust worthy, etc.
Machinery/Tools/Equipment
The information regarding helping material and equipments that may facilitate the job
performance and that are to be used by the job holder. For example, white board,
multimedia etc. for a teacher.
Performance Standards
Information regarding the specific standards that should be observed by the job holder and
that may be used during performance evaluation of employees.
For example to report to college for lecture at 8:00 AM, or to produce various units.
When we make specific to work activities that how to perform those activities, then this
specification becomes performance standards.
Like for a student the work activity is to study but when we make it specific that he will
study during 9:00 am to 10:00 am, then it will become a performance standard.
Job Content/Physical environment
The information regarding the physical working conditions and specific objects like
temperature, noise, pollution, office or field work, working within minus temperature etc.
Skill requirements/ Job specifications
The information regarding the specific qualifications and skills required by/in a human to
perform a job like knowledge, expertise etc.

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Uses of Job Analysis Information


(i)
(ii)
(iii)
(iv)
(v)
(vi)

Recruitment and selection


Designing training contents
Conducting performance evaluation
Compensation plans
Discovering and assigning unassigned duties
Resolving legal/ethical issues and disputes

(i)

Recruitment and selection:


The job analysis information provides with a detailed overview of job which is helpful in
selecting the right person for the job.

(ii)

Designing training contents


The information is helpful in designing training programs for the employees by
identifying various deficiencies in employees working capacity.

(iii)

Performance evaluation
The information regarding performance standards is helpful in comparing with actual
performance with those standards to evaluate the employees accordingly.

(iv)

Designing compensation plans


Employees compensation packages may be designed according to their nature of job and
work activities.

(v)

Discovering and analyzing un-assigned duties


Job analysis may be helpful in identifying various activities which are un-assigned so the
managers may assign those duties to an existing employee or they may hire a new person.

(vi)

Resolving legal/ ethical issues/ Disputes


While deciding about solution to various problems or work related issues, job analysis
information may be helpful for the managers in dissolving disputes, legal issues or ethical
issues.
For example an employee comes to manager and complains that I am performing this duty
from 2 years, and this new employee is disturbing me now in performing this duty. The
manager has job description which is the solution of this problem. He will remove their
problem according to their work boundary.

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Process of conducting Job Analysis


Step 1. Identifying information requirements
Step 2. Collecting Relevant information
Step 3. Select representative jobs
Step 4. Collecting the job analysis information
Step 5. Verify the information
Step 6. Write down job description and job specifications

Step 1. Identifying information requirements:


Deciding about that what information is required to conduct the job analysis and considering various
realities including:
What methods should be used
What time it will take
Who will conduct the job analysis
How the collected information may be analyzed and used

Step 2. Collecting Relevant information


Collecting the relevant information regarding the specific job which is under the process of analysis
including:
Organizational chart:
The organization wide distribution of work activities and authorities in the form of a
diagram/graphical representation.

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Process Chart:
The graphical representation of various processes within organization that how input are
converted in to output.

Step 3. Select representative jobs


The process of selecting and identifying the subject matter experts who are under the process of job
performance and who may provide the relevant information regarding that job.
Selection of subject matter experts
Sampling
In this step we will inquire only from those people who are being selected for process. For example we
are conducting analysis for students then we will inquire only from students not from gate keeper or
sweeper etc.

Step 4. Collecting the job analysis information


Actually collecting the job analysis information from selected representatives using any method which
has already been decided this information may include
Work activities
Human behavior
Job contents
etc

Step 5. Verify the information


The process of authenticating the information by asking its validity from colleagues or supervisor of
that job.

Step 6. Documentation
To write down all the information in a logical and comprehensive manners preparing to important
documents to the organization

Job Description= list of duties


Job specification= list of qualifications/human requirements

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Job Guidelines while Conducting the Job Analysis


(1) Select the subject matter experts by considering the individuals who have been performing
the duty for a longer period of time
(2) Select more than one person to collect the information to avoid concealment or
misrepresentation
(3) Collect data from individuals working under similar job title with various departments of
organization because of differences in
(i) Time requirements
(ii) Level of responsibility
(iii) Decision making authority
(iv) etc
(4) use the most appropriate method and tools which are easily understandable by the jo holder
(5) Select with the rapport, create the rapport ( ) with the jobholder to make them at ease
so they may provide detailed information about the job without hesitation.

Methods of Collecting Job Analysis Information

Interview
Questionnaire
Observation
Participants Diary
Multiple Methods

i.

Interview:

Direct interaction b/w parties to discuss various issues under consideration


Direct interaction
Parties
Issues under consideration/evaluation/selection/job analysis/interview

Types of Interview:
a. Structured
b. Un-structured
c. Semi-structured
Interviews are costly and time taking.

ii.

Questionnaire:
A structured set of questions designed to obtain information from a number of
respondents/ employees regarding specific issues.
Structured
Large number of respondents
Information regarding specific issue

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Second most widely used method less costly and time taking. Used when information is required
from a large number of employees/respondents.

iii.

iv.

Observation:
Directly monitoring the employees while performing their job obligations during specific
time period/during a cycle time.
Cycle time: observation is valid if an employees is being observed during Cycle time that is
the time it takes to complete a job/ an activity/ a process from it starts till it ends.
Reactivity Issue: There may be the specific problem in terms of biasness in individuals
behavior due to observation from other parties that may be called as re-activity problem.

Participant Diary/Log:
Employees are provided with a note book or a digital assistant to record each and every
activity performed during their job obligations throughout cycle time. This information is
collected by the supervisors after completion of job and it is used to prepare job
description and specifications after due verifications and authentications.

v.

Multiple Methods:
Using a combination of more than one method to collect information regarding job.

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Job Description
(How to write a job description)
1.
2.
3.
4.
5.
6.
7.
8.
9.

Job identification
Job summary
Duties and responsibilities
Performance and standards
Working relationship/professional relationships
Authority of jobholder
Job context/physical conditions
Helping material ( machines, tools, equipments)
Human requirements.

1. Job identification:
All the information that helps in introducing a specific job and that is used to distinguish one
job from the others.

2. Job Summary:
The assistant HR Manager is responsible to assist the HR Manager in performing HR
activities/personnel activities, recruitment and selection, training and development,
performance evaluation, management, compensation management and managing human
relations.

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3. Duties and Responsibilities


This is called the heart of job description and it contains a detailed list of work activities and
operations that are to be performed by the job holder during its professional obligations
including routine or occasional activities.

4. Performance Standards
The details about specific measures of performance or the standards that are to be maintained
by the job holder as part of his duty.
For example to meet with other employees to identify various issues at least five persons per
day. (At least five persons per day is a standard)

5. Working Relationships
The details about various other parties that are to be contacted by the job holder as part of its
job duty including supervisors, colleagues, subordinates or any other third party.

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6. Authority of Job Holder


The details about limitation or work boundary within which a person can make decisions and
he is authorized to impose its decisions.

7. Physical Conditions/Work environment/ Job context/Working conditions


It includes all the information regarding the facilities and supports that are available to the
employees for a smooth performance of its job.

8. Helping Material/Machines
The information regarding specific tools, machines or equipments that are to be used within
job

9. Human Requirements
A list of skills and experience, qualifications and abilities and expertise that are required for
the specific job activities/obligations.

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Job Specifications/Human Requirements


(How to identify job specifications/human requirements?)

1. Specifications based on Judgment:


The method to identify human requirements for a job by taking opinion of experts and to list
down human criteria based on their judgments.

2. Specifications based on Systematic Analysis:


The method to determine the human requirements by identifies various behavioral traits and to
analyze which traits are positively related to performance that may serve as better predictor of
work activities.
Step (i)
identify various skill requirements or behavioral dimensions.
Step (ii)
Conduct the work sample test to identify predictors of job.
Step (iii) Select the most significant predictors as specifications for that job.
For example:

Other Job Related Terms


Job Definition:
The procedure to clarify the roles, responsibilities and procedures that are to be used by the job holder
to perform its work activities to minimize role ambiguity and role conflicts.
(i) Role Ambiguity
(ii) Role Conflict
For example two assistants for vouching (book keeping and record keeping). Define role to
minimize role conflict.

Job Placement (placement):


The procedure to assign specific responsibilities to an employee according to its area of specialization
or the convenience of job performance.

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Job Enlargement:
Assigning additional same level duties to an employee other than its formal job descriptions.

Job Rotation:
Continuously and systematically moving an employee from one job place to another to enhance its
understanding about the job and to assess its capabilities regarding various work activities.

Job Enrichment:
All the procedures or arrangements used to develop employees capabilities or to increase their
contribution for the organization may be termed as job enrichment.
For example increase the spam of control
- Assigning decision making authority
- Job rotation to enhance understanding etc.

De-Jobbing:
(To do job informal)

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Recruitment and Selection Process


Definition:
The procedure to attract suitable candidates to fill out the vacant positions available with the
organization.
(The people who will come to apply for job will, called candidates.)

Effectiveness of Recruitment:
The effectiveness of recruitment efforts is measured in terms of:

Quantity:
What number of applicants applied for the specific job position announced by the
organization? The higher the number of applicants, the recruitment will be considered more
effective.

Quality:
What is the number of eligible candidates who are fulfilling minimum job criteria and who
possess the required skills, expertise and abilities that are included with in job specifications?

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Issues in Recruitment effectiveness


(1)
(2)
(3)
(4)
(5)
(6)

Strategic Recruitment
Recruitment method
Non recruitment issues
Image of firm
Pre-screening
Legal/Ethical Issues

(1) Strategic Recruitment:


The firm should consider that its recruitments efforts are according to the overall strategy of
the organization, so that the firm may be able to maintain competitor advantage through
efficient use of human resources.

(2) Recruitment Method:


The organization must prefer to use the most appropriate method that can bring a large number
of suitable candidates and that is convenient for the candidate to apply for the job. For
example online recruiting, personal recruiting, distance recruiting.

(3) Non-Recruitment Issues:


The organization should consider various perspectives with issues that are not directly related
with the overall recruitment procedure yet they may affect the effectiveness of overall
recruitment efforts. For example conveyance, facility, sitting arrangement.

(4) Image of Firm:


The managers should consider creating a positive image of the firm related to its HR policies
and practices so a number of candidates may be motivated to apply for the job.

(5) Pre-Screening (Short Listing):


The organization may go through the bio-data of candidates to apply for the job to determine
eligible candidates as well as to identify the candidates who are interested to join the
organization in the future.

(6) Ethical/Legal Issues:


The organization should consider all the legal restrictions as well as various ethical
considerations while dealing with and attracting applications for the job.

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Sources of Candidates
(1) Internal Sources
(2) External Sources
To identify the sources from where the organization may attract the suitable candidates to apply
for the available job positions.

(1) Internal Sources:


To attract the suitable candidates to apply for the job from within the organization, among
existing employees or inviting the individuals who have already been working with the
organization.

Advantages of Internal Sources


(i)
(ii)
(iii)
(iv)
(v)

The organization knows about the strengths and weaknesses of employee.


The employee knows about the policies and procedures within organization.
No formal orientation programs are required if the current employees are re-selected by
the organization.
No training programmers are required as the employees have already been working with
the firm.
It helps in increasing the motivation and commitment of employees if they are reselected
within organization.

Dis-Advantages of hiring internal candidates/ sources


(i) It may reduce the motivation and morale of employees who are rejected from promotion or reselection.
(ii) The organization may lose creativity and innovation if they are not attracting fresh brains from
outside.
(iii) Inbreeds, inbreeding problem: the employees who have been working with the organization
for a long period of time may violate various organization resources due to their excessive
information about the organization.
(iv) Pre-selection Bias: there may be chances of pre-selection bias that a specific employee is
selected even before the format screening procedures as the organization knows about its
employees.

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Types of Internal Sources

1. Job Posting:
Posting a job on the notice board of the organization along with its brief description and
specifications to encourage the employees to apply for those positions. It may include:
(i) Posting job on notice board
(ii) Sending an official email or memo to employees
(iii) Publishing the availability of job on official website

2. Re-hiring:
Re-selection of the employees whose terms and services with the organization have been
expired for another period of time. It includes:
(i) Renewal of contract after its maturity
(ii) Reassignment of projects after they are completed

3. Succession Planning:
The procedure to identify the future human requirements of the organization and to select and
develop current employees to fulfill future requirements.

Procedure of Succession Planning


Step (i)

to identify the future human requirements that what positions may be available/vacant
with the organization.
to select the most suitable employees who are considered to be the appropriate choice

Step (ii)
to
Step (iii)

Fulfill future requirements.


to develop the selected employees for future through various techniques including
increasing decision making authority etc.

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(2)
1.
2.
3.
4.
5.
6.
7.

24

External Sources

Advertising
Employment Agency
On demand Recruiting Services
Temp Agency
Referrals
Walk-ins
College Recruiting

1. Advertising:
The procedure and practices that are used / adopted by an organization to convey the outsiders
about availability of positions within organization along with a brief description and
specification about the job.
(i) Selection of Media: ( print, electronic, personal advertisement)
The organization should prefer to select the most appropriate channel to convey the
information to the outsiders that may include personal communication,
communication through print resources or electronic resources.
(ii) Construction of Ad/Advertisement:
The organization should be careful while designing advertisement for the job positions
following a four step procedure called AIDA plan.
a. Attention
b. Interest
c. Desire
d. Action
a. Attention:
Anything which can attract our attention for example any model, actor etc.
b. Interest:
Attractive salary, bonus, other facilities etc
c. Desire:
When we will feel interest then there will be a desire for getting that job.
d. Action:
When we will feel a desire for getting a job then we will take an action in the
form of applying for that job.

AIDA Plan
The organizations should try to /consider attracting external candidates by constructuring the most
suitable advertisements that may create the interest of candidates and they would desire to apply for
the job and this desire may be converted into action by providing the necessary contact details,
(telephone, office address, email etc.)

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2. Employment agency:
Various organization either public or private that provide specialized recruitment services to the
organizations to facilitate them during the recruitment and selection procedure and to help them hiring
the most suitable person for the job.
Employment agencies are preferred by the organization if:
(i) The organization does not have occupy the human resource department
(ii) The HR department is not very much effective in hiring the suitable candidates
(iii) It is time and cost effective to consult the employee agency
(iv) The organization failed to conduct recruitment procedures in past

3. On demand recruitment services:


The outsourcing agency that provide recruitment specialists to the other organizations to
perform all the recruitment and selection procedure as per the requirement of the organization
using organizational resources and good well

4. Temp Agency:
The outsourcing agency that provides other organizations with temporary workers to work for
various projects and assignments as a member of the hiring organization.
For example a security guard of a security company is working in a bank.

5. Referrals:
The candidate who are recommended by existing/current employees of the organization or
various authentic resources with the basic assumption that good people know good people.

6. Walk-in:
The individuals who tends to show their interest for the organization by applying personally or
electronically even if there are vacant positions within organization or otherwise.

7. College Recruiting:
Attracting and inviting suitable candidates among the graduation classes of a college or
university to find out fresh graduates to fill vacant positions within organization.
(i) College Recruitment:
College recruitment may be done through:
a) On Campus Visit:
The setup where the representatives of the organizations tend to visit the
university campus to attract suitable candidates among students.
(In this type the representatives comes to university)
b) On site visit:
The setup where students are invited to Visit Companys office or
plant/factory to attract them to apply for various positions within organization.
c) Internships:
The specific setup where students are provided with an opportunity to secure
the organization and to perform actual job duties for a limited period of time
to attract them for the permanent employment.

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Tests of investigations
Test: taking the sample of an individuals behavior to predict its future performance.

Tests of investigations
Test: taking the sample of an individuals behavior to predict its future performance.

Type of tests
1.
2.
3.
4.
5.

Tests of intellectual abilities


Tests of physical abilities
Work sample tests
Tests of personality
Achievement tests

1. Tests of intellectual ability/cognitive ability /intelligence tests/IQ tests


To identify the intellectual abilities of an individual by considering various dimensions like thinking,
reasoning, and problem solving.
Dimensions of intellectual ability
i.
Arithmetic (numbers aptitude, ability to deal with numbers.
ii.
Verbal/ verbal comprehensive/language ability
A person can be as more affected as more his speech will be good
iii.
Reasoning/analytical reasoning
Ability to use logic to solve the problems
iv.
Memory: ability to retain and re-call the information.

2. Test of physical abilities/motor abilities


To identify capacity of an individual to perform various tasks that involves strength stamina and coordination between various parts of body.
Dimensions of physical abilities.
i.
Strength: measure of strongness (a person can lift how much weight and can work in
how much temperature.)
ii.
Stamina: how repeatedly/continuously a person can perform various tasks.
iii.
Co-ordination: whether various parts of body assist each other while performing
physical activities/tasks.

3. Work sample test/miniature:


the type of test where the candidate is required to perform the actual job task using the real time
equipment and softwares. For example operating a machine, designing software, web designing etc.

4. Tests of personality/ test of interests:


the type of test conducted to indentify the specific personality traits possessed by an individual or to
find out its interest and hobbies to determine whether that person is suitable for the organization and

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for the job. (Person job fit). For examples MAPS, inkblot tests, sentence completion, clouded picture
tests etc.

5. Achievement test:
the type of test that is conducted to identify what an individual has learnt from its past job experience.
For example midterm exams, final exams etc.

Investigation and references process


The process of verifying the information provided by a candidate to determine its accuracy and to find
out various facts that are concealed by that individual during application procedures.

Purpose:

To verify the provided information


To identify the concealment of facts and information
To determine some harmful information for the organization

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Recruitment and selection process


Interview
Definition:
Direct interaction between parties to discuss various issues under consideration
Direct interaction
Parties
Issues under consideration

Selection Interview:
Direct interaction between an employee and candidate to determine the suitability of that individual
for job/organization

Issues while conducting the interview:


Factors that affect the usefulness of interview:

i.

First impression BIAS (SNAP judgment)


The interviewer should consider evaluating a candidate based on its overall behavior and
knowledge about the contents of the job instead of making assessment regarding the
candidates based on snap judgment or first impression.

ii.

Non-verbal behavior: (Impressions Management)


The interviewer must be vigilant (careful) about the non verbal communication including
body language, gestures, eye contents, that may affect its performance in the interview
and that may create false impression of the candidate regarding its job performance.

iii.

Job understanding:
The interviewers must be appointed who can be considered as subject matter experts and
who are familiar about the requirements of the job, understand the duties and
responsibilities and know about the human specifications required to perform the job
activities.

iv.

Contrast Errors/Candidate Order Error:


The interviewer should consider the overall performance of a candidate instead of under
acting or over acting that person because of the specific order in which the candidate
appears in front of the panel and by making comparison of the candidates with each other.

v.

Personal Characteristics Bias:


The interviewer must consider the job related knowledge and other behavioral
characteristics of individual instead of selecting or rejecting candidate based on their
personal characteristics including age, gender, color, etc.

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vi.

29

Interviewers Behavior:
The interviewer should not facilitate the candidates by providing them positive
impressions or hints regarding the interview contents/questions or by adopting a behavior
that is too much strict or lenient.

Types of Interviews
1. Based on construct
i. Structured interviews
ii. Unstructured interviews
iii. Semi-structured interviews

2. Based on contents
i.
ii.
iii.
iv.

Situational interviews
Behavioral interviews
Stress interviews
Job related interviews

3. Based on settings
i.
ii.
iii.
iv.
v.
vi.

Individual interviews
Panel interviews
Group discussion
Mess interviews
Sequential interviews
Other types

1. Based on Construct:
Classification of an interview o the bases of the structure, or construct whether the type and number of
questions have already been decided or otherwise.

i.

Structured interviews/Directional Interviews:


The type of interview where the questions are already decided and the interviewer is
directed to ask the same questions accordingly.

ii.

Un-structured/Non directional interviews:


The type of interviews that follow the format of a general conversation and interviewers
are not specifically directed to ask pre-decided questions.

iii.

Semi structured interviews:


It is a combination of directional and non directional interview structure where a limited
amount of questions are pre-decided while the interviewer has the right to ask the question
according to situation.

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2. Based on contents:
The classification of an interview on the basis of the type of questions that are included with in an
interview (that should be asked from the candidates) is as following:

i.

Situational Interview (What you will do?)


Situational Interview is a type of interview in which questions are asked regarding the
assumed situations that how a candidate may response to that specific condition? For
example how you can make a sales presentation more effective by considering various
points of interest.

ii.

Behavioral interview: (How you did?)


Behavioral interview is a type of interview in which questions are asked regarding the
actual behavior of a candidate that how he responded to that specific condition in past. For
example how you delivered your last sales presentation more effectively considering
various points of interest.

iii.

Stress based interview:


A type of interview in which candidates are made un-easy through a series of harsh and
negatively coded questions to assess to stress tolerance ability of the candidate and their
ability to deal with the problematic situation. For example why you left your previous job?
Why should we select you?

iv.

Job related interview:


The type of interview in which a series of questions is asked from the candidate related to
its previous job or the area of specialization from which the candidate belongs. For
example asking to an accountant about adjusting entries, asking a marketing officer about
new product development etc.

3. Based on Settings:
The classification of an interview on the bases of style of administration and physical settings in which
the interview is being conducted.

i.

Individual interview:
The setting in which a single interviewer is going to conduct the interviewer for individual
candidates.

ii.

Panel interview:
The interview in which a group of the interviewers is appointed to conduct the interview
for individual candidates. The panel may comprise of:
H.R. Personnel
Experts/Externals
Supervisor/Dept. Head

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iii.

31

Group Discussion:
The settings where a group of candidates is assigned with a specific topic to discuss with
each other and they are being evaluated by the interviewer on the bases of their
contribution and the quality of arguments.

iv.

Mass Interview:
The settings where a panel of interviewers is appointed to conduct the interview for more
than one job candidates at the same time.
Mass interview is the combination of panel and group interview.

v.

Sequential Interview:
The settings where a candidate has to go through a series of interviews based on:
a. Time intervals (for example one interview is today, 2nd is after 3 days and so on.)
b. Level of Organization (for example first supervisor will take interview, then manager,
then head of department etc.)

vi.

Other Types:
a.
b.
c.
d.

Computerized interviews
Online Interviews
Distance Interviews
Web-based interviews (with the help of web-cam)

Employment Selection
The process of hiring the right person for the job after careful planning and recruitment and after
applying the most appropriate screening techniques including tests, investigations and interviews.

Why Selection is Important?


i.
Performance:
The performance of an individual employee depends upon other employees performance
and contribution, so the organization must be careful in selecting the right person for the
job who can contribute towards other members.

ii.

Effectiveness/Achievement of Goals:
The organization has to achieve its targets through an effective use of its human resources
so the individuals must be selected who have capabilities and skill to drive the
organization towards the right direction.

iii.

Time and Cost:


Selection of the employees is the process that requires a considerable amount of time and
monitory resources so the organization must be careful to make the use of time and cost as
an investment rather than making wastage of these resources.

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Negligent Hiring
If the organization fails to select the right person for the job and it becomes harmful for the
organization, the specific condition may be called as negligent hiring.
Negligent hiring may include:
i. Mistakes while employment planning
ii. Errors while recruiting the candidates
iii. Designing and conducting in-appropriate screening tools (tests, investigations, interviews,)

Training People
Employee Orientation:
All the procedures that are adopted to make an employee aware about the organization, its policies and
various other perspectives regarding the job.
Why orientation is important/provided?
i.
To welcome to the employees to the organization.
ii.
To make the employees at ease so they can start the socialization process.
iii.
To make them aware about the organization.
iv.
To provide information about the history/past, present condition and future vision of the
organization.
v.
To inform about the facilities that can be enjoyed by an employee being the member of the
organization.
vi.
To provide awareness regarding rules, regulations and procedures that should be
followed/observed.
vii.
To make them aware about the specific code of conduct or behaviors that is expected from
the employee.

Contents of Orientation Program


Orientation kit/Employee Hand Book:
The published material containing all the introductory information regarding the
organization that is considered to be necessary for an employee. The orientation kit may
include the information regarding:
i. The Organization:
The information regarding the past, present position and future vision of the
organization.
ii. Department Information:
The details about the specific department and the job activities that are joined by the
employee.

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iii. Policies and Procedures/ Rules and Regulations:


The specific characteristics or procedures that should be followed by an employee to
perform its work activities.
iv. Code of Conduct:
The information/detail regarding the specific behaviors that are expected from the
employee.
v. Facilities/Supports:
What specific facility may be enjoyed by the employee as a member of organization
for example Wi-Fi, transportation, Library etc?
vi. HR. Information:
The details regarding the HR functions including training/development, performance
evaluation and employee compensation.
vii. Safety and Security Measures/Precautions:
The detail regarding the precautions and safety measures that should be observed by
an employee.

Training
Teaching employees various skills required to perform their job activities and to develop them
according to the requirements of organization.

Coaching:
The training program that is designed to enhance professional skills of an employee and to
develop its capacity to perform job related tasks.
For example making adjusting entries for an account officer, new product development
training for a marketing executive etc.

Consoling:
The training program that is designed to enhance personal skills of an employee and to
develop its capacity to solve/resolve individual conflicts and emotional problems.

Learning Guidelines for Training Program:


i.
ii.
iii.
iv.
v.

Provide an overview of the training contents to the employee.


Arrange the information I am logical and comprehensive manner.
Provide practical examples regarding the contents of training.
Use familiar terms and concepts and easily understandable language for the audience.
Use audio visual aids, and other helping material that may facilitate the learning.

Skills Transfer Guidelines:


i.
ii.
iii.
iv.

Increase the similarity between the training environment and actual job environment.
Provide time to practice
Explain each part of the machine and each step of process that is under consideration
Explain various critical job factors that should be remembered by the employee. For example
do not use brake at once.

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v. Explain precautionary measures that should be considered while performing job. For example
do not smoke while driving.

Motivation Guidelines:
How to keep employee motivational to the job?
i. Explain the perceived training need to the employee to make them motivated towards the
training program.
ii. Follow the learning by doing technique and involve the employees in to the actual activities
of the job.
iii. The trainer should provide the employees with positive reinforcement, timely feedback and
prompt/immigrate suggestions regarding their job activities.
iv. The trainer should consider the learning capacity of the trainees and allow them to learn the
job according to their own pace/speed of learning.
v. The trainer should observe the schedule of the training program and the training should be
provided during the early hours of the days as the learning tendency/curve decreases
throughout the working day.

Training and Development Process

1. Training Need Assessment:


The process of identifying various performance deficiencies or various needs for improvement
and to determine whether these deficiencies can be overcome through training or there may be
other solutions like provision of resources, job rotation etc.
(Deficiency: difference b/w performance and standards is called deficiency.)

a. Task Analysis/Training need assessment for new employees:


Evaluating the need for training program for new employees of the organization by
dividing its job into various tasks to determine which tasks are known to the employees
and which activities is unknown, that require training.

b. Performance Analysis/Training Need Assessment for Current Employees


The training needs assessment for current employees of the organization in which their
actual performance is compared with the standards to identify various performance

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deficiencies and to determine whether this efficiency can be removed through training or
there may be other solution.
Process of Performance Analysis
Step 1:
compare the actual performance with the standards
Step 2:
Identify various performance deficiencies
Step 3:
Design training objectives to remove the deficiency or taking other corrective
actions

2. Instructional Design
The process of deciding about the specific materials, information and contents that should be convey
to the employees, as well as making decisions regarding the methods that should be used to convey the
training information.
Contents of Instructional Design:
Making decisions regarding the specific information that is useful for the employees and that should
be convey them including all the materials, workbooks, exercises, assignments or practical
exposure/experience. For example course contents of a student.

Methods
The specific techniques or physical settings that should be used to convey the training information to
the employees and managing the training contents accordingly.
1. On the Job Training (OJT)
2. Off the Job Training

1. On the Job Training/OJT


Training employees to learn various job related skills in the actual job environment while
performing their actual job duty.
Importance /Benefits/Advantages of OJT /why organizations use OJT?
i.
No extra facilities are required
ii.
In-expensive in terms of time and monitory cost
iii.
It follows the principal of learning by producing
iv.
It provides with an immigrate feedback and re-enforcement and corrective action can be
applied accordingly

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Methods of OJT
i.
ii.
iii.
iv.
v.
vi.

Coaching
Rotations
Special Assignment/Action Learning
Job instructions Training
Informal learning
Apprenticeship

i. Coaching:
On the job training method where an individual is assigned to a supervisor or a subject matter
expert to learn various job related skills by taking guidelines and directions and by consulting
in case of various problems.

ii. Job Rotation


A systematic movement of any employee from one job location to the other location to
increase its insights about the organization and to enhance its understanding regarding various
operations and procedures.

iii. Special Assignment/Action Learning


On the job training approach where an employee is assigned with independent projects and
assignments to work full time by generating all the necessary resources and information and
by resolving various problems and issues accordingly. This method involves an active
participation of the employee to learn various job related skills through self participation.

iv. Job Instructions Training


On the job training method where an employee is provided with a written description of step
by step procedure to perform the job activities along with various pre-cautions and safety
measures. The employee tends to follow the job instructions/guidelines by consulting the
instructions manual and to perform the job by considering its safety requirements.

v. Informal Learning
On job learning where individuals tend to learn various job activities using informal setups
from their colleagues, supervisors or sub-ordinates other then than organization. The
organization may encourage the informal learning within the organization by providing
facilities and support.

vi. Apprenticeship
On the job training technique where an individual is assigned to an expert/craft man to learn
various job related skills by dedicating its time and efforts to achieve the training objectives.

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2. Off the Job Training


The training techniques where an employee tends to learn various job activities using off the job
equipments and facilities other than the actual job location.
Methods of Off the Job Training
i. Lectures/Seminars/Conferences and Workshops
ii. Case Study Method
iii. Management Games
iv. Simulations
v. Computer Based Training

i.

Lectures/Seminars/Conferences and workshops:


Off the job training setup where an expert or a group of experts tend to elaborate there area of
expertise with a group of audiences that is immediately followed by a question-answer session
or group discussions. It may be arranged either on small, medium or large scale and it may
follow the specific setup that is combination of theoretical knowledge and practical
experience.

ii.

Case Study Method:


Off the job training method in which employees are provided with a written description of past
job related incidents and events to identify problems, to analyze the issues and to provide with
a various solutions that may be helpful in developing their skills.

iii.

Management Games
Off the job training exercises in which an individual employee or a group of employees tend
to compete with each other regarding various job related practices and to enhance their skills.
a. Role Playing Exercises:
Off the job training exercise that include specific set of activities assigned to an individual
to develop its capabilities for example role of investor
b. Behavior Modeling Exercises:
Various training exercises that are designed to modify the behavior of an employee
according to the requirements of the organization by following various re-enforcements.

iv.

Simulations
Off the job training equipments that are exactly similar to the actual job environment designed
to train the employees for various jobs that are risky in terms of monitory resources, physical
resources or loss of life, for example to jump from a plane, flying etc.

v.

Computer Based Trainings:

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3. Validation of training Program


The process to find out accuracy of training program, its contents and methods to ensure its
validity and reliability. The validation can be done through:
i.
Consultation through Experts:
By taking an opinion of the subject matter specialists who have been performing
similar type of duty for a longer period of time.
ii.
Representative Audience:
Presenting the training program to a small group of representative audience to take
their advice and to find out various errors/bugs and deficiencies. Audience should be
considered only those people who could understand the topic and have the ability of
giving their opinion.

4. Implementation of Training Program


Actually presenting the training program to a group of employees for which it was designed
by managing various issues including:
i.
Availability of trainer
ii.
Arrangement of location
iii.
Providing resources and equipments
iv.
Problem solving and facilitations
v.
Time management
vi.
Etc

5. Evaluation of Training Program


All the procedures that are designed to measure the success of a training program after its
implementation and to identify whether the training was effective in achieving its objectives or
not?

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Training Effects to Measure


These factors will be seen after the training and on the base of these factors any training will be
considered successful or negligent.
i.
Reactivity
ii.
Learning
iii.
Behavior
iv.
Results

i.

Reactivity:
The response of employees towards training contents and methods assuming that a
positive word of mouth is the predictor of success of training program.

ii.

Learning:
If the employee acquires new knowledge, skills and abilities due to the implementation of
training program, it may be considered success of that training.

iii.

Behavior:
If an employees on the job behavior has been changed positively after the implementation
of training program, that training may be considered successful.

iv.

Results:
If there is a positive improvement in the operational output of an employee and its
productivity has been increased the training may be considered to be successful/effective.

Negligent Training
If the managers failed to train their employees according to the requirements and training was unable
to achieve its objectives and it may be harmful for the organization, its members and other
stakeholders, this training will be called negligent training.
Negligent training may include:
i.
Wrongful need assessment
ii.
In-appropriate contents and methods
iii.
Errors while validating the training program
iv.
Any other relevant mistakes.

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Appraising People
1. Performance Appraisal
2. Performance Management

1. Performance Appraisal
All the procedures that are designed to compare the actual performance of an employee with
the performance standards and to provide with feedback along with suggestions and reenforcements.
Process of Performance Appraisal
i.
Setting standards
ii.
Compare actual performance with the standards
iii.
Providing feedback along with suggestions and re-enforcements.

2. Performance Management System


The process of managing the performance of the employees according to the requirements of
the organization integrating/ combining goal setting, performance evaluation and future
development in to a single common system to achieve organizational strategic objectives.

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Why performance appraisal is important? OR Importance of performance appraisal


i.
It provides the employer an exact idea about the actual performance of an employee
with in organization
ii.
It is an integral/importan part of overall performance management system.
iii.
Most of the employers make their rewards and promotion decisions on the actual
performance of the employees.
iv.
It helps an employer to suggest future develompent for an employee according to its
performance.
v.
An employer may provide the employee with suggestions and re-inforcements for its
improvement.

Issues in Performance Appraisal


i.
ii.
iii.
iv.
v.

Strategic Appraisal
Quality and quantity
Supervisors Role
Realistic Appraisal
Feedback

i.

Strategic Appraisal:
The management should ensure that an employees performance is contributing towards
achievement of its overall strategy to determine various performance improvements that
are beneficial for the organization.

ii.

Quantity and Quality:


The management should be aware of an employees operational output in terms of
quantity as well as considering the quality of its output.

iii.

Supervisors Role:
The management should consider involving the immediate supervisor in to the process of
an employees evaluation to make it more reasonable as the supervisor has an exact idea
about an employees performance and its expertise.

iv.

Realistic Appraisal:
The management should be neutral while evaluating the performance of an employee and
they should convey the actual situations of an employees performance including various
efficiencies and deficiencies.

v.

Feedback:
The organization should consider providing timely feedback to the employee along with
suggestions and re-enforcements to make improvements accordingly.

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Appraisal Interview

Satisfactory:
For example to for being passed in exams of a semester there is required 1CGPA but for being
promoted in next semester 2CGPA is required.
Now if a student gets more than 2CGPA, his performance is satisfactory and promotable, but if a
student gets less than 2CGPA but more than 1CGPA, his performance is satisfactory but not
promotable.

Un-Satisfactory:
For example an employee does not show satisfactory performance, and then management will decide
about his performance. If his mistakes are correctable, then they will give him suggestions for
improvement, and if his mistakes are not correctable, then management will ask him bye bye.

Who should do Appraisal?


/Parties or Types of Performance Appraisal
i.
ii.
iii.
iv.
v.
vi.

Supervisor
Self Rating
Peer Appraisal
Subordinate Feedback
Rating Committee
360 Degree Feedback

i.

Supervisor:

ii.

The type of evaluation where an employee is being evaluated by its immediate supervisor
or the senior authorities considering that the supervisor has an exact idea about an
employees performance, skills, efficiencies and various other aspects. The supervisors
evaluations are most vilely used and considered effective than other methods.
Self Rating: 25-40% bias
The type of evaluation where an individual employee tends to rate its own performance y
using the given criteria as directed by the organization. The self ratings may prove to be
biased as the individuals tend to rate themselves higher than their actual performance.

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iii.

iv.

v.

43

Peer Appraisal: (Logrolling)


The type of performance evaluation where an individual is being rated by its co-workers,
colleagues or team members. The peer appraisal may be based in term of Log Rolling
that is making collaborations and alliances by the group members to rate each other higher
than their actual performance.
Subordinate Feedback/Upward Feedback: (only for development purpose)
If an employee is being evaluated by its subordinates or the individuals who are working
under its command, it is considered to be an upward feedback that is designed for the
purpose of development instead of just an evaluation.

Rating Committee/Appraisal Committee/Panel Evaluation:


If a panel of experts is appointed to evaluate the performance of employees considering
that it may be neutral and un-biased as compared with other methods. The evaluation
panel may include the HR Personnel, supervisors, experts or any other third parties.

vi.

360 Degree Feedback:


The type of evaluation where an employee is evaluated by supervisor, colleagues,
subordinates or any other third parties outside the organization. The 360 degree feedback
is usually designed for the purpose of suggesting improvements instead of just evaluation.

Appraisal Problems
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.

Problems because of which appraisal becomes useless are as following.


Un-Clear Standards
Halo Effect
Recency Effect
Outside/Third party Influence
Leniency
Strictness
Central Tendency
Biasness

i.

Un-clear Standards:
If the standards and targets are not cleared to the employees it may crate various
ambiguities for both the employer and the employees.

ii.

Halo Effect:
If an employer tends to evaluate various individuals on the bases of a few dominant
characteristics of its behavior instead of considering its overall personality and
performance.

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iii.

44

Recency Effect:
Tendency of an evaluator to rate the employees on the basis of considering its overall
performance throughout the evaluation period.

iv.

Outside/Third Party influence:


Tendency of an evaluator to rate the employees under the influence of outside parties to
make evaluation either positive or negative

v.

Leniency:
Tendency of an individual to rate various employees higher than their actual performance
may be called as leniency effect.

vi.

Strictness:
Tendency to rate the employees below than their actual performance may be considered as
the strictness effect.

vii.

Central Tendency:
Tendency of an employer to evaluate the employees on average basis without considering
their actual performance including all the achievements and drawbacks.

viii.

Biasness:
If an employee is being evaluated under the influence of personal demographic
characteristics it may be considered as Bias. The personal characteristics may include
age, gender, social class, religion, race, etc.
For example ( chorro yaar apna aadmi hy.)

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How to avoid from Appraisal Problems


/ Solution of the Appraisal Problems
i.
ii.
iii.
iv.
v.

Clarifying the standards


Train the supervisor
Use the appropriate method
Rating Committee
Dairy Keeping/ Record Keeping

Appraisal Method
The specific proceeds or techniques used by the organization to evaluate the performance of their
employees and to provide them feedback accordingly. It includes two important decisions.
i. What to measure?
ii. How to measure?

Performance Dimensions
The decision regarding specific indicators or characteristics of the job that may be used as the base for
performance evaluation for example quality, job knowledge, time etc.
The performance dimensions may be categorized in to four different types.
i.
General Dimensions
ii.
Specific Dimensions
iii.
Competencies
iv.
Goal Achievement

i.

General Dimensions/Generic Dimensions:


The performance indicators that are general in nature and they may exist within any kind
of job activities. For example quality, quantity, job knowledge etc.

ii.

Specific Dimensions:
The type of indicators that are not common and that may exist for certain kind of job or
designation. For example marks for students, vouching for an accountant, sales plan for a
marketing officer etc.

iii.

Competencies:
The type of performance indicators through certain employees are evaluated on the bases
of certain job related skills including conflict management skills, customer relation
management skills, using software etc.

iv.

Goal Achievement:
The performance indicator that include the specific qualitative targets that should be
achieved by an employee during the course of its job.
For example meeting 10 customers per hour, attending 30 calls per day etc.

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How to Measure?
Methods for Employees Evaluation
Decision regarding specific methods that should be used for an employees evaluation and to provide
with feedback.
i.
Graphic Rating Scale
ii.
Alternative Ranking Method
iii.
Forced Distribution Method
iv.
Paired Comparison
v.
Critical Incidents Method
vi.
Narrative Forms
vii.
Management by Objectives(MBO)
viii.
Behavioral Anchored Rating Scale (BARS)

i.

Graphic Rating Scale


The evaluation method where certain performance dimensions are identified and assigned
with a specific rating scale to evaluate the employee on each dimension using the given
rating scale
a) Indentify a range of performance dimensions
b) Assign an appropriate rating scale to each dimensions
c) Evaluate the employee using the given rating scale on each dimension

Performance
Dimenssions
Quality

Quantity

Job Knowledge

Below 50%

50-75%

75-100%

Target

ii.

Poor

Good

Excellent

Above
Expectation

Alternative Ranking Method


The evaluation method where employees are ranked according to their order of
performance by assigning the top position to the best performance than the next best and
so on.
Students Marks
A
88
B
82
C
80
D
76
E
73

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iii.

47

Forced Distribution Method


The evaluation criteria where an employee is evaluated according to the specific
distributions designed and implemented by the organization.
Students
Marks
Ranking
A
88
Above 20%
B
82
C
80
Above 60%
D
76
E
73
Poor 20%

iv.

Paired Comparison Method


The evaluations method in which performance of group members is compared with each
other by identifying a range of performance dimensions and rating each employee against
the performance indicators.
Quality
Time
Job Knowledge
Targets Total
Ranking
A
3
1
B
C
D

v.

+
+
-

+
+
-

+
+
+

Critical Incidents Method


The evaluation method where the supervisor tends to keep record of all the good and bad
examples of the job focusing on various incidents that are not routine matters to discuss
these examples with the employees along with suggestions after the due time.

vi.

Narrative Forms
Evaluating the performance of an employee and providing with feedback using the
specifically designed or descriptive documents that include both the performance
evaluation as well as the recommendation.

vii.

Management by Objectives(MBO)
A systematic procedure designed by the organization to identify individual departmental
and organizational objectives and to evaluate the performance of an employee against the
objective.
Step 1: Identify organizational objectives
Step 2: Determine department/group objectives
Step 3: Clarify individual Objectives
Step 4: Evaluation
Step 5: Feed back

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viii.

48

Behavioral Anchored Rating Scale (BARS)


The evaluation method where a range of various behaviors is identified that may be
adopted to perform the job activity and these behaviors are assigned with specific ratings
according to their accuracy, to rate the employees as per the behavior adopted by them.
Step 1: Identify a range of various behaviors to perform the job tasks
Step 2: Assign ratings to each behavior as per the importance/accuracy of that behavior
Step 3: Rate employee according to the specific behaviors adopted to perform the job
activity

Compensating People
All kinds of financial and non-financial benefits offered to an employee in exchange of its services for
the organization.
The employee compensation may include:
i.
Direct Financial Payments
ii.
In-Direct Payments
iii.
Benefits in Kind
iv.
Non-Financial

i.

Direct Financial Payments:


The cash payments directly made to an employee as take home cash arrangements, for
example salary, commission, cash rewards, etc.

ii.

In-direct Payments:
All the payments made to third party for whom the benefit is enjoyed by the employee like
insurance, medical treatment fee, etc.

iii.

Benefits in kind:
All the tangibles or facilities offered to an employee to facilitate its job performance and
to encourage its contribution, for example computer, tools and equipments etc.

iv.

Non Financial Benefits:


All kinds of non-monitory offers made to an employee like appreciation, respect,
recognition, certification, etc.

Compensation Package/Compensation Plan:


A combination of all the direct and indirect payments and various other benefits offered to an
employee according to its nature of job or the specific designation held by that individual.

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49

Ingredients of Compensation Package


i.
ii.
iii.
iv.
v.
vi.
vii.

Basic pay/basic wages/basic salary


Increments/pay raises
Allowances
Bonus and incentives
Benefits/Fringe benefits/Perquisites/Perqus/Perks
Pay for performance/Merit Pay
Commission

i.

Basic Pay/Basic Wages/Basic Salary:


The cash amount offered to an employee according to its specific pay grade or its
contribution for the organization.

ii.

Increments/Pay Raises:
The permanent increase in basic pay of an employee that becomes a part of its salary
arrangement for the next compensation period. Increments may be offered either on the
bases of superior performance or on the bases of duration of time with in a specific
organizations.
a. Increments based on performance/merit raise
b. Increments based on seniority

iii.

Allowances:
The additional cash amount offered to an employee to adjust individual differences or to
encourage an employee on the bases of certain characteristics. For example entertainment
allowance, traveling allowance, senior post allowance etc.

iv.

Bonuses and incentives:


The additional cash payments or other benefits to an individual to recognize its
contribution for the organization, or to encourage the employee for future performance.
Bonuses are generally past oriented and offered after the job has accomplished, while
incentives are offered to encourage future performance before the task has accomplished.

v.

Benefits/Fringe Benefits:
The facilitation or support offered to an employee in terms of tangible and non tangible
benefits including member ship of professional organization or sight fitness centers and
residence etc.

vi.

Pay for Performance/Merit Pay/PFP:


The additional payment or facilitation offered to an employee to recognize its superior
performance and to encourage that individual/employee for future.

vii.

Commission:
A percentage of sales amount offered to an individual who has contributed its efforts in
making that sale possible.

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50

Factors Affecting Pay Rates Decisions


There are some factors which have their impact on the decisions of company regarding pay rates for its
employees.
i.
Legal Issues
ii.
Labor Unions
iii.
Companys Policy
iv.
Equity

i.

Legal Issues:
It includes all the binding and restrictions imposed by the federal or provisional authority
governing the pay rates or various other facilities. For example including minimum wage
rate, overtime pay, paid leave, old age benefits etc.
For example any company cannot pay to its employees less than Rs. 9000 in Pakistan
because of restriction of the government.

ii.

Labor Unions
The compensation decisions may also be effected by the groups of employees within
organization that are formally designed to protect the rights of employees. The labor union
may affect the compensation decision through collective bargaining or using various
other techniques like protest, strike, lock outs, etc

iii.

Company Policy:
The organization may design various policy matters or strategies to compensate their
workers according to their nature of job, skills, or contribution for the organization. The
companys policy may include decision regarding various allowances, benefits or
commission based pay plans etc.

iv.

Equity Issues:
Various factors that are introduced by the competitors or the other organization may also
force the management to design competitive pay plan that is adjustment in pay rate
according to the compensation offered by the other firm. The equity issue is important to
retain the employee within the organization and to reduce employees turnover.

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Employee Incentives
Various ingredients that are offered to an employee as compensation to motivate them for future
performance and to recognize their efforts for the organization.
Employee incentives may be categorized in to two types.
i.
Individual incentives
ii.
Group/organizational incentives

i.

Individual Incentives:
a) Piece work
c) Merit Pay/Raise

b)
d)

Commission
Recognition

(a) Piece Work:


The cash amount offered to an employee on each unit contributed by that individual.
For example an organization says to his employee that you will be given Rs. 5 per each unit
which you will produce.

(b) Commission:
Additional cash amount offered to the sales person against each unit sold by that individual.

(c) Merit Pay/Pay for Performance (PFP):


The additional cash amount or rewards offered to an employee to recognize its contribution
and superior performance within organization.

(d) Recognition based Awards:


The rewards or various other compensations offered to an employee to recognize its services
for the organization.

ii.

Group/Organizational Incentives
a. Employee stock ownership program
c. Gain sharing Plan

b.
d.

Profit sharing Plan


At-Risk Pay Plan

a. Employee Stock Ownership Program:


Various arrangements that are design to offer ownership of the firm by purchasing its stock or
shares.

b. Profit Sharing Plan (PSP):


Various arrangements where a company intends to share a percentage of its profit with the
employee in recognition of their efforts.

c. Gain Sharing Plan (GSP):


The arrangements where various cost saving techniques are applied and in the result generated
gain is shared with the employees who implemented the cost saving techniques.

d. At-Risk Pay Plan:


The arrangement where the organization keeps some part of salary of an employee because of
any project based on that employee and on the ending of that project company returns that
reserved amount with also extra amount to that employee. This is called at risk pay plan.
For example the organization invests on a project on the base of any person who has capability
of performing for that project. After the starting of that project if that person leaves to that
company then this project will be in deficit for that company, so for this security purpose
company keep a part of salary in reserve.

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