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Foundation of Human Resource Management

Human Resource Management

PREFACE
The text of the Human Resource Management has been written with the basic
objective of introducing and familiarizing students with Human Resource
managements concepts that help them develop their knowledge base and
understand various facets of HRM. This book covers important concepts and
information that begins with introducing the subject in the module-1 followed by
Module II in which functions of HR Department are elaborated that makes one
understand how an employee is selected in an organization by throwing light upon
fundamentals of recruitment and selection which also covers areas such as Job
Analysis, Job description, Job specification, Recruitment, Selection, Placement and
Induction and socialization, Training and Development Training Process &
Methodology Need and objectives Training Procedure Methods of Training
Tools and Aids Evolution of training Programs.
Module III , IV and V discuss various functions of Human Resource Department
such as Compensation, Maintenance Integration and Audit & Control. This book
discusses various contemporary issues of HR department by focusing on Job
evaluation, Merit rating, Methods of wage payment, Incentive Compensation
Types, Advantages, perquisites, Wage Policy in India - Minimum Wage, Fair
Wage, Living Wage .
The Human Resource Management is an ever evolving field and this book alludes
various concepts of this field such that students are able to relate to the basics
concepts of HRM and get an insight on the role of an HR manager and diverse
activities involved in this discipline.

Human Resource Management

Brief Table of Contents


Chapter no. Title
CHAPTER 1 HUMAN RESOURCE MANAGEMENT-

INTRODUCTION

CHAPTER 2 JOB ANALYSIS, JOB DESCRIPTION AND JOB


SPECIFICATION
CHAPTER 3 RECRUITMENT AND SELECTION
CHAPTER 4 INDUCTION, SOCILIZATION AND PLACEMENT
CHAPTER 5 TRAINING AND DEVELOPMENT
CHAPTER 6 CAREER PLANNING AND CAREER DEVELOPMENT
CHAPTER 7 JOB EVALUATION AND COMPENSATION
CHAPTER 8 WAGE AND INCENTIVE COMPENSATION SCHEMES
CHAPTER 9 EMPLOYEE WELFARE , FRINGE BENEFITS AND SAFETY
& ACCIDENT PREVENTION
CHAPTER 10 ADDRESSING EMPLOYEE GRIEVANCE AND DISCIPLINE
CHAPTER 11 PERFORMANCE APPRAISAL
CHAPTER 12 HUMAN RESOURCE INFORMATION SYSTEM

Human Resource Management


Chapter-1 Introduction to Human Resource Management
After reading this chapter, you will be able to understand:
1. Meaning and evolution of Human Resource Management
2. Objectives and Functions of HRM
3. Difference between HR and Personnel Management
4. Structure of HR department
1.0 Introduction
Every organization is essentially a combination of physical and human resources.
Physical resources refer to materials, money and machines pre-arranged by the
organization for production or trade. Human resources, on the other hand, refer to
the knowledge, education, skills, training and proficiency of the members of the
organization. All organizational resources are important for achieving the
objectives of an organization. In fact, the effectiveness of an organization lies in
the judicious blending of the two resources to achieve optimum competency.
However, for a long time, it was felt that the efficient utilization of physical
resources was primary for developing organization. This was so because the
acquisition of physical resources resulted in a huge outflow of funds and those
assets carried a definite value. On the contrary, it was felt that hiring employees
never cost anything substantial for a firm and it was also quite easy to replace
them. This made human resource less important for employers. But, in the past
decade, employers have realized that intellectual capital is critical to business
success. The main reasons for this change are due to the understanding that
1. Product innovation and marketing strategy, which are crucial for market
survival and growth in a competitive environment, are possible only when a
good and creative workforce is present.
2. The challenge, opportunities and even disputes of creating and managing
organizations arise mostly from people-centered problems.
3. People are alike and they cannot be treated identically. They differ
physically and psychologically. These difference require individual
attention in order to achieve the optimum productivity.

Human Resource Management

1.2 MEANING AND DEFINITION


Human Resource Management (HRM) is a management function that managers
recruit, select, train and develop members for an organization. HRM is concerned
with the peoples dimension in the organizations.
We quote three definitions on HRM. But before quoting the definitions, it is useful
to point out the essentials which must find their place in any definition.
The core points of HRM are:
1. Organizations are not mere bricks, mortar, machineries or inventories. They
are people. It is the people who staff and manage organizations.
2. HRM involves the applications of management functions and principles. The
functions and principles are applied to acquisitioning, developing and
maintaining, and remunerating the employees in the organization.
3. Decisions relating to employees must be integrated. Decisions on different
aspects of employees must be consistent with other human resource
decisions.
4. Decisions made must influence the effectiveness of the organization.
Effectiveness of an organization must result in betterment of the services to
the customers in the form of high-quality products supplied at reasonable
cost.
5. HRM functions are not confined to business establishments only. They are
applicable to non-business organizations too, such as education, health care,
recreation, and the like.
The following three definitions collectively cover all the five core points:
1. a series of integrated decisions that form the employment relationship;
their quality contributes to the ability of the organization and the
employees to achieve their objective.
2. . Is concerned with the people dimensions in management. Since every
organization is made of people, acquiring their services, developing their

Human Resource Management


skills, motivating them to higher levels performance and ensuring that
they continue to maintain their commitment to the organization are
essential to achieving the organizational objectives. This is true,
regardless of the type of organization government, business, education,
health, recreation, or social action.
3. management is the planning, organizing, directing and controlling of
the procurement , development, compensation, integration, maintenance
and separation of human resources to the end that individual,
organizational, and social objectives are accomplished.
Thus, HRM refers to a set of programs, functions and activities designed and
carried out in order to maximize both employee as well as organizational
effectiveness.
1.3 EVOLUTION OF HRM
HRM, a relatively new term, engaged during the 1970s. Many people continue to
refer to the discipline by its order, more traditional titles, such as personnel
management or personnel administration.
The trend is changing. The term now days used in industry circles is HRM.
Coming to evolution of HRM as a subject, it may be stated that concern for the
welfare of workers in the management of business enterprises has been in
existence since ages. Kautilyas Arthashastra states that there existed a sound base
for systematic management of resources during as early as the 4th century BC. The
government then took an active interest in the operation of public and private
sector enterprises and provided systematic procedures for regulating employeremployee relationships.
Elsewhere, human resources in organizations received the managements attention
much earlier. As early as in 1800 BC itself, minimum wages rate and incentive
wages plan were included in Babylonian Code of Hammurai.
Experts of HRM in our country have tried to chronicle the growth of the subject
only since the 1920s. this was the period when state intervention to protect the
interests of workers felt necessary because of the difficult conditions which
followed the First World War, and the emergence of trade unions. The Royal
Commission (1931) recommended the appointments of labour-welfare officers to

Human Resource Management


deal with the selection of workers and to settle their grievances. The Factories Act,
1948, made appointments of welfare officers compulsory in industrial
establishments employing 500 or more workers each.
The aftermath of the Second World War and the countrys political independence
witnessed increased awareness and exceptions of workers. During the 1960s, the
personnel function began to expand the welfare aspects, with labour welfare, IR
and personnel administration integrating into the emerging profession called
personnel management (PM). Simultaneously, the massive thrust given to the
heavy industry in the context of planned economic development, particularly since
the Second Five Year Plan and the accelerated growth of public sector in the
national economy resulted in a shift in focus towards professionalization of
management.
In 1990s, a shift in professional values was discernible. It shifted from a concern
for welfare to a focus on efficiency. In the 1980s, professionals began to talk about
new technologies, HRM challenges and HRD.
In the 1990s, the emphasis shifted to human values and productivity through
people. Reflecting this trend, the American Society for Personnel Administration
(ASPA) was renamed as the Society for Human Resources Management (SHRM).
Thus, beginning in 1920s, the subject HRM has grown in to a matured profession.
Below table shows the evolution of HRM.
1.4 SCOPE OF HRM
The scope of HRM is indeed vast. All major activities in the working of a worker
from the time of his or her entry into an organization until he or she leaves come
under the preview of HRM. Specifically, the activities included are HR planning,
job analysis and design, recruitment and selection, orientation and placement,
training and development, performance appraisal and job evaluation, employee and
executive remuneration, motivation and communication, welfare, safety and
health, industrial relations (IR) and the like. For sake of convenience, we can
categorize all these functions into four objectives:

1.5 HRM Objective and Function

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HRM Objective

Supporting Functions

1. Societal Objectives
1. Legal compliance
2. Benefits
3. Union Management Relations
2. Organizational Objectives
1. Human Resource Planning
2. Employee Relations
3. Selection
4. Training and development
5. Appraisal
6. Placement
7. Assessment
3. Functional Objectives
2. Placement
3. Assessment

1. Appraisal

4. Personal Objectives
1. Training and development
2. Appraisal
3. Placement
4. Compensation
5. Assessment
1.6 THE SEMANTICS
As in any discipline, there is the problem of semantics in HRM, too. First, we have
two terms, namely, personnel management (PM) and HRM. Between these two
terms is a basic difference, and it is useful as to what it is.
HRM differs from PM both in scope and orientation. HRM views people as an
important source or asset to be used for the benefit of organization, employees and
the society. It is emerging as a distinct philosophy of management aiming at
policies that promote mutuality mutual goals, mutual respect, mutual rewards and
mutual responsibilities. The belief is that policies of mutuality will elicit
commitment which, in turn, will yield both better economic performance and

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greater human resource development (HRM). Though a distinct philosophy, HRM
cannot be treated in isolation. It is being treated into the overall strategic
management of business. Further, HRM represents the latest term in the evolution
of the subject. The year 1990 was a turning point in this evolution. The American
society for personnel administration (ASPA), the largest professional association in
this field of management, changed its name to the society for human resource
management (SHRM). Since then, the expression is gradually replacing the
hackneyed term personnel management.
1.7 HRM AND PERSONNEL MANAGEMENT
The difference between HRM and PM is a subject of discussion amongst HRM
experts. They do not hold identical views about similarities and dissimilarities
between HRM and PM.
According to Lowry, PM and HRM are the successive stages of the same concept
without any differences in the concept. In his words, Human Resource
Management is just the continuing process of personnel management it is not
different.

1.7.1 HR Management vs Personnel Management


While digging for the difference between Human Resources Management and
Personnel Management, you are most likely going to get very divergent views,
depending on which sphere of experts you question. While some strongly affirm
that there is no difference between the two, others will recognize the variance, but
will still acknowledge the unmistakable similarities. In lay terms however, theres
a general tendency to use the terms interchangeably.
The difference, when acknowledged, between HR and Personnel, is often depicted
as philosophical. Personnel management encompasses more administrative
disciplines of payroll issues, employment law compliance and all other related
tasks. On the other hand, HR is more concerned with the management of a
workforce, as this is one of the key resources that drive the day-to-day operations
of a company; hence its success.

Human Resource Management


Whenever a distinction is made between Human Resources and Personnel
management, Human Resources is always represented to a broader extent than
Personnel management. Human Resources, it is said, embodies and elaborates
tasks of Personnel management, and at the same time, creates and develops teams
of employees for the advantage of the company. One of HRs primary goals is to
provide a suitable environment for employees to fully utilize their skills, and work
at maximum efficiency levels.
The tasks that are common within Personnel management include the traditional,
routine duties; thus, it is generally described as reactive, i.e. only responding to
demands as they arise. Human resources, on the other hand, involve continuous
innovation and strategizing to manage a companys workforce more efficiently. It
is, therefore, generally considered proactive. Theres an ongoing development of
policies, functions and skill assessments all aimed at improving the companys
workforce.
While performance management is always considered to be influenced by the
organizations, HR is generally considers as an integral part of the organizational
functions. Personnel Management duties are solely the domain of the personnel
department. However, with regard to HR, most of the companys senior level
employees (managers) are somehow involved, and key goal may be to engage the
managers in the skills development processes needed to accomplish personnel
related duties.
In terms of performance, motivation and rewards, Personnel Management typically
endeavors to reward and motivate employees with salaries, bonuses, compensation
and a standard paid annual leave in order to derive employee satisfaction. For HR,
the primary motivators are seen as job creativity, work groups and efficient
strategies to meet challenges.
To summarize, Personnel management is more concerned with payroll and similar
tasks, while HR is concerned with the overall management of a companys
workforce. Personnel tasks are creative, while HR tasks are generally proactive,
and continuous. Personnel Management is considered independent from
organizational influence, while HR is dependent on input from some employees,
like senior management.

1.7.2 Similarities between HRM and PM

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The basic elements common to HRM and PM strategy:


Business Strategy Both form the basis for the evolution of HR and PM
strategy.
Matching People Choosing the right people for the right job and developing
them to achieve their maximum level of competence remain the priority of
both HRM and PM.
Prominence of Line Authority HRM, similar to PM, recognizes that the
primary responsibility for managing people stays with line managers.
Identical Core Elements Techniques like selection, traning, development,
compensation and performance management are common to both HRM and
PM.
Emphasis on Communication and Participation HRM and PM provide
equal importance to the communication process and workers participation
in decision making.
1.8 ORGANISATION OF HR DEPARTMENT
Two issues become relevant in a discussion on organization of an HR Department.
They are
(i)
place of the HR Department in the overall set-up and
(ii) Composition of the HR department itself.
Status of the HR Department in the total organizational structure depends on
whether a unit is small or large. In most of the small organizations, there is no
separate department to co-ordinate the activities relating to personnel. In fact, there
may not be any personnel managers at all. Services of outsiders who specialize in
maintaining accounts and records relating to provident fund, pension and other
statutory requirements are retained for free. Alternatively, a low places employee
may be entrusted with the task of attending to these functions. Figure shows a
structure of this type. In Fact, it was this arrangement which was followed in the
past, irrespective of the size of the organization. Earlier, personnel departments
were called health and happiness departments. The people assigned to deal with
personnel issues were often individuals who were past their prime. The personnel

Human Resource Management


department was seems as a place where the lesser productive employees could be
places with minimal damage to the organizations ongoing operations. Individuals
in the personnel department were perceived as those responsible for planning
company picnics, vacation schedules and retirement parties. Personnel, as an
activity, were seen as a necessary but unimportant part of the organization.
Fortunately, things have changed for the better and the status of the personnel
department has improved enormously over the years.
Owner/Manager

Production
Manager

Sales Manager

Office Manager

Accountant

Personnel
Assistant

Fig. HRM in a small-scale unit


A large scale unit will have a manager/director heading the HR department. His or
her status will be equal to that of any executive. Figure given below shows this
structure. This arrangement holds good when the company has a single unit. Where
the company has multiple plans located in different parts of the country, there may
be a centralized HR/personnel department at the mail or registered office and each
plant will have separate HR/personnel departments. Routine activities relating to
each plant are handled by the HR/personnel department attached to the work,
whereas the broad policies, matters concerning executives and the like are handled
by the central department. This is the case with conglomerates as BHEL, ITI and
L&T.
Chairman and
Managing Director

Director
Production

Director Finance

Director
Personnel/HRM

Director Marketing

Director R&D

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Fig. HRM in large scale unit
Coming to the composition of the HR Department, it may be stated that it depends
on the scale of operations and attitude of the top management towards its
personnel. However, a typical HR department is headed by a Director, under who
are Managers Personnel Manager-Administrative, Manager-HRD and ManagerIndustrial Relations. The department will grow in size and importance when new
demands are places on it by the top management.
Owner/Manager

Manager
Personnel

Human Resource
Planning

Manager
Administration

Manager HRD

Appraisal

PR

Hiring

Canteen

Grivance Handling

Medical

Compensation

Welfare

Manager IR

Traning and
Development

Transport

Legal

1.9 DUTIES OF HUMAN RESOURCE MANAGERS


Basically Human resource manager caries out three distinct functions:
1. A line function: The human resource manager directs the activities of the
people in his or her own departments and in related services areas (like the
plant cafeteria). In other words, he or she exerts line authority within the HR
department. While they generally cant wield line authority outside, they are

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likely to exert implied authority. This is because line manager know the
human resource manager has top managements ear in areas like testing and
affirmative action.
2. A coordinative function: Human resource manager also coordinate
personnel activities, a duty often referred to as functional authority (or
functional control). Here he or she acts as the right arm of the top
executive to ensure that line manager are implementing the firms human
resource policies and practices (for example, adhering to its sexual
harassment policies).
3. Staff (assist and advise) functions: Assisting and advising line managers is
the heart of the human resource managers job. He or she advises the CEO to
better understand the personnel aspects of the companys strategic options.
HR assists in hiring, training, evaluating, rewarding, counseling, promoting,
and firing employees. It administers the various benefit programs (health and
accident insurance, retirement, vacation, and so on).

1.10 Quiz
Complete all the review questions listed here to test your
understanding of the topics and concepts in this chapter
1.
a)
b)
c)
d)

Human Resource Management is primarily concerned with


Sales
Dimensions of people
External environment
Cost discipline

2. Human Resource Management aims to maximize employees as well as


organizational
(a) Effectiveness
(b) Economy
(c) Efficiency
(d) Performativity

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3. Demand for human resources and management is created by
a) Expansion of industry
b) Shortage of labor
c) Abundance of capital
d) Consumer preferences
4. Human Resource Management function does not involve
a) Recruitment
b) Selection
c) Cost control
d) Training
5. Which one of the following becomes a creative factor in production?
a) Land
b) Capital
c) Consumers
d) Human Resources
6. Quality- oriented organization primary concern centers around
a) Coordination
b) Communication
c) Human Resources
d) Discipline
7. The term
refers to the total knowledge, skills, creative
abilities , talents and aptitudes of an organizations workforce as well as the
values, attitudes and beliefs of the individuals involved.
a) Human resource
b) Human resource management
c) Human resource planning
d) Human relations
8. Which of the given statement reflect the Relationship between HRM &
Management?
a) Both are same
b) Management is one aspect of HRM

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c) HRM is one aspect of Management
d) No relationship exists
9. The functions of Human resource management can be classified into two
broad categories. Identify them.
i. Managerial functions
ii. Planning functions
iii. Employment functions
iv. Operative functions
a) Only i and iii
b) Only i and iv
c) Only ii and iii
d) Only iii and iv
10.The human resource management functions aim at
a) Ensuring that the human resources possess adequate capital, tool, equipment
and material to perform the job successfully.
b) Helping the organization deal with its employees in different stages of
employment.
c) Improving an organizations creditworthiness among financial institutions.
d) None of the above.

Human Resource Management

CHAPTER-2- JOB
SPECIFICATION

ANALYSIS,

JOB

DESCRIPTION

AND

JOB

Upon Completion of this chapter, you will be able to understand:


1. Meaning, uses and techniques of Job Analysis
2. Meaning and Content of Job Description
3. Job Specification and its components

2.1 JOB ANALYSIS


Job Analysis is an essential prerequisite for the effective management of the
human resource of an organization. It is about gathering relevant information about
a job. It actually specifies the tasks involved and the factors that influence the
performance of the job.
As a process, it is capable of producing results with great practical relevance for
human resource management. Job analysis has applications in almost all the HR
activities of an organization.
In reality, the job analysis process involves ascertaining what people do and
understanding why and how they do it.

Human Resource Management


Job analysis is detailed and systematic study of jobs to know the nature and
characteristics of people to be employed for each job.
Job Analysis involves gathering dataabout observable job behaviors, and
delineating the knowledge, skills, abilities, and other characteristics needed to
perform the job
- R.J
Harvey
The process of job analysis is essentially one of the data collection and then
analyzing the data. It provides the analyst with basic data pertaining to specific
jobs in terms of duties, responsibilities, skills, knowledge, degress of risk etc. This
data may be classified as follows:
1.
2.
3.
4.
5.

Job identification
Nature of the job
Operations involved in doing the job
Materials and equipments to be used in doing the job
Personal attributes required to do the job e.g. education, traing, physical
strength and mental capabilities etc.
6. Relation with other jobs.
This information relating to a job which is thus classified , if examined carefully,
would suggest that some information relates to the job and some concerns the the
individual doing the job. The requirements of a job are known as Job Description
and the qualities demaned from the job holder are termed as Job Specification.

What job analysis is:


It is a systematic method for gathering information
It focuses on work behaviors, tasks, and outcomes
It identifies the personal qualifications necessary to perform the job and the
conditions under which work is performed
It reports the job as it exists at the time of analysis; not as it was in the past
nor as it exists in another organization

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What job analysis is not:
It is not an analysis of thought processes, attitudes, traits, or aptitudes
It is not a time and motion study
It is not an analysis of an individual position

2.1.1Uses of Job Analysis


The purpose of Job Analysis is to establish and document the 'job relatedness' of
employment procedures. The employer use job analysis information to support
several human resource management activities.
Recruitment and Selection
Job analysis provides information about what the job entails and what
human characteristics are required to perform these activities. This
information in the form of job description and job specifications, help
managers decide what sot of people to recruit and hire.
Compensation
Job analysis information is indispensible for estimating the value of each job
and its appropriate compensation. Compensation usually depends on the
jobs required skill education level, safety hazards, degree of responsibility,
and so on all factors you can access through job analysis.
Training
The job description lists the jobs specific duties and requisite skills- and
therefore the training- that the job requires.
Performance Appraisal
A performance appraisal compares each employees actual performance
with his or her performance standards. Doing so requires knowledge of the
jobs duties and standards. Managers can use job analysis to find out what
these duties and performance standards are.
Safety and Health
Job analysis can provide exact information about the nature and type of
work conditions essential for an accident-free work environment. It can also

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suggest the safety requirements for the job. The need for the safety training
and safety apparatus can also be ascertained with the help of job analysis.
Legal Requirements
The job description is a vital document for an organization in legally and
morally justifying its hiring practices, promotion policies, terminations,
disciplinary actions, and grievance redressal procedures. In fact, it is a legal
necessity for an organization to keep a job description statement for each
position in the organization

2.1.2Techniques of Data Collection in Job Analysis


No matter what the methodology adopted for data collection in job analysis, the
focus should be gathering information about the tasks associated with the job and
desired human behavior at work. However the characteristics of the job, the
purpose of the job, the purpose of the job analysis, and the desired quality of
information are the factors that usually influence the decisions involving the
selection of techniques for data collection.
Data collection for job analysis is usually done at one or more levels. These levels
are: (i) individual (ii) group, (iii) organizational and (iv) community. Further, the
decision involving the selection of a specific technique is usually influenced by the
factors such as the type of data to be collected, the methods of data collection, the
source from which the data will be collected, and the manner of data analysis.
The different methods of data collection are:
Questionnaire Method
Having employees fill out questionnaires to describe their job related duties
and responsibilities is a popular way to obtain job analysis information. The
major advantage of questionnaire is that it is the easiest and more efficient
method to collect information from a large number of employees within a
short period. Different types of questionnaire are structured questionnaire,
structured checklist method, open ended questionnaire etc.
Observation Method
In this method, the job analyst closely observes the performance of the
employee on the job. He record the various tasks performed by the employee

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as a part of the job. This method is ideal for gathering first-hand information
relating to working conditions, the physical activities involved in the job,
and so on.
Critical Incident Method
A critical incident is a significant event that takes place in the job
environment and forces the employee to respond in the form of performance
or behavior. Critical incidents are considered as snapshots in the regular
course of the job. The aim of this method is to gather relevant and behavior
centered description of the job.
Interview Method
In this method, the job analyst asks the employee questions about t=various
dimensions of the job. He then contacts the employees supervisors to get
further information and also to verify the correctness of the information
collected from the employee. While preparing the questions for interview the
analyst must ensure that the questions are uncomplicated and realistic in
nature.
Dairy Maintenance Method
In this method employee is asked to keep a record of all the activities
performed by him as apart of the job analysis process. He should record the
information in chronological order. Diary maintenance will enable the
employee tom keep track of all the activities. This method ensures
continuous and better employee involvement in the job analysis process.

2.2 Job Description


Job description is an organized factual statement of job contents in the form of
duties and responsibilities of specific job. It aims at simplifying and standardizing
the HR activities of an organization. The preparation of Job description is
necessary before a vacancy is advertized. As the title indicated, the documents are
descriptive in nature and constitute a record of job facts in an organized way.
Job description document discloses what is to be done, how it is to be done and
why it is to be done.
The contents of job description have been discussed below:

Human Resource Management


1. Job Title: It is desirable that the job title should be short, definite and
suggestive of the nature of the job. It identifies the nature of the job and
its position in the organization.
2. Job Location: It is necessary to give the location of the job. By location
we mean the name of the department where the job under consideration
exists.
3. Job Summary: A short paragraph succinctly summarizing the tasks
performed by the employee is helpful for the subsequent convenient
identification of the job.
4. Salary Range: List starting salary, mid-range, and high (maximum)
salary for the position. It should also include information about how
employees may be eligible for additional compensation (i.e., sales
commissions, performance bonuses, annual raises, etc.)

5. Duties to be performed: Each task performed should be written out and


estimate made of the percentage of the time that is developed to the
performance of each task. This is the most important phase of the job
description and should be carefully prepared.
6. Machines, tools and materials: The tools, machines, equipments and
materials used in the performance of the job should also be included in
the job description. It indicates the nature and the complexity of the job.
7. Relation to other jobs: Clear cut relation of the job under consideration
with other jobs in the organization will help to understand the nature of
the job well

Human Resource Management


8. Nature of supervision: There are certain jobs, particularly unskilled jobs,
which require intensive supervision, while other jobs requie less
supervision, because people manning these positions are more committed
to the achievement of organization goals. Nature of supervision must be
given in the job description.
9. Working environment: The working conditions, hazards and other
characteristics of the physical surroundings within the working area
should be described to help in subsequent interpretation of job
evaluation.

2.3 Job specification


Job specification sets out the education, qualification, training, personal attributes
and competencies a job holder requires top perform her or his job satisfactorily.
The employee characteristics required for job may include physical, mental, social
and behavior characteristics of job holders. The qualifications may include
education, experience, skills and other background requirements for a job holder.
Important components of job specification are listed below:
1. Education and training
A job specification states whether the jobs requires school-or college- level
education. It mentions the technical or professional qualification
requirements of the job holder. Finally, it specifies the minimum training
requirements the job holder must have completed.
2. Work Experience
A job specification prescribes the work experience requirements for the job
holder. And sometimes also the minimum experiences for effective
performances.
3. Skills and Competencies.
Under this component head, a job specification states the types of skills
necessary for the satisfactory performances of the job. It indicates the nature
of skills required like computer skills, communication skills, technical skills,
and statistical skills.

Human Resource Management

4. Physical Strength and Stamina


If the job involves physical activities like lifting or moving heavy objects,
the job specification also mentions the physical requirements of the job
holder.
5. Stress-Coping Ability
When the nature of the job requires a lot of stress endurance and involves
constant work pressure in the form of deadlines or night shifts, the stress
management ability of the candidate should be mentioned.
2.4 QUIZ:
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1. A written statement of main duties and responsibilities which a
particular job entails is called
a) Job Analysis
b) Job Specification
c) Job description
d) Job Evaluation
2. Which of the following is not the component of Job Specificationa) Skills and competences
b) Job Location
c) Work Experience
d) Education and Training
3. Which of the following is not the technique of data collection in job
analysis
a) Questionnaire Method
b) Observation Method
c) Ranking method
d) Interview Method

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4. Job Analysis benefits Human Resource Planning, recruitment and
selection, compensation management and Performance appraisal.
Identify the end results of a job analysis that form the basis for
recruitment and selection.
a) Job Description and Job Specification
b) Job design and Job review
c) Job description and job review
d) Job design and Job specification
5. Job analysis is the recording of all activities involved in a job and the
skill and knowledge requirements of the performance of the job. What
is it also known as?
a) Job review or Job design
b) Job review or Job Classification
c) Job specification or Job description
d) Job classification or Job specification
6.

is defined as a portrayal of the tasks, responsibilities,


duties and functions of a job.
a) Job specification
b) Job Design
c) Job analysis
d) Job description

7.

is a complete list of competencies and qualifications


required to match the job descriptions
a) Job specification
b) Job design
c) Job analysis
d) Job review

8. Which of the following methods are generally used to collect and


compile information on Critical incidents as part of job analysis
using the critical incident technique?
i) Technical Conference
ii) Observation
iii) Interviews
iv) Questionnaires

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a)
b)
c)
d)

(i) and (ii)


(ii) and ( iii)
(iii) and (iv)
(i) and (iv)

9. Which one of the following is not a behavioral specification in a job


specification?
a) Ability to make judgments
b) Ability to undertake research
c) Ability to interpret data
d) Ability to be authoritative
10.
involves increasing the length and hence the
operating time of each cycle of work for the job holder. It is a modern
management technique in which different and continuous small cycles
are integrated into one single cycle of operation.
a) Job rotation
b) Job enlargement
c) Job sharing
d) Job enrichment

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CHAPTER-3 RECRUITMENT AND SELECTION


Upon Completion of this chapter, you will be able to understand:
1. Meaning of Recruitment and Selection
2. Importance of Recruitment and Selection
3. Methods of Recruitment
4. Selection Process

3.1 RECRUITMENT
The human resources are the most important assets of an organization. The
success or failure of an organization is largely dependent on the caliber of the
people working therein. Without positive and creative contributions from people,
organizations cannot progress and prosper. In order to achieve the goals or the
activities of an organization, therefore, they need to recruit people with requisite
skills, qualifications and experience. While doing so, they have to keep the present
as well as the future requirements of the organization in mind.
Recruitment is distinct from Employment and Selection. Once the required
number and kind of human resources are determined, the management has to find
the places where the required human resources are/will be available and also find
the means of attracting them towards the organization before selecting suitable
candidates for jobs. All this process is generally known as recruitment. Some
people use the term Recruitment for employment. These two are not one and the
same. Recruitment is only one of the steps in the entire employment process. Some
others use the term recruitment for selection. These are not the same either.
Technically speaking, the function of recruitment precedes the selection function
and it includes only finding, developing the sources of prospective employees and
attracting them to apply for jobs in an organization, whereas the selection is the
process of finding out the most suitable candidate to the job out of the candidates
attracted (i.e., recruited).Formal definition of recruitment would give clear cut idea
about the function of recruitment.

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3.1.1DEFINITIONS
Recruitment is defined as, a process to discover the sources of manpower to
meet the requirements of the staffing schedule and to employ effective measures
for attracting that manpower in adequate numbers to facilitate effective selection of
an efficient workforce.
Edwin B. Flippo defined recruitment as the process of searching for
prospective employees and stimulating them to apply for jobs in the organization.
Recruitment is a linking function-joining together those with jobs to fill and those
seeking jobs. It is a joining process in that it tries to bring together job seekers
and employer with a view to encourage the former to apply for a job with the latter.

3.1.2 PURPOSES AND IMPORTANCE


The general purpose of recruitment is to provide a pool of potentially qualified job
candidates. The purpose is to:Determine the present and future requirement of the organization in
conjunction with it personnel- planning and job analysis activities.
Increase the pool of job candidate at minimum cost.
Help increases the success rate of the selection process by reducing the
number of visibly overqualified job applicants.
Help reduce the probably that job applicants, once recruited and selected,
will leave the organization only after the short period of time.
Meet the organizations legal and social obligations regarding the
composition of it workforce.
Begin identifying and preparing potential job applicant who will be
appropriate candidates.
Increases organizational and individual effectiveness in the short term and
long term.
Evaluate the effectiveness of various recruiting techniques and sources of all
type of job applicants.
Recruitment represents the first contact that a company makes with potential
employees. It is through recruitment that many individuals will come to know a
company, and eventually decide whether they wish to work for it. A well-planned

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and well-managed recruiting effort will result in high-quality applicants, whereas,
a haphazard and piecemeal effort will result in mediocre ones. High-quality
employees cannot be selected when better candidates do not know of job openings,
are not interested in working for the company and do not apply. The recruitment
process should inform qualified individuals about employment opportunities,
create a positive image of the company, provide enough information about the jobs
so that applicants can make comparisons with their qualifications and interests, and
generate enthusiasm among the best candidates so that they will apply for the
vacant positions.
3.1.3FACTORS AFFECTING RECRUITMENT
The following are the 2 important factors affecting Recruitment:A. INTERNAL FACTORS
Recruiting policy
Temporary and part-time employees
Recruitment of local citizens
Engagement of the company in HRP
Companys size
Cost of recruitment
Companys growth and expansion
2) EXTERNAL FACTORS

Supply and Demand factors


Unemployment Rate Labourmarket conditions Political and
legal considerations Social
factors
Economic factors
Technological factors

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3.1.4 CENTRALISED V/s DECENTRALISED RECRUITMENT
Recruitment practices vary from one organization to another. Some
organizations like commercial banks resort to centralized recruitment while some
organizations like the Indian Railway resort to decentralized recruitment practices.
Personnel department at the central office performs all the functions of recruitment
in case of centralised recruitment and personnel departments at unit level/zonal
level perform all the functions of recruitment concerning to the jobs of the
respective unit or zone.
MERITS OF CENTRALISED RECRUITMENT
Average cost of recruitment per candidate/unit should be relatively less due
to economies of scale.
It would have more expertise available to it.
It can ensure broad uniformity among human resources of various
units/zones in respect of education, skill, knowledge, talent, etc.
It would generally be above malpractices, abuse of powers, favouritism,
bias, etc.
It would facilitate interchangeability of staff among various units/zones.
It enables the line managers of various units and zones to concentrate on
their operational activities by relieving them from the recruiting functions.
It enables the organization to have centralised selection procedure,
promotional and transfer procedure, etc.
It ensures the most effective and suitable placement to candidates.
It enables centralised training programmes which further brings uniformity
and minimizes average cost of staff.

MERITS OF DECENTRALISED RECRUITMENT


The unit concerned concentrates only on those sources/places wherein
normally gets the suitable candidates. As such the cost of recruitment would
be relatively less.
The unit gets most suitable candidates as it is well aware of the requirements
of the job regarding culture, traditional, family background aspects, local
factors, social factors, etc.
Units can recruit candidates as and when they are required without any
delay.

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The units would enjoy freedom in finding out, developing the sources, in
selecting and employing the techniques to stimulate the candidates.
The unit would relatively enjoy advantage about the availability of
information, control and feedback and various functions/processes of
recruitment.
The unit would enjoy better familiarity and control over the employees it
recruits rather than on employees selected by the central recruitment agency.
Both the systems of recruitment would suffer from their own demerits. Hence,
the management has to weigh both the merits and demerits of each system before
making a final decision about centralizing or decentralizing the recruitment.

3.1.5 SOURCES OF RECRUITMENT


The sources of recruitment may be broadly divided into two categories:
internal sources and external sources. Both have their own merits and demerits.
Lets examine these.
INTERNAL SOURCES
Persons who are already working in an organization constitute the internal
sources.
Retrenched employees, retired employees, dependents of deceased
employees may also constitute the internal sources. Whenever any vacancy arises,
someone from within the organization is upgraded, transferred, promoted or even
demoted.
A. PRESENT EMPLOYEES
Promotions and transfer from among the present employee can be good sources of
recruitment. Promotion to higher positions has several advantages are:It is good public relations
It build morale
It encourages competent individuals
It improve the probability of a good selection
When carefully planned, promoting

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B. EMPLOYEE REFERRALS
This can be good sources of internal recruitment. Employee can develop good
prospects for their families and friends by acquainting them with the company,
furnishing cards of introduction, and even encouraging them to apply. There are
some potential negative factors associated with employee referrals. They include
the possibility of inbreeding, manifesting in groups of people quitting one firm and
joining another. They carry with them the cultural practices of the previous firm.
They from cliques of their own, demand unacceptable privileges and often threaten
to quit if demand are not met.
C. FORMER EMPLOYEES
Former employee is also an internal source of applicants. Some retired employee
may be willing to come back to work on apart time basis or may recommend
someone who would be interested in working for the company. An advantage with
the sources is that the performance of these people is already known
D. PREVIOUS APPLICANTS
Although not truly an internal source, those who have previously applied for job
can be contacted by mail, a quick and inexpensive way to fill an unexpected
opening. Although walk ins are likely to be more suitable for filling unskilled
and semi- skilled jobs, some professional opening can be filled by applicants to
previous jobs.

EXTERNAL SOURCES
External sources lie outside an organization. Here the organization can have the
services of : (a) Employees working in other organizations; (b) Jobs aspirants
registered with employment exchanges; (c) Students from reputed educational
institutions; (d) Candidates referred by unions, friends, relatives and existing
employees; (e) Candidates forwarded by search firms and contractors; (f)
Candidates responding to the advertisements, issued by the organization; and (g)
Unsolicited applications/ walk-ins.

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A. PROFESSIONAL OR TRADE ASSOCIATIONS


Many associations provide placement service for their member. These services
may consist of compiling job seeker list and providing access to member during
regional or national conventions. Further many associations publish or sponsor
trade journals or magazines for their member. These publications often carry
classified advertisement from employer interested in recruiting their members.
B. ADVERTISEMENT
These constitute a popular method of seeking recruits as many recruiters prefer
advertisement because of their wide reach.
A number of factor influence the response rate to advertisement. There are three
important variables identification of the organization, labour market conditions,
and the degree to which specific recruitments included in the advertisement.

E. EMPLOYMENT EXCHANGES
Employment exchanges have been set up all over the country in the deference to
the provision of the employment exchange Act. 1959. The Act applies to all
industrial establishments having 25 workers or more each. The Act requires the
entire industrial establishment to notify the vacancies before they are filled. The
major functions of the exchange are to increases the pool of the possible applicants
and to do preliminary screening. Thus employment exchanges act as a link
between the employers and the prospective employees. These offices are
particularly useful in recruiting blue- collar, white- collar, and technical workers

F. CAMPUS RECRUITMENT
Collage, university, research laboratories, sports field and institute are fertile
ground for recruiters, particularly the institutes. The Indian institute of
management and the Indian institute of technology are on the top on list of avenues

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for recruiters. In fact, in some companies, recruiters are bond to recruit a given
number of candidates from these institutes every year. `

G. WALK- INS, WRITE- INS AND TALK- INS


The most common and least expensive approach for candidate is direct application
in which job seeker submit unsolicited application letter or resumes Direct
applications, can also provide a pool of potential employee to meet future need.
From employees view point, walk- INS, are preferable methods of recruitment as
they are free from the hassles associated with other method of recruitment.
H. CONSULTANTS
Ferguson associates, human recourse consultants, head hunter, batliboi and
company, annalistic consultancy Bureau, aims management consultants and the
search house are some among the numbers recruiting agencies.

I. CONTRACTORS
Contractors are used to recruit casual workers. The names of the workers are not
entered in the company record and, to this extent, difficulties experienced in
maintaining permanent workers are avoided.

J. RADIO AND TELEVISION


Radio and television are used but sparingly, and that too, by government
department only. Companies in the private sector are hesitant to use the media
because the high costs and also because they fear that such advertising will makes
the companies look desperate and damage their conservative image.

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K. GATE HIRINGS AND CONTRACTORS
Gate hiring (where job seekers, generally blue collar employees, present
themselves at the factory gate and offer their services on a daily basis), hiring
through contractors, recruiting through word-of-mouth publicity are still in use
despite the many possibilities for their misuse in the small scale sector in India.

L. UNSOLICITES APPLICATNS/WALK-INS
Companies generally receive unsolicited applications from job seekers at
various points of time; the number of such applications depends on economic
conditions, the image of the company and the job seekers perception of the types
of jobs that might be available etc. Such applications are generally kept in a data
bank and whenever a suitable vacancy arises, the company would intimate the
candidates to apply through a formal channel. One important problem with this
method is that job seekers generally apply to number of organizations and when
they are actually required by the organizations, either they are already employed
in other organizations or are not simply interested in the position.

3.1.6 RECENT TRENDS IN RECRUITMENT

OUTSOURCING
The outsourcing firms help the organization by the initial screening of the
candidates according to the needs of the organization and creating a suitable pool
of talent for the final selection by the organization. Outsourcing firms develop their
human resource pool by employing people for them and make available personnel
to various companies as per their needs.

POACHING/RAIDING

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Buying talent (rather than developing it) is the latest mantra being followed by
the organizations today. Poaching means employing a competent and experienced
person already working with another reputed company in the same or different
industry; the organization might be a competitor in the industry. A company can
attract talent from another firm by offering attractive pay packages and other terms
and conditions, better than the current employer of the candidate.

E-RECRUITMENT
Many big organizations use Internet as a source of recruitment. E- Recruitment is
the use of technology to assist the recruitment process
The two kinds of e- recruitment that an organization can use is
o Job portals i.e. posting the position with the job description and the
job specification on the job portal and also searching for the suitable
resumes posted on the site corresponding to the opening in the
organization.
o Creating a complete online recruitment/application section in the
companies own website

3.1.7 RECRUITMENT STRATEGIES OF SOME COMPANIES

HCL Technologies

Internal recruitment: The IT major relies heavily on this model, which


also saves huge cost for the company, at the same time ensuring that the
talent pool remains intact.
Campus hiring: Many of the business unit heads and senior people at HCL
have been picked from the campuses of some of the best engineering,
management and non-management colleges across the globe.
Employee referrals: HCL finds this to be a reliable channel to reach out
to its potential employees.

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Social networking sites: At least 5-7% of its total recruiting is done through
websites such as LinkedIn. This primarily includes much of senior-level
hiring, and makes it easier for the hiring managers to target candidates with
niche skills or for roles based in alien geographies.
3.1.8 MERITS AND DEMERITS OF INTERNAL RECRUITMENT OR
RECRUITING PEOPLE FROM WITHIN
Merits

1) Economical: The cost of


recruiting internal candidates is
minimal. No expenses are
incurred on advertising.
2) Suitable: The organization can
pick the right candidates having
the requisite skills. The candidate
can choose a right vacancy where
their talents can be fully utilized.

Demerits

1) Limited Choice: The


organization is forced to select
candidates from a limited pool. It
may have to sacrifice quality and
settle down for less qualified
candidates.

2) Inbreeding: It discourages entry


for talented people, available
outside an organization. Existing
employees may fail to behave in
3) Reliable: The organization has
innovative ways and inject
the knowledge about suitability of
necessary dynamism to enterprise
a candidate for a position.
activities.
Known devils are better than
3) Inefficiency: Promotions based
unknown angels!
on length of service rather than
4) Satisfying: A policy of
merit, may prove to be a blessing
preferring people from within
for inefficient candidate. They do
offers regular promotional
not work hard and prove their
avenues for employees. It
worth.
motivates them to work hard and
earn promotions. They will work
with loyalty commitment and
4) Bone of contention:
enthusiasm.
Recruitment from within may
lead to infighting among
employees aspiring for limited,

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higher level positions in an
organization. As years roll by,
the race for premium positions
may end up in a bitter race.

3.1.9 Merits and Demerits of External sources of Recruitment

Merits

Demerits

Wide Choice: The organization has


the freedom to select candidates from
a large pool. Persons with requisite
qualifications could be picked up.

Expenses: Hiring costs could go up


substantially. Tapping multifarious
sources of recruitment is not an easy
task either.

Infection of fresh blood: People


with special skills and knowledge
could be hired to stir up the existing
employees and pave the way for
innovative ways of working.

Time consuming: It takes time to


advertise, screen, to test and test and
to select suitable employees. Where
suitable ones are not available, the
process has to be repeated.

Motivational force: It helps in


motivating internal employees to
work hard and compete with external
candidates while seeking career
growth. Such a competitive
atmosphere would help an employee
to work to the best of his abilities.

De-motivating: Existing employees


who have put in considerable service
may resist the process of filling up
vacancies from outside. The feeling
that their services have not been
recognized by the organization,
forces then to work with less
enthusiasm and motivation.

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Long term benefits: Talented


people could join the ranks, new
ideas could find meaningful
expression, a competitive
atmosphere would compel people to
give out their best and earn rewards,
etc.

Uncertainty: There is no guarantee


that the organization ultimately will
be able to hire the services of
suitable candidates. It may end up
hiring someone who does not fit and
who may not be able to adjust in the
new setup.

3.2 SELECTION-MEANING AND DEFINITION


Once the applicant pool is prepared, the next step for the HR department is to
implement the predetermined selection process in order to select the best candidate
for the job. The aim of this process is to finally end with candidates best suited for
the vacant jobs. The organization must be able to distinguish the applicants who
are most likely to perform well as employees from the others who are less suitable.
Selecting the most suitable candidate for a job is never an easy task for an
organization, but it becomes all the more difficult when the organization has to
screen candidates to fill vacancies that are critical to the organization. This is
because any faulty decision in the selection of employees can have a far reaching
impact on the performance and future of the organization.

According to ODonnell Selection is the process of choosing from among the


candidates, from within the organization or from the outside, the most suitable
person for the current position or for the future position.
We may conclude that selection is a systematic process of identifying suitable
candidates for the jobs available in the organization from the available applicant
pool.
3.2.1 PURPOSE OF SELECTION

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The basic purpose of selection process is to choose right type of candidates to man
various positions in the organization. In order to achieve this purpose, a well
organized selection procedure involves many steps and at each step, unsuitable
candidates are rejected.
DISTINCTIVE FEATURES OF SELECTION
1. Selection means employment of workers or establishing a Contractual
relationship between the employer and the worker.
2. Selection is a negative process because it involves rejection of unsuitable
candidates.
3. Selection aims at eliminating unsuitable candidates and ensuring most
competent people for the vacant job.
4. Selection is a complex process under which each candidate is required to
cross a number of hurdles before getting the offer for a job.
3.2.2 SELECTION PROCESS
Selection is a long process, commencing from the preliminary interview of
the applicants and ending with the contract of employment. The procedure
of selection will vary from organization to organization and even from
department to department within the same organization according to the
kinds of jobs to be filled.
Thus every organization will design a selection procedure that suits its
requirements. However the main steps could be incorporated are as under:
1.
2.
3.
4.
5.
6.
7.
8.

Preliminary interview
Receiving applications or application blanks
Screening of application
Employment tests
Interview
Reference checking
Medical examination
Final Selection
The successive stages in the selection process are discussed below:

1.Preliminary Interview

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The selection programme begins with preliminary interview or
screening. The preliminary interview is generally does the job of
eliminating the totally unsuitable candidates. The preliminary
interview enables the HR specialists to eliminate unqualified job
seekers based on the information supplied in their application forms.
2. Receiving Applications or Application Blanks
Whenever there is a vacancy, it is advertised or enquires are made from
the suitable sources, and applications are received from the candidates.
Standard application forms (application blanks) may be drawn up for
different jobs supplied to the candidate on requests.
The application forms usually involve items such as name, address, age,
marital status and dependents, schooling, experience and reference. There
may be several other items depending upon the specific requirements of
the organization and the job.
3.Screening of Applications
After the applications are received, they are screened by a screening
committee and a list is prepared of the candidates to be interviewed.
Applicants may be called for interview on some specific criteria like sex,
desired age group, experience and qualifications. The number of
candidates to be called for interview is normally five to seven times the
number of posts to be filled up. The screened applications are then
reviewed by the Personnel Manager and interview letters are dispatched
by registered post or under certificate of post.
4.Employment Tests
Individual differ in almost all aspects one can think of .They differ with
respect to physical characteristics, capacity, level of mental ability, their
likes and dislikes and also with respect to personality traits. The pattern
of physical, mental and personal variables gives rise to thousand and one
combinations and the particular pattern makes the individual suitable for
several classes of activities, jobs or field of work. Matching of
individuals physical, mental and temperamental pattern with the
requirements of jobs or filed of training is a difficult task. So before
deciding upon the job or jobs suitable for a particular individual, one

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should know the level of his ability and the knowledge. This will require
the use of employment tests which are listed below:
a.

b.

c.

d.

Intelligence tests: The aim of intelligence test is to measure


the general intellectual abilities of a person. The uniqueness
of this test is that it measures several abilities of the
candidate and derive the intelligence score.
Aptitude tests: An aptitude test measures the latent talents of
a person that may be crucial to performing the job
successfully. This test is normally given to those applicants
who have no previous experience in that file
Interest tests: A persons mental and physical abilities are
not sufficient to achieve a desirable job performance. The
aim of the interest test is to know the interest test is to know
the interest, aptitude and preference of a person towards a job
offered.
Personality tests: Personality refers to the sum of the
characteristics of a person which reflect on his /her response
to a particular situation. The characteristics may include
among other things, introversion, interpersonal skills,
motivation, stability, self belief, courage, attitude and
temperament.

Employment tests are widely used for judging the applicants suitability
for the job.
5.EMPLOYMENT INTERVIEW
Employment tests provide a lot of valuable information about the
candidate. Interview is a formal, in-depth conversation conducted to
evaluate the applicants acceptability.
An interview can be defined as a selection procedure designed to predict
future job performance on the basis of applicants oral response to oral
inquiries or, as a purposeful exchange of ideas, the answering of
questions and communication between two or more persons
The main purposes of an employment interview are:

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a) To find out the suitability of the candidate.
b) To seek more information about the candidate
c) To give him an accurate picture of the job with details of terms and
conditions and some idea of organizations policies.
Employment interview is considered to be an excellent selection device.
TYPES OF INTERVIEW (METHODS)
a)THE STRUCTURED INTERVIEW:
The structured interview has also been called patterned or standardized
interview. The interviewer predetermines the questions to be asked. He
merely follows the same template to ask the interviewee a series of
questions with title or no deviation. This method ensures uniformity in
the interview process and facilitates easy comparisons among the
candidates.
b) THE UNSTRUCTURED INTERVIEW
In this type of interview, the interviewer does not pre-plan the
questions to be asked. In fact, he decides on the questions as the
interview proceeds. The purpose of this method is to allow a free
discussion on any topic as it emerges. Interviewers generally avoid
asking the same or similar questions.
c) IN DEPTH INTERVIEW
The purpose of these interviews is to discuss the information
concerning the candidate in detail. This method normally covers the
subjects of mutual interest like specialization, motivation, qualification
and career plan of the candidate on one hand, and the firms offer on
the nature of job, pay, perquisites, career opportunities on the other.
d) THE GROUP INTERVIEW
The group interview method has been devised to assess leadership.
Usually a topic is given discussion to a leaderless group of applicants.
This method is provides opportunities to rate various qualities as
initiative, poise, adaptability to new situations, social awareness and
speaking ability.

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e) STRESS INTERVIEW
The purpose of this interview is to put the candidate in an
uncomfortable situation to see his/her ability to handle stress.
f) PANEL INTERVIEW
In this method, the applicant is interviewed by more than one
interviewer. A panel of two or more interviewers is formed to
interview the candidate. The interviewers are generally drawn from
different fields. The marks awarded by all the interviewers are finally
consolidated into a panel score.
6. CHECKING REFRENCES
A reference is potentially an important source of information about a
candidates ability and personality if he holds a responsible position in
some organization or has been the boss or employer of the candidate. Prior
to final selection, the prospective employer normally makes an
investigation or the reference supplied by the applicant and undertakes
more or less through search into the candidates past employment,
education, personal reputation, financial condition etc.
7. MEDICAL EXAMINATION
The pre employment physical examination or medical test of a candidate
is an important step in the selection process.
8. FINAL SELECTION AND APPOINTMENT LETTER
The next step in the selection process is job offer to those applicants who
have crossed all the previous hurdles. Job offer is made through a letter of
appointment. Such a letter generally contains a date by which appointee
must report on duty.

3.3QUIZ
Complete all the review questions listed here to test your understanding of
the topics and concepts in this chapter

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1. In todays rapidly changing business environment, organizations have to
respond quickly to requirements for people. Which is the step that starts off
the process of acquiring and retaining employees for an organization?
a) Selection
b) Induction
c) Recruitment
d) Appointment
2. Edwin B. Flippo defined the process of recruitment as
a) The process of seeking and attracting a pool of people from which
qualified candidates for job vacancies can be chosen
b) The process of searching for prospective employees and stimulating
them to apply for jobs in the organization
c) The process of choosing the most suitable candidates from the
available candidates
d) The process of inspiring people to apply for the jobs in the
organization and choosing the most suitable candidate from the
available candidates
3. An effective recruitment program aims at
a) Aiding the recruiter by making a wide choice of candidates available
b) Attracting the best people for the job
c) Optimizing the cost and time involved in recruitment
d) All of the above
4. The policy of filling job vacancies with candidates from within the company
instead of searching for new talent from outside has certain disadvantages.
One of the disadvantages of this approach is that
a) The return on investment on the workforce decreases for the company
b) The organization might miss out on talent that is available in the
market
c) The cost of recruitment, selection and induction is increased
d) It might have a negative effect on the morale of the employees.
5. There are various methods of recruiting from external sources. Some of
popular methods are advertisements, campus recruitments, employee
referrals, employment exchanges, private placement agencies, etc. Which of
the following recruitment sources is likely to have the widest reach?

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a)
b)
c)
d)

Recruitment agencies
Campus recruitment
Advertisements
Employment exchanges

6. Which of the following is determining the selection of media when


advertising for candidates to fill a job vacancy?
a) Cost of advertising in the media
b) The target audience for the advertisement
c) The reach of the advertisement desired
d) All of the above
7. Unsolicited application are
a) Job applications that are not received by the company
b) Job applications that are referred by existing employees
c) Job applications that are not in response to any advertisement or
announcement of vacancy
d) Job applications that are rejected by the company
8. Which one of the following is the most important criteria for determining the
success or failure of the recruitment program?
a) The cost involved
b) The number of candidate hired
c) The number of successful placements
d) The number of applicants for the job
9.

is considered to be a vital step in the employment process,


where the organization attempts to identify the right candidate for the right
position.
a) Recruitment
b) Selection
c) Placement
d) Induction

10.

help in assessing an individuals genuine liking for a job.


They are generally inventories of the likes and dislikes of candidates in
relation to work, occupations, hobbies and recreational activities.
a) Personality tests

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b) Aptitude tests
c) Intelligence tests
d) Interest tests
11. In the selection process, the main advantage of structures interviews is that
a)
b)
c)
d)
12.

It does not require advance planning


There is no scope of subjectivity
The interaction between the interviewer and interviewee is formal
It gives more flexibility to the interviewer

help in assessing an individuals value system, emotions,


maturity, and other characteristics. These characteristics are expressed in
traits like self-confidence, tact, optimism, decisiveness, conformity,
objectivity, judgment, dominance or submission and impulsiveness or
stability.
a) Personality tests
b) Aptitude tests
c) Interest tests
d) Situational tests

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CHAPTER-4 INDUCTION, SOCILIZATION AND PLACEMENT


Upon Completion of this chapter, you will be able to understand:
1. Meaning of Induction(Orientation)
2. Purpose and Types of Induction
3. Concept of Socialization
4. Significance of Placement

4.1 Orientation (Induction)


Employee orientation or induction is a crucial stage in the hiring process of an
organization. The newly joining employees get the first impression of the
organization through the orientation programmes. It is thus necessary for any
organization to have meticulously planned and well executed orientation program
to educate the employees about the various aspects of organizations. Orientation
programs are useful in making the new employee feel assured, happy and at ease
with the new environment. In orientation programmes, employees are usually
briefed about the history of the organization, its culture, values and attitude, the
expectation of the management, the job and department details, and the product or
services information.
4.1.1 PURPOSE OF EMPLOYEE OREINTATION/INDUCTION
The changing characteristics of the labour market, the increasing demand for the
skilled labour, the availability of simple and appropriate technology for storing and
presenting information, and the employees explicit demand for information about

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the organization have all forced organization to pay serious attention to employee
orientation. There is also growing realization among organization that the process
of orientation can sustain and improve the new employees initial enthusiasm. We
shall now see the important purposes served by employee orientation.
Formally Welcoming Employees
Many organizations view orientation programmes as an occasion for the
management to welcome new employees formally and procedurally
Overcoming Initial Uneasiness and Hesitation
The new employees suffer from initial anxiety about the organization. Orientation
helps in quickly overcoming the initial nervousness and hesitation.
Exchanging Information
Orientation provides a platform for the organization to transfer knowledge about
the job, department, organization and people to the new employees. The
organization, too, gets to know about the employees, their background, and
individual career plans.
Assessing Employees
Although the selection process has already evaluated the training requirement
requirements of the employees the orientation provides one more opportunity to do
so.
Acclimatizing Employees
Orientation programmes enable the organization to teach the employees the basics
of the job and the satisfy measures to be adopted, and acquaint them with the other
facilities available in the premises.
Controlling the HR Cost
In the absence of orientation programmes, employees are normally left to learn
everything on their own, and this might push up their learning cost to the

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organization in the form of resource wastage and work disturbances. This could
also increase the HR cost associated with recruitment and selection.
Developing the Team Spirit
When the orientation programme is conducted for a group of new employees, it
helps in promoting team spirit among the peers.
Socializing Employees
Socialization refers to inculcating suitable values, standards and beliefs among the
employees so that they integrate themselves not only with the formal organization
but also with the informal groups.

4.1.2 Types of Orientation


Based on the number and nature of the new employees and its policy towards
orientation, an organization may decide on a specific method of orientation. The
important types of orientation pragramme.
General-Idea Orientation
In this type, some general information about the organization is provided to the
employees. For instance attendance and discipline is provided .The organization
may entrust the orientation pragramme to the HR department, which would
conduct it for all new entrants, irrespective of their departments.
Job-Specification Orientation
The purpose of this orientation is to inform the employees about the various
aspects of the job and other things related to it. For instance, the details of the
duties, responsibilities and accountability associated with the job, and specific
safety and other measures required in the performance of the job are provided.
Traditional and Modern Orientation

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Based on its purposes and content, orientation may also be classified into traditional
orientation and modern orientation. When the organizations employ the general and
oft-repeated materials to orient employees, it may be called traditional orientation.
In this method, orientation is viewed as a ritual and one-time exercise by the
organization. In the case of modern orientation, the organization views it as the
beginning of a continuous process to convert an employee into a precious asset.

4.1.3 An Effective Orientation Programme


Since the orientation programme is crucial to the management from the employee
motivation and retention perspective, every effort must be made to make it
effective and successful. The following measures might help the organization
achieve the desired effectiveness.
Framing Clear-cut Objectives
The organization should frame the objectives of its orientation in unambiguous
terms. The participations status and information requirements should be
considered for determining the objectives are capable of providing a clear direction
to the whole orientation programme.
Determining the Roles of Departments and Personnel
The organization should determine clearly the department and persons responsible
for conducting the orientation programme. The responsibility for orientation is
assigned to the HR department normally. In some organizations, however, the
training departments are assigned the task of conducting orientation programmes.
Assessing the New Employees Information Requirements Accurately
An effective orientation programme must be able to fully address the first day
concerns and general information requirements of the new employees. Its success

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lies in making the new employees feel assured and positive about their new
organization and the job.
Selecting Appropriate Methodology, Techniques and Programme
Content
The organization should also be judicious in designing the content
(curriculum) of the orientation programme. It should not attempt to include
everything in the programme content. It should decide exactly what the
employee should know initially and what information can wait for future
presentations. It should never overburden the new employees with
information. Thus, it is essential to ensure that the programme content flows
from the objectives and also work towards their attainment.
Creating a Positive Environment for New Employees
The organization should strive to create a positive environment for its new
employees. Even before the beginning of the orientation sessions ,arrangements
must be made to receive these employees and guide them to their predetermined
places. The whole orientation programme must be designed in such a way that the
participants completely enjoy their participation in it.
Providing Continuous Review and Effective Feedback
As employee orientation is a continuous process in an organization, it is necessary
to develop appropriate instruments to evaluate the effectiveness of such
programmes. Evaluation techniques should measure the extent of learning
achieved through orientation programmes.

4.2 SOCIALISATION
Socialization is the process of introducing or integrating the new employees into
the organizational culture. In simpler terms, it is the process by which the new
employees learn the organizational culture.

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Socialization is a much longer process than orientation. Inspire of the
comparatively long period of socialization required for achieving the results
desired, some organization have developed an excellent socialization process for
improving the performance and loyalty of the employees. For instance, firms like
PROCTER and GAMBLE and IBM have achieved excellence in the socialization
process.
Facilitating the employees to share the organizational values and culture is the core
of socialization programmes. The definitions highlight the different interpretations
of socialization
Socialization is the ongoing process of instilling in all employees the prevailing
attitudes , standards , values , and the patterns of behavior that are expected by the
organization and its departmentsGARY DESSLER

4.2.1 The Socialization Process


The process of socialization of employees takes place in two phases. These are
socialization by organization and personalization by individuals. In the first phase,
the organization makes efforts for the socialization of the new employees. This is
done through orientation and training programmes. In the second phase, new
employees do their best to personalize their relationship with the organization. The
organizational socialization process usually comprises three stages these are:

1. Anticipatory socialization
This is the first stage in the socialization process but is normally completed
even before the actual entry of the employees into the organization .It refers to
the values, attitude and other behaviors already acquired by the new employees
before their entry into the organization. The organization attempts to find out
these behaviors of the employees through the selection process.
2. Organizational socialization

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In this stage, the organization undertakes the necessary efforts to gradually expose
the new employees to the prevailing organizational culture. This is done by
facilitating the employees to learn the relevant values, beliefs and attitude. When
the pre-acquired values of the employee and the organizational culture are similar,
the socialization process becomes simple as it can easily help the employees
assimilate the organizational culture and value. Organization may employ a formal
or an informal socialization process or both to educate the employees about the
organizational culture.
3. Socialization outcomes
The final stage of the socialization process is the achieving of the objectives of the
socialization efforts. Since it is difficult to measure attitude, behavior,
commitment, motivation and values, as the abstract terms, the organization may
keep its objectives in terms of productivity, performance and other measurable
terms. When the outcomes are positive, the socialization process is normally
viewed as effective.

4.3 PLACEMENT
Placement is the process of finding an appropriate fit between the people and the
positions in an organization. It is actually the determination of the job which an
accepted candidate is to be assigned to, and his assignment to that job. When the
organization chooses an exact number of candidates for the specific vacancies
available in the organization, placement is simple and easy.
Once the employees complete the stipulated orientation the next step is his
placement in the job. Based on the employees work performance and behaviour in
the orientation programme, organizations choose not only the appropriate jobs but
also the appropriate supervisors for placing the employees
On many occasions, organization utilizes the orientation programmed for
identifying the behaviour, knowledge and attitude of the new employees. This
information is then used to choose the appropriate placement for the employees.

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Similarly, organization also use long and extensive training programmes for
identifying the aptitude of the employees before placing them in suitable positions,
especially in the case of managerial placements.
Placement is usually the last stage in the recruitment and selection process of an
organization. The process of job placement is involves reassigning the jobs among
the existing employees.

4.3.1 CHALLENGES IN PLACEMENTS


Though placement appears to be a simple function for an organization, it is not so
in reality. Quite a few issues can cause the placement efforts to fail in the
organization.
CULTURAL AND BEHAVIOURAL INCOMPATIBILITY:
Sometimes, the organizations do not consider the behavioral compatibility between
the superiors and the freshly joining subordinates. They do not ensure the fitness of
the whole man for the job but his skill alone. Therefore cultural compatibility
should also be considered in placement. This is because the culture differs within
the organization and also from department to department

NATURE OF JOB:
Nature of job can also cause problems in placements. The organization should
consider many factors before placing employee in these jobs. For instance, the
skills of socializations and leadership should also be taken into considerations to
determine the match between the job and the employees.

LEVEL OF ADAPTABILITY:

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When the employees exhibit a high degree of flexibility and openness, it can
facilitate the process of placement. In contrast placements become difficult when
the employees exhibit stiffness.

4.4 QUIZ
Complete all the review questions listed here to test your understanding of
the topics and concepts in this chapter
1. When an employee joins an organization he has to adapt to the new work
culture, work activities, co-workers and boss, etc. This process of adaptation
is known as
.
a) Employment
b) Recruitment
c) Placement
d) Induction
2. The process of induction is also known as
a) Introduction
b) Orientation
c) Adaptation
d) Probation
3. Which of the following is not true about the process of socialization?
a) Socialization has an influence on employee performance
b) Proper implementation of the socialization process ensures
organizational stability
c) Socialization is the sole responsibility the HR department and the
immediate supervisor
d) Socialization ensures that a new employee fits well into the
organization
4. Different parties need to be involved in the process of socialization, if it is to
proceed smoothly. These include
a) Co-workers
b) Supervisors

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c) Clients
d) All of the above
5. Which of the following is not a part of the socialization process in an
organization?
a) Training employee in soft skills
b) Participating in trade fairs
c) Providing technical training
d) Providing on-the-job training

CHAPTER-5 TRAINING AND DEVELOPMENT


After reading of this chapter, you will be able to understand:
1. The Nature and Importance of Training and Development
2. The Scope and Importance of Training.
3. Assessing Training Needs
4. The training Process

5. Methods of Training
6. Management Development

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5.1 INTRODUCTION
Training is, essentially, a value-addition activity undertaken by an organization to
enrich the value of its core assets, namely, its people. It plays a vital role in
enhancing the efficiency, productivity and performance of the employees. It is a
learning process that helps employees acquire new knowledge and the skills
required to perform their present jobs efficiently. Rapid technological
developments and the resultant changes in the production process have compelled
the management of various companies to treat training as a continuous process of
the organization. Training typically comprises predetermined programmes to
achieve the desired performance efficiency at various levels-individual, group and
organizational. In simple terms, training is all about making a difference between
where the worker stands at present and where he will be after some point of time.
Training is usually a short-term skill development exercise meant for nonmanagerial employees either to learn a job or to overcome their deficiency in the
performance of the present job. The success of any training programme lies in
recognizing the training needs within the organization and then designing and
implementing training programme based on those needs in order to carry out a
continuous up gradation of knowledge, skills and employee attitudes. In fact,
sustained training efforts by an organization usually lead to the creation of a highly
competent and motivated workforce that is all set to take on the challenges of
performance and productivity. Undeniably, organizations can think of achieving
success in the globalized market only when they can ensure that their employees
perform to their fullest potential.
Training is the creation of an environment where employees may acquire or learn
specific, job related behavior, knowledge, skills, abilities and attitudes.
-Terry L. Leap

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To sum up, we can say that training is the process by which an employee
acquires the necessary knowledge and skills to perform the job.

5.1 SIGNIFICANCE OF EMPLOYEE TRAINING


Today, Indian organizations have realized the importance of training as a tool to
achieve their strategic goals. It is not viewed by the organization as a cot any
longer but as an investment on one of its most dynamic assets, namely, employees.
Many organizations consider training as a strategic employee retention tool. It
helps the organization create a smarter force capable of meeting any situation and
challenges. We shall now discuss the significance of training in detail.
Enlargement of Skills and Competency
Training helps in enhancing the technical knowledge and skills of the
employees at every level of the organization. In fact, the improvement of
skills is no longer optional for the organization but a matter of compulsion,
due to the growth in technology and improved processes.
Effective Utilization of the Existing Human Resources
Training results in improved performance, which in turn, facilities optimum
utilization of the available human resources. It also enables the employees to
accomplish the organization goals as well as their personal goals effectively.
Enhancement of Customer Satisfaction
Almost everywhere, organizations are compelled to ensure superior quality,
lower costs, and better services to their customers. To meet these challenges,
they must enhance their overall performance continuously. The training of
employees helps in improving helps in improving upon the quality of work
and in controlling costs.
Enhancing Competitive Advantage
One of the important competitive advantages of an organization in a
competitive environment is its workforce. It can retain its core workforce

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competency and skills through continuous and systematic training of its
labour force.
Enrichment of Team Spirit
Generally, training helps in the promotion of team spirit and inter-team
cooperation among the employees. In fact, it enhances the spirit of a group
and makes the members work harder to succeed as a group.
Ensuring Personal Growth
Training is an investment in people. It is emerging as an important technique
to retain people. The process of skills acquisition helps not only the
organization in achieving its goal but also the employees in ensuring their
personal growth. Obviously, employees prefer those organizations that
expose them to modern technologies and help them upgrade their skills and
knowledge.
Enabling a Learning Culture
Training helps in creating a learning culture within the organization.
Successful organizations recognize that well-structured and significant
employee learning programmes connect well with their long-term strategic
success.
Establishing a Positive Organizational Climate
Training enhances the interaction and understanding between the employers
and the employees. It helps build a good labour-management relationship and
ensures that the individuals goals align well with the organizational
goal. Thus, it aids in creating a positive perception and feeling about the
organization. The collective feeling of the employees about their
organization is called the organizational climate.
Encouraging Better Health and Safety Measures
Training helps in improving the health and safety of the employees. Safety
training teaches the employees about the safety measures to be followed and
also the best and secure way of performing a job. It minimizes the problems

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of industrial accidents and sickness. Thus, it assists in the development of a
healthy working environment.
Ensuring Organizational Growth and Development
Training aids in organizational development since it helps in developing
since it helps in developing leadership skills, motivation, loyalty,
communication and other aspects required for successful employees. It
facilitates the establishment of effective decision-making and problemsolving processes.

5.2 Assessing Training Needs


The assessment of training needs is an important job for the HR department. It is
usually done at two levels. At the first level, the training needs of the individual
employees are assessed. At the second, training needs are assessed for different
groups in the organization. The training needs assessed at group levels are usually
referred to as the organizational-need assessment. Normally, the employee skills
inventory is prepared to identify the likely skills shortage in the organization. Skills
inventory is an estimation of the kind of skills possessed by the employees while
skills shortage is the situation where the required skills are more than the available
skills in fact, skills shortage is an indication of the need for training at the
organizational level.
The individual employees training needs can be assessed by comparing the
actual performance of the employee with the standard performance. The deficit in
performance will indicate the nature and extent of the need for his/her training
programmes. The individual employee may also require training at the time of
transfer and/or promotion in order to learn the new job.
To determine the training needs of its employees, an organization should involve
as many sources as possible and then decide on the best one that can provide
reliable information. We shall now discuss each of these sources.
Performance Evaluation

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Performance evaluation reports help in assessing the training needs at the
individual levels. The current performance of an employee is an important
indicator of his training requirements.
In addition, an organization may review productivity reports, performance
scores, absenteeism records and attrition reports to assess the actual
performance of the employees.
Job Analysis
Job description report and job specification can be examined to decide the
skills, abilities and knowledge required to perform the job effectively. They
may form the basis for determining the training requirements of the job
holders.
Attitude Survey
Attitude survey is a process of gathering information from the employees
about the various aspects of the organization. The information about the
attitude of workers towards their work environment, their level of
awareness, and their views on the relevance of the existing training
programmes and future training requirements can be ascertained.
Advisory Panel
An organization may constitute panels comprising the representatives of the
management and those of the employees to decide on the training needs. The
panel has to assess the existing skills requirement before deciding on the
number and nature of the training programmes required for a specific period.
Ability Test Score
An organization can give ability tests to its employees to identify their
existing levels of skills and abilities. The results can then be compared with
the standard skills requirements to determine the need for and extent of the
training programmes.
Feedback

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The feedback from the customers, the employees and all others who are
important to the business can help in determining the training needs.
Similarly, the employees who quit can provide vital clues to the weakness of
the organization in general and its training programmes in particular at the
time of exit interview.

5.3 Scope of Training


The reach-out of training programmes is far and wide. Depending upon the nature,
duration and purpose of the training programmes, the trainees may acquire
attributes like skills, knowledge, and analytical acumen, concepts, attitudes and
ethical values. Let us see these attributes briefly.
Knowledge
The basic purpose of any training programme is to provide the participants
with the requisite knowledge to achieve the goals of the job. Knowledge is
generally developed through the processes of perception, learning and
reasoning. For instance, when the organization finds the existing skills and
knowledge of the staff inadequate to achieve the strategic goals and
objectives, training is considered. Training imparts job-related knowledge to
the participants and enables them to understand what they must do in their
job and how they should do it.
Skills Acquisition
Skill is defined as an ability to produce solutions in some problem domain. It
is developed progressively by persistent training and other practices.
Employees may require one or more skills like intellectual skills,
management skills, social skills, motor skills, mental skills, technical skills
and perceptual skills.
Attitude Formation

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Attitude is the mental state of an individual concerning his beliefs, feelings,
values and tendencies that influence him to behave in one way or the other.
A negative attitude may cause suspicion and mistrust in the action of the
organization and make the employees resist changes with all their might.
Employee training programmes can bring about the desired changes in their
attitude and instill in them a sense of cooperation, motivation, commitment
and satisfaction.
Ethical Values
Ethics are principles of right and wrong that are accepted by an individual or
a social group. The management of human resources often calls for
decisions involving ethics, fair treatment and justice. Organization should
supplement those policies with the necessary training on ethical practices.
These trainings can help employees understand the presence of ethical codes
to settle problems involving ethical dilemmas in a fair and just manner and
lastly, ensure the adoption of ethical values in every aspect of their dealing
with the people.
Analytical Reasoning
Analytical reasoning refers to the systematic way of thinking to comprehend
the problems, develop alternative plans of action, choose the best course of
action and implement the selected plan to successfully resolve the problems.
Continuous training programmes provide the necessary impetus to sharpen
the analytical reasoning and problem-solving skills of employees.

5.4 Steps in an Employee Training Process


Changes in the internal and external situations are inevitable and, thus, training
becomes a continuous process. The general purpose of any training process is to
train employees to be able to look for and respond to changes in a successful way.
The training process has been described in the given diagram. These steps have
been briefly explained a follows.

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Determine the needs

F
e
e
d
b
a
c
k

Develop the objectives

Choose the techniques

Identify the Trainer

Implement the Programme

Evaluate the effectiveness

Steps in the Training Process


1. Determination of the Training Needs
The first step in a training process is to identify the specific operational skills to be
developed for performing a job. A methodical approach to identify the real needs
must be undertaken. Generally, to recognize the training needs of the employees,
an analysis at one or more of the following three levels is undertaken.
a.Organizational Analysis

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This focuses on identifying areas in the organization where training is
needed. The aim is to connect the training needs to the achievement of
the organizational goals. At this level, the strategic mission and vision,
corporate goals and plans of the organization are examined carefully and
then compared with the existing manpower inventory to determine the
training needs.
b. Operation Analysis
This involves the proper examination of the work to be performed after
training. It focuses on the tasks that are required to be performed to
accomplish the organizational goals. It also involves the collection of
information about the competencies required for effective job
performance. An examination of the operating problems like customer
grievances, downtime reports, and quality issues along with the
performance evaluation and the interview of the employees can offer
information for the determination of the training needs.
c. Individual Analysis
This focuses on deciding about the individual training needs. The
difference between the actual performance and the standard performance
of an individual indicates the training needs. Actually, individual analysis
deals with questions like who should be trained and what should be
taught. It involves asking pointed questions to find out exactly what job
knowledge and skills the person must have in order to perform well.

2. Development of the Training Objectives


Once the training goals have been established, the next step is to determine the
specific objectives of the training programmes. Each programme can have its own
objectives. However, these objectives must be directly related to the assessed
training needs and should also focus on satisfying those needs. It is absolutely

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essential to have concrete and measurable goals; otherwise it would be difficult to
evaluate the effectiveness of the training programmes.

3. Selection of the Training Techniques


The next step involves decisions regarding the training techniques to be used in the
programme. Based on the training needs and goals, an appropriate training method
should be chosen to achieve the desired results. Though there are several
techniques available to train the participants, each technique is unique and there are
definite differences existing among these techniques about how well each one
serves the various objectives. Broadly there are two categories. These are: on-thejob training methods and off-the- job training methods. On-the-job training means
imparting real-time training at the work spot, even while doing the actual job. Offthe-job training means training at a place away from the work spot and in formal
classrooms.

4. Identifying the Trainer


Once the training method has been decided, the next important step is selecting and
training the trainers for the programme. This is a critical step because the success
of the whole training effort relies greatly upon the competency and ability of the
trainers. They must be adequately competent, knowledge and mature people with
effective communication skills. They must also be familiar with the companys
philosophy, objectives, structure, culture and specific purpose of the training
programme.

5. Implementing the Training Programme


Once the training methods and trainers have been decided, the next step is the
actual implementation of the training programme. For successful implementation,
some of the prerequisites are the convenience of location, the comfortableness of
the training facilities, the quality and adequacy of the provided materials, and the
timing and duration of the programme. Similarly, frequent interaction between the
trainers and trainees can also be encouraged to ensure their involvement in the
training process.

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However, the implementation stage is often fraught with a lot of practical
difficulties. For instance, training is often viewed as a process to effect change and
hence viewed with mistrust and suspicion by the employees. Another difficulty in
the execution of the training programme is keeping appropriate records. Unless
proper records of the performances of the employees are kept before and after the
training programme respectively, it would be difficult to determine the net gains of
the employees achieved through the programme.

6. Evaluation of the Training Programme


This is the final step in an employee training process. Hamblin(1974) defines
Evaluation as any attempt to obtain information (feedback) on the effects of a
training programme, and to assess the value of the training in the light of that
information. Training evaluation is of vital importance because monitoring the
training function and its activities is necessary in order to establish its social and
financial benefits and costs. For an effective evaluation, it is essential to pre-assess
the attributes to be emphasized in the training programme. Understandably, an
evaluation of these attributes after training will facilitate a meaningful comparison
to determine the effectiveness of the training programme. The absence of such
facilities for comparison will make it difficult to evaluate the utility of the training
programme for the trainees. Hence, it is imperative that the training efforts be
documented to demonstrate that training provides a valuable service. It is
important to understand the purpose of evaluation before planning it and choosing
methods to do it.
Evaluation feedback assists in improving efficiency and effectiveness of:
Training content and methods
Use of organizational budget, staff, and other resources
Employee Performance
Organizational productivity
Through evaluation, trainers:
Recognize the need for improvement in their training skills
Are given suggestions from trainees for improving future training

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Can determine if training matches workplace needs
According to Hamblin, there are five levels at which evaluation can take place:
1. Reactions of trainees to the training experience itself
2. Learning evaluation requires the measurement of what trainees have learned
as a result of their training
3. Job behavior evaluations concerned with measuring the extent to which
trained have applied their learning on the job
4. Organizational unit evaluation attempts to measure the effect of changes in
the job behavior of trainees on the functioning of the part of the organization
in which they are employed
5. Ultimate value addition aims to measure how the organization as a whole
has benefited from the training in terms of greater profitability, survival or
growth

5.5 Methods of Training


A broad range of training methods is available to an organization to deliver
training to its employees. Based on the training goals and need assessments, an
appropriate method may be chosen. There are two options available to an
organization while deciding on a training programme. It can either design its own
programme or get an externally available package and make modifications in it to
suit the purpose and requirements of its training programmes. We shall now
discuss these training methods in detail.
5.5.1 ON-THE-JOB TRAINING METHODS
These methods are generally applied on the workplace while employees are
actually working. The basic idea behind the adoption of this kind of training is to
transfer the skills and knowledge from a highly competent and experienced
employee to a new one, while sustaining the productivity of both. To be successful,
the training should be done according to a structured programme that uses task
lists, job breakdowns, and performance standards as a lesson plan. Following are
the on-the-job methods.

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1. Job Rotation
In this method, usually employees are placed on different jobs turn by turn
where they learn all sorts of jobs of various departments. The objective is to
furnish a comprehensive awareness about the jobs of different departments.
Job rotation aids the employees in comprehending a variety of jobs and in
acquiring multi-skills to manage these jobs comfortably. It also presents the
organization with wide options to effect personnel changes to achieve the
desired productivity and strategic goals.
3.Job Coaching
An experienced employee can give a verbal presentation to explain the nittygrittys of the job.
3. Job Instruction
It may comprise of an instruction or directions to perform a particular task or
a function. It may be in the form of orders or steps to perform a task. Under
this method, all the necessary steps in the job, together with brief write-ups
about each step, are complied sequentially. Each step would have a
corresponding self-explanatory note. Each note would explain what needs to
be done in that step, why it has to be done and how it has to be done. In this
way, the job instruction training sheet for each job can be prepared and
provided to the trainees.
4. Apprenticeships
Generally fresh graduates are put under the experienced employee to learn
the functions of job. An apprenticeship is a formal agreement between an
individual who wants to learn a skill and an employer who needs a skilled
worker. Apprenticeship training is an earning while learning arrangement
for a required term. Several organizations practice this method to impart
skills to employees it is commonly used to train people for various crafts
jobs like those of an electrician, a fitter, a turner, a plumber, a carpenter, a
machinist and a printer. In this method, the superior, who is usually a highly
skilled employee, becomes the instructor and imparts knowledge to the
trainee (called an apprentice) at the work spot. These programmes can last
for a few months to several years, depending on the nature and complexity
of the jobs. The main motivating factor for the trainees here is the awareness
that they are acquiring the exact knowledge needed to perform their jobs.

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5. Internships and Assistantships
An intern or an assistant are recruited to execute a specific time bound jobs
or projects during their education. It may consist of a part of their
educational courses. In fact, it is a unique kind of recruitment-cum-training
that calls for positioning a student in a temporary job without any obligation
for the company to hire him permanently after training. Internship is usually
beneficial to both the parties. For instance, the interns help the organization
do the needed tasks and in turn, gain hands-on experience with the job and
first-hand knowledge about the prevailing business practices. The best
feature of an internship is that it lets the employers try out future prior to
making a job offer.
Advantages of On-the-Job Training:
It is directly in the context of job
It is often informal
It is most effective because it is learning by experience
It is least expensive
Trainees are highly motivated
It is free from artificial classroom situations
Disadvantages of On-the-Job Training:
Trainer may not be experienced enough to train
It is not systematically organized
Poorly conducted programs may create safety hazards

5.5.2 OFF THE JOB TRAININGS


It is method in which workers are imparted training at a place away from their
usual workplace. These methods can be taught effectively in a step-by-step
manner. These are used away from work places while employees are not
working like classroom trainings, seminars etc. these methods are ideal for
teaching the theoretical aspects of the jobs. They become critical when on-thejob training involves potential risk to the trainees and others. Following are the
off-the-job methods:

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1. Classroom Lectures
It is a verbal lecture presentation by an instructor to a large audience. This
method of training uses the trainers oratory skills to provide knowledge and
skills to the employees through intensive study materials. It involves
programmed instruction material, which is to be learned, is presented in
small, sequential steps with self instruction.
Communication is primarily one way: from the instructor to the learner. It
provides a great deal of information quickly to a large group of trainees.
However this method is least effective for retaining and applying information
and the trainees looses attention easily.
2. Audio-Visual
It can be done using Films, Televisions, Video, and Presentations etc. The
advantage of this method are wide range of realistic examples, quality is
control possible. One-way communication, No feedback mechanism and
No flexibility for different audience are the disadvantages of this method.
3. Simulation
Creating a real life situation for decision-making and understanding the
actual job conditions. Trainees participate in a reality-based, interactive
activity where they imitate actions required on the job. It is useful for skill
development. Following are some of the simulation methods of trainings
1. Case Studies: It is a written description of an actual situation and
trainer is supposed to analyze and give his conclusions in writing.
The cases are generally based on actual organizational situations.
Its a story with a practical message. The trainees recommend
solutions based on the content provided. It works well with any size
group. It is an ideal method to promote decision-making abilities
within the constraints of limited data.
2. Role Plays: Here trainees assume the part of the specific
personalities in a case study and enact it in front of the audience.
Trainees can learn possible results of certain behaviors in a
classroom situation. It is more emotional orientation and improves
interpersonal relationships. Attitudinal change is another result.
These are generally used in MDP.

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3. Sensitivity Trainings: This is more from the point of view of
behavioral assessment, under different circumstances how an
individual will behave himself and towards others. There is no
preplanned agenda and it is instant.
Advantages of this type training are increased ability to empathize,
listening skills, openness, tolerance, and conflict resolution skills and
disadvantages include participants may resort to their old habits after
the training. It is also time consuming.
4. In- Basket Exercise Training: In this method of training, trainees
are given in tray of a manager containing various kinds of mails and
correspondence, which requires decision making. Trainees go
through each mails and gives his decision. This is good method to
develop analytical thinking and decision making capabilities of of
the trainees.
4. Programmed Instructions: Provided in the form of blocks either in book
or a teaching machine using questions and Feedbacks without the
intervention of trainer. Courses conducted online; flexible timetable; can
be done at own pace; requires self-discipline on trainees to achieve
training objective.
However, clarifying individual doubts can pose problems in this method.
5. Vestibule Training: This method combines the benefits of the classroom
with the benefits of on the job training. The classroom is located as close
as conditions allowed to the departments for which the employees are
being trained. It is furnished with the same machines as used in
production. The employees are trained as if on the job, but it did not
interfere with the more vital task of production. Transfer of skills and
knowledge to the workplace is not required since the classroom is a model
of the working environment.

Advantages of Off-the-Job Training:


Trainers are usually experienced enough to train
It is systematically organized
Efficiently created programs may add lot of value
Disadvantages of Off-the-Job Training:

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It is not directly in the context of job
It is often formal
It is not based on experience
It is least expensive
Trainees may not be highly motivated
It is more artificial in nature

5.6 DEVELOPMENT
An organizations conscious effort to provide its manager (and potential
managers) with opportunities to learn ,grow and change, in hopes of producing
over the long term cadre of managers with the skills necessary to function
effectively in that organization.
(DeSimone et al: 2002)
Management development is the process by which managers acquire not only
skills and competency in their present jobs but also capabilities for future
managerial tasks of increasing difficulty and scope.
Edwin B. Flippo
The management and leadership development process is flexible and continuous,
linking an individuals development to the goals of the job and the organization.
Management development programmes provides the opportunity to develop a
broad base of skills and knowledge that can be applied to many jobs in the
organization. Management development curriculum is changing. The overarching
goal is a comprehensive curriculum for managers to develop the necessary core
competencies to become excellent leaders. Expanding management core
competencies will enable managers to keep pace with the demands of a changing
organization.
5.7OBJECTIVES OF MANAGEMENT DEVELOPMENT
The main objectives of management development are :

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1. To provide effective managerial resources to the business at all levels now
and in the future as well as to provide opportunities for self-development
and career growth.
2. To develop a set of personal attributes which are required to understand
customers present and future needs
3. To develop a managerial talent necessary for meeting present as well as
future organizational manpower needs, especially at top positions
4. To attract and retain best professionals in the organization
5. To enable managers to develop management skills and competencies
needed to achieve excellent levels of performance in both present and
future jobs
6. To develop intrapreneurship and facilitate transfer of skills and learning to
other employees of the organization such as new joinees
5.8 PRINCIPLES OF MANAGEMNT DEVELOPMENT
The principles of management development are:
1. Encouraging growth and career development of employees as per the
philosophy of human resource management
2. Improving skills and knowledge that can be immediately applied at work
3. Increasing motivation and job satisfaction of managerial personnel
4. Creating a network of colleagues for problem solving and support
5. Promoting communication and planning throughout the organization and
department networks
5.9 STRATEGIES TO SUPPORT MANAGEMENT DEVELOPMENT
The following strategies are noteworthy:
1. Modeling and encouraging the desired behaviour that fits well with the
organizations mission, vision, values, objectives and culture.
2. Discussing and creating a development plan during the performanceplanning
cycle
3. Endorsing employees attending classes and activities that support
developmeny plans and goals.
4. Discussing what the employee learned in the classes and support integrating
new ideas/methods to workplace issues

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5. Providing timely behaviour feedback on performance and discussing ways to
improve and develop further.
6. Providing opportunities for employees to develop through mentoring , cross
training, internships, professional associations, committee and task force
assignments, skill assessment programmes , and university extension
programs.

5.10 Quiz
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter

1. Every organization, irrespective of its size or nature of operations, need


to provide training to its employees at various stages of their career.
Identify the man objective of training
i.
ii.
iii.
iv.
a)
b)
c)
d)
2.

Updating employee skills and improving employee performance


Preparing for promotion and managing succession
Retaining and motivating employees
Avoiding managerial obsolescence and creating an effective efficient
organization
Only i, ii, iii
Only ii, iii, iv
Only iii, iv, i
i, ii, iii, iv

is/are widely used for helping the employees understand the


rules, regulation, procedures, and policies of the organization.
a) Job rotation
b) Apprenticeship
c) Classroom Lectures
d) Vestibule training

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3.

is a form of off-the-job training, where the trainee is exposed


to an artificial work situation that closely resembles the actual work
situation.
a) Classroom lecture
b) Simulation exercise
c) Job rotation
d) Job instruction training

4.

is described as a method of human interaction involving


realistic behaviour in imaginary situations.
a) Experimental exercise
b) Role playing
c) Vestibule training
d) Apprenticeship

5. A benefit of the programmed instruction method of off-the-job training is


that
a) Helps in improving the communicational skills of the trainee
b) Helps in improving the people management skills of the trainee
c) Promotes continuous interaction between the trainer and the trainee
and facilitates learning
d) Helps in improving the relationship management skills of the trainee
6. The skills that a management development program aims to develop include:
a) Technical and People skills
b) Technical and communication skills
c) Technical and managerial skills
d) Intellectual and managerial skills
7.

can be used to identify the development needs of the


managers. They assess a managers ability to perform a job, and identifying
the areas requiring development
a) Assessment Centers
b) Training centers
c) HR departments
d) Test Centers

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8. In the
method of management development, each employee
is given a written account usually of a real-life situation occurring in a
certain organization. The employee analyzes the situation, identifies the
problems and their probable causes, and suggests solutions from the
perspective of a person who has to tackle the situation in actuality.
a) In-basket
b) Incident
c) Role Playing
d) Case Study
9. Job rotation plays an important role in developing the skill set of a manager.
Which of the following may be considered to be the advantages of job
rotation in management development?
i. Stimulates the development of new and creative ideas
ii. Reduces monotony of work
iii. Interaction with employees of different departments providing
enriching experience of various day to day problems
iv. Increase productivity by promoting competition between departments
a) Only i, ii, iii
b) Only ii, iii, iv
c) Only iii,, iv, i
d) i, ii, iii, iv
10. Which of the following statements can be considered to be incorrect, with
respect to the basic prerequisites for a successful management development
program?
a) Management development should take place only when a manager
feels it is necessary
b) Managers must take up the responsibility of developing their
subordinates for greater responsibilities
c) Management development must match the needs of the organization
and the individual
d) Managers must be motivated to invest time I their own development
and that of their subordinates, using special reward systems

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CHAPTER-6 CAREER PLANNING AND CAREER DEVELOPMENT


After reading of this chapter, you will be able to understand:
1. Meaning and Importance of Career Planning and Development
2. Steps in Career Planning
3. Meaning and relevance of Promotion and Demotion

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4. Meaning and Type of Transfer and Separation

6.1 CAREER PLANNING-INTRODUCTION


Career planning is a subset of career management. Career planning applies the
concepts of Strategic planning and Marketing to taking charge of one's professional
future.
Career planning is the process of establishing career objectives and determining
appropriate educational and developmental programs to further develop the skills
required to achieve short- or long-term career objectives. The term career is used to
refer to an individual's entire work Life. It can be defined in a narrow sense, to be
the succession of jobs and/or ranks held by a person in a particular organization.
An individual's career begins with placement in a job and ends with departure from
the organization which may be through retirement resignation or death. Career
planning and development are concepts which include all those events either
happening to or initiated by individuals which affect a person's progress or
Promotion, higher widening and/or changing employment possibilities and
acquiring a different and normally higher status, better conditions of service or
increased satisfaction with the job. Career planning refers to planned and
systemized progression of events and development in the field of work or vocation
of individuals during the employable periods of their life. The basic character of
career development is futuristic in the sense that its policies and programmers are
devoted to tomorrow.
The following classification system with minor variations is widely used:
a) Development of overall goals and objectives,
b) Development of a strategy (a general means to accomplish the selected
goals/objectives),
c) Development of the specific means (policies, rules, procedures and
activities) to implement the strategy, and
d) Systematic evaluation of the progress toward the achievement of the
selected goals/objectives to modify the strategy, if necessary.

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6.2 IMPORTANCE OF CAREER PLANNING AND DEVELOPMENT:
Career planning and development is required and hence has to be designed to
fulfill the following basic objectives:
a) To secure the right person at the right time, in the right place. It assures the
adequate availability of qualified personnel in the organization for future
openings. This has two facets: positively, to make succession-planning
timely and smooth; negatively, to avoid a "square peg-in-a round-hole" in
the organization.
b) To ensure that the road to the top is open for all.
c) To facilitate effective development of available talent.
d) To impart to the employee maximum satisfaction, consistent with their
qualifications, experience, competence, performance as well as
individualistic needs and expectations, leading to a harmonious balance
between personal and organizational objectives. Individuals who see that
their personal development needs are met tend to be
more satisfied with
their jobs and the organization.
e) To strengthen the organizations manpower retention programmers based on
adequacy of career compensation, motivation management. It seeks to
improve the organizations ability to attract and retain high talent personnel,
since outstanding employees always are scarce and they usually find
considerable degree of competition to secure their services. Such people may
give preference to employers who demonstrate a concern for their
employees' future. Proper career planning and development would insure
against any possible dislocation, discontinuity and turnover of manpower.
To fulfill such a broad agenda of objectives, the organization must analyze
the strength and weaknesses of the existing infrastructure, its internal
support system.

6.3 STEPS IN CAREER PLANNING


1. Self Assessment
The first and foremost step in career planning is to know and assess yourself.

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You need to collect information about yourself while deciding about a
particular career option.You must analyze your interests, abilities, aptitudes,
desired lifestyle, and personal traits and then study the relationship between
the career opted for and self.
2. Goal Setting
Set your goals according to your academic qualification, work experience,
priorities and expectations in life. Once your goal is identified, then you
determine the feasible ways and objectives how to realize it.
3. Academic/Career Options
Narrow your general occupational direction to a particular one by an
informatory decision making process. Analyze the career option by keeping
in mind your present educational qualification and what more academic
degrees you need to acquire for it.
4. Plan of Action
Recognize those industries and particular companies where you want to get
into. Make the plan a detailed one so that you can determine for how many
years you are going to work in a company in order to achieve maximum
success, and then switch to another. Decide where you would like to see
yourself after five years and in which position.
5. Catch Hold of Opportunities
Opportunity comes but once. So, whenever you get any opportunity to prove
yourself and get into your desired career, try to convert it in every way for
suiting your purpose. Remember, a successful professional is also quite
opportunistic in his moves, examining every opening to turn to his favor.

6.4 PROMOTIONS

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Promotion can be defined as the advancement of an employee from one position to
another, resulting in his financial benefit. It is certainly a good and effective
motivator for employee. Organizations employee promotion as a tool to recognize
and reward the merit and sincerity of the employees. Internal promotion, as
compared to external hiring, for filling the job vacancies in the organization can
increase the loyalty and moral of the employees. Promotions, which are normally
accompanies by financial incentives, also fulfill the economic needs of the
employees, in addition to fulfilling the social need of attaining increased status in
the society. Advancement in the career of the employee is the essence of the
definitions of promotions.
Promotion is the permanent movement of a staff member from a position in job
class to a position in another job class of increased responsibility and complexity
of duties and in a higher salary range.
-The Policy manual, University of North Texas
6.4.1 CHARACTERISTICS OF PROMOTION
The characteristics of promotion are identified as follows:
A promotion normally involves movement of an employee from one
position to another within an organization.
A promotion is normally accompanied by an increase in authority,
responsibility and compensation, and demands more skills.
Normally a promotion involves the permanent movement of employees to
the higher positions in the organization. Moving an employee to higher
position on a temporary basis without any increase in compensation is
usually viewed as promotion.
The promotion of an employee is an administrative act as the management
has every right to decide on the matters pertaining to promotion.
The promotion of an employee to the next level is normally decided on the
basis of merit and seniority or both.
A simple addition of duties to the existing positions or a hike in the financial
compensation at the existing position cannot become a promotion
automatically.
6.4.2 CRITERIA FOR PROMOTION

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Promotion is one of the highly sensitive tasks of the HR managers, especially when
it involves selection from a pool of prospective candidates. A good promotion
decision requires an objective evaluation of the relevant competences of the
perspective candidates. Depending upon the overall promotion policy, the
organization must evolve a procedure of determining the promotions of its
employees. We shall now see the general promotion criteria of organization.
Merit
Merit as a basis for promotion means fulfilling the job positions in a
organization with the most talented person available within the
organization for those positions. In this category of promotion, merit is
given an appropriate consideration while the other factor like seniority
becomes the insignificant in the promotion decision. In such cases, the
candidates identification, evaluation, and selection for promotion will
be based only on job related criteria.
Seniority
In the case of seniority based promotions, the length of the service of
the employees is considered for promotion, while other factors like
competence and commitment are overlooked. As such, the job
positions are available within the organization are filled with persons
who have maximum years of service in the organization. The length of
service in the organization or in the present position becomes the sole
criterion in promotion decisions. The seniority based system is
normally followed in public sector organizations. In organizations
where seniority is the sole basis, promotions are time bound and also a
formality.
Seniority-Cum-Merit-based Promotions
In this method and organization considers both merit and seniority for
determining the promotion of an employee. The primary purpose of
this method is to include the positive features of both the promotion
criterion. The organization may decide the weights for merit and
seniority on the bases of its HR and promotion policies. For instance,
an organization may decide to have the proportion of merit and
seniority in the ratio of 70 and 30 in order to evaluate and potential
candidates.

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It is important to note that current competence of individuals cannot alone be the
basis for elevation but certain relevant traits are required like growth-potentiality,
capacity to take on higher responsibilities, risk-bearing dynamism, a vision and a
perception for total organizational progress. Indeed, if rewards are not
commensurate with demonstrated accomplishments, the organization is bound to
suffer. Career planning, must include not only the very best and brilliant achievers
in the organization, but also those who are senior, averagely competent and
Adequate and who have rendered long service by growing with the organization.
The whole system of promotion, owes its rationale to two important factors: a
Personnel factors connected with the reward for longevity, loyalty and good work;
motivation for better performance, urge for recognition; search for job satisfaction
and goal of self actualization or fulfillments a Organizational factors connected
with accomplishment of its objectives through obtaining of right persons at the
right time within its own jurisdiction, generation and availability of such requisite
skills and specialized knowledge specific to the relevant tasks and programmers.

6.5 DEMOTION
A demotion is a reduction in an employee's rank or job title within the
organizational hierarchy of a company, public service department, or other body. A
demotion may also lead to the loss of other privileges associated with a more
senior rank and/or a reduction in salary or benefits. An employee may be demoted
for violating the rules of the organization by a behavior such as excessive lateness,
misconduct, or negligence. In some cases, though, an employee may be demoted as
an alternative to being laid off, if the company is facing a financial crisis. A move
to a position at the same rank or level elsewhere in the organization is called a
lateral move or deployment. The opposite of a demotion is a promotion.
Within the continuum of disciplinary options available within most organizations,
a demotion falls in the middle range of severity. Minor violations of rules or the
first violation of a rule will typically result in a verbal or written warning or a
suspension without pay. At the other extreme, for severe violations of the rules,
such as embezzlement or sabotage, an employee will typically be fired and the
company will file criminal or civil charges. In sports leagues, when teams are
transferred between divisions, the worst-ranked teams in the higher division are
relegated to the lower division.

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6.5.1 REASONS FOR DEMOTION


An employee may be demoted for several reasons including administrative
convenience and punishment. Following are the important reasons for demotion:
Administrative Convenience
Due to external developments and/or internal restructuring, an
organization may be forced to abolish certain categories of jobs or
merge the jobs for administrative purposes.
Inefficiency
Employees can me moved out of the existing position to some
lower level for consistence failure to meet the performance goals
of the organization.
Disciplinary Action
An organization may impose demotion as a punishment for any
serious violation of code of conduct. Demotion is considered as
less severe punishment than dismissal or discharge of employees
from the job.
Voluntary Demotion
It is also called demotion on request. It involves shifting an
employee to a lower designation upon his request or concurrence.
Employee may request a voluntary demotion when they are not
wiling or able to perform the existing duties any longer or
shoulder the responsibilities of current positions properly.

6.6 TRANSFER
A horizontal shifting of employs from one job to another without any job related
increase in the pay, benefits and status of the employee is called transfer. It can
broadly be classified into two categories, namely, imposed transfer and requested
transfer. In case of the former, an employee is transferred for administrative
convenience with or without his concurrence. For instance an organization may
carry out transfers for better utilization of skills and knowledge of the employees.

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Transfers may also be used to see whether an employee is fit for permanent
placement in that position as a part of promotion. In case of requested transfers, an
employee is transferred to another job or place because he has requested the
transfer. Transfers are often requested by the employee for personal reasons.
The lateral movement of employees from the existing job to another with
comparable duties responsibilities and pay range is the essence of the definitions of
transfer.
We can define transfer as an employees lateral mobility in the organization
structure without any significant change in the authority, responsibility,
compensation and social status.

6.6.1 OBJECTIVES OF TRANSFER


Transfers can serve several purposes for both the organization and employee. We
will now discuss the major purposes of transfer:
Optimum utilization of skills
Organization may transfer employee through from places where there is
underutilizations due to labour surplus to other places within the
organization that suffer from skills shortages.
Training of employees
Many organization transfer employee as a toll to train the employee in
different jobs of the organization
Disciplinary Action
As part of disciplinary action, employees may be transferred to the least
preferred jobs or destination without any change in the job authority,
responsibility, and compensation packages.
Employee Request
Organizations may order a transfer to fulfill the request of an employee for
it. Employee may cite health, family or other personal problems for seeking
voluntary transfers. They may also seek transfers for job related reasons like
difficulties and high level of stress

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Transfer can be done on the request of employee due to personal reason like family
problem or health problem.
Due to HR policy which states that one employee can work in department or
place for specific time period.
Transfers are common in the organizations where the work load varies
timely.
If an employee is not able to do the work or job assigned effectively he can
be transferred to the other job where he can use his skills properly according
to his interest and abilities.
Departmental vacancies can be filled with transfer of employees from
overstaffed department.
Employees can be transferred to the position or department with the higher
priority workload.
6.6.2 TYPES OF TRANSFER
Transfers may take place due to variety of reasons and for that there are
different types of transfers: Production Transfer
When the transfers are being made for filling the position in such
departments having lack of staff, from the departments having surplus
manpower it is called production transfer. It prevents the layoffs form the
organization. Also it is good to adjust existing staff rather than to hire the
new one.
Remedial Transfer
Remedial transfer refers to rectification of wrong selection or placement of
employees. If the employee can adjust himself in the given job he can be
transferred to the job where he can use his skills and abilities accordingly.
Versatility Transfer
Such transfers are done to increase the versatility in the employees so that he
can work different kind of jobs. This is done by transferring employee to
different jobs closely related in same department or process line.. This is
used as a training device. It helps employee to develop him and he is

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equipped for the high responsibility jobs as he is having knowledge of the
whole process.
Shift Transfer
In many multi-shifts jobs such as Call centers employees are transferred
from one shift to another due to their personal reasons like health problem or
evening college for higher studies or any family problems.

6.7 SEPARATION
Employee Separation is one of the very important and crucial function / process of
HR Department. This process, if not handled in an efficient manner, can lead to
various legal complications.
The relation of an employer and employee has a beginning; they stay together for a
while and then they separate. Beginning of the relation is called as recruitment
process or talent acquisition that passes through selection phase and followed by
induction. Staying together in the relation comprises the various phases such has
performance management; career management; professional growth; development
and etc. And the final stage of the relation is the separation.

6.7.1 Types of Separation


Depending upon the reason, an organization may initiate voluntary or involuntary
separation of employees by adopting any one of the mentioned forms:
Resignation
This is the most common way of separation. Employee leaves his job and
employment with his employer to pursue better opportunities; a better
position at a better compensation package in a branded company (or better
known company) in a same city and country or in a different city or different
country. So, an employee resigns for:
1) Better compensation and benefits
2) Higher position / level
3) Challenging role
4) To move from an unknown or lowly branded company to a highly

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branded and reputed company (Top 10 or 25 companies in the world etc)
5) For foreign or international assignments
Termination
Usually, this process is perceived negatively by employees. In termination,
an employer uses his right to terminate the contract of an employment. There
can be many reasons for an employer to terminate the contract of
employment but some of the common reasons are:
1) Non-Performance
2) Indiscipline
3) Misconduct
4) Insubordination
5) Theft and etc
Absconding
This is one of the most unethical, unexpected and unprofessional way to
terminate the contract of an employment. In this, on one fine day an
employee decides not to go to work. He does not care to hand-over his stuff.
In case an employee decides to abscond (or run-away), it becomes very
important to understand his motives and intentions. Employees can abscond
in either or all of the below mentioned circumstances / situations:
1. After stealing the confidential information or documents or database
from the company.
2. If the intentions of an individual is to commit a crime.
3. If there is a work-pressure and stress and the individual is not able to
cope-up with it (as it happens in call-centers, BPO and other high-stress
industries).
4. If the employee has committed any crime outside the office and after
working hours (such as murder or getting involved in terrorist activities
or theft or any other civil crime).
5. Then, when priorities are different. Employee has asked for leave due
to some urgency at his home (or might be he is trying to escape from his
work responsibilities) and at the same time his team also needs him in
the office and his leaves are not approved.
6. If he has got some exceptionally good opportunity that requires him
to join immediately and he feels that the process of separation in his

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company is a bit too complicated. He assumes few things and do not
really try to face the challenge.
7. Lastly, it is a personality issue. Employees that abscond have
different personalities. They are low in confidence. They are too weak to
face the reality and challenges of life. They feel that running away from
the problem is as good as solving the problem. They are cowards to take
the problems head-on.
Retirement
This is most common form of separation of employees from the
organization. Depending upon its retirement policy, an organization would
initiate the necessary steps to separate the employees upon attaining the
specific age. The age of retirement from government services in India differs
from one state to another within the range of 55 to 65 years. However
private organizations can have their own retirement policies.
Retrenchment
Retrenchment is a kind of involuntary separation which an organization
adopts to downsize it labour force. The purpose of retrenchment is to reduce
the expenditure of the business and raise the profitability, especially during
the difficult times of organization. The need for retrenchment may arise due
to the closure of unprofitable business operations, the automation of
operations, and shifting business from one region or country to another
Layoff
A layoff is similar to retrenchment except that it is a temporary separation of
employees from the organization. Organizations usually resort to layoffs to
overcome the problems of business slowdown and other temporary business
interruptions. Since a layoff is a temporary separation, the employees would
be called back once the business fortunes revive and get stabilized.
6.7

QUIZ

Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter

Human Resource Management


1. In which of the following activity the employee is no longer associated with
the organization
a) Transfer
b) Separation
c) Promotion
d) Demotion
2. It is the process of establishing career objectives and determining
appropriate educational and developmental programs to further develop the
skills required to achieve short- or long-term career objectives
a) Promotion
b) Career Planning
c) Job Rotation
d) Training
3. Which of the following is not considered as a type of separation
a) Resignation
b) Termination
c) Demotion
d) Absconding
4. Successful career planning and development requires action froma) The organization, his employees immediate manager and the
employee
b) The employee and his/her immediate manager
c) A variety of sources both internal and external to the organization
d) The employee with some assistance/guidance from his/her immediate
manager.
5. A/An
can be defined as a sequence of positions, roles or
jobs by one person over a relative long time span.
a) Work
b) Profession

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c) Occupation
d) Career
6.

can be defined as logical progressions between jobs, or from


one job to a target position.
a) Need analysis
b) Career Counseling
c) Career path
d) Opportunity analysis

7.

is the horizontal movement of an employee from one


job to another job at the same level in the organizational hierarchy.
a) Promotion
b) Career development
c) Transfer
d) Vacancy-based promotion

8. In
promotion, when a vacancy arises for a position,
employees at the next lower level are assessed based on their performance
and service, and the best performer is promoted to the vacant position.
a) Seniority based
b) Merit based
c) Time bound
d) Vacancy based
9. Which of the following alternatives might result lead to job vacancies in an
organization?
i. Employee turnover
ii. Promotions
iii. Recruitment
iv. Demotions and Terminations
a) i, ii,iii
b) i, iii, iv

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c) i, ii, iv
d) i, ii, iii, iv
10. Paul Pigors and Charles Myers define
as advancement of
employees to a better job- better in terms of job responsibility, more prestige
or status, greater skill and especially increased rate of pay or salary.
a) Career development
b) Self assessment
c) Promotion
d) Transfer
CHAPTER 7 JOB EVALUATION AND COMPENSATION

After reading this chapter, you will be able to understand:


1. Meaning, characteristics and objectives of Job Evaluation
2. Job Evaluation Process and methods
3. Job Specification and its components
4. Merit rating and Job Evaluation

7.1 JOB EVALUATION


Job evaluation as a management technique was developed around 1900.
It became one of the tools with which managers understood and directed
organizations. Frederick W. Taylor, through his interest in improving the
efficiency of work, made studying the job one of his principles of scientific
management.

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Early organization theorists were interested in how jobs fit into organizations: they
focused on the purpose of the job. But this early interest in job evaluation
disappeared as the human relations movement focused on other issues. It was not
until the 1960s that psychologists and other behavioral scientists rediscovered jobs
as a focus of study in organizations.
Job evaluation is the process of systematically determining a relative internal
value of a job in an organization. In all cases the idea is to evaluate the job, not the
person doing it. Job evaluation is the process of determining the worth of one job
in relation to that of the other jobs in a company so that a fair and equitable wage
and salary system can be established.
Job evaluation may be defined simply as an attempt to determine and compare the
demands which the normal performance of particular jobs makes on normal
workers without taking into account of the individual abilities or performance of
the workers concerned.
-International Labour Organization
Job evaluation represents an effort to determine the relative value of every job in
a plant and to determine what the fair basic wage for such a job should be.
-Kimball and Kimball

7.1.1 Characteristics of Job Evaluation


Based on these definitions, job evaluation has the following characteristics:Job evaluation is primarily concerned with the determination of the worth of
the job within an organization. It is not concerned with the external worth of
the job, i.e., the worth of the job in the labour market.
It is non-personal in approach as it does not consider the abilities and skills
of the job holders while evaluating a job.
Job characterises like duties, responsibilities and accountability often from
the basis for the determination of the relative worth of the job.
In Job evaluation, jobs are allocated to grades or levels, depeding upon their
performance or scores in the job evaluation process.

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Determination of fair and equitable pay scales for jobs is the driving force
behind the job evaluation process.

7.2 Objectives of Job Evaluation


The following are the objectives of the job evaluation exercise in an organization:
To rank the jobs in the order of importance based on the job duties,
responsibilities and other relevant factors
To develop job grades and pay grades for facilitating simple and efficient
wage and salary administration
To institutionalize the system of pay scale fixation in order to ensure
consistency and uniformity
To determine the pay scales of the employees in a systematic and scientific
manner based on the relative worth of the jobs
To avoid or eliminate the employees grievances against the bias and
prejudices in the determination of the pay scales of the employees
To enhance the ability of the organization in attracting and retaining the best
talents.

7.3 Principles of Job Evaluation


Clearly defined and identifiable jobs must exist. These jobs will be
accurately described in an agreed job description.
All jobs in an organisation will be evaluated using an agreed job evaluation
scheme.
Job evaluators will need to gain a thorough understanding of the job
Job evaluation is concerned with jobs, not people. It is not the person that is
being evaluated.
The job is assessed as if it were being carried out in a fully competent and
acceptable manner.
Job evaluation is based on judgement and is not scientific. However if
applied correctly it can enable objective judgements to be made.
It is possible to make a judgement about a job's contribution relative to other
jobs in an organisation.
The real test of the evaluation results is their acceptability to all participants.

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Job evaluation can aid organisational problem solving as it highlights
duplication of tasks and gaps between jobs and functions

7.4 Benefits of Job Evaluation


1. Reduction in inequalities in salary structure
It is found that people and their motivation is dependent upon how well they
are being paid. Therefore the main objective of job evaluation is to have
external and internal consistency in salary structure so that inequalities in
salaries are reduced.
2. Specialization
For the reason, division of labour and thereby specialization, a large number
of enterprises have got hundred jobs and many employees to perform them.
Therefore, an attempt should be made to define a job and thereby fix salaries
for it. This is possible only through job evaluation.
3. Helps in selection of employees
The job evaluation information can be helpful at the time of selection of
candidates. The factors that are determined for job evaluation can be taken
into account while selecting the employees.
4. Harmonious relationship between employees and manager Through job
evaluation, harmonious and congenial relations can be maintained between
employees and management, so that all kinds of salaries controversies can be
minimized.
5. Standardization
The process of determining the salary differentials for different jobs become
standardized through job evaluation. This helps in bringing uniformity into
salary structure.
6. Relevance of new jobs
Through job evaluation, one can understand the relative value of new jobs in
a concern.
7. Basis for Training Need Identification

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As job evaluation studies the job characteristics and job demands in terms of
the efforts and skills required, it can also be used to determine the training
and development requirements of the job holders.
8. Basis for Career Planning and Development
Since job evaluation considers the behavioural, motivational and personality
requirements of a job in addition to the job characteristics, it provides the
basis for determining the career plans and succession plans of the
organization.

7.5 JOB EVALUATION PROCESS


It is essential for an organization to develop a systematic and objective evaluation
process to gain the confidence of the employees in the process.
An organization can have its own process of conducting job evaluation. Generally
the process of job evaluation involves the following steps:1. Identification of the jobs to be evaluated
First Step is the determination of jobs to be covered under the evaluation
process. It is very difficult to evaluate all the jobs of an organization. It,
therefore chooses a few key jobs which represent a group of similar jobs for
job evaluation purpose.
2. Gathering Relevant Information about the Job
The next phase is of job evaluation process is the collection of necessary
information about the jobs being evaluated. For this the evaluator may adopt
data collection techniques like interviews, questionnaires and observations
besides job description statement, for gathering relevant information. Then,
the evaluators should do a thorough analysis of all the information available
with them.
3. Determination of Job Ranking
After analysis all the information related to the jobs, the evaluator assesses
the extent of the presence of the chosen factors in the jobs. Based on the
results of such an assessment, the evaluator determines the rating for each

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job. Since similar factors are assessed in the evaluation process, the rating
reflect the relative worth of a job in comparison to other jobs in the
organization.
4. Selection of Benchmark Jobs
To ascertain the comparative pay scales of all the jobs in the organization,
the evaluators may select a few jobs which are normally found in every
organization and are comparable in nature. These jobs are usually called
benchmark jobs and served as yardsticks for determining the pay scale of all
other jobs in the organization.
5. Wage and Salary Surveys
At this stage, an organization conducts a survey of pay scales of the
benchmark, jobs in other organization. Based on several surveys, the
monetary value of each job is determined.
6. Periodic Review and Feedback
Developments in the external environment influence the organizations
continuously and also cause change in the internal factors.Consequently,
organizations are forced to review the jobs at periodic intervals to determine
their worth in the changed context.

7.6 Methods of Job Evaluation


The more difficult the job, the more is its worth. The more scarce the labour supply
and higher the demand, the more a job is worth. The more skills, education and
responsibility required in a job, the more it is worth. These generalizations usually
hold true for most jobs and serve as indicators of what the level of pay should be,
but they are so general that they are of little use in translating specific jobs into
rates of monitory compensation. Therefore several systems of job evaluation have
been developed which take into account the above mentioned factors either directly
or indirectly.
There are four types of job evaluation methods, as mentioned below:

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Job Ranking
The job ranking method is the simplest and easiest job evaluation method;
jobs and the employees who perform those jobs are ranked from highest to
lowest depending on their quality and value to the organization. In this each
successive job is higher or below than the previous one in sequence and all
the jobs is arranged as per their requirement. Usually this technique is used
to rank jobs according to the whole job rather than number of compensable
factors.
Job Grading method
In this method, jobs are grouped on the basis of similarities found in their
characteristics and value. The characteristics may include the problemsolving skills required, the communication and persuasion abilities needed,
demand for creativity, the physical or mental efforts required, and the
difficulty or stress involved in the job. Generally, jobs within each job group
or class are eligible for the same pay scale or grade.
Point Method
It is one of the quantitative methods in job evaluation. In this the worth of a
job is determined on the basis of the extent of the presence of some defined
factors in that job. Maximum point values are assigned to each of the job
factors required to be considered. Then each job is awarded points scored by
it. A job factor is a specific requirement levied upon the job holder which he
must contribute, assume and endure. The major factors are skill, effort,
responsibility and working conditions. These factors or points are later
converted into money value.
Factor Comparison Method
This method determines the relative rank of the jobs to be evaluated in
relation to monitory scale. It is often used for evaluating white collar,
professional and managerial position, although it is equably suitable for
grading other jobs as well. It is essentially a combination of the ranking and
point systems.
I n this method , five factors are generally evaluated for each job:
Mental Requirements

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Skills
Physical Requirements
Responsibilities
Working Conditions
The factor comparison method is more scientific and complex than any other
method.

7.7 MERIT RATING


Merit-rating is associated with performance appraisal of an employee. This is a
systematic approach for evaluating the performance of an employee on the job,
which he performs. This is also called as personnel rating and employee
evaluation.
Merit rating aims at evaluating the relative worth of employees in the organisation
before awarding them appropriately. In this the organisation links the part of the
employees wages to their actual performance in comparison with the standards set
by it. These standards may be in terms of critical job factors like competency,
initiative, attitude, safety records, punctuality, regularity records, health,
dynamism, behaviour, reliability and adaptability. Depending upon the importance
of these factors to the job, the organisation may assign points to each of these
factors. The employees overall performance in the job is then evaluated to
determine their aggregate scores, which, in turn, decide the incentive payable to
them.
Merit-rating is a formal, objective procedure for evaluating personality,
contributions and potentials of employees in a working organization.
7.7.1 JOB EVALUATION VS MERIT RATING
Job-evaluation and merit-rating are compared in the following ways:
Job Evaluation vs Merit Rating

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Job Evaluation
(1) It evaluated a job or work

Merit Rating
(1) It evaluated a worker

(2) It is for the purpose of fixing a (2) It is for the purpose of deciding
base-wage for a job.

reward for exceptional merit of


worker.

(3) It is independent of operator or (3) It is independent of job. It is


worker. It is impersonal in nature.

impersonal in nature.

(4) Useful for decision regarding wage (4) Useful


and

salary administration, skill

match, etc.
(5) It considers requirement of job.

training,

for

decision

placement,

regarding
promotion,

counselling, etc.
(5) It

considers

ability

and

performance of individual.

7.8 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1.

is a systematic process of analyzing and assessing jobs


to determine the relative worth of each job in an organization and
forms the basis for designing the compensation management system
in the organization.
a) Job Grading

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b)
c)
d)

Job evaluation
Job analysis
Performance Appraisal

2. Several quantitative and non quantitative techniques are used for


comparing jobs in an organization in order to classify them and attach
monetary values to them. Among the alternatives listed below,
identify the non-quantitative technique(s).
i. Ranking
ii. Point ranking method
iii. Factor comparison method
iv. Job grading
a) Only i and ii
b) Only ii and iii
c) All except i
d) Only iv
3. In the
method of evaluating jobs, a key job is identified
and its worth is determined. Subsequently, the importance of each job
in comparison with representative job is determined and then the job
is ranked.
a) Paired Comparison
b) Job Grading
c) Single Factor Ranking
d) Relative Ranking
4. The factor comparison method is a quantitative job evaluation
technique. It is based on the principle of two other methods used for
job evaluation. The two methods on which the factor comparison
method is based are
a) Ranking and Point ranking
b) Job classification and job grading
c) Job grading and ranking
d) Decision band and point rating
5. The main objective of job evaluation is to determine the relative worth
of different jobs in the organization and provide the basis for
compensation management system. However, job evaluation fulfils

Human Resource Management


some other objectives as well. Identify statement which is not one of
these objectives.
a) Avoidance of discrimination of any kind in wage determination
b) Determination of the position and place of a job in the
organizational hierarchy
c) Updating the employees skills
d) Ensuring employee satisfaction with respect to compensation
6. The point rating method is a quantitative technique of job evaluation.
What is/are the advantage(s) of this method?
i. The system is accurate and dependable
ii. Wage differentials are likely to be systematic and in accordance
with the content of each job
iii. It is quickly and inexpensive method of job evaluation
iv. It is a simple technique
a) Only iii
b) Only i and ii
c) Only iii and iv
d) Only ii and iv

CHAPTER-8 WAGE AND INCENTIVE COMPENSATION SCHEMES


After reading this chapter, you will be able to understand:
1. Wages and wage system in India
2. Methods of wage payment
3. Incentive compensation- nature and importance
4. Prerequisite for effective incentive scheme

Human Resource Management

5. Types of Incentive schemes

8.1 WAGES AND WAGE SYSTEM IN INDIA


Wages refers to the total pay package which an employee receives on a periodic
basis. A healthy, competent and devoted work force is the most precious asset of a
successful organization. In order to obtain, retain and develop such workforce or
employees, it is necessary that they are suitably rewarded for their services. A
remunerative wage structure is the dominating force, which motivates employees
to contribute their maximum worth to the enterprise
The term wages in broad sense means any economic compensation paid by the
employer under some contract to his employer for the services rendered by them.
The basic wage is the remuneration by way of basic salary paid to the employee.
Allowances on the other hand are paid in addition to the basic wage to maintain the
value of the basic wage over a period of time. Such allowances include holiday
pay, bonus, and social security benefits. Under the Payment of Wages Act, 1936,
Section 2 (VI), any award of settlement and production bonus, if paid, constitutes
wages.
Minimum Wage, Living Wage, and Fair Wage
Money is often looked upon as a means of fulfilling the basic needs of man. Food,
Clothing, transportation, education, and security are possible because of money.
Promotions, monetary benefits, and other allowances act as motivators. In India
in1948, a committee was set up to brig out a report on minimum wage, fair wage,
and living wage.

8.1.1 MINIMUM WAGE


A minimum Wage is defined by the committee as the wage which must provide
not only bare sustenance of life but also preserve the efficiency of the worker.

Human Resource Management


Minimum wage may be tied by an agreement between the management and the
workers, but it is usually determined through legislation. In any even the minimum
wage must be paid irrespective of the extent of profits, the financial condition of
the establishment or the availability of workmen at lower wages.
The 15th Indian labour conference (1957) formally qualified the term minimum
wage thus:
In calculating the minimum wage, the standard working class family
should be taken to comprise three consumption units for one earner,
the earnings of women, children, and adolescents being disregarded.
Minimum food requirements should be calculated on the basis of a set
intake of calories as recommended by Dr. Aykroyd for an average
Indian adult of moderate activity.
Clothing requirements should be estimated on the basis of a per capita
consumption of 18 yards per annum, which would give for the
average workers family of four a total of 72 yards
In respect of housing, the rent corresponding to the minimum area
provided for under the Government Industrial Housing Schemes
should be taken into consideration in fixing the minimum wage.
Fuel, lighting and other miscellaneous items of expenditure should
constitute 20 % of the total minimum wage.

8.1.2 LIVING WAGE


The living wage as defined by the committee is one which should enable the earner
to provide for himself and his family food, clothing, shelter, and also education and
medical needs, social needs, and a measure of insurance. Such a wage was
determined keeping in view the national income and the capacity to pay. The living
wage may be somewhere between the lowest level of the minimum wage and the
highest limit of the living wage , depending upon the bargaining power of labour,
the capacity of the industry to pay, the level of the national income, the general
effect of the wage rise on neighbouring industries, the productivity of labour, the

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place of industry in the economy of the country, and the prevailing rates of wages
in the same or similar occupations in neighbouring localities.
Living wage is that which workers can maintain the health and decency, a measure
of comfort and some insurance against the more important misfortune of lie. A
living wage must be fixed considering the general economic conditions of the
country. The concept of living wage, therefore, varies from country to country.

8.1.3 FAIR WAGE


According to the committee on fair wages, it is the wage, which is above the
minimum wage but below the living wage. The lower limit of fair wage is the
minimum wage and the upper limit is the capacity of the industry to pay. Hence a
fair wage may depend upon such factors as productivity of labour, prevailing rates
of waging, level of national income, the place of industry in the economy, and so
on.
It is fixed only by comparing with an accepted rate. Such a standard can be
determined with reference to those industries where labour is well organised and
has been able to bargain with the employees. The wages must be fair, i.e.
sufficiently high to provide standard family with , food, shelter, clothing, medical
care and education of children appropriate to the workmen.

8.2 FACTORS DETERMINING WAGES

The most important being the bargaining capacity of the employer and
employees.

Standing of the particular organization and its financial capacity to pay


higher wages.

The prevailing rates of wages for similar type of work in the market (i.e.
level of competition) as well as the prevailing condition of the economy.

If a job requires specialised skills and training,wages should be accordingly


higher.

Human Resource Management

The nature and type of the work done by the workers. For example, higher
wage rates should be paid for complicated and hazardous jobs.

Productivity of workers like workers who are more efficient and experienced
should get higher wages.

8.3 WAGE POLICY IN INDIA


Wage policy refers to all systematic effotrts of the government in relation to
national wage and salary system. It includes orders , legislation, and son on to
regulate the levels or structutres of wages and salareswith a view to achieveving
economic and social objectives of the government. Specifically the objectives of
wage policy are
1. To obtain for the workers a just share of the fruits of e conomic
development
2. To set minimum wages for workers whose bargaining position is week
3. To bring about a more efficient allocation and utilization of human
resources through wage and salary differentials
4. To abolish mal practices and abuses in wage and salary payments.
The first step towards the evolution of wage policy was the enactment of the
Payment of Wages Act, 1936. The main objective of the Act is to prohibit any
delay of withholding of wages legitimately due to the employees. The next step
was the passing of the Industrial Disputes Act, 1947, authorising all the state
governments to set up industrial tribunals which would look into disputes relating
to remuneration. Another note able development that led to the evolution of wage
policy was the enactment of the Minimum Wages Act, 1948.
The purpose of the Act is the fixation of minimum rates of the wages to workers in
sweated industries such as woollen, carpet making, flour mills, tobacco
manufacturing, oil mills, plantations, quarrying, mica, agriculture, and the like. The
Act was amended several times to make it applicable to more and more industries.
Then came the Equal Remuneration Act, 1976, which prohibits discrimination in
matters relating to remuneration on the basis of religion, region or sex.

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The constitution of India committed the government to evolve a wage policy.
Successive five year plans have also devoted necessary attention to the need for a
wage policy. Following the recommendation of the First and Second Plans, the
Government of India constituted wage boards for the important industries in the
country. A wage board is a tripartite body comprising representations from the
government, owners, and employees. Technically speaking, a wage board can only
make recommendations, and wage policies are normally implemented through
persuasion.
In spit of legislations, tribunals, and Boards, disparities in wages and salaries still
persist. Some of the disparities are:
1. Employees of MNCs are paid much more than their counterparts in
host countries for identical work.
2. Different industries have different have wage and salary structures
resulting in disparities in remuneration for identical work.
3. Wide gaps exist between different wages and salaries of employees in
the organized stores and of those in the unorganized, the latter earning
much less than the former.
4. Differences exist between earnings of employees in the government
sector and those in the private sector.
5. Within the government sector, salary differences exist among the
employees of different departments.
The disparities are glaring. If an illiterate supervisor in a leather
processing unit can earn Rs. 12000 plus per moth and a half-yearly
bonus, how much can a universe professor can earn? Rs 10,000 and no
bonus? If auto driver can earn Rs 3000 per month, how much should a
temporary lecturer in a college earn? Rs 1200 per month? And remain
temporary forever. A sweeper in L&T is an income tax assessee but a BE
or an MBBS degree holder works for Rs 800 per month in a small-scale
unit or Rs 1200 in a private nursing home, respectively.

Human Resource Management


There are clerks in Mumbai who get nearly twice as much as a labour
tribunal judge- the man who arbitrate everyones wages and salaries. And
a head clerk in LIC gets, at the maximum of his grade, more than half of
the salary of a high court judge, not less.
In order to correct such disparities, the government of India appointed a
committee headed by Mr. Bhootalingam in 1979. The brief given to the
committee was to suggest rational and integrated wage policy covering
all sectors of the economy. Soon after the committee submitted its report,
there was hue and cry raised against the recommendations. It was
criticized as anti-labour and impracticable. The report was promptly and
predictably shot down.

8.4 METHODS OF WAGE PAYMENT


There are two methods of wage payment. One method relates to the hours the
employee is at work, regardless of his output (time rate system).
The other method is related to the production or output, regardless of the time
taken for production (piece rate system).
The other methods-incentive schemes-are only a variation of the two or combined
with time and piece rate systems.

1) TIME WAGE SYSTEM


In this system the worker is paid on the basis of time spent on the work
irrespective of the amount of work done. The basis of this time may be hour,
day, week or month. This is the oldest system of wage payment.
Suitability
Quality of work is more important that the volume.
Measurement of work is not convenient (indirect labour)
Production involves delay and interruption due to uncontrollable factors.
Where the work requires a high degree of skill and dexterity.

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Where work is of nature that efficiency can be measured by close
supervision.
Merits
It is simple to understand or operate.
Workers are assured of guaranteed minimum wages irrespective of the
output.
Suitable to beginners and learners.
For precision work (pattern making, tool making) where care is more
significant than speed, the time rate systems will help maintain the
quality of products.
It is favoured by trade unions.
Demerits
It makes no distinction between efficient and inefficient workers.
It offers very little to capable and efficient workers in the form of incentive
to increased production.
Management is made to spend more on assuring close supervision and there
by prevent wastage of time.
Workers try to make the work as long as possible so that they can earn more.
Thus, labour cost per unit is increased.
The system is unfair since wages and productivity are not correlated.

2) PIECE RATE SYSTEM


Under piece rate system, the workers are paid at a stipulated rate per piece or
unit of output. Here speed is the basis of payment, instead of time. In the system,
the rate is fixed per piece of work and the worker is paid according to the number
of pieces completed or the volume of work done by him, irrespective of time taken
by him in completing that work. Efficiency is, thus recognised in this system.
Suitability
Quality of work is not important.

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Work is of a repetitive nature
Job rate can be fixed satisfactorily.
There is sufficient demand for output to guarantee continuous work.
The job is a standardised one.
Merits
It provides encouragement for higher production by rewarding efficient
workers in a suitable way.
In their bid to earn more, workers will try to adapt better and more efficient
methods and thereby increase production. As a result the general dexterity
and skill of the workers are enhanced.
As wage rate is fixed per unit, it is easy to prepare quotations, estimates and
budgets.
Idle time will be reduced to the minimum, as workers are not paid for wasted
time on the job.
Workers take great care in maintaining machines and tools properly because
their breakdown would cause work stoppages and reduce their earnings.
Cost of supervision is less, as workers do not require supervisors to oversee
their efforts.
Demerits
Under the straight piece wage plan, no minimum remuneration is
guaranteed.
Beginners and average workers will not be able to earn reasonable wages
because of their inability to complete the work as fast as their experienced
counter-parts do.
Quantity will be over emphasised at the cost of quality unless close
supervision is maintained.
Piece rate are unsuitable in circumstances where work is intermittent and job
cannot be standardised.
Since wages are linked with output, there will be a tendency among workers
to labour hard and overstrain themselves to record higher and higher output
to get increased wages thereof overwork affects the health of workers.

8.5 NATURE OF INCENTIVE PAYMENTS

Human Resource Management


Besides wages and salary employees are paid incentives upon their performance.
Incentives payments are quite substantial and are paid as regularly as wages and
salaries.
Incentives are the monetary benefits paid to workmen in recognition of their
outstanding performance. They are defined as variable rewards granted according
to variations in the achievement of specific results. The international Labour
Officer refers to incentives as payment by results. Unlike wages and salaries
which are relatively fixed, incentives generally vary from individual to individual,
and from period to period for the same individual.
8.5.1 FEATURES OF INCENTIVE PLANS
The characteristics of these plans are as follows:
1. Minimum wages are guaranteed to all workers
2. Incentives by way of bonus, etc. are offered to efficient workers for the time
saved.
3. A standard time is fixed and the worker is expected to perform the given
work within the standard time. The standard time is set after making the time
studies for the performance of a specific job.
8.5.2 IMPORTANCE OF INCENTIVES
The primary advantage of incentives is the inducement and motivation of
workers for higher efficiency and greater output.
Earnings of employees would be enhanced due to incentives.
There will be reduction in the total as well as unit cost of production,
through incentives.
Production capacity is also likely to increase.
It leads to reduction in supervision, better utilisation of equipment, reduced
scrap, reduced lost time, reduced absenteeism and turnover and increased
output.
Incentive packages are a very attractive proposition for managements
because they do not affect employers contribution to the provident fund and
other employee-retirement benefits.

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8.5.3 DISADVANTAGES OF INCENTIVE
There is tendency for the quality of products to deteriorate unless steps are
taken to ensure maintenance of quality through checking and inspection.
Difficulties may arise over the introduction of new machines and methods.
Workers may oppose such introduction for fear that new piece or bonus rates
set, when the job is restudied at intervals of time, may yield lower earnings,
or when the new machines are introduced, they may slacken their rate of
work in order to avoid rising output to a level which would make a restudy
of the job necessary.
Workers tend, moreover, to regard their highest earnings as normal and may,
therefore, press for a considerably higher minimum wage when they are paid
by results than when they are paid by the hour.
There is evidence that some workers paid by results have disregarded
security regulations in order to achieve high output, thus, increasing the
danger of accidents.
Another disadvantage is that jealousies may arise among workers because
some are able to earn more than others.
One of the greatest difficulties with the incentive systems is in the setting of
piece or bonus rates. Rate fixing involves delicate problems of judgement in
which there is always a risk of error.
Difficulty also arises in determining the standard performance.
Preparing incentives schemes is such a complex business, management
usually outwit their employees.

8.6 PRE-REQUISITES FOR AN EFFECTIVE INCENTIVE SYSTEM.


All things considered, it may be concluded that in many industries or undertakings
and for a large group of operations, well designed systems for payment by results
shall yield advantages to all concerned. Many of these advantages will be realised
provided sufficient safeguards are provided. Such pre-requisites are:
1. The co-operation of workers in the implementation of an incentive scheme is
essential because the employees somehow devise, if they do not like a
scheme, ingenious ways of evading or sabotaging the plan, often with the
tactic connivance of the supervisor or foreman.

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2. The scheme must be based on scientific work measurement. The standards
set must be realistic and must motivate workers to put in better performance.
Workers must be provided with necessary tools, equipment and materials so
as to enable them reach their standards.
3. Indirect workers, such as supervisors, foreman, charge hands, helpers, crane
operators, canteen staff, store keepers and clerical staff should also be
covered by incentive schemes.
4. There should be management commitment to the cost and time necessary to
administer incentive schemes properly, and these must be carefully assessed
before embarking on an incentive programme.
5. There is greater need for planning. Many incentive schemes, started
hurriedly, planned carelessly, and implemented in differently have failed and
have created more problems for the organisation than they have tried to
solve.
6. The other safeguards areThe incentive scheme should be appropriate to the type of work
carried out and the workers employed.
The reward should be clearly and closely linked to the efforts of the
individual or group.
Individuals or groups should be ale to calculate the reward they get at
each of the levels of output they are capable of achieving.
The scheme should operate by means of a well- defined and easily
understood formula.
The scheme should be properly installed and maintained.
Provisions should be made for controlling the amounts paid, to ensure
that they are proportionate to effort.
Provisions should be made for amending rates in defined
circumstances.
Create incentives for performance and disincentives for non
performance.
Set and review specific objectives for each employee periodically.
8.6.1 ESSENTIALS OF A SOUND INCENTIVE PLAN
Guarantee Minimum Wages
It must guarantee minimum wages irrespective of the performance of the
worker.
Simple

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It must be simple to operate and easy to understand
Equitable
All workers should get an equal opportunity to earn the incentive pay.
Equal pay for equal work should be the rule
Economical
The incentive plan should not be a costly affair. The benefits must exceed
the costs.
Flexible
It must be reasonably flexible so as to take care of changes in technology,
demand for and supply of skills, competitive rates in the industry, etc.
Support
The incentive plan should take workers and unions into confidence. It
should be implemented after consulting the workers and the union. It should
be the outcome of mutual trust and understanding between management and
workers.
Motivating
The incentives should be large enough to motivate the worker to superior
performance. At the same time, there should be checks and balances to
ensure that the workers does not exert himself to painful levels, affecting
the quality.
Prompt
There should be very little time gap between performance and payment. As
soon as the job is finished, the worker should get his (incentive) earnings
promptly.

8.7 TYPES OF INCENTIVE SCHEMES


(PRODUCTIVITY LINKED INCENTIVE COMPENSATION)
Incentive schemes are many and varied. The international labour organisation
(ILO) classifies all the schemes of payment by results into four categories. They
are:
1.
2.
3.
4.

Schemes where the workers earnings vary in the same proportion as output.
Where earnings vary less proportionately than output.
Where earnings vary proportionately more than output.
Where earnings differ at different levels of output.

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Incentive
Schemes

Earnings Vary In
The Same Prop.
As Output.

Earnings Vary
Less Prop. Than
Output.

Earnings Vary
Prop. More Than
Output.

Earnings Differ
At Diff. Levels Of
Output.

Straight Piece
Work.

Halsey Plan.

High Piece Rate.

Taylor's
Differential Piece
Rate.

Rowan Plan.

High Standard
Hour.

Merrick
Differential Piece
Rate.

Standard Hour.

Barth Plan.

Gantt Task
System.

Bedaux Plan.

Emerson's
Efficiency Plan.

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1. THE INCENTIVE METHODS WHERE INCOMES VARYING IN


SAME PROPORTION TO OUTPUT
The chief characteristics of the schemes where incomes vary in proportion to
output is that any gains or losses resulting directly from a workers output accrue
to him or her(leaving to the employer any gains or losses in overheads costs per
unit of output). In contrast, when the worker is paid by the hour, day or month, all
gains or losses resulting from changes in his or her output accrue to the employer.
The straight piece-work and the standard hour systems are the two popular
incentive schemes which come under the first category.
Straight piece-work method is the simplest, oldest and the most commonly used
method. Here, the rate per unit of output is fixed, and the total earnings of a worker
are arrived at by multiplying the total output(measured in terms of units) by the
rate per unit.
For example, if the rate per unit is 10 paise and the total output of an employee is
100 units, his or her earnings will be 100 x 0.10 =Rs. 10
In the standard hour system (also called 100 per cent gains-sharing), standard time
in terms of hours is fixed for the completion of a job. The rate per job is then
determined. A worker is paid for a standard time at his or her time-rate if he or she
completes the job in the standard time or less. He or she is paid the same wages if
he or she takes more than the standard time, unless he or she is guaranteed time
wages.
The following example illustrates the method:
Standard time = 10 hrs
Rate per hour = Rs. 1
Case 1

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Time taken = 8 hrs
Earnings =10 X 1= Rs. 10.00
Case 2
Time taken = 12hrs
(a) Earnings if time wages are not guaranteed =
10 X 1= Rs10
(b) Earnings if time wages are guaranteed=
12 X 1=Rs 12

2. EARNINGS VARYING PROPORTIONATELY LESS THAN


OUTPUT
Four allied but different system come in this group, namely halsey, rowan,barth
and bedaux. The common feature of all these is that time is used as the measure of
output and bonus is paid on the time saved, that is, the difference between the
standard time set for the job and the time actually taken. These schemes are called
gain-sharing schemes as both the employer as well as the employee shares the
gains resulting from the saved time. The worker may be paid for half (or any other
fraction) of the time saved, the employer getting the balance.
a) HALSEY SYSTEM
Under the halsey system, standard time is fixed for the completion of a job and the
rate per hour is also determined. If the worker takes the standard time or more to
complete the job, he or she gets paid at the time rate. In other words, time wages
are guaranteed even if the output of the worker is below standard. Where the work
is done in les than the standard time, he or she gets paid for the actual time, at the
time-rate plus a bonus which is calculated at or as a specified %age of saved
time. The percentage varies from 30-70 percent. The usual share is 50%, the
remaining going to the employer.
The following example illustrates the scheme:

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Standard time= 10 hrs
Rate per hour= re 1
Case 1
Time taken=10 hrs
Earnings= 10 X 1= Rs10.
Case 2
Time taken =12hrs
Earnings=12 X 1= Rs12.
Case 3
Time taken=8hrs
Earnings:
Time wages=8 X 1=rs8.
Bonus

=50 % X 2 X 1=Rs1.

Total Earning = 8+ 1 = Rs 9

b) ROWAN SYSTEM
Under the rowan system too, standard time and rate per hour are fixed. If the time
taken to complete the job is equal to or exceeds the standard time, the employee is
paid for the time taken at the rate per hour. If the time taken is less than the
standard time, the employee is entitled to bonus, in addition to the time wages. The
bonus takes the form of a percentage of the workers time rate. This percentage is
equal to the proportion of the saved time, to the standard time.
Rowan system operates on the following lines:

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Standard time =10 hrs
Rate per hour = Re1
Case 1
Time taken=10 hrs
Earnings

= 10 X 1= Rs 10.

Case 2
Time taken=10 hrs
Earnings =12 X 1= Rs 12.
Case 3
Time taken =8hrs
Earnings=8 X 1=Rs 8
Bonus=2/10 X 8= Rs 1.60
Total Earnings = 8+1.60 = Rs 9.6

c) BARTH SCHEME
Unlike the halsey and rowan systems, the barth variable sharing system does not
guarantee the time-rate. The workers pay is ascertained by multiplying the
standard hour by the number of hours actually taken to do the job, taking the
square root of the product and multiplying it by the workers hourly rate.
Pay = Rate per hour X standard hour X number of hours actually taken
For example:
Standard time =10 hrs
Rate per hour = Re 1

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Case 1
Time taken = 10hrs
Earnings = 1 X 12 X 10
=10.95 X 1
= Rs 10.95
Case 2
Time taken =10 hrs
Earnings = 1 X 10 X 10
= 10 X 1
= Rs 10.00
Case 3
Time taken =8 hrs
Earnings

= 1 X 8 X 10
=8.94 X1
= Rs 8.94

d) BEDAUX SCHEME
Under the bedaux scheme, the standard time for a job is determined. Each minute of
the allowed time is called a point or B. Thus, there are 60Bs in one hour. Each job
has a standard number of Bs. The rate per hour is also determined. The worker
receives, in addition to his or her hourly rate, a bonus which under the original plan
is equal to 75 percent of the number of points earned, in excess of 60 per hour,
multiplied by one-sixtieth of the workers hourly rate. If a worker does not reach

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his or her standard, he or she is paid at the time-rate of the workers hourly rate. If
a worker does not reach his or her
An example to illustrate the bedaux system is as follows:
Standard time =10 hrs
Rate per hour = Re1
Case 1
Actual time =12 hrs
Earnings

=12 X 1= Rs 12

Case 2
Actual time = 8 hrs
Earnings = time wages= 8 X 1= Rs 8
Bonus
Standard Bs =10 X 60
=600
Actual bonus =8 X 60
=480
Bs saved

=120

Bonus=75/100 X 120 X 1/60= Rs 1.50


Total earnings= 8+1.50
= Rs 9.50

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3. EARNINGS VARYING PROPORTIONATELY MORE THAN
OUTPUT
This category includes two methods (i) the high piece rate and (ii) the high
standard hour system. Under the former, the earnings of the worker are in
proportion to his or her output, as in straight piece work, but the increment in
earnings for each unit of output above the standard is greater.
For example,
For each one percent increase in output above the standard, there may be a 4/3
times increase in earnings as compared to one percent increase in earnings under
the straight piece rate system. The higher rates start applying after the standards
have been reached. Similar logic applies to the high standard hour system.
The main feature of these two schemes is that since is that since direct labour costs
per unit increase for levels of output above the standard, the worker also shares the
earnings the earnings in overhead costs which results from an increased output.
The amount of this share depends on the size of the increments in earnings which
are payable at different levels of output. If these increments were large enough and
increased progressively with output, the workers obviously could obtain all the
savings in overhead costs. This is not, of course, the case where the increment in,
earnings remains the same for each successive increase in output.
4. EARNINGS DIFFERING AT DIFFERENT LEVELS OF OUTPUT
This group includes several schemes. These system can be best explained by
describing how earning vary from minimum to maximum at different levels of
output. Earnings for one part of the range may vary proportionately less than
output and for another part proportionately more, or more usually in the same
proportion as the output.
The Taylors Differential Piece Rate System, the Merrick Differential Piece Rate
System, the Gantt task system and the Emersons Efficiency System fall under the
category where earnings differ at different levels of output.

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a) TAYLORS DIFFERENTIAL PIECE-RATE SYSTEM


Under this the (developed by F.W.Taylor in 1880) there is a low rate for output
below the standard, and a higher piece-rate for output above the standard with a
large bonus of 50% of the time-rate when the standard output is attained.
To illustrate the Taylors piece rate system, we take the following:
Standard output = 100 units
Rate per unit

= 10 paise

Differentials to be applied:
120 % of piece-rate at or above the standard
80 % of piece-rate when below the standard
Case 1
Output = 120units
Earnings =120 X 120/100 X 0.10
= Rs 14.40
Case 2
Output = 90 units
Earnings = 90 X 80/100 X 0.10
= Rs 7.20

b) MERRICK DIFFERENTIAL PIECE-RATE SYSTEM


This is a modification of the Taylor system with three instead of two rates. One
large step is broken into two, so as to encourage new and average workers. Straight

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piece-rates are paid up to 83% of the standard output, at which a bonus of 10 % of
the time rate is payable, with a further 10 % bonus on reaching the standard output.
For outputs above the standard, high piece-rates are paid.
The Merrick system can be illustrated as follows:
Standard output

= 100 units

Piece-rate

=10 paise

Case 1
Output = 80 units
Efficiency =80/100 X 100
=80%
Earnings
As the efficiency is less than 83 %, only the base piece-rate applies.
Case 2
Output = 90 units
Efficiency = 90/100 X 100 = 90 %
Earnings;
As the efficiency is more than 83% but less than 100% of the base piece-rate
applies:
90 X 110/100 X 0.10= Rs 9.90
Case 3
Output =110 units
Efficiency =110/100 X 100
=110%

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As the efficiency exceeds 100%, 120%of the piece-rate applies:


110 X 120/100 X 0.10 = Rs 13.20
c) GANTT TASK SYSTEM
Under this system, the worker is guaranteed his or her time-rate for output below
the standard. On reaching the standard output or task, which is set at a high level,
the worker is entitled to a bonus of 20% of the time wages.
For outputs above the task, high piece rates are paid.
The Gantt task system operates as follows:
Rate per hour = Rs 0.50
High Piece-rate = Rs 0.10
Standard output = 80 units
Time Taken = 8 Hrs

Case 1
Output = 70 units
As the output is less than the standard only time wages are paid to the worker.
Earnings = 8 X 0.50= Rs 4
Case 2
Output = 80 units
Earnings

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As the output is equal to the standard, the worker is entitled to time wage plus 20%
of time wages as bonus.
Time wages = 8 X 0.50
= Rs 4.00
Bonus

=20/100 X 4
= Rs 4.80

Case 3
Output earnings =110 units
As the output is more than the standard, the worker is entitled to a high piece-rate.
110 X 0.10 = Rs 11

d) Emersons plan
Under this, a standard time is set for each job, and the efficiency of each worker is
determined by dividing the time taken by the standard time. Up to 67% of
efficiency, the worker is paid by time-rate. Thereafter, a graduated bonus, which
amounts to a 20% bonus at 100% efficiency, is paid to the worker; thereafter, an
additional bonus of 1% is added for each additional 1% efficiency.
The following example illustrates the method:
Standard output in 10 hrs =100 units.
Rate per hour

= Rs 1

Case 1
Output in 10 hrs = 50 units

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Earnings:
Efficiency = 50%
As the efficiency is below 67% the worker is entitled to time wages only.
10 X 1 = Rs 10
Case 2
Output in 10 hrs = 100 units
Efficiency

= 100%

The worker is entitled to time wages plus 20% of time wages as bonus.
Time wage = 10 X 1
= Rs 10
Bonus

=20/100 X 10
= Rs 2

Earnings = (10+2) = Rs 12

Case 3
Output in 10 hrs =130 units
Efficiency

=130%

At the rate of 20% at 100% efficiency and 1%for everyone percent increase in
efficiency, the worker is eligible for 50%of the time wage as bonus.
Time wages =10 X 12 = Rs10
Bonus

=50/100 X 10 = Rs 5

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Earnings = (10 + 5) = Rs 15

8.8 Summary
Employees are paid incentives in addition to wages and salaries. Incentives are
linked to performance. This leads to better motivation among employees. Reduced
cost, reduced supervision, reduced scrap and the like are the other benefits of
incentives. There are problems, nevertheless. Quality of the products is likely to
decline. Introduction of an incentive scheme is difficult, too. Jealousies creep in
among workers. Problems associated with incentive may be overcome and the
plans may be made to serve their purpose, provided several safeguards are taken.
Consultation and co-operation of workers are only examples of such pre-requisites.
8.9 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1. A
wage should enable the male earner to provide for himself
and his family, not only the bare essentials of food, clothing and shelter, but
also a measure of frugal comfort including education for the children,
protection against ill-health, requirements of essential social needs, and a
measure of insurance against the more important misfortunes including old
age.
a) Minimum
b) Good
c) Living
d) Generous
2. Which, among the following types of wages, is likely to be the highest in
terms of value?
a) Fair Wage
b) Minimum Wage

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c) Living Wage
d) Base Wage
3.

are the rewards an employee receives for his/her employment


and position in the organization. They include scholarship for employees
children, reimbursement of medical expenses incurred by the employee and
family, or paid vacations for the employee with his family.
a) Intrinsic Rewards
b) Non-Financial Rewards
c) Incentives
d) Benefits

4. Among the short term incentive plans, the


tries to eliminate
the limitations of time and piece rate systems while trying to combine their
merits.
a) Rowan Plan
b) Halsey Plan
c) Barth Plan
d) Progressive Bonus
5. Calculate the extra earnings for a worker according to the Rowan Plan, given
that the standard time for a job is 8 hours and the hourly rate is Rs 4. He
completes the job in 5 hours.
a) Rs. 7.50
b) Rs. 7.00
c) Rs. 8.00
d) Rs. 7.75
6. An effective way to motivate employees is to give them non- monetary
incentives for their performance and contribution to the organization.
Among the following
is not a non monetary incentive.
a) A holiday for two at Singapore
b) Awards for exceptional performance

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c) Giving additional responsibility to the good performer
d) Increasing the employees annual bonus
7. Living wages should enable a male earner to provide for himself and his
family, the bare necessities for survival , a measure for of fugal comfort and
also a measure of insurance against misfortunes like old age. The first
central pay commission introduced the principle of living wage for
.
a) Government Employees
b) Private sector employees
c) Agricultural Workers
d) Journalists
8. Helix creative works gives more importance to the quality of work done by
its employees rather than the quantity. The nature of work in the company is
such that it cannot be easily standardized. A basic wage plan that would be
appropriate for the company is a/an
.
a) Time Wage Plan
b) Output based incentive plan
c) Production based pay plan
d) Piece wage plan
9. The Government of India conducts different surveys at various times in
order to determine the way the wages are to be fixed at different levels.
Which of the following is one such survey conducted by the government?
a) Working class family income and expenditure survey
b) Top executive Compensation survey
c) Annual Survey of the highest paid executives in India
d) B-schools salary survey
10. The
of incentive payment is generally used for groups.
The emphasis here is on team work and coordination.
a) Point rate system

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b) Progressive bonus
c) Task bonus system
d) Barth System

CHAPTER -9 EMPLOYEE WELFARE , FRINGE BENEFITS AND SAFETY &


ACCIDENT PREVENTION

After reading this chapter, you will be able to understand:

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1. Meaning, objectives and types of Employee Welfare
2. Employee Welfare Measures
3. Fringe Benefits Need and Type
4. Safety Measures and Accident Prevention

9.1 INTRODUCTION TO EMPLOYEE WELFARE


Employee welfare measures are one of the key inputs to bring about the desired
level of employee satisfaction, motivation and productivity in the organization.
The basic objective of welfare measures is to ensure the physical and mental wellbeing of the employee. An organization must view employee welfare measures as
an investment rather than an expense. This is because the profitability of an
organization is directly linked to the productivity of its workforce.
Definition
Employee labor welfare means anything done for the comfort and improvement,
intellectual or social, of the employees over and above the wages paid which is not
a necessity of the industry.
-Arthur James Todd
Labor welfare is understood to include such services, facilities, and amenities as
may be established in or inside the vicinity of undertakings to enable the persons
employed therein to perform their work in healthy, congenial surroundings, and to
provide them with amenities conducive to good health and high morale.
-ILO at ARC
9.1.1 Features of Employee Welfare
Employee welfare is provided voluntarily by the organization to express its
interest in the general well-being of the employees.
It is usually provided over and above the statutory and contractual
obligations of the organization towards workforce compensation.

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Since employee welfare measures are not linked to the performance of the
employees, they have a direct and proportionate impact on the profits of the
organization.
Employee welfare measures look to enhance the mental, physical,
intellectual and moral well-being of the employees.
Employee welfare is an ongoing process and not a one-time activity of the
organization.
Employees, employers, trade unions and the government are the
stakeholders of employee welfare measures.
9.1.2 Objectives of Employee Welfare
The primary purpose of employee welfare measures is to improve the employeremployee relationship within an organization. However, an organization can also
have multiple objectives while developing employee welfare measures. These
objectives could be:
Employee welfare aims at creating a motivational environment, which
facilitates better cooperation from the employee for the plans and proposals
of the organization.
It focuses on retaining the talented employees within the organization for a
long time.
Organizations look to obtain high employee involvement, commitment and
satisfaction through welfare measures.
The long-term aim of welfare measures is to achieve a desired level of
productivity, performance and efficiency among the employees.
Organizations attempt to create goodwill for themselves in the labor market
through welfare measures, which would, in turn, help them attract the best
talents with ease.
Employee welfare strives to create a strong bond between the organization
and the employees.

9.2 TYPES OF WELFARE MEASURES


The welfare measures undertaken to improve the well-being of the employees can
be classified broadly into two categories. These are:
STATUTORY WELFARE FACILITIES

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In this welfare facilities are undertaken as per the requirements of the laws.
These are facilities offered by the organizations in the compliance with the
central and state government regulations. The central government has
enacted several acts to protect the interests of the employees.
Acts under Statutory Welfare Facilities
Factories Act, 1948: It is a central act enforced by the state
governments and is applicable to all the factories engaged in
manufacturing activities. Under this act there are various sections
which governs employee welfare measures like:
Health and safety of the employee
Clean and tidy working place should be provided to the
employees.
Canteen facilities must be available in every factory.
Contract Labor ( Regulation and Abolition) Act, 1970: this
deals with provisions like:
In factories where work-related night-staying by contract
employees is necessary, restroom facilities must be
provided.
The contractor must provide a sufficient number of
drinking water, toilet and washing facilities. etc
NON- STATUTORY WELFARE FACILITIES
Non-statutory facilities may include the facilities offered by the employers
voluntarily and also those created by the employees themselves through their
unions and other agencies. The objective behind this is improving the
general well-being of the employees and to improve their cooperation for the
present and future activities of the organization.
Facilities under Non- Statutory Welfare Facilities
Transport Facilities: These are provided by an organization to carry
its employees to and from their homes. This facilities help the
employees save time and energy and avoid inconvenience. With the
help of this facilities the problem of distance are easily overcome

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Housing Facilities: The purpose of offering housing facilities is to
improve the standard of living of the employees. It enables the
employers to get the services of their employees quickly and reliably.
Education Facilities: Many organizations encourage their employees
to pursue their studies in different forms. This may be in the form of
skill development through training programmes or sponsoring formal
education in external educational institutes.
Canteen Facilities: many organizations provide subsidized food to
their employees through canteen facilities. These canteens may be
located inside or outside the factory premises.
Likewise there are many facilities like Recreation facilities, Insurance
facilities, E-Commuting and Flexi-Time facilities, Intra-Mural
Facilities, Extra-Mural Facilities.

9.3 EMPLOYEE WELFARE RESPONSIBILITY


In India, the responsibility for employee welfare facilities rests not only with
the employers but also with the central and state governments, trade unions
and other voluntary agencies.
Employers: Employers have the first and direct responsibility to
provide welfare facilities to the employees. Their active involvement
in the employee welfare facilities is crucial to the success of the
welfare programmes. They usually provide these facilities to attract
and retain the talented employees. In fact, the welfare of the
employees is one of the comprehensive responsibilities of the
employers.
Central Government: it is empowered to make rules to protect the
health, safety and welfare of the employees working in factory
premises. It enacts and amends laws from time to time to ensure that
the employees are provided with the basic welfare facilities in their
work spot.

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State Government: These are normally the enforcing authority for
the laws enacted by the central government from time to time. They
can also create their own laws to regulate the conditions of
employment and protect the welfare of the employees working in
various employments.
Trade Unions: In recent times, trade unions have taken an active role
in offering welfare facilities to the employee in order to improve their
well-being.
Merits of Welfare Measures

High Employee Retention


Improve Productivity and Efficiency
Better Focus on Job
Preserve Physical and Mental Health
Improve the Standard of living
Cordiality in Labor-Management Relations.

Limitations of Welfare Measures

High Labor cost


Absence of Measurement Tool
Lack of Justification for Expenditure
Risk of Executing Statutory Welfare under Duress.

9.4 FRINGE BENEFITS


The term fringe benefits refer to the extra benefits provided to employees in
addition to the normal compensation paid in the form of wage and salary. These
benefits are referred to as fringe benefits because many years ago, they were
small, relatively inconspicuous, or fringe components of compensation. Buy along
with times, they have also grown. Now days these benefits have became important
part of a comprehensive compensation package offered by employers to
employees.

9.4.1 Features of Fringe Benefits

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They are supplementary forms of compensation.
They are paid to all employees based on their membership in the
organization.
They are indirect compensation because they are usually extended as a
condition of employment and are not directly related to performance.
They help raise the living conditions of employees.
They may be statutory or voluntary. Provident Fund is a statutory benefits
where as transport is a voluntary benefit.

9.4.2 Need for Fringe Benefits


Employee Demands: Employees demand more and varied types of fringe
benefits rather than pay hike because of reduction in tax burden on the part
of employees and in view of the galloping price index and cost of living.
Trade Union Demands: Trade unions compete with each other for getting
more and new variety of fringe benefits to their members. If one union
succeeds in getting one benefit, the other union persuades management to
provide a new one.
Employers Preference: Employers also prefer fringe benefits to pay-hike,
as fringe benefits motivate the employees to give their best to the
organization. It improves morale and works as an effective advertisement.
As a Social Security: It is a security that society furnishes through
appropriate organization against certain risks like accidents and occupational
diseases to which its members are exposed. Benefits like safety measure,
medical facilities, are included in it with a view to provide security to his
employees against various contingencies.
To Improve Human Relations: Human Relations are maintained when the
employees are satisfied economically, socially, and psychologically. Fringe
benefits satisfy the workers economic, social and psychological needs.

9.5 OBJECTIVE OF FRINGE BENEFITS


Originally fringe benefits systems purported to develop a climate for healthy
employer employee relationships minimize excessive labour turnover costs and
provide a feeling of individual security against hazards and problems of life with a
view to eventually enhancing employee loyalty to the company and improving
productivity. Some of the objectives are as mentioned below:

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To create and improve sound industrial relations.
To motivate the employees by identifying and satisfying their unsatisfied
needs.
To provide security to the employees against social risks like old age
benefits and maternity benefits.
To protect the health of the employees and to provide safety to the
employees against accidents.
To promote employees welfare.
To create a sense of belongingness among employees and to retain them.
Hence, fringe benefits are called golden handcuffs.
To meet the requirements of various legislations relating to fringe benefits.

9.5.1 TYPES OF FRINGE BENEFITS


There are mainly five categories that are being offered in Indian Organization.
1. Payment for time not worked: This category includes; hours of work, paid
holidays, holiday pay, and paid vacations.
2. Employee Security: Physical and job security to the employee should also
be provided with a view to ensure security to the employee and his family
members. When the employees services get confirmed, his job becomes
secure. Further, a minimum and continuous wage or salary gives a sense of
security to the life.
3. Safety and Health: Employees safety and health should be taken care of in
order to protect the employee against accidents, unhealthy working
conditions and to protect the workers productive capacity.
4. Workmens Compensation: This is intended to meet the contingency of
invalidity and death of a worker due to an employment injury or an
occupational disease specified under the Workmens Compensation Act,
1923 at the sole responsibility of the employer.
5. Health Benefits: Today various medical services like hospital, clinical and
dispensary facilities are provided by organizations not only to employees but
also to their family members. Benefits under this Act include; sickness

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benefit, maternity benefit, disablement benefit, dependants benefit, medical
benefit, etc.
6. Voluntary Arrangements: However, most of the large organizations
provide health services over and above the legal requirements to their
employees free of cost by setting up hospitals, clinics, dispensaries and
homeopathic dispensaries.
7. Welfare and Recreational Facilities: This includes benefits like canteen,
consumer societies, credit societies, housing, legal aid, employee counseling,
welfare organizations, holiday homes, educational facilities, transportation,
parties and picnics and miscellaneous facilities.
8. Old age and retirements benefits: Industrial life generally breaks join
family system. The saving capacity of the employee is very low due to lower
wages, high living cost and increasing aspirations of the employee and the
family members. These benefits include (a) provident fund, (b) pension, (c)
deposit linked insurance, (d) gratuity and (e) medical benefit.

9.6 THE FUTURE OF FRINGE BENEFITS


Current benefit packages have evolved over the years from the plans that addressed
the basic needs of the workers and provided minimum benefited to the individuals.
Today, we see a much mire complex pattern of plans with enhanced flexibility,
tailored to meet the needs of individuals and costing public sector and private
sector organizations dearly in terms of rupees. Employees in general are more
educated, more sophisticated and more demanding of remuneration including
fringe benefits. Employers are, therefore, required to devise newer benefits to
attract and retain competent personnel, keeping a watch on the benefits costs.
9.7 SAFETY MEASURES AND HEALTHY ENVIRONMENT

9.7.1 SAFETY
Safety refers to the absence of accidents. Stated differently, safety refers to the
protection of workers from the danger of accidents. Safety, in simple terms, means

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freedom from the occurrence or risk of injury or loss. Industrial safety or
Employee safety refers to the protection of workers from the danger of industrial
accidents.
9.7.2 ACCIDENTS
An accident is an unplanned and uncontrolled event in which an action or reaction
of an object, a substance, a person, or a radiation results in personal injuries.
TYPES OF ACCIDENTS:
There are various types of accidents which can be classified as major and minor
categories.
Accidents
Internal

External
Minor

Major
Fatal

Disability

Temporary
Partial
Total

Permanent
Partial
Total

9.7.3 NEED FOR SAFETY:


An accident-free plant enjoys certain benefits these can be categorized as under:
Cost Saving: Two types of cost are incurred by the management when an
accident occurs. There are the direct costs, in the form of compensation
payable to the dependents of the victim if the accident is fatal, and medical
expenses incurred in treating the patient if the accident is non-fatal. More
serious than the direct costs are the indirect or hidden costs which the
management cannot avoid. The indirect costs are three to four times higher

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than the direct costs, these includes, loss on account of down-time of
operators, slowed-up production rate of other workers, damages to
equipment etc.
Increased Productivity: Safety plants are efficient plants. To a large extent,
safety promotes productivity. Employees in safe plants can devote more time
to improving the quality and the quantity of their output and spend less time
worrying about their safety and well being.
Moral: Safety is important on humane grounds too. Managers must
undertake accident prevention measures to minimize the pain and suffering
the injured worker and his/her family is often exposed to as a result of the
accident.
Legal: There are legal reasons too for undertaking safety measures. There
are laws covering occupational health and safety, and penalties for noncompliance have become quite severe. The responsibility extends to the
safety and health of the surrounding community, too.

9.7.4 SAFETY PROGRAMME:


Safety programme deals with the prevention of accidents and with minimizing the
resulting loss and damage to person and property. Five basic principles must
govern the safety programme of an organization. The five principles are:
1. Industrial accidents result from a multiplicity of factors. But these have to be
traced to their root causes, which are usually faults in the management
system arising from poor leadership from the top, inadequate supervision,
insufficient attention to the design of safety into the system, an unsystematic
approach to the identification, analysis and elimination of hazards, and poor
training facilities.
2. The most important function of safety programmes is to identify potential
hazards, provide effective safety facilities and equipment and to make
prompt remedial action. This is possible only if there are:
Comprehensive and effective systems for reporting all accidents
causing damage or injury;
Adequate accidents records and statistics;

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Systematic procedures for carrying out safety checks, inspection and
investigations;
Methods of ensuring that safety equipment is maintained and used;
and
Proper means available for persuading managers, supervisors and
workers to pay more attention to safety matters.
3. The safety policies of the organization should be determined by the top
management and it must be continuously involved in monitoring safety
performance and in ensuring that corrective action is taken when necessary.
4. The management and the supervision must be made fully accountable for
safety performance in working areas they control.
5. All employees should be given thorough training in safe methods of work
and they should receive continuing education and guidance on eliminating
safety hazards and preventions of accidents.

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Strategic
choice

Development
of Safety
Policy

Evaluation of
Effectiveness

Organization
for Safety

Implementation of the
programme

Analysis of
causes for
accidents

Fig: SAFETY PROCESS


9.7.5 CAUSES FOR ACCIDENTS
The causes for accidents can be classified into two groups;
Human Failure: This leads to an accident when the employee ignores
safety precautions and commits an unsafe act. Majority of accidents occur
because of human failure.
Machine Failure: This refers to faulty mechanical or physical conditions
leading to accidents.

9.7.6 ACCIDENT RATES

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Accidents are described in terms of frequency, severity and incidence.
Organizations generally maintain frequency, severity and incidence records.
Mathematical formulae are used to calculate accident rates. Thus, for calculating
the incidence rate the formula is:

Incidence rate = Number of recordable injuries1million


Number of employee exposure hours

9.8 REMEDIES
The methods and devices for the prevention of accidents are now available in
plenty. There are few principles or measures that are applicable to all industrial
establishments, irrespective of their size and age. These principles are:
The methods most valued in accident prevention are analogous to the
methods required for the control of quality, cost and quantity of production.
Safety incentive programs should focus on processes rather than outcomes.
The supervisor or the foreman is the key person in industrial accident
prevention. His/her application of the art of supervision to the control of
worker performance is a factor which exerts the greatest influence in
successful accident prevention.
Four basic methods are available for the prevention of accidents
engineering revision, persuasion and appeal, personal adjustment and
discipline.

9.9 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter

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1. With respect to the accidents, the
states that it is an
occurrence in an industrial establishment causing bodily injury to a person,
which makes him unfit to resume his duties in next 48 hours.
a) Explosive Act, 1884
b) Factories Act, 1948
c) Mines Act, 1952
d) Dangerous Machines (Regulation) Act, 1983
2. An unsafe working atmosphere in an organization results in accidents,
causing harm to the health and well being of the employees. Which of the
following is not a cause behind such accidents?
a) Technical Errors
b) Occupational hazards and Risks
c) Human errors
d) Absence of Proper Legislation
3. Some employees in an organization are highly susceptible to human errors
and tend to make a lot of mistakes. These mistakes at times may result in
injuries and can sometimes prove to be fatal. What are these employees
known as?
a) Accident prone employees
b) Careless employees
c) Casual employees
d) Sloppy Employees
4. What is the full form of ILO?
a) International Labor Organization
b) International Legal Organization
c) Indian Labor Organization
d) Indian Legal Organization
5.

is concerned with providing immediate job knowledge, skills


and methods of work, besides instructing the employee about the course of
his/her work in a particular department or a job and training him/her on how
to prevent accidents and handle an accident situation, if it unfortunately
occurs
a) Safety Engineering
b) Safety Training

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c) Environment Management
d) Root cause analysis

CHAPTER-10 ADDRESSING EMPLOYEE GRIEVANCE AND


DISCIPLINE
After reading this chapter, you will be able to understand:

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1. Meaning, characteristics and forms of Grievances
2. Effects of Grievances
3. Techniques for Grievance Identification and Grievance Procedure
4. Discipline
10.1 INTRODUCTION

A grievance is a type of discontent which must always be expressed. It can be


valid or ridiculous but must grow out of something connected with companys
operations or policy. It must involve an interpretation or application of the
provisions of the labour contract.
Edwin B. Flippo
The complaints affecting one or more individual workers in respect of wages
payments, overtime, leave, transfer, promotions, seniority, work assignment and
discharge constitute grievances- The National Commission on Labour.
10.1.1 CHARACTERISTICS OF GRIEVANCES
On the basis of these definitions, we can make out the following characteristics of
grievances:
Grievances arise out of the perceived injustice or fair treatment felt by the
aggrieved employee.
It is the state or feeling of discontent or dissatisfaction about any aspect of
an organization.
The cause of a grievance may be real or imaginary, serious or
inconsequential, genuine or fake, legitimate or irrational.
A grievance may be voiced or unvoiced. But it should be expressed in some
form. It is normally expressed in a written form.

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It must arise only out of the job of the employee in the company and not out
of family or personal problems.
10.2 FORMS OF GRIEVANCES
A grievance may take any of the following forms: a) factual, b) imaginary, c)
disguised.
a) Factual: A factual grievance arises when legitimate needs of employees
remain unfulfilled, e.g. wage hike has been agreed but not implemented
citing various reasons.
b) Imaginary: when an employees dissatisfaction is not because of any valid
reason but because of a wrong perception, wrong attitude or wrong
information he has. Such a situation may create an imaginary grievance.
Though management is not at fault in such instances, still it has to clear the
fog immediately.
c) Disguised: An employee may have dissatisfaction for reasons that are
unknown to him. If he/she is under pressure from family, friends, relatives,
neighbors, he/she may reach the work spot with a heavy heart. If a new
recruit gets a new table and almirah, this may become an eyesore to other
employees who have not been treated likewise previously.
Grievances generally arise from the following sources:
Contract terms, which are too general, contradictory, or ambiguous.
Working conditions and pay arrangements, which are in some manner
unsatisfactory to the employees.
Supervisors who fail to properly abide by and administer the contract.
Employees who fail to live up to the conditions set by the management or
who neglect adhering to the terms of the contract.
10.3 EFFECTS OF GRIEVANCES
Grievances, if they are not identified and redressed, may adversely affect, workers,
managers, and the organization as a whole. The effects are:
i. On production includes:
Low quality of production.
Low quality of production and productivity.
Increase in the wastage of material, spoilage/breakage of machinery.

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Increase in the cost of production per unit.
ii.

On the employees:
Increase the rate of absenteeism and turnover.
Reduces the level of commitment, sincerity and punctuality.
Increases the incidents of accidents.
Reduces the level of employee morale.

iii.

On the managers:
Strains the superior-subordinate relations.
Increase the degree of supervision, control and follow up.
Increase in indiscipline cases.
Increase in unrest and thereby machinery to maintain industrial peace.

10.4 NEED FOR A GRIEVANCE PROCEDURE


Thus, grievances affect not only the employees and managers but also the
organization as a whole. In view of these adverse effects, the management has to
identify and redress the grievances in a prompt manner. If the individual
grievances are left ignored and unattended, there is a danger that these grievances
may result in collective disputes. They affect the employee morale adversely.
Hence, it is essential to have a proper grievance handling procedure for the smooth
functioning of the organization.
10.4.1 ADVANTAGES OF HAVING A GRIEVANCE HANDLING
PROCEDURE
THE FOLLowing are some of the distinct advantages of having a grievances
handling procedure:
a) The management can know the employees feelings and opinions about the
companys policies and practices. It can feel the pulse of the employees.
b) With the existence of a grievance handling procedure, the employee gets a
chance to ventilate his feelings. He can let off steam through an official
channel. Certain problems of workers cannot be solved by first line
supervisors, for these supervisors lack the expertise that the top management
has, by virtue of their professional knowledge and experience.

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c) It keeps a check on the supervisors attitude and behaviour towards their
subordinates. They are compelled to listen to subordinates patiently and
sympathetically.
d) The morale of the employees will be high with the existence of proper
grievance handling procedure. Employee can get their grievance redressed in
a just manner.
10.5 TECHNIQUES OF GRIEVANCE IDENTIFICATION
A good organization must have the ability to detect, analyze and correct the causes
of potential employee dissatisfaction before these become grievances. The calls for
a proactive rather than a reactive approach of waiting for the grievance to reach it
formally. For this, the organization must perfect a system to identify the simmering
trouble in advance and solve it before it gets out of control. It may adopt any one
of the methods to identify employee dissatisfaction.
a) EXIT INTERVIEW
When employee quit an organization for any reason, an exit interview mat
be conducted to obtain information about job-related matters. If the manager
tries sincerely through an exit interview, he might be able to find out the real
reason why X is leaving the organization. To elicit valuable information,
the manager must encourage the employees to give the correct picture so as
to rectify the mistakes promptly. If the employees is not providing fearless
answers, he may be given a questionnaire to fill up and post the same after
getting all his dues cleared from the organization where he is currently
employed.
b) GRIPE- BOX SYSTEM
Under this system employees can drop their written complaints in the boxes
kept by the organization. The purpose of this system is to provide an outlet
to the employees to secretly express their complaints without the fear of
being victimized. Gripe box are usually kept at prominent places in the
office for receiving anonymous complaints pertaining to any aspect of work.
This method is more effective than suggestion box, if the complaints are
serious and sensitive in nature.

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c) OPINION SURVEY
While a gripe box is an impersonal means of receiving complaints , an
opinion survey is direct and personal means of gathering information from
the employees about their existing grievance. Group meetings, periodical
interviews, snap meetings and collective bargaining sessions are the various
forums available for the employees to get to know the employees state of
mind.
d) OPEN- DOOR POLICY
This is the progressive style of gathering complaints from the employees. In
this system, the workers are encouraged to call on the relevant manager at
any time, to freely share their opinions, feelings and complaints with him.
This method will be effective only when there is mutual trust in the
relationship among the managers, the supervisors and the employees.
e) OBSERVATION
A manager/ supervisor can usually track the behaviors of people working
under him. If a particular employee is not getting along with the people,
spoiling material due to carelessness or recklessness, showing indifferences
to commands, reporting late for work or is remaining absent the signal are
fairly obvious. Since the supervisor is close to the scene of action, he can
always find out such unusual behaviors and report promptly.
10.6 THE GRIEVANCE PROCEDURE
The best way to handle grievance is to prevent it from arising in the first instance
by creating a positive work environment; the next way is to have an effective
mechanism to handle the reported grievance in a mutually satisfactory and
expeditious manner.
Each organization can develop and practice its own procedure to redress the
grievance of the employees, for example, large organization may have a well
established system for a grievance procedure while small ones ,ay follow an ad
hoc approach to grievance handling. Nevertheless, grievance procedures are the

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keystones of industrial relations because of their ability to resolve disputed issues
while work continues without litigation, strikes and other radical disputes.
The three fundamental principles governing any grievance settlement procedure
are:
1. Settlement at the lowest level
2. Settlement as expeditiously as possible, and
3. Settlement to the satisfaction of the aggrieved.
There are five stages but it is not necessary that each grievance must pass through
all these stages. We shall now discuss these stages ion detail.
STAGE 1
In the first stage, the aggrieved employee, also called, a grievant, makes a
written/oral submission to his immediate supervisor about his grievance. Union
representative may or may not accompany the aggrieved employees to the
supervisor. After ascertaining the facts of the complaint , the supervisor takes the
necessary action to settle the issue and informs the employee of his decision. When
the employee is satisfied, the matter ends there; otherwise the aggrieved employee
proceeds with the next course of action.
STAGE 2
Now, the aggrieved employee goes to the higher authorities like the
sectional/departmental head or any other competent person for the settlement of his
grievance. At this point, the employee is normally accompanied by the middlelevel union leaders. After analyzing the grievance in detail and seeking relevant
explanations, the concerned supervisor arrives at a decision and communicates it to
the aggrieved employee. If the employer is not satisfied yet, he would request his
union to process the grievance and adopt it as a union grievance.
STAGE 3
At this stage, the employee grievance becomes the union grievance and it is
referred to the grievance committee consisting of members representing both the
management and the labour union. The committee would discuss the issue in detail

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and reach a decision for settling the grievance. It is also possible to that the
committee may refer the matter to higher level, if it could resolve it.
STAGE 4
If the grievance still defines solution, the stage is set for referring the issue to the
arbitrator for third-party meditation. Usually, the arbitrator is chosen jointly by the
management and the union. Now, the concerned supervisors in consultation with
the higher level union leaders write the issue to be arbitrator.
STAGE 5
Grievance arbitrator is the final stage of the grievance procedure. The arbitration
hearings are quasi-judicial proceedings. The arbitrators decision is final,
compulsory and binding on both the management and the union.
However, in the absence of any formal grievance procedure, the non-unionized
and/ or smaller organizations normally adopt a simple, two-stage procedure for
settling the grievances of the employees. These stages are:
Stage I: The aggrieved employee makes a written or oral representation to the
frontline supervisor, seeking settlement of his grievance, and if the redressal efforts
fail, the issue goes to the next stage.
Stage II: In this stage, the labour officer is involved in the process. He acts as a
mediator between the aggrieved employee and the supervisor in arriving at a
settlement. Higher levels of management may get involved in the grievance
redressal procedure, depending on the nature and magnitude of the grievance and
other situational necessities.
Generally, the grievance redressal method adopted in smaller organizations is to
allow the aggrieved employees to discuss their grievances openly with the
management and get their grievances redressed, if found genuine

10.6.1 ESSENTIAL PRE-REQUISITES OF GRIEVANCE PROCEDURES

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Every organization must have a systematic grievance procedure in order to redress
the grievance effectively. Unattended grievance may culminate in the form of
violent conflicts later on. The grievance procedure, to be sound and effective
should possess certain pre-requisites.
a. Conformity with statutory provisions: Due consideration must be given to
the prevailing legislation while designing the grievance handling procedure.
b. Unambiguity: every aspect of the grievance handling procedure must be
clear and unambiguous. All employees should know whom to approach first
when they have a grievance, whether the compliant should be written or oral,
the maximum in which the redressal is assured, etc. The redressing officer
must also know the limits with which he can take the required action.
c. Simplicity: The grievance handling procedure must be simple and short. If
the process is complicated then it may discourage employees and they may
fail to make use of it in a proper manner.
d. Promptness: The grievance of the employee should be promptly handled
and necessary action must be taken immediately. This is good for both the
employees and the management, because if the wrong doer is punished late,
it may effect the morale of other employees as well.
e. Training: The supervisors and the union representatives should be properly
trained in all aspect of grievance handling beforehand or else it will
complicate the problem.
f. Follow- up: The personnel department should keep track of effectiveness
and the functioning of grievance handling procedure and make necessary
changes to improve it from time to time.
10.6.2 STEPS IN THE GRIEVANCE PROCEDURE
a. Identify Grievance: employee dissatisfaction and grievance should be
identified by the management if they are not expressed. If they are
ventilated, management has to promptly acknowledge them.
b. Define Correctly: The management has to define the problems properly and
accurately after it has been identified/ acknowledged.
c. Collect data: complete information must be collected form all the parties
relating to the grievance. Information should be classified as facts, data,
opinions, etc.
d. Analyze and solve: The information should be anlaysed, alternative solution
to the problem should be developed and the best solution must be selected.

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e. Prompt Redressal: the grievance must be redressed by implementing the
solution.
f. Implement and Follow-up: Implementation of the solution must be
followed up at every stage in order to ensure effective and speedy
implementation.

10.6.3 ESSENTIALS OF A GOOD GRIEVANCE PROCEDURE


A good grievance procedure must fulfill the following conditions:
Legally Sustainable
It should be ensured by the organization that its grievance procedure is in
conformity with the existing law of nation. The procedure cannot violate any
of the rights of the employees guaranteed by law. In case of disagreement
between the grievance procedure and the legal provision on may matter, the
latter is supreme and binding.
Mutually Acceptable
In order to be effective, the grievance procedure must enjoy the confidence
of all the relevant parties, namely, the management ant the employees ant
their unions. The grievance procedure should not be viewed or used as a
battleground by a party to defeat the other.
Easily Understandable
The grievance procedure must be reasonably simple and easily
understandable. It should be known to all the employees of the organization
of the organization. If all the employees has a grievance on hand, he must
know what is to be done and who is to be contacted.
Highly Flexible
The grievance procedure must be highly flexible enough to respond to the
reported grievance quickly. It should not get bogged down in any procedural
delay. As far as possible, the number of stages ib grievance procedure
should be kept to the minimum. There should also be a time limit at each

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stage to redress the grievance. In fact, promptness in grievance settlement
indicates the efficiency of the system. To the extent possible, the grievance
should be settled at the earliest stage to redress the grievance.
Sufficiently Knowledgeable
The managers, supervisors, union leaders and others dealing with employee
grievance must be well-trained in the grievance handling procedure. They
should have sufficient knowledge and a good exposure to the techniques of
grievance redressal.
10.6.4 BENEFITS OF THE GRIEVANCE REDRESSAL PROCEDURE
A sound grievance procedure offers the following benefits to an organization:
Enables the management to know the pulse of its employees by learning
about their feelings and opinions about the policies and practices of the
organization.
Provides a channel to the aggrieved employees to express their grievance
about various aspects of their jobs formally.
Provides clues about the behavior and attitude of the managers and
supervisors towards their subordinates.
Gives an assurance to the employees about the existence of a mechanism for
the prompt redressal of their grievance.
Keeps up the morale of the employees by ensuring that their grievance will
be redressed in a fair and transparent manner.

10.7 ADMINISTRATION OF DISCIPLINE


Discipline is a force that prompts an individuals or a group to observe the rules,
regulations and procedures, which are deemed to be necessary to the attainment of
an objective.
William R. Spriegel and Edward
Schultz
Discipline is the state of employee self-control and orderly conduct that indicates
the extent of genuine teamwork within an organization.

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R. Wayne Mondy
Disciplinary action refers to the punishing the employees who fail to meet those
standards of behaviour. Many organizations maintain a disciplinary policy or
system to regulate the behaviour of the employees and deal with the acts of
discipline. Some organization s even conduct discipline management training for
their supervisors and managers to help them understand the tactics of managing
discipline among the employees effectively.
10.7.1 CHARACTERISTICS OF EMPLOYEE DISCIPLINE
Employee discipline as a concept must have a few necessary characteristics. The
necessary characteristics of discipline derived from these definitions are:
Standard Behaviour
Discipline involves setting a standard behaviour for the employees to follow
in the organization. An organization must express the standard behaviour in
the form of a code of conduct for its employees.
Driving Force
Discipline is a force that derives the employees of an organization to observe
the code of conduct in the organization.
Positive or negative in nature
The force may be positive or negative. A positive force rewards the
employees who observe the rules of the organization while a negative force
punishes those who violate such rules and regulations.
Voluntary or Imposed
Discipline may be voluntary or imposed. In the case of voluntary discipline,
an employee develops a discipline on his own, which is called selfdiscipline. In the case of the imposed discipline, the employees observe rules
and regulations out of external force or threat.
A right of the Management
Imposing discipline in the form of rules and regulations is an inalienable
right of the management. The employees or unions can challenge this right
only when these rules are not fair, just, reasonable or consistent.
An Element of Control Process

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Discipline is an element of management control process. As such, it is an
aspect of standard behaviour in the control process. An evaluation of the
actual behaviour of employees would show the observance or inobservance
of standard behaviour, i.e. the discipline of the employee.
10.8 OBJECTIVES OF DISCIPLINE
Traditionally, the purpose of discipline is to punish the employees for the violation
of rules and regulations. In those days, to impose discipline, organization depended
predominantly on the threat of punitive action. In modern times, discipline aims at
encouraging employees to observe self-discipline in behaviour and performance so
that both the employees and the employers benefit out of it. At present,
organizations accord a high priority to developing self-discipline among the
employees through necessary training and counseling. We shall now see the
objectives of the contemporary discipline system.

Goal Accomplishment
Achieving the corporate objectives is an important aim of employee
discipline. In fact, al efforts directed towards the maintenance of discipline
must end up with the accomplishment of organizational goals; otherwise the
imposition of discipline will be of no use.
Developing a Responsive Workplace
Organizations utilize discipline to make the employees conform to the
standards they have set. This obviously facilitates the employees in avoiding
reckless and insubordinate behaviour and keeps them responsive and
disciplined.
Changing Employee Behaviour
Organizations aim at bringing in the desired behaviour among the employees
through discipline. The presence of the discipline policy can help the
employees check their behaviour against the standards and cause changes in
their behaviour, if necessary. For instance, discipline may caution the low
performers of the organization and can compel them to alter their behaviour
to meet the performance standards.

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Improving Morale and Motivation
Organization attempt to enhance employee motivation and morale through a
fair discipline system. When the employees perceive the discipline policy of
their organization to be fair and legitimate, they may be willing to work hard
to avoid any disciplinary action against them. Similarly, when they see an
act of indiscipline getting a fair and quick punishment, they feel proud of
their disciplined behaviour. This feeling provides a sense of satisfaction,
motivation and commitment to the employees. Eventually, it improves their
morale.
Exercising Consistency in Action
Discipline aims at supplementing the efforts of managers and supervisors to
exercise effective control over subordinates. Since the authority to take
disciplinary action is normally vested with the supervisors, it evokes fear in
the minds of the employees and forces them to comply with the instructions
of their supervisors.
Ensuring Consistency in Action
Organizations strive to ensure consistency in the disciplinary actions of
different managers while dealing with acts of indiscipline of similar nature
and intensity. They also aim at ensuring consistency in the disciplinary
actions of the supervisors in different periods of time.
Promoting industrial Relations
One of the objectives of discipline is to foster good industrial relations in the
organization. Discipline issues often cause lot of strain in the unionmanagement relations. However, through objective and transparent
disciplinary process, organization can convince the unions about the fairness
of the process and get their continued cooperation in the future.
Substituting Personal Supervision
Another objective of discipline is to reduce the need for close supervision in
the organizations. Discipline system and policies develop self-discipline
among the employees, which, in turn, eliminate the necessity of closely
supervising the performance and behaviour of the employees. Thus, through
discipline, organizations can aim at reducing the cost of supervision without
compromising on its quality.

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10.9 TYPES OF DISCIPLINE
The general purpose of discipline is to bring about positive changes in an
employees performance, attendance or behaviour. There are many disciplinary
systems available for an organization to fulfill the objectives of discipline goals.
Depending upon its management philosophy, HR policies and other characteristics,
an organization may settle for a particular type of discipline.
10.9.1 POSITIVE DISCIPLINE
Positive discipline, which is called self-discipline, as well as preventive discipline,
aims at seeking the willing cooperation of employees in observing the discipline
code of the organization. The two inherent aspects of positive discipline are:
i.
ii.

Personal responsibility of employees for maintaining discipline; and


Independent decision making by them to eliminate their unsuitable and
undesirable behaviour.
In this method, the responsibility of the organization is to create a positive
environment that gently prompts the employees to comply with the organizational
code of conduct. Besides, the management must provide unambiguous instructions
to the employees and relevant and timely feedback about the performance and its
behaviour expectations. In the event of indiscipline, remind rather than reprimand
is the approach in positive discipline. The employees are reminded about the rules,
and the desired changes in behaviour occurs. Thus, when performance or
behaviour indiscipline is reported against employees, the first requirement for
them, in this method, is to rededicate and recommit themselves to the job and the
organization. The prerequisite for implementing positive discipline are:
An excellent communication network
A well- defined line of authority
Appropriate working conditions
Sufficient discipline training
Although an organization needs to devote considerable time and resources to
developing positive discipline among its employees, its efforts would certainly pay
it rich dividends in the long term. The benefits of positive discipline are cordiality

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in labour- management relations, improved employee motivation and morale,
minimum use of formal authority, effective goal accomplishment and positive
image for the organization in the labour market.
10.9.2 NEGATIVE DISCIPLINE
It is a traditional form of discipline followed by an orthodox management. In this
method, fear is the key to the maintenance of discipline. For instance, the fear of
punishment for the acts of indiscipline will be the driving force for the employees
to avoiding misconduct. It also forces them to obey the rules and regulations of the
organization.
This form of discipline is also known by names like punitive discipline and
enforced discipline. It never seeks the willing cooperation of the employees in
ensuring discipline within the organization. Besides, employees working under a
negative environment view discipline as a restraint on their freedom of behaviour.
The prime aim of the employees in this method is escaping punishment and not
cooperating with the management. For instance, when the management threatens
the employees with dire consequences if they do not report for duty at 10 a.m. and
remain till 5 p.m., their response would be to ensure that they remain in the office
during the stipulated office hours but not reach earlier or leave later than that time.
The intention here is evading threat of punishment and not extending cooperation
or performing to the potential. The consequences of negative discipline are:
Distrust in industrial relations and mutual antagonism.
Low morale and motivation
High labour turnover
Work-to-rule approach
Lack of self-belief
10.9.3 PROGRESSIVE DISCIPLINE
It is popular form of discipline adopted successfully by many organizations in
maintaining discipline among their employees. This method of discipline has found
wide acceptance even among the unions. Progressive discipline requires an

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organization to adopt a step-by-step approach in dealing with the indiscipline
problems of an employee. While dealing with the discipline issues concerning the
employees, this method suggests that the organization begin the discipline issues
concerning the employees, this method suggests that the organization begin the
disciplinary action process with a modest disciplinary action, then increase the
degree of severity gradually and finally end up with the most severe punishment if
the successive stages of punishment do not yield the desired change in the
behaviour of the employees. For instance, the disciplinary process may end up in
his dismissal, if all the efforts to correct his behaviour fail.
A progressive disciplining of an employee may begin with the hiring of an
employee and can continue through his entire work life in the organization. It may
even lead to his suspension and ultimate dismissal. Progressive discipline may be
defined as any employee discipline system that provide a graduated range of
responses to employee performance or conduct problems.
Although progressive discipline is similar to positive discipline, it differs on one
basic aspect, which is the gradually growing and proportionate punishment to the
employees. The extent of punishment depends on the frequency and severity of the
performance and behaviour problem and the length of service of the employee.

SIGNIFICANCE OF PROGRESSIVE DISCIPLINE


Since the disciplinary actions for misconduct move from mild to severe
punishment gradually, this method assumes greater significance from the
organizational point of view.
It provides adequate opportunities to the employees to correct their
behaviour and performance.
It enables the managers to intervene in the disciplinary issues involving the
employees at the first available opportunity.
It facilitates the managers in getting involved in the disciplinary matters
without worrying about the prospects of losing the employees friendship.
This is because the employees are let off with mild punishments in the initial
stages of disciplinary actions.

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Progressive discipline helps the management avoid time-consuming and
costly litigation because this method rarely resorts to extreme punishment.
As a matter of fact, the serious disciplinary actions are almost always
challenged in the court.
A proper compilation of the several discipline violations indulged in by the
employees and the series of actions initiated by the management through the
progressive discipline policy can help the management prepare a legally
defensible case against the employees in the event of their suspension or
dismissal.
In the event of dismissal or discharge of employees as a result of disciplinary
action, the organization may have to incur high staffing cost for finding the
right replacement for the separated employee. In this method, extreme
punishments like dismissal are rare as the management provides an adequate
number of opportunities to the employees to discipline themselves by
changing their behaviour and continue in the job.
10.10 CAUSES OF INDISCIPLINE
Indiscipline simply means unacceptable behavior of an employee in the
organization. The unacceptable behaviour may occur in the foem of unsatisfavtoeyr
performance or undesirable conduct. The important factors responsible for
undisciplined behaviour are:
Conventional management practices
Unfair Treatment
Absence of an effective code of conduct
Absence of a proper grievance-handling mechanism
Ineffective HR policies and practices
Absence of an efficient communication system
Negative attitude of the employees and their unions
Organizational culture
10.10 TYPES OF DISCIPLINARY ACTION
The outcomes of indiscipline in normal circumstance are disciplinary actions in
the form of punishments. The different type of punishments are normally awarded
for different kinds of offences.

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Oral Reprimand
It is an oral warning issued to an employee by a manager for the
performance or behavior misconduct reported against that employee. Its
purpose is to caution the employee against the continuance of the same
misconduct in the future.
Written Warning
When an oral warning to the employee does not produce the desired result,
the manger may issue a written warning to the employee. The written
warnings are usually legal documents and may have to be presented in the
court at a later stage
Denial of Increments, Promotions and Pay hikes
On some occasions, the management may refuse promotions, increments or
pay hike by blacklisting the employee for specified period of time. These are
usually punishments of a temporary nature.
Pay Reductions and disciplinary Demotions
This is usually more severe than the denial of pay hikes and promotions
because the employee loses part of even the existing benefits and privileges
hitherto received by him. In case of demotion, the employee loses social
status too in addition to the monetary loss
Suspension
Depending upon the nature of the misconduct committed by the employee,
the immediate supervisor or manger may demand the suspension of the
employee accused of misconduct. Once the investigation is over, the
suspension may be converted into dismissal or into some other less severe
punishment or simply revoked.
Discharge or Dismissal
This is the severest punishment of all. In this, employee is permanently
removed from service. Dismissal or discharge must be done in accordance
with the relevant provisions of the law. In case of dismissal, the employee is
not entitled to any separation benefits. In contrast, the employee is eligible
for his provident fund and other retirement benefits in the event of his
discharge from his job.

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10.11 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1. In the first stage of most grievance redressal procedures, the grievance is
verbally conveyed by the employee to the
.
a) HR representative or the arbitrator
b) HR representative or the designated officer
c) Supervisor or the arbitrator
d) Supervisor or the designated officer
2. In a unionized organization if the grievance committee, constituted by
members from both the
and
, is not able to resolve the
matter ,the grievance is referred to the arbitrator who takes the final
decision.
a) Government, Management
b) Union, department
c) Employees, Government
d) Union, management
3. Developing mutual respect for each other and for the organization rules and
procedures among employees happens when they undertand and believe that
these rule and procedures will contribute to the achievement of both
organization goals and their personal goals. Positive discipline is also known
as
discipline.
a) Imposed
b) Cooperative
c) Enforced
d) None of the above
4.

related problems, one of the major types of problems


encountered in organizational, related to misuse of leave facilities, tardiness,
and absenteeism.
a) On the job behaviour
b) Attendance
c) Dishonesty
d) Incongruence

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5. Sunil Kumar works as a chartered accountant in an MNC. Although he is
very efficient, he is absent from work for at least six to seven days in a
month. Which of the following could be the reasons for such attendancerelated problems?
i. Attitude towards work
ii. Ensured job security leading to a relaxed approach and lack of interest
in job
iii. Congruence between employee goals and organizational goals
iv. Unpleasant relationships with supervisors
a) Only i. ii, and iii
b) Only i, ii, and iv
c) Only i, iii, and iv
d) i, ii, iii, and iv

CHAPTER-11 PERFORMANCE APPRAISAL


After reading this chapter, you will be able to understand:
1. The nature and purpose of Performance Appraisal
2. Process of Performance appraisal and Methods of Performance Appraisal

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3. Factor affecting performance appraisals
4. Rating errors in Performance Appraisal

11.1 INTRODUCTIONS -PERFORMANCE APPRAISAL


Human resources a term used to describe the individuals who comprise the
workforce of an organization, although it is also applied in labor economics to, for
example, business sectors or even whole nations.
Human resource Development is the process by which corporate management
stimulates the motivation of employees to perform productivity. Therefore
organization have to create conditions where skill will and resources the three
important ingredients for performance are matched appropriately as depicted
below.
Performance appraisal is a part of Performance management. Performance
appraisals of Employees are necessary to understand each employees abilities,
competencies and relative merit and worth for the organization. Performance
appraisal rates the employees in terms of their performance.
Performance appraisals are widely used in the society. Performance appraisal takes
into account the past performance of the employees and focuses on the
improvement of the future performance of the employees.
Performance appraisal is necessary to measure the performance of the employees
and the organization to check the progress towards the desired goals and aims.
Definitions:
Performance Appraisal may be defined as evaluating individual job performance
as a basis for making objective personnel decisions.
(Robert
Kreitner:2004)

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Performance Appraisal is a process of systematic evaluating performance and
providing feedback upon which performance adjustments can be made:.
(Nelson:2004)
11.2 PURPOSE OF PERFORMANCE APPRAISAL
Purpose of performance appraisal includes elements as follows:
1. Career Development
This provides an opportunity for discussion of career objectives, and
creation of a strategy designed to maximize career potential,
To provide an opportunity for career counseling,
To help in succession planning,
To assess training needs
To plan for career development
To assess and develop individual abilities
To provide an objective basis on which to base decisions about training
and promotion
2. Feedback
As well, feedback is encouraged in both directions: as such, employees
are encouraged to prepare ratings of their supervisors.
To provide constructive feedback to the individual regarding how their
performance is seen
This provides a structured format for the discussion of performance
issues on a regular basis.
Feedback either reinforces performance strengths, or provides the
opportunity to discuss resolution of performance deficiencies.
3. Administrative Uses of Performance appraisal
Salary Promotion
Retention/termination
Recognition of performance

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Layoffs
Identification of poor performers
4. Performance History
This provides a performance history which is not dependent upon human
memory, and which may be useful in the full range of personnel
decisions, including compensation decision-making.
To review past and present performance, identifying strengths and
weaknesses.
5. Organizational Goals
To clarify, for the individual, organizational expectations.
This provides an opportunity to view ones performance in the context of
broader organizational goals.
To assess future promotion prospects and potential.
To set objectives for the next period
6. Job Standards
This provides an opportunity for clearer articulation and definition of
performance expectations.
7. Documentation use of Performance appraisal
Documentation for HR decisions
Helping to meet legal requirements

11.3 OBJECTIVES OF PERFORMANCE APPRAISAL


The main objective of performance is to improve the performance of the
organization through improved employee performance. The goal of performance
appraisal is to allow the employee the opportunity to progress to their full potential
in order to meet the organizational needs and his personal development goals.
Through this process, true teamwork and maximum performance can be achieved.

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The foundation of the performance appraisal is improved communication between
the employee and the manager.
Some of the Objectives of Performance Appraisal are:
1. To increase motivation and productivity
Performance appraisal helps employees to set plan work and identify skills in
order to achieve them. Employee is motivated as there is clarity of what he is
required to do in a given period. Increased clarity brings greater focus on job
related activities, which in turns facilitates better performance, efficiency and
commitment. This increases the productivity of the individual employees and
the organization stands benefited out of improved performance of employees.
2. To enhance transparency
Setting of performance targets /objectives, agreement on measurement criteria
and organizations expectations of desired performance level brings to
transparency to the appraisal process.
3. To retain top talent
Performance appraisal helps organization in taking people related decisions such
as career planning, career development, promotions, training and development
opportunities, and succession planning. Meritorious employees are rewarded
better with increased compensation, promotions, leadership grooming
opportunities, job rotations, etc. and help retain top talents in the organization
by satisfying their growth and development needs.
4. To increase commitment
Employees involvement in planning of work and identification of skills helps
to bring greater self-awareness and increases his commitment to the objectives
of performance appraisal activities. Performance appraisal provides an
opportunity to communicate performance feedback, review the job description,
plan upcoming goals and objectives and develop an individual development

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plan.

5. To develop employees
Performance appraisal accord an opportunity to develop an employee through
the identification of gaps in skills and competencies. Once deficiencies in skills
and competencies has identified, suitable training and development programmes
can be established for rectifying the gaps/deficiency. This results in personal
and professional development of employees.
6. To ensure accountability and ownership
Performance appraisal casts high responsibility on the individual employees to
accomplish his work objectives effectively. It induces employees to put his
heart and head to into improving his performance for which is accountable to
his manager. Since he is clear of performance goal and requirements, therefore
owns the appraisal as a good way to improve his career prospects in his
organization.
The brief summary of the objectives is:
1. To review the performance of the employees over a given period of time.
2. To judge the gap between the actual and the desired performance.
3. To help the management in exercising organizational control.
4. Helps to strengthen the relationship and communication between superior
subordinates and management employees.
5. To diagnose the strengths and weaknesses of the individuals so as to identify
the training and development needs of the future.
6. To provide feedback to the employees regarding their past performance.
7. Provide information to assist in the other personal decisions in the
organization.
8. Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.

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9. To judge the effectiveness of the other human resource functions of the
organization such as recruitment, selection, training and development.
10.To reduce the grievances of the employees.

11.4 PROCESS OF PERFORMANCE APPRAISAL:

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1.

ESTABLISHING PERFORMANCE STANDARDS


The first step in the process of performance appraisal is the setting up of the
standards which will be used as the base to compare the actual performance
of the employees. This step requires setting the criteria to judge the
performance of the employees as successful or unsuccessful and the degrees
of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care
should be taken to describe the standards.

2.

COMMUNICATING THE STANDARDS

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The employees should be informed and the standards should be clearly
explained to them. This will help them to understand their roles and to know
what exactly is expected from them. The standards should also be
communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant
feedback from the employees or the evaluators.
3.

MEASURING THE ACTUAL PERFORMANCE


The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees
during the specified period of time. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the
careful selection of the appropriate techniques of measurement, taking care
that personal bias does not affect the outcome of the process and providing
assistance rather than interfering in an employees work.

4.

COMPARING THE ACTUAL WITH THE DESIRED


PERFORMANCE
The actual performance is compared with the desired or the standard
performance. The comparison tells the deviations in the performance of the
employees from the standards set. The result can show the actual
performance being more than the desired performance or, the actual
performance being less than the desired performance depicting a negative
deviation in the organizational performance. It includes recalling, evaluating
and analysis of data related to the employees performance.

5.

DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with the
employees on one-to-one basis. The focus of this discussion is on
communication and listening. The results, the problems and the possible
solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this can

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have an effect on the employees future performance. The purpose of the
meeting should be to solve the problems faced and motivate the employees
to perform better.
6.

DECISION MAKING
The last step of the process is to take decisions which can be taken either to
improve the performance of the employees, take the required corrective
actions, or the related HR decisions like rewards, promotions, demotions,
transfers etc.

11.5 Performance Appraisal Methods:

Rating
Methods

Comparative
Methods

Narrative
Methods

Behavioral
Methods

Checklists

Straight
Ranking

Critical
Incidents

MBO

Graphic
Rating Scale

Paired
Comparison

Essay

BARS

Grading

Field Review

Human
Resource
Accounting

Forced
Distribution

Confidential
Reports

Assessment
Centers

Forced
Choice

360 Degree

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There are many methods can be used when doing performance appraisals. Now
performance appraisals are used to determine a lot of things with employer. Here
are some of those things listed below.
Deciding promotions
Determining transfers
Deciding of future employment
Determine training employees need
Finding out skill and competency deficit.
Deciding who gets rewards
There are various methods of performance appraisal depending on the size and
nature of the organization. Broadly speaking, the methods of performance
appraisal may be divided into four as depicted in the figure above.

11.5.1 RATING METHODS


These methods rely on putting employees on certain pre-defined scale to access
their performance. Two rating methods are:
a. Checklists:
Another simple type of individual evaluation method is the checklist. A
checklist represents, in its simplest form, a set of objectives or descriptive
statements about the employee and his behavior. If the rater believes
strongly that the employee possesses a particular listed trait, he checks the
item; otherwise, he leaves the item blank. A more recent variation of the
checklist method is the weighted list. Under this, the value of each question
may be weighted equally or certain questions may be weighted more heavily
than others. The following are some of the sample questions in the checklist.

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A rating score from the checklist helps the manager in evaluation of the
performance of the employee. The checklist method has a serious limitation.
The rater may be biased in distinguishing the positive and negative
questions. He may assign biased weights to the questions. Another limitation
could be that this method is expensive and time consuming. Finally, it
becomes difficult for the manager to assemble, analyze and weigh a number
of statements about the employees characteristics, contributions and
behaviors. In spite of these limitations, the checklist method is most
frequently used in the employees performance evaluation.
b. Graphic rating scale
Perhaps the most commonly used method of performance evaluation is the
graphic rating scale. Of course, it is also one of the oldest methods of
evaluation in use. Under this method, a printed form, as shown below, is
used to evaluate the performance of an employee. A variety of traits may be
used in these types of rating devices, the most common being the quantity
and quality of work. The rating scales can also be adapted by including traits
that the company considers important for effectiveness on the job. A model
of a graphic rating scale is given below.

11.5.2COMPARISON METHOD
These methods rely of relative comparison and ranking of employee performance
based on certain criteria or characteristics of performance. Five comparative
methods are:
a. Ranking
Ranking methods compare one employee to another, resulting in an ordering
of employees in relation to one another. Rankings often result in overall
assessments of employees, rather than in specific judgments about a number
of job components.
b. Paired Comparison:

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A better technique of comparison than the straight ranking method, this
method compares each employee with all others in the group, one at a time.
After all the comparisons on the basis of the overall comparisons, the
employees are given the final rankings.
c. Grading:
The manager is given a list of categories to be assessed. This is done by
selecting a grade which matches the employee's performance. The different
grades of performance are determined in advance such as excellent, very
good, good, satisfactory and poor.
d. Forced Distribution:
In this method, the employees are appraised according to the pattern of a
normal curve (bell shaped) in order to check tendency of appraisers to rate
most of the employees around high points. This method forces the appraisers
to spread their employee evaluations in a prescribed distribution. The
distribution in general is as under:
20% of employees = excellent performers
60 % of employees = average performers
20 % of employees = poor performers
Forced distribution is primarily used to eliminate rating errors such as
leniency and central tendency, but the method itself can cause rating errors
because it forces discriminations between employees even where job
performance is quite similar. For example, even if all employees in a unit are
doing a good job, the forced distribution approach dictates that a certain
number be placed at the bottom of a graded continuum. For this reason,
raters and ratees do not readily accept this method, especially in small
groups or when group members are all of high ability.
e. Forced Choice
This approach is known as the forced choice method because the rater is
forced to select statements, which are readymade. In this the rater is asked to
choose from the among groups of statements those which best fir the

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individual being rated and those which least fit him. The advantage of this
method is the absence of personal bias in rating. The disadvantage is that the
statements may not be properly framed they may not be precisely
descriptive of the ratees traits.

11.5.3 NARRATIVE METHOD


These methods rely on written statements to indicate the performance level of
employees and involve great deal of linguistic skills of the appraisal designer. Four
narrative methods are:
a. Critical incidents
In this method of performance appraisal, the evaluator rates the employee on
the basis of critical events and how the employee behaved during those
incidents. It includes both negative and positive points. The drawback of this
method is that the supervisor has to note down the critical incidents and the
employee behavior as and when they occur.
b. Essay Appraisal
This traditional form of appraisal, also known as Free Form method
involves a description of the performance of an employee by his superior.
The description is an evaluation of the performance of any individual based
on the facts and often includes examples and evidences to support the
information. A major drawback of the method is the inseparability of the
bias of the evaluator.
c. Field review
In this method, a senior member of the HR department or a training officer
discusses and interviews the supervisors to evaluate and rate their respective
subordinates. A major drawback of this method is that it is a very time
consuming method. But this method helps to reduce the superiors personal
bias.
d. Confidential Reports
Manager prepares confidential reports for each subordinate who reports to
him. In these reports, he talks of the highs and lows of the employee's
performance. The drawback here is that the employee does not get the

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chance to make improvements on his performance as this report is kept
confidential.

11.5.4 Behavioural Method


Behavioural methods of performance appraisal are based on the following
propositions:
i)
ii)

Evaluations are not conducted for raises, promotions, or bonuses


instead for development and communication
Most important aspect in all is multilateral communication between
employees, managers, and others, rather than one-way
communication.
Six behavioural methods are:

a. Management By Objective
The principle behind Management by Objectives (MBO) is to create
empowered employees who have clarity of the roles and responsibilities
expected from them, understand their objectives to be achieved and thus
help in the achievement of organizational as well as personal goals.
The focus is on future rather than on past. Goals and standards are set for the
performance for the future with periodic reviews and feedback. Involving
employees in the whole process of goal setting and increasing employee
empowerment increases employee job satisfaction and commitment.
Frequent reviews and interactions between superiors and subordinates helps
to maintain harmonious relationships within the enterprise and also solve
many problems faced during the period.
b. Behavioral anchored rating scales: (BARS)
Basically means that it rates performance factors, instead of personality
factors like the trait rating scale. This scale uses a job analysis to determine
what it takes to do the job, after it does that it rates the employee against that
and determines how well you do.

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These scales are very time consuming and expensive to do.
The negatives with this way of doing it are that it makes the employees try to
outdo all the other employees, making it a non cooperative environment.It
measures past performance and not present performance, does not motivate
people.
c. Human resource Accounting
Human resource accounting method tries to find the relative worth of these
assets in the terms of money. In this method the performance of the
employees is judged in terms of cost and contribution of the employees. The
cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs
etc whereas their contribution includes the total value added (in monetary
terms). The difference between the cost and the contribution will be the
performance of the employees. Ideally, the contribution of the employees
should be greater than the cost incurred on them.
d. Assessment Centers Technique
Assessment centre refers to a method to objectively observe and assess the
people in action by experts or HR professionals with the help of various
assessment tools and instruments. Assessment centers simulate the
employees on the job environment and facilitate the assessment of their on
the job performance.

The following are the common features of all assessment centers:


The final results is based on the pass/fail criteria
All the activities are carried out to fill the targeted job.
Each session lasts from 1 to 5 days.
The results are based on the assessment of the assessors with less emphasis
on self-assessment
Immediate review or feedback are not provided to the employees.

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The main tools used in assessment center are:
In-basket exercises, in which participants respond to a series of
administrative problems that simulate typical managerial tasks
Leaderless group discussions, in which a group of participants without an
assigned leader must arrive at a group solution to a specified problem within
a given time period
Role-plays, in which participants are involved in a simulation of a situation
that could occur on the job
Interviews, in which participants typically are questioned about how they
have handled particular work situations in the past and how they would
respond to specific work situations in the future
Management games, in which participants must work cooperatively to meet
mental or physical challenges.
e. 360 Degree Performance Appraisals
360 degree feedback, also known as 'multi-rater feedback', is the most
comprehensive appraisal where the feedback about the employees
performance comes from all the sources that come in contact with the
employee on his job.
360 degree appraisal has four integral components:
1. Self appraisal
2. Superiors appraisal
3. Subordinates appraisal
4. Peer appraisal
a. Self appraisal gives a chance to the employee to look at his/her
strengths and weaknesses, his achievements, and judge his own
performance.
b. Superiors appraisal forms the traditional part of the 360 degree
performance appraisal where the employees responsibilities and
actual performance is rated by the superior.
c. Subordinates appraisal gives a chance to judge the employee on the
parameters like communication and motivating abilities, superiors
ability to delegate the work, leadership qualities etc.

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d. Peer appraisal, also known as internal customers, the correct feedback
given by peers can help to find employees abilities to work in a team,
co-operation and sensitivity towards others.
f. Balanced Scorecard
An approach given by Kaplan and Norton provides a framework of various
measures to ensure the complete and balanced view of the performance of
the employees. Balanced scorecard focuses on the measures that drive
performance.
The benefits of the balanced scorecard approach in measuring performance are:
Gives the complete picture of the employee as well as the organizational
performance.
It guides users in determining the critical success factors and performance
indicators.
Strategic review or analysis of the organizational capabilities and
performance.
Focusing the whole organization on the few key things needed to create
breakthrough performance.
Integrating and directing the performance and efforts from the lowest
levels in the organization to achieve excellent overall performance.
Components of balanced scorecard:
Learning & Growth Perspective: This perspective focuses on how an
organisation is improving its ability to innovate, improve and learn in order to
support success with the critical operations and processes defined in the Internal
Process Perspective. This may include employee training and corporate culture
attitudes. In the modern management philosophy, it is increasingly becoming
important for the organizations to develop a culture of learning where the
employees constantly learn and share the knowledge to facilitate growth. The onthe-job training and mentoring is also an essential component of the perspective.
Business Process Perspective: This component focuses on what an organisation
must be doing well to meet the customer needs defined in the Customer

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Perspective. It also lets managers know how well their business is running and how
well the internal processes are designed to meet the objectives.
Customer Perspective: This area focuses on what must be done and what's most
important, from the customer's perspective, to achieve the mission.. The objectives,
measures, targets and, eventually activities are therefore planned to implement
strategy regarding the customer satisfaction.
Financial Perspective: The importance of financial considerations is paramount in
most situations and in most organizations. For any strategic choice, therefore, the
timely and accurately presented funding data is critical and the sources of funding
and budgeting must be done. Another key consideration is the prospects of
sustainability of funding for the initiative required to implement the strategy. This
component of the Balanced Scorecard therefore looks at the projects from a
financial perspective and discusses financial considerations.

11.6 THE FACTORS AFFECTING PERFORMANCE:


There are a number of factors which may be affecting the employees performance.
Each employee may have different effect from different things at workplace. Their
attitude and behavior can play a vital role in their performance. The project will
identify the root of employee behavior and how it relates to low productivity so
that you can establish strategies for improving employee performance.
There are many factors that can affect the performance of employees in an
organization. It is the responsibility of the administrators of the organization to
create a good working environment for the employees.
1. Knowledge and skills: For an employee to work and function well in an
organization, the employee should have adequate knowledge and skills. The
employee must have proper attitude with the skills necessary to be efficient in
work.
2. Family: Usually all employees in any organization will have family problems at

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one point in their life. Some people may have frequent problems. These problems
at home may also affect their work. These problems can affect the work adversely.
The employers should be able to show adequate compassion on these workers to
help the worker function effectively.
3. Support from superiors: Superiors have to understand the needs of the
employees for the employee to work efficiently. Sometimes frequent fault finding
of the employees work may also lead to deficiency in work. Employee
effectiveness is also lost if there is no proper guidance or planning in an
organization.
4. Adaptability: Some employees may not be able to cope with the changes that
occur at work. Equipments may change or the type of work can change in an
organization. This can make the employee unable to adapt. Adequate training is
necessary to help the employee to cope and be able to perform better.
5. Social values: The type of work in an organization may also involve a sense of
compassion. This is especially true when the organization deals with people.
People who tend to be aggressive by nature may find conflicts in the situation.
Good performance may be affected, not because of lack of ability or interest, but
by conflict of values.
6. Health: Employees must be physically and mentally healthy to perform better in
an organization. Chronic illnesses in the family can also affect the performance of
the employee. In course of time, it can lead to conflicts and non performance.
Adequate health cover as part of the employee benefits will help a little in
improving the efficiency of the person at work.
7. Workplace: Some people are highly sensitive to the environment and also climate.
These should be conducive for work; otherwise even good performers can also
become poor performers. The work situation and environment should be
adequately modified to help the employees have better working conditions.
8. Ethics: Work ethics is very important for the performance of an employee.
Good morals and ethics can help a person to improve their performance.
Otherwise, it can lead to poor performance and can also demotivate the other
employees.

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11.7 RATING ERRORS IN PERFORMANCE APPRAISAL


Halo Effect
Occurs when a rater attaches too much significance to a single factor of
performance and gives similar ratings on other performance elements. E.g. A manager rates a worker very high on quality because of her immaculate
attention to details and lack of defects in her work. Then assuming the
individual to be an overall high performer based on the quality of her work
output, the manager rates her very high on efficiency, responsibility,
punctuality, etc. without taking an objective look at her performance in these
areas
Horn Effect
Rating an employee unsatisfactory in one quality, which in turn influences
the rater to give a similar rating or a lower than deserved rating on other
qualities
Recency Bias
Occurs when recent events tend to overshadow the overall performance.
E.g. - People do have first impression & memory errors. Thus a person who
has worked very hard & excelled throughout the year, but for some
inadvertent reasons had faced performance issues in the last weeks or month
may at times get a poor appraisal from the supervisor, showing a recency
bias & we remember what we see either first or last
Contrast Effect
When supervisors rate employees one after another, rating of an exceptional
performer or a very poor performer could affect the subsequent ratings of
other individuals. E.g. - Let's suppose that a supervisor has just rated an
outstanding performer & is now evaluating an individual who is also a good
performer but there seems to be a contrasting difference b/w the abilities &
output of the two individuals. This significant difference in performance or
employee competencies could lead the supervisor to rating the second
individual as an average performer
Personal Bias

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Personal beliefs, attitudes, assumptions, experiences, preferences and lack
of understanding about a person, class or a phenomenon can lead to an
unfair evaluation. E.g. - Bias against a race, ethnicity, religion, age, sex, or
assuming that certain class of people are not suitable to perform a specific
job or function etc. If you believe for instance, that women are emotional &
men are rational, then chances are that you would not employ a female
worker for a role that involves making objective decisions. Similarly, that
young workers are faster & more efficient than old workers would make it
more probable to give a higher efficiency rating to a younger worker than an
old worker.
First impression
The tendency of a rater to make an initial favorable or unfavorable
judgment about an employee
Same As Me
Rating an employee higher than deserved because the person has qualities
or characteristics similar to those of the rater (or similar to those held in high
esteem)
Different From Me
Rating an employee lower than deserved because the person has qualities or
characteristics dissimilar to the rater (or similar to those held in low esteem)
Spillover Effect
Allowing past performance appraisal ratings to unjustly influence current
ratings
Status Effect
Over-rating employees in higher-level jobs or jobs held in high esteem &
underrating employees in lower level jobs or jobs held in low esteem
Central Tendency
Providing a rating of average or around the midpoint for all qualities. Since
many employees do perform somewhere around average, it is an easily
rationalized escape from making a more meaningful appraisal
Strict Rating

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Rating consistently lower than the expected norm or average; being
constantly harsh in rating performance qualities
Lenient Rating
Rating consistently higher than the expected norm or average, being overly
generous in rating performance qualities. This is probably the most common
form of rating error. A major reason for this error is to avoid conflict. It
provides a path of least resistance
Stereotyping
If we consider a certain group of people as hard working, then we may tend
to rate anyone in that group as being highly productive, even if they are not
Glass Ceiling Effect
The supervisor may sometimes decide when an employee has reached their
peak performance & stop challenging the employee to continue to improve
Self-fulfilling Prophecy
Managers who hire employees usually want them to succeed. It is a good
reflection on the good mgr. At the same time, mgrs may not expect success
from an employee that someone else selected. It is also easy to put too much
credence in what others have told you about this employee. We look for
performance that supports our beliefs & disregard performance that is
contrary to our beliefs. This is also called the PygmalianEffect

11.8 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1. Performance Appraisal can be defined as the process of
.
a) Evaluating the qualifications of an employee and rewarding him/her
suitability

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b) Evaluating the performance of an employee and communicating the
results of the evaluation to him/her for the purpose of rewarding or
developing the employee
c) Detailing the various aspects of a job like the tasks involved, the
responsibilities of the job and the deliverables, and finding suitable
employees to do the job.
d) Determining and recording all the pertinent information about specific
job, including the responsibilities attached to the job and the abilities
required to perform the job successfully
2. Peer evaluation is a very sensitive area as it may lead to false and unhealthy
appraisals due to
.
a) Competition among supervisors
b) Competition between supervisors
c) Competition among peers
d) None of the above
3. There are various traditional and modern methods of performance appraisal.
Which of the following is not a traditional method of appraisal?
a) Checklist appraisal
b) Management by Objective
c) Team appraisal
d) Essay Appraisal
4. MBO is also called the goal-setting approach. How are the goals set in the
Management by Objective method?
a) Goals are developed by the employees himself/herself
b) Goals are developed with the active participation of the employee and
his/her supervisor.
c) Goals are set by the employees immediate supervisor
d) Goals are set by the headquarters of the organization
5. In the
method of performance appraisal, the appraiser makes
a note of all the significant incidents that reflect the performance or
behaviour of the employee during the appraisal period
a) Critical Incident
b) Significant happening
c) Balanced Scorecard

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d) Memorable Performance
6. Paired comparison ranking method is more suitable in situations
where
a) A large number of employees have to be appraised
b) The employees to be appraised are shop floor workers
c) Only a few employees have to appraised
d) The organization structure is highly complex
7. In
performance appraisal, the employees performance is
evaluated by his supervisor, his peers , his internal/external customers, his
internal/external suppliers and his subordinates.
a) Total
b) 180 degree
c) All round
d) 360 degree
8. In the
method of performance appraisal, the rater responds
yes or No to a set of questions which assess the employees performance
and behavior
a) Ranking
b) Checklist
c) Alternation
d) Paired Comparison
9. In the context of performance appraisals, the leniency effect refers to
a) The situation when an appraiser allows a single characteristics of an
appraisee to dominate his judgment of employee performance
b) The tendency of an appraiser to rate most of the appraisees in the
middle of the performance scale
c) The situation when the appraiser tends to give high ratings and only
positive feedback to an appraise irrespective of his/her performance
d) Judging an appraisee based on the group to which he belongs and
appraisers perception of the group.

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10.Apart from evaluating the performance of the employees for
rewards/punishments and development, a good performance appraisal
system serves many other purposes. These include:
a) Determining the training and development needs of the employees
b) Forming the basis of transfers, promotions, and other career planning
activities
c) Helping in succession planning
d) All of the above

CHAPTER-12 HUMAN RESOURCE INFORMATION SYSTEM


After reading this chapter, you will be able to understand:
1. Meaning and objectives Human Resource Information System
2. Application of Human Resource Information System
3. Steps in implementing HRIS
4. Benefits and limitations of HRIS

12.1 INTRODUCTION HUMAN RESOURCE INFORMATION SYSTEM

Human resource departments. The quality of personnel management departments


contribution largely depends upon the quality of information held by it. Many
personnel activities and much effort by personnel professionals are devoted to
obtain and refine departments data base. Information requirements may include:

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Duties and responsibilities of every job in the organization
Skills possessed by every employee
Organizations future human resource needs
Current productivity of human resources
Identification of training needs
Acquisition, storage and retrieval of information present a significant challenge to
the management. However, once the database is created, maintenance becomes a
much easier task provided data security and privacy of employees can be
safeguarded.
HRIS is defined as systematic procedure for collecting, storing, maintaining,
retrieving, and validating data needed by an organization about its human
resources, personnel activities, and organization unit characteristics.
-K.A. Kovach and C.E. Cathcart,Jr
System which seeks to merge the activities associated with human resource
management (HRM) and information technology (IT) into
one common database through the use of enterprise resource planning (ERP)
software. The goal of HRIS is to merge the different parts of human resources,
including payroll, labor productivity, and benefit management into a less capitalintensive system than the mainframes used to manage activities in the past.
Information is needed for internal control, feedback and corrective actions, and for
statutory obligation. HRIS is utilized basically for the following four process:
Storing information and data for each individual employee for future
reference.
Providing a basis for planning, organizing, decision making, controlling and
a host of other human resource function.
Meeting daily transactional requirements such as marking present/ absent,
and granting leave.

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Supplying data and submitting returns to government and other statutory
agencies.
Originally, HR departments used to share hardware and files with other
departments. Later, companies began to develop information system devoted
exclusively to human resource applications. These system came to be known as
human resource information systems.
A HR information system should be designed around a database consisting of
employees and position records. The access to the database could be in batch mode
or through online transactions, with ad hoc enquiries being satisfied by a report
writer. A number of standard reports, such as age analysis, absence reports, salary
review reports and employee profiles could be used to facilitate the functions
described in succeeding paragraphs.
12 .2 OBJECTIVE OF HUMAN RESOURCE INFORMATION SYSTEM
The primary purpose of an HRIS is the application of technology for enhancing the
efficiency of human resource management. As the years progressed, the
applications and utility of an HRIS increased manifold, and now, there is a broadbased and self-contained HRIS available with numerous rich features. The presentday advanced HRIS can do several more functions with the features and options
available in it. The objectives of an HRIS are:
To enhance the ability of human resource management to leverage an
absorb new and emerging opportunities and challenges in the business
horizons
To ensure efficient collection, storage and distribution of HR related
information in a paper less work environment
To create a HR information hub for the whole organization this facilitates
effective people to people and people to information contacts.

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To establish an integrated system for achieving an efficient and purposeful
integration of various human resource functions and effective deployment of
strategic human resources
To facilitate faster processing of information and more effective decision
making, to make the optimum use of the available human resources
To enable the HR managers to devote more time to strategic issues by
relieving then from routine operations through the employee self service
system. The ESS in the HRIS lets the employees have direct access to select
information without disturbing the HR manager
To facilitate employees direct and online access to information on training,
payroll and relevant matters.
To maximize the accuracy, reliability and validity of workforce records and
eliminate the cost and wastages associated with the manual maintenance of
HR records

12.3 APPLICATIONS OF HRIS


Some of the applications which could be computerized and the nature/ type of
information that can be recorded and stored are described below.
1. Personnel administration: It will encompass information about each
employee, such as name, address, date of birth, date of joining the
organization, and information about next of kin and family. The facility
should allow the user to maintain a number of address records such as
permanent home address, local postal address, and the address of next of kin.

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2. Salary administration: Salary review procedures are an important function
of the human resources department. A good human resource information
system must be able to perform what if analysis and present the proposed
increases in a report suitable for distribution to various departments. The
report should give the details of present salary, last increase, and the
proposed increase. A global update feature which will require a minimum of
operator intervention should be available to effect pay increase for
employees.
3. Leave/absence recording: An essential requirement of HRIS is to provide a
comprehensive and accurate method of controlling leave/absences. A
fundamental aspect of leave management is to maintain a complete leave
history for each employee with the ability to increase entitlement according
to leave rules. Every employee can be issued with an identity card with an
employee token number coded on it. The identity card of the employee
entering/ leaving the gate will be swiped through and timing loggedin/logged-out. This will avoid manual effort in recording data, and
calculating wages for employees with any possibility of errors by oversight/
malpractice.

4. Skill inventory: Human resource information system is used to record


acquired skills and monitor a skill database at both employee and
organizational level. This will provide the opportunity to identify employees
with the necessary skills for certain positions or job functions.
5. Medical History: The HRIS may be used to record occupational health data
required for industrial safety purposes, accident monitoring, exposure to
potentially hazardous materials, and so on. For example, hearing loss in
certain work areas may be monitored using audiometric tests and results
recorded on HRIS. The records of periodical medical examinations may also
be maintained.

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6. Accident monitoring: The system should record the details of the accidents
for the injured employees. This can be used to highlight accident-prone areas
or accident prone times within the organization.

7. Performance appraisal: The system should record individual employee


performance appraisal data such as the due date of the appraisal, scores for
each performance criteria, potential for promotion, and other information to
form a comprehensive overview of each employee. The textual data relating
to appraisals can be retained in paper form and can be combined with the
overview obtained from the human resource information system for training
transfer and promotion purpose.
8. Training and development: The system should consider the training and
development needs of employees, with the ability to record and enquire on
courses completed, those underway, and any projected courses. This will
enable any gaps in training to be identified and also allow training costs to
be monitored at the organizational level. The system could also be used for
recording the details of training imparted to various employees.
9. HR Planning: An organization hires people because it has a need to fill a
position to ensure that it continues to operate efficiently and within the
budget restraints. Therefore, a fundamental aspect of a HRIS should be to
record details of the organizational requirements in terms of positions. A
HRIS can be used to connect employees to required positions and keep track
of their movements. This philosophy provides the user with a means of
identifying vacancies and establishing staff numbers, using either reports or
on line enquires. A logical progression path and the steps required for
advancement can be identified by HRIS after which the individual progress
can be monitored.
10.Recruitment: An essential function of any personnel department is
recruitment. Recording details of recruitment activity such as the cost and

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method of recruitment, and the time taken to fill the position can be used to
provide a picture of the cost of recruitment in terms of time as well as rupee
value.
11.Career Planning: HRIS could record projected positional moves. The
system must be capable of providing succession plans to identify which
employees have been earmarked for which positions.
12.Collective bargaining: A computer terminal can be positioned in the
conference room and linked to the main database. This will expedite
negotiations by readily providing up to date data and also facilitating what
if analysis. This will provide the means for discussions based on facts and
figures and not feelings and fictions. The system can be also be made
accessible through telephone lines and modems to all employees to fire
personnel queries.

12.4 NECESSARY CAPABILITIES OF A HRIS:


INPUT FUNCTION: The input function provides the capabilities needed to get
the human resources information into HRIS. Some of the first things must be
established that are the procedures and processes required to gather the necessary
data. In other words, where, when, and how will the data collected? After
collection, data must be entered into the system after codification. Once the data
has been fed, it must be validated to ensure that it is correct. The system should
have the capability of easily updating and changing the validation table.

Database

Input activities
Entry Edit
Validation

Acceptable
data to data
maintenance
function

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Data
collection
Procedure

Message table

Acceptance
or error

Edit/validation
criteria

Edit/validation
table values

Direct user access

DATA MAINTENANCE FUNCTION: The data maintenance function is


responsible for the actual updating of the data stored in the storage devices. As
changes occur in human resource information, these should be incorporated into
the system. As new data is brought into the system, it is often desirable to maintain
the old data for posterity. The components of data maintenance function are shown

Data maintenance activities


Update
Create
Derive

Database

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Transaction from
function

to output

Input function
Reports

OUTPUT FUNCTION: The output function of an HRIS is the most familiar one
because the majority of HRIS users are not involved with collecting,
editing/validating and updating data, but they are concerned with the information
and reports produced by the system. Most human resource information system
consists of selecting a segment of the total population and providing a report
containing specific information regarding the selected population and / or the
calculation of results. The demands on the output function are the major factors
that influence the particular type of software to be used. The components of output
report function are shown.

Disk

Turn around
reports
Output Activities
Select
Process
Report

Output Request
procedures

Output dissemination

Procedures

Ad hoc
reporting

Report
library

Data

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12.5 STEPS IN IMPLEMENTING AN HRIS


The following steps should be followed in setting up an HRIS
1. Inception of idea: Idea must originate somewhere. The originator should
make a preliminary report justifying the need for an HRIS. The most critical
part of this step is to clearly illustrate how an HRIS can assist management
in making certain decisions.
2. Feasibility study: The present system should be studied to highlight the
problem areas and the likely benefit of an HRIS. It should carry out a cost
benefit analysis of the HRIS in terms of labour and material as also the
intangible savings, such as increased accuracy and fewer errors.
3. Vendor analysis: The purpose of this step is to determine what hardware
and software are available that will best meet the organizations needs at the
least price. This is a difficult task. This involves discussions with help in
making a decision of going to the off the shelf package or to develop the
system internally.
4. Contract negotiations: The contract stipulating the price delivery, vendors
responsibilities with regard to installation, service maintenance, training to
organization employees etc may be negotiated.
5. Training: Project team members may first be trained to use the system and
then they could train all users from other departments.
6. Tailoring the system: It involves making changes to the system to best fit
the organizational needs.
7. Collecting data: Data is collected and fed into the system.
8. Testing the system: Purpose of the testing is to verify output of HRIS and
make sure that it is doing what it is supposed to do. All reports need to be
critically analyzed.
9. Starting up: Even after testing, often some additional errors surfaces during
the start up. These need to be sorted out.
10.Maintenance: It normally takes several months for the HR people to get
acquainted with HRIS

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11.Audit: After a year or so, the project team should audit the performance of
HRIS and if required, corrective actions should be taken.

12.6 BENEFITS OF HRIS:

Effective use of Human resources


The chief benefit of an HRIS is the optimum and strategic use of human
resources in an organization. Since there is a complete visibility in all the
activities performed by the employees, it prevents duplication in the
employees, it prevents duplication in the employee efforts by tracking
people as they move through the system.
Ability to manage voluminous Data
The inherent ability of an HRIS is its capacity to store, manipulate, retrieve
and distribute large volumes of data within the shortest possible time. It is
certainly unmatched in analysis complex, voluminous and heterogeneous
data and in guiding their interaction and reporting. An HRIS can handle
large data. This requires reconciliation with high speed and great accuracy,
which is very difficult to accomplish in any manual operation.
Reduction in labour cost
An HRIS has the ability to reduce the labour requirement in the HR
department significantly. When there is a decrease in the labour requirement,
the labour cost, which is requiring cost to the organization, is kept down. For
instance, automating the HR processes, like hiring through the applicant
tracking system, lowers the time-to-hire and cost-per-hire considerably.
Faster and effective HR Decisions
Since the decision support system of an HRIS is capable of generating as
many alternatives decisions as possible for solving problem, the managers
can make the best decisions quickly and precisely. Certainly, a timely

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decision enables the organization to capitalize quickly on the opportunities
rising in the business environment.
Better Supervision and Control over Human Resources
The effectiveness of supervision and control exercised by the managers over
the employees is certainly superior in an HRIS environment as compared to
that in a manual environment. This is because all the activities of the
employees are monitored round the clock on a real time basis through HRIS.
Optimum Security and Confidentiality
Preserving the security and confidentiality of the employee data is a major
problem for many organizations. They can keep their employees record
safer through an HRIS by limiting access to such information. They can use
password and other authorization requirements to prevent any unauthorized
access to valuable and sensitivity information about the employees.
Anytime, Anywhere Access
HRIS enables its users to have anytime, anywhere access with multiple
channels for task performance and reporting. It removes the need for the
users to be within the premisies to have access to the information available
in the HRIS. Email, web, window forms, SMS and voice are some of the
forms used prominently for accessing an HRIS in normal circumstances.
Better Focus on Strategic Activities by Managers
The automation of HR mangers routine administrative activities like
attendance tracking, work scheduling, etc., allows them to devote more time
to strategic planning tasks. HRIS enables HR managers to perform from the
top levels of the management by involving themselves in strategic decision
making process.
Better Statutory Compliances
Since all statutory provisions are usually incorporated in an HRIS, it ensures
that these provisions are strictly adhered to. When employees overlook any

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of the regulatory provisions even unintentionally while performing HR
activities, it may invite legal troubles for the organization. This can be
completely avoided when employees perform through the HRIS.
Meeting the future challenges and Changes of HRM
The role of HR managers has received an increased status in organization
when compared to earlier years. Thus, the HR mangers should be prepared
to perform more complex administrative operations in future for which they
should inevitably depend on the sophisticated HRIS.
12 .7 LIMITATIONS OF HRIS
While the computerized HRIS, described earlier, has many benefits, it also has
many problems which need to be addressed to before it can really be useful. Some
of them are described below.
It can be expensive in terms of finance and manpower requirements.
It can be threatening and inconvenient to those who are not comfortable with
computers. For computerized information to be useful at all levels, there is
an urgent need for large scale computer literacy.
Often the personnel designing HRIS do not have a through understanding of
what constitutes quality information for the users. Thus, the user managers
do not get exactly the reports which they want. Producing information that is
of quality to the users requires an investment in time, effort and
communication on the part of HRIS managers.
Computers cannot substitute human being. Human intervention will always
be necessary. Computers can at best aid the human effort. The quality of
response is dependent upon the accuracy of data input and queries fired. The
garbage-in and garbage-out (GIGO) is the key expression in any
computerized system.
In many organizations, the system is operated in batch mode with the
records being updated once a week. Online facility in multi user
environment needs to be developed so that the reports generated are not of
phase with the realities. In many a situation, the state information is as good
as no information.

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Conclusion:
Information is a vital ingredient to management. Accurate, timely and relevant
information is necessary for decision making. Being key to the employee
productivity, competitive strength, and corporate excellence, information is
being recognized as the fifth organizational resource. A well designed and
comprehensive HRIS provides the needed information within the shortest
period and at reduced cost. This is why computerized HRIS is being
increasingly used.
12.8 QUIZ
Complete all the review questions listed here to test your understanding of the
topics and concepts in this chapter
1. The automation of attendance keeping, payroll preparation and application
tracking are some of the activities carried out at the
level.
a) Management Information System
b) Decision Support System
c) Electronic data processing
d) None of the above
2. The simulation of a situation is the uniqueness of the
a) Management Information System
b) Decision support system
c) Electronic data processing
d) None of the above

model.

3. Which of the following is not an advantage of the Human Resource


Information System?
a) A reduction in labour cost
b) The ability to manage voluminous data
c) Better supervision and control over human resources

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d) None of the above
4. Which of the following is not normally an essential condition for an
effective HRIS?
a) Ensuring clarity of HRIS goals
b) Strengthening the infrastructure and other supporting systems
c) Changing the HR manager
d) Sustained enhancement of the HRIS capabilities
5. Which of the following is/are the sub-system(s) of HRIS?
a) Position control and budgeting system
b) Compensation Management system
c) Performance management system
d) All of the above

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09
KEY TO END CHAPTER QUIZES
Chapter 1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

b
a
a
c
d
c
a
c
b
b

Chapter 2
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

c
b
c
a
b
d
a
c
c
d

Chapter 3
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

c
b
d
b
c
d
c
c
b
d
b
a

Human Resource Management ADL


09
Chapter- 4
1.
2.
3.
4.
5.

d
b
c
d
b

Chapter -5
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

d
c
b
b
c
d
a
b
a
a

Chapter 6
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

b
b
c
a
d
c
c
d
c
c

Chapter 7
1.
2.
3.
4.
5.
6.

b
a
d
a
c
b

Chapter 8

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09
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

c
c
d
b
a
d
a
a
a
a

Chapter 9
1.
2.
3.
4.
5.

b
d
a
a
b

Chapter 10
1.
2.
3.
4.
5.

d
d
b
b
b

Chapter 11
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

b
c
c
b
a
c
d
d
c
d

Chapter 12
1. c
2. b

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09
3. d
4. c
5. d

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09
References
1. Durai Pravin, Human Resource Management, Pearson Education, 2010
2. Deb Tapomoy, Human Resource Development, Ane Books India, 2006
3. Jyothi.p and Venkatesh D. N, Human resorce Management , oxford
university press, 2006
4. Dwivedi R. S., Managing Human Resources Personnel Management in
Indian enterprises, galgotia publishing Company, 2006
5. Aswathappa k, Huam Resource management, Tata McGraw-Hill, 2008