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HUMAN RESOURCE MANAGEMENT

UNIT – 1
INTRODUCTION

1.1.MEANING OF HR AND HRM


Human resources (HR) is the company department charged with finding, screening, recruiting
and training job applicants, as well as administering employee-benefit programs
Human resources are the people who make up the workforce of an organization, business sector,
or economy. "Human capital" is sometimes used synonymously with "human resources",
although human capital typically refers to a more narrow view (i.e., the knowledge the individuals
embody and economic growth). Likewise, other terms sometimes used include "manpower",
"talent", "labour", "personnel", or simply "people".

Human Resource Management (HRM) is the term used to describe formal systems devised for
the management of people within an organization. The responsibilities of a human resource
manager fall into three major areas: staffing, employee compensation and benefits, and
defining/designing work.
Human resource management (HRM or HR) is the management of human resources. Commonly
referred to as the HR Departmentit is designed to maximize employee performance in service of
an employer's strategic objectives. HR is primarily concerned with the management of people
within organizations, focusing on policies and on systems. HR departments are responsible for
overseeing employee-benefits design, employee recruitment, training and development,
performance appraisal, and rewarding (e.g., managing pay and benefit systems).] HR also
concerns itself with organizational change and industrial relations, that is, the balancing of
organizational practices with requirements arising from collective bargaining and from
governmental laws.

1.2.NATURE AND SCOPE OF HRM


NATURE OF HRM

Nature of HRM:

1. HRM involves management functions like planning, organizing, directing and


controlling.
2. It involves procurement, development, maintenance and management of human
resource.
3. It helps to achieve individual, organizational and social objectives.
4. HRM is a mighty disciplinary subject. It includes the study of management psychology
communication, economics and sociology.
5. It involves team spirit and team work.

1 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
The scope of HRM refers to all the activities that come under the banner of HRM. The activities are as follows

HUMAN
RESOURC JOB
INDUSTRIAL E ANALYSIS
RELATIONS PLANNIN DESIGN
G RECRUITMEN
T AND
MOTIVATION, SELECTION
WELFARE,HEALT SCOPE OF
H AND SAFETY
HRM ORIENTATION
AND
INDUCTION
COMPENSATION
PLANNING AND TRAINING
PERFORMANCE AND
REMUNERATION
APPRAISAL DEVELOPMEN
T

1. Human resources planning: - Human resource planning is a process by which the


company to identify the number of jobs vacant, whether the company has excess staff or
shortage of staff and to deal with this excess or shortage.
2. Job analysis design: - Another important area of HRM is job analysis. Job analysis gives
a detailed explanation about each and every job in the company. Based on this job
analysis the company prepares advertisements.
3. Recruitment and selection: - Based on information collected from job analysis the
company prepares advertisements and publishes them in the news papers. A number of
applications are received after the advertisement is published, interviews are conducted
and the right employee is selected thus recruitment and selection are yet another
important areas of HRM.
4. Orientation and induction: - Once the employees have been selected an induction or
orientation program is conducted. The employees are informed about the background of
the company. They are told about the organizational culture and values and work ethics
and introduce to the other employees.
5. Training and development: - Every employee goes under training program which helps
him to put up a better performance on the job. Training program is also conducted for
existing staff that have a lot of experience. This is called refresher training. Training and
development is one area were the company spends a huge amount.

2 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
6. Performance appraisal: - Once the employee has put in around 1 year of service,
performance appraisal is conducted i.e. the HR department checks the performance of
the employee. Based on these appraisal future promotions, incentives, increments in
salary are decided.
7. Compensation planning and remuneration: - There are various rules regarding
compensation and other benefits. It is the job of the HR department to look into
remuneration and compensation planning.
8. Motivation, welfare, health and safety: - Motivation becomes important to sustain the
number of employees in the company. It is the job of the HR department to look into the
different methods of motivation. Apart from this certain health and safety regulations
have to be followed for the benefits of the employees.
9. Industrial relations: - Another important area of HRM is maintaining co-ordinal
relations with the union members. This will help the organization to prevent strikes
lockouts and ensure smooth working in the company.
1.3.FUNCTIONS OF HRM

Functions of Human Resource Management

Human Resource Management functions can be classified in following three categories.

MANAGERIAL FUNCTIONS OPERATIVE FUNCTIONS ADVISORY FUNCTIONS

1.HUMAN RESOURCE PLANNING RECRUITMENT AND SELECTION ADVISED TO TOP MGT

JOB ANALYSIS AND DESIGN

2. ORGANISING ADVISED TO DEPTL HEADS


PERFORMANCE APPRAISAL

TRAINING & DEVELOPMENT


3. DIRECTING
WAGE AND SALARY ADMINISTRATION

4. CONTROLLING EMPLOYEE WELFARE & MAINTENANCE

The Managerial Functions of Human Resource Management are as follows:

1. Human Resource Planning - In this function of HRM, the number and type of employees
needed to accomplish organisational goals is determined. Research is an important part of this
function, information is collected and analysed to identify current and future human resource
needs and to forecast changing values, attitude, and behaviour of employees and their impact
on organisation.

2. Organising - In an organisation tasks are allocated among its members, relationships are
identified, and activities are integrated towards a common objective. Relationships are
established among the employees so that they can collectively contribute to the attainment of
organisation goal.

3 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
3. Directing - Activating employees at different level and making them contribute maximum to
the organisation is possible through proper direction and motivation. Taping the maximum
potentialities of the employees is possible through motivation and command.

4. Controlling - After planning, organising, and directing, the actual performance of employees
is checked, verified, and compared with the plans. If the actual performance is found deviated
from the plan, control measures are required to be taken.

The Operative Functions of Human Resource Management are as follows:

1. Recruitment and Selection - Recruitment of candidates is the function preceding the selection,
which brings the pool of prospective candidates for the organisation so that the management
can select the right candidate from this pool.

2. Job Analysis and Design - Job analysis is the process of describing the nature of a job and
specifying the human requirements like qualification, skills, and work experience to perform that
job. Job design aims at outlining and organising tasks, duties, and responsibilities into a single
unit of work for the achievement of certain objectives.

3. Performance Appraisal - Human resource professionals are required to perform this function
to ensure that the performance of employee is at acceptable level.

4. Training and Development - This function of human resource management helps the
employees to acquire skills and knowledge to perform their jobs effectively. Training an
development programs are organised for both new and existing employees. Employees are
prepared for higher level responsibilities through training and development.

5. Wage and Salary Administration - Human resource management determines what is to be


paid for different type of jobs. Human resource management decides employees compensation
which includes - wage administration, salary administration, incentives, bonuses, fringe benefits,
and etc,.

6. Employee Welfare - This function refers to various services, benefits, and facilities that are
provided to employees for their well being.

7. Maintenance - Human resource is considered as asset for the organisation. Employee turnover
is not considered good for the organization. Human resource management always try to keep
their best performing employees with the organization.

8. Labour Relations - This function refers to the interaction of human resource management with
employees who are represented by a trade union. Employees comes together and forms an union
to obtain more voice in decisions affecting wage, benefits, working condition, etc,.

9. Personnel Research - Personnel researches are done by human resource management to


gather employees' opinions on wages and salaries, promotions, working conditions, welfare
activities, leadership, etc,. Such researches helps in understanding employees satisfaction,
employees turnover, employee termination, etc,.

4 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
10. Personnel Record - This function involves recording, maintaining, and retrieving employee
related information like - application forms, employment history, working hours, earnings,
employee absents and presents, employee turnover and other other data related to employees.

The Advisory Functions


of Human Resource Management are as follows:
Human Resource Management is expert in managing human resources and so can give advice
on matters related to human resources of the organization. Human Resource Management can
offer advice to:

1. Advised to Top Management


Personnel manager advises the top management in formulation and evaluation of personnel
programs, policies, and procedures.

2. Advised to Departmental Heads


Personnel manager advises the the heads of various departments on matters such as
manpower planning, job analysis, job design, recruitment, selection, placement, training,
performance appraisal, etc.
1.4. ROLE AND OBJECTIVES OF HRM

ROLE OF HRM
1. Advisory Role:
HRM advises management on the solutions to any problems affecting people, personnel
policies and procedures.

(a) Personnel Policies: Organization Structure, Social Responsibility, Employment Terms &
Conditions, Compensation, Career & Promotion, Training & Development and Industrial
Relations.
(b) Personnel Procedures: Relating to manpower planning procedures, recruitment and
selection procedures, and employment procedures, training procedures, management
development procedures, performance appraisal procedures, compensation procedures,
industrial relations procedures and health and safety procedures.
2. Functional Role: The personnel function formulates personnel policies in accordance with the
company’s doctrine and management guidelines. It provides guidance to managers to help them
ensure that agreed policies are implemented.
3. Service Role: Personnel function provides personnel services. These services constitute the
main activities carried out by personnel department, like payroll, disciplinary actions, etc, and
involve the implementation of the policies and procedures described above.

The primary objective of HRM is to ensure the availability of right people for right jobs so as the
organisational goals are achieved effectively.

This primary objective can further be divided into the following sub-objectives:

5 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
1. To help the organisation to attain its goals effectively and efficiently by providing competent and
motivated employees.

2. To utilize the available human resources effectively.

3. To increase to the fullest the employee’s job satisfaction and self-actualisation.

4. To develop and maintain the quality of work life (QWL) which makes employment in the organisation a
desirable personal and social situation.

5. To help maintain ethical policies and behaviour inside and outside the organisation.

6. To establish and maintain cordial relations between employees and management.

7. To reconcile individual/group goals with organisational goals.

HRM OBJECTIVES AND FUNCTIONS

1. Legal and Ethical compliance


SOCIAL
2. Satisfying Society’s Needs and Wants
OBJECTIVES
3. Harmony among Union and-management
relations

1. Human Resource Planning


ORGANIZATIONA 2. Employee’s relations
L OBJECTIVES 3. Recruitment, Selection and Training of retail employees

1.Performance Management
2.Compensation and benefits
FUNCTIONAL
3.Labour relations
OBJECTIVES
4.Managerial relations

1.Training and Development


2. Performance Management
PERSONAL
OBJECTIVES
3. Compensation and benefits

1.5. PERSONNEL MANAGEMENT

6 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Personnel management can be defined as obtaining, using and maintaining a satisfied
workforce. It is a significant part of management concerned with employees at work and with
their relationship within the organization.
According to Flippo, “Personnel management is the planning, organizing, compensation,
integration and maintainance of people for the purpose of contributing to organizational,
individual and societal goals.”
According to Brech, “Personnel Management is that part which is primarily concerned with
human resource of organization.”

Nature of Personnel Management

1. Personnel management includes the function of employment, development and


compensation- These functions are performed primarily by the personnel management
in consultation with other departments.
2. Personnel management is an extension to general management. It is concerned with
promoting and stimulating competent work force to make their fullest contribution to the
concern.
3. Personnel management exist to advice and assist the line managers in personnel matters.
Therefore, personnel department is a staff department of an organization.
4. Personnel management lays emphasize on action rather than making lengthy schedules,
plans, work methods. The problems and grievances of people at work can be solved more
effectively through rationale personnel policies.
5. It is based on human orientation. It tries to help the workers to develop their potential
fully to the concern.
6. It also motivates the employees through it’s effective incentive plans so that the
employees provide fullest co-operation.
7. Personnel management deals with human resources of a concern. In context to human
resources, it manages both individual as well as blue- collar workers.

7 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Role of Personnel Manager
Personnel manager is the head of personnel department. He performs both managerial and
operative functions of management. His role can be summarized as :

1. Personnel manager provides assistance to top management- The top management are
the people who decide and frame the primary policies of the concern. All kinds of policies
related to personnel or workforce can be framed out effectively by the personnel
manager.
2. He advices the line manager as a staff specialist- Personnel manager acts like a staff
advisor and assists the line managers in dealing with various personnel matters.
3. As a counsellor,- As a counsellor, personnel manager attends problems and grievances of
employees and guides them. He tries to solve them in best of his capacity.
4. Personnel manager acts as a mediator- He is a linking pin between management and
workers.
5. He acts as a spokesman- Since he is in direct contact with the employees, he is required
to act as representative of organization in committees appointed by government. He
represents company in training programmes.

Functions of Personnel Management


Following are the four functions of Personnel Management:

1. Manpower Planning
2. Recruitment
3. Selection
4. Training and Development

PERSONNEL MANAGEMENT CONCEPT

8 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
1.6. POLICIES AND STRATEGIES OF HRM

Policies of HRM

Human resource policies are continuing guidelines on the approach an organization intends to
adopt in managing its people. They represent specific guidelines to HR managers on various
matters concerning employment and state the intent of the organization on different aspects of
Human Resource management such as recruitment, promotion, compensation, training,
selections etc. They therefore serve as a reference point when human resources management
practices are being developed or when decisions are being made about an organization's
workforce.
A good HR policy provides generalized guidance on the approach adopted by the organization,
and therefore its employees, concerning various aspects of employment. A procedure spells out
precisely what action should be taken in line with the policies.
PURPOSE
The establishment of policies can help an organization demonstrate, both internally and
externally, that it meets requirements for diversity, ethics and training as well as its commitments
in relation to regulation and corporate governance of its employees. For example, in order to
dismiss an employee in accordance with employment law requirements, amongst other
considerations, it will normally be necessary to meet provisions within employment contracts
and collective bargaining agreements.[4] The establishment of an HR Policy which sets out
obligations, standards of behavior, and documents disciplinary procedures, is now the standard
approach to meeting these obligations. HR policies provide frameworks within which consistent
decisions are made and promote equity in the way in which people are treated.
HR policies can also be very effective at supporting and building the desired organizational
culture. For example, recruitment and retention policies might outline the way the organization
values a flexible workforce, compensation policies might support this by offering a 48/52 pay
option where employees can take an extra four weeks holidays per year and receive less pay
across the year.
In actuality, policies and procedures serve a number of purposes:

1. They provide clear communication between the organization and their employees
regarding their condition of employment.
2. They form a basis for treating all employees fairly and equally.
3. They are a set of guidelines for supervisors and managers.
4. They create a basis for developing the employee handbook.
5. They establish a basis for regularly reviewing possible changes affecting employees.
6. They form a context for supervisor training programs and employee orientation
programs.

DEVELOPMENT

9 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
In developing HR Policies, there should be clear and consistent statement of the organization's
policies regarding all conditions of employment and procedures for their equal and fair
implementation. In order to fulfill this objective, policies and procedures should be:

 Clear and specific, but provide enough flexibility to meet changing conditions.
 Comply with all appropriate law and regulation.
 Consistent amongst one another and reflect an overall true and fair view approach to all
employees.
HR policies are developed by making decisions and taking actions on the day-to-day problems of
the organization. The process of developing HR policies involves the assessment of the following
factors:

1. Identify the purpose and objectives which the organization wishes to attain regarding
its Human Resources department.
2. Analysis of all the factors under which the organization's HR policy will be operating.
3. Examining the possible alternatives in each area which the HR policy statement is
necessary.
4. Implementation of the policy through the development of a procedure to support the
policy.
5. Communication of the policy and procedures adapted to the entire organization.
6. Auditing the policy so as to reveal the necessary areas requiring change.
7. Continuous revaluation and revision of policy to meet the current needs of the
organization

FORMULATION
Human resource management consists of deliberate organizational activities designed to
improve employee productivity and administration through such means as recruitment,
compensation, performance, evaluation, training, record keeping and compliance. HR policies
should be developed for key HR management functions covering eight commonly accepted
responsibilities:

1. Compensation and benefits


2. Labor management relations
3. Employment practices and placement
4. Workplace diversity
5. Health, safety and security
6. Human resources information systems
7. Human resource research
8. Training and development

10 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
TYPES OF HR POLICIES

ON THE BASIS OF SOURCE ON THE BASIS OF DESCRIPTION

1. Originated Policies 1. General Policies

2. Implicit Policies 2. Specific Policies

3. Imposed Policies

4. Appealed Polices

On the basis of source


On the basis of their source, policies could be classified into

1. Originated Policies - These are the policies usually established by the senior managers in
order to guide their subordinates.
2. Implicit Policies - These are the policies which are not formally expressed; they are
inferred from the behavior of managers. They are also known as Implied Policies.
3. Imposed Policies - Policies are sometimes imposed on the business by external agencies
such as government, trade associations and trade unions.
4. Appealed Policies - Appealed policies arise because the particular case is not covered by
the earlier policies. In order to know how to handle some situations, subordinates may
request or appeal for the formulation of specific policies.
On the basis of description
On the basis of description, policies may be general or specific.

1. General Policies - These policies do not relate to any specific issue in particular. General
policies are formulated by an organization's leadership team. This kind of policies is called
'general' because they do not relate to any specific issue in particular.
2. Specific Policies - These policies are related to specific issues
like staffing, compensation, collective bargaining etc. Specific policies must confirm to
the pattern laid down by the general policies.

ADVANTAGES

The following advantages are achieved by setting up HR policies:

1. It helps managers at various levels of decision making to make decisions without


consulting their superiors. Subordinates are more willing to accept responsibility because

11 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
policies indicate what is expected of them and they can quote a written policy to justify
their actions.
2. It ensures long term welfare of employees and makes for a good employer-employee
relationship as favoritism and discrimination are reduced. Well-established policies
ensure uniform and consistent treatment of all employees throughout the organization.
3. It lays down the guidelines pursued in the organization and thereby minimizes
the personal bias of managers.
4. It ensures prompt action for taking decisions because the policies serve as standards to
be followed. They prevent the wastage of time and energy involved in repeated analyses
for solving problems of a similar nature.
5. It establishes consistency in the application of the policies over a period of time so that
each one in the organization gets a fair and just treatment. Employees know what action
to expect in circumstances covered by the policies. Policies set patterns of behavior and
permit employees to work more confidently.

STRATEGIES OF HRM
PEOPLE

DEVELOPMEN
T PROGRAMS
HRM
STRATEGIE
S

STRUCTURE CULTURE

HRM strategies, also known as Human Resource Management strategies, are your organization’s
plans for managing people, culture, structure, and training and development, and for
determining how people fit into your organization’s future growth.

PEOPLE

One of the first aspects of your HRM strategy is determining the type of person who is needed to
work in the organization. This is not just a matter of personality but also of the personalities and
work styles that are needed to help your organization achieve its overall business strategy. Do
the people in your organization need to be numbers-oriented, outgoing and focused on sales, or
a combination of both? Consulting firms such as Bernard Hodes Group or human resources
management software such as Oracle's PeopleSoft can help your organization create and manage
an effective "people framework."

12 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
PROGRAMS

Your organization’s programs include several elements. The first is attracting the kinds of people
you’ve decided are the right fit. How will the organization advertise positions and recruit the
talent you’ve decided you need? After you’ve made the right hires, you have to look at how to
train people to do their jobs effectively. In addition to training, your organization must decide
how to retain employees after hiring and initial training. Your organization should also determine
if there will be a bonus structure, a rewards program or further training that will lead to
promotion in the future.

CULTURE

A large part of your HRM strategy relates to the overall culture of the organization. You should
take the time to determine the leadership and management style of the organization. Is it
autocratic, “open door,” proactive or dictatorial? Your organization’s senior management should
decide on a closely related range of styles in order for a culture to “trickle down.” On the other
hand, what beliefs, values or missions does the organization want to achieve? This could be
related to customer service, beating the competition or rising to the top of the market itself. One
of the best ways to begin thinking about your organization's culture is to research how other
organizations and human resources professionals have created a culture. You can start your
research on the Web via Workforce Management or the Society for Human Resources
Management.

STRUCTURE

HRM strategy also extends to your organization’s structure. You must decide what jobs will carry
out which functions. Along with this, you should determine which jobs go with which
departments--and who is going to manage those departments. A human resources consulting
firm can help you with this structure or you can learn about job descriptions and job evaluation
at HR.com

DEVELOPMENT

One of the final pieces of your HRM strategy is the development of the organization. You’ve
already decided how to train the people you bring in, but what are the plans for training them in
the long run? Will you offer leadership training as part of the overall development plan? Will you
give employees the opportunity to take courses that will allow them to apply for promotion?
Does the organization plan to publish “learning plans” that allow an employee to map out his
future career, even if it isn’t in the department in which he started out? Talent and learning
management system providers like Geo Learning or Learn.com can help you map out
development plans, see sample learning strategies, and decide how to manage training within
your organization.

13 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
UNIT – 2
DESIGNING AND DEVELOPING HR SYSTEMS

2.1. HUMAN RESOURCE PLANNING (HRP)

Human resource planning is a process that identifies current and future human resources needs
for an organization to achieve its goals. Human resource planning should serve as a link between
human resource management and the overall strategic plan of an organization.

DEFINITION
“Process by which an organization ensures that it has the right number & kind of
people at the right place and at the right time, capable of effectively and efficiently completing
those tasks that help the organization achieve its overall objectives..

NEED AND IMPORTANCE OF HRP

Forecast future personnel needs: To avoid the situations of surplus or deficiency of manpower
in future, it is important to plan your manpower in advance. For this purpose a proper forecasting
of futures business needs helps you to ascertain our future manpower needs. From this angle,
HRP plays an important role to predict the right size of manpower in the organization.
Cope with change: HRP enables an enterprise to cope with changes in competitive forces,
markets, technology, products and government regulations. Such changes generate changes in
job content, skills demands and number of human resources required.
Creating highly talented personnel: Since jobs are becoming highly intellectual and incumbents
getting vastly professionalized, HRP helps prevent shortages of labor caused by attrition. Further
technology changes would further upgrade or degrade jobs and create manpower shortages. In
these situations only accurate human resource planning can help to meet the resource
requirements. Further HRP is also an answer to the problems of succession planning.
Protection of weaker sections: A well-conceived personnel planning would also help to protect
the interests of the SC/ST, physically handicapped, children of socially oppressed and backward
classes who enjoy a certain percentage of employments notwithstanding the constitutional
provisions of equal opportunity for all.

14 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
International strategies: International expansion strategies largely depend upon effective HRP.
With growing trends towards global operations, the need for HRP further becomes more
important as the need to integrate HRP more closely into the organization keeps growing. This is
also because the process of meeting staffing needs from foreign countries grows in a complex
manner. Foundation of personnel functions:

HRP provides essential information for designing and implementing personnel functions such
as recruitment, selection, personnel development, training and development etc.

HRP SYSTEM
HRP System as such includes following elements or sets for planning
 Overall Organization Objectives
 Business Environment
 Forecasting Manpower Needs
 Assessing Manpower Supply
 Matching Manpower Demand-Supply factors

2.2. JOB DESIGN

What is Job Design ?


Job Design is the function of specifying the work activities of an individual or group in an
organizational setting.

The Objective of Job design


Is to develop jobs that meet the requirements of the organization and its technology and
that satisfy the job holder’s personal and individual requirements.

Definition of Jon Design


The process of l inking specific tasks to specific jobs and deciding what techniques,
equipments and procedures should be used to perform those tasks.

Job design (also referred to as work design or task design) is a core function of human
resource management and it is related to the specification of contents, methods and relationship
of jobs in order to satisfy technological and organizational requirements as well as the social and
personal requirements of the job holder. Its principles are geared towards how the nature of a
person's job affects their attitudes and behavior at work, particularly relating to characteristics
such as skill variety and autonomy. The aim of a job design is to improve job satisfaction, to
improve through-put, to improve quality and to reduce employee problems (e.g., grievances,
absenteeism).

Job characteristic Theory

The job characteristic theory proposed by Hackman & Oldham (1976) stated that work
should be designed to have five core job characteristics, which engender three critical

15 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
psychological states in individuals—experiencing meaning, feeling responsible for outcomes, and
understanding the results of their efforts. In turn, these psychological states were proposed to
enhance employees’ intrinsic motivation, job satisfaction, quality of work and performance,
while reducing turnover.

Techniques/Methods of Job Design

1. Job simplification
Definition: The Job Simplification means breaking the job into relatively easier sub-parts with
the intention to enhance the individual’s productivity by minimizing the physical and mental
efforts required to perform a complex job.

2.Job Rotation
Job rotation is the systematic movement of employees from one job to another within the
organization to achieve various human resources objectives such as orienting new employees,
training employees, enhancing career development and preventing job boredom or burnout

16 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Objectives

1. Employee Learning
1. Rotation making employees more versatile
2. Gives employees a broader understanding of the business allowing them to be
better prepared to be promoted to management.[1]
2. Employer Learning
1. Using job rotation employers can learn their individual worker's strengths
2. Employers receive a flexible and knowledgeable workforce that can be sourced
throughout the company or agency.
3. Employee Motivation
1. Rotation reduces boredom
2. More knowledge of the company as a whole may lead to more promotions.

3. Job Enrichment

Job enrichment is a management concept that involves redesigning jobs so that they are
more challenging to the employee and have less repetitive work. The concept is based on a 1968
Harvard Business Review article by psychologist Frederick Herzberg titled 'One More Time: How
Do You Motivate Employees?'

 Reduce repetitive work.


 Increase the employee's feelings of recognition and achievement.
 Provide opportunities for employee advancement (i.e. promotions into jobs requiring
more skills).
 Provide opportunities for employee growth (i.e. an increase in skills and knowledge
without a job promotion).

Principles of Job enrichment

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
1. Removing some controls while retaining accountability
2. Increasing the accountability of individuals for own work
3. Giving a person a complete, natural unit of work
4. Granting additional authority to employees in their activity
5. Making periodic reports directly available to the workers themselves rather than to
supervisors
6. Introducing new and more difficult tasks not previously handled
7. Assigning individuals specific or specialized tasks; enabling them to become experts

4. Job Enlargement
Job enlargement means increasing the scope of a job through extending the range of
its job duties and responsibilities generally within the same level and periphery. Job
enlargement involves combining various activities at the same level in the organization and
adding them to the existing job.

Core job dimensions

1. Skill variety — this refers to the range of skills and activities necessary to complete the
job. The more a person is required to use a wide variety of skills, the more satisfying the
job is likely to be.
2. Task identity — this dimension measures the degree to which the job requires
completion of a whole and identifiable piece of work. Employees who are involved in an
activity from start to finish are usually more satisfied.

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
3. Task significance — this looks at the impact and influence of a job. Jobs are more
satisfying if people believe that they make a difference, and are adding real value to
colleagues, the organization, or the larger community.
4. Autonomy — this describes the amount of individual choice and discretion involved in a
job. More autonomy leads to more satisfaction. For instance, a job is likely to be more
satisfying if people are involved in making decisions, instead of simply being told what to
do.
5. Feedback — this dimension measures the amount of information an employee receives
about his or her performance, and the extent to which he or she can see the impact of
the work. The more people are told about their performance, the more interested they
will be in doing a good job. So, sharing production figures, customer satisfaction scores
etc. can increase the feedback levels.

2.3.JOB ANALYSIS

Job Analysis is a process to identify and determine in detail the particular job duties
and requirements and the relative importance of these duties for a givenjob. Job Analysis is a
process where judgments are made about data collected on a job

Purpose

One of the main purposes of conducting job analysis is to prepare job


descriptions and job specifications which in turn helps hire the right quality of workforce into an
organization. The general purpose of job analysis is to document the requirements of a job and
the work performed. Job and task analysis is performed as a basis for later improvements,
including: definition of a job domain; description of a job; development of performance
appraisals, personnel selection, selection systems, promotion criteria, training needs
assessment, legal defense of selection processes, and compensation plans.

Job analysis aims to answer questions such as:

19 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
 Why does the job exist?
 What physical and mental activities does the worker undertake?
 When is the job to be performed?
 Where is the job to be performed?
 Under What conditions it is to be performed?
Procedures of Job Analysis

JOB ANALYSIS

TASK ORIENTED WORKER ORIENTED

Focuses on the work, work duties, Focuses of the worker finding out
responsibilities and rating the tasks. attributes KSAOs

KSAO = Knowledge, Skills, Ability and


Other Personal characteristics.

2.4. JOB EVALUATION

A job evaluation is a systematic way of determining the value/worth of a job in relation to other
jobs in an organization. It tries to make a systematic comparison between jobs to assess their
relative worth for the purpose of establishing a rational pay structure.

Process of Job Evaluation

Gaining Acceptance

Creating Job Evaluation committee

Finding the Jobs to be evaluated

Analyzing and preparing job description

Selecting the method of evaluation

Evaluating Jobs

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
 Gaining acceptance: Before undertaking job evaluation, top management must explain the
aims and uses of the programme to managers, emphasizing the benefits. Employees and
unions may be consulted, depending on the legal and employee relations environment and
company culture. To elaborate the program further, presentations could be made to explain
the inputs, process and outputs/benefits of job evaluation.
 Creating job evaluation committee: It is not possible for a single person to evaluate all the
key jobs in an organization. Often a job evaluation committee consisting of experienced
employees, union representatives and HR experts is created to set the ball rolling.
 Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing
and costly. Certain key jobs in each department may be identified. While picking up the jobs,
care must be taken to ensure that they represent the type of work performed in that
department, at various levels.
 Analysing and preparing job description: This requires the preparation of a job
description and also an analysis of job specifications for successful performance. See job
analysis.
 Selecting the method of evaluation: The method of evaluating jobs must be identified,
keeping the job factors as well as organizational demands in mind. Selecting a method also
involves consideration of company culture, and the capacity of the compensation and
benefits function or job evaluation committee.
 Evaluating jobs: The relative worth of various jobs in an organization may be determined
by applying the job evaluation method. The method may consider the "whole job" by ranking
a set of jobs, or by comparing each job to a general level description. Factor-based methods
require consideration of the level of various compensable factors (criteria) such as level and
breadth of responsibility, knowledge and skill required, complexity, impact, accountability,
working conditions, etc.
2.5.RECRUITMENT AND SELECTION

Recruitment (hiring) is a core function of human resource management. It is the first step
of appointment. Recruitment refers to the overall process of attracting, short listing, selecting
and appointing suitable candidates for jobs (either permanent or temporary) within an
organization.[1] Recruitment can also refer to processes involved in choosing individuals for
unpaid positions, such as voluntary roles or unpaid trainee roles. Managers, human resource
generalists and recruitment specialists may be tasked with carrying out recruitment, but in some
cases public-sector employment agencies, commercial recruitment agencies, or specialist search

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
consultancies are used to undertake parts of the process. Internet-based technologies to support
all aspects of recruitment have become widespread.

Definition

According to Dale Yoder, “Recruitment is 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 working force.

Process of Recruitment

Recruitment process steps


But . . . there’s a little more to it than that, as you might imagine. Okay, so company officials must
be self-aware and know what works for their organization and what doesn’t. They must also act
proactively and have the proper frame of mind at the outset. Creating a basic recruitment
flowchart can sometimes be helpful to keep you on track.
With all of this in mind, below are the 10 basic steps in the recruitment process. (Remember, the
process in individual to each organization, meaning they might omit steps, add steps, move them
around, or all three.)

1—Identifying the hiring need


You can’t find what you need . . . if you don’t know what you need. It’s not enough to know that
you need [insert position title here]. You must also know the complete job description. However,
you must know the description as the last employee who left in the position left it, NOT the
description when that person took the job. That’s because chances are good that they took on
new/additional responsibilities while in the position. Now the job when they left is different than
they job when they arrived.

2—Planning
Once you’ve identified exactly what you need (both in terms of hard skills and soft skills), then
it’s time to put a plan together to find what you need. You know what they say: “When you fail
to plan, you plan to fail. “Where, where, where,. . . except it’s absolutely correct. Make sure that
you get the “buy in” of everybody involved with the hiring process on the steps that will be taken
and the communication channels that will be used. All it takes is one misstep to blow everything
up.

3—Searching
This is a case where you need to be a “hunter” and not a “gatherer.” Too many companies are
“gatherers,” thinking that superstar candidates are going to rain down from the sky like so much
manna. No, they are not. Once again, this is why companies hire “headhunters.” They hunt, they
do not gather. Not only that, but they’re good at what they do. Hiring authorities and even
companies with internal recruiters often cannot match the expertise and connections of a
recruiter who “works in the trenches” of the industry day after day.

4—Identifying viable candidates

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Finding candidate is also not enough. An organization (or its recruiter) must also find qualified
candidates. Anybody can find candidates. They’re everywhere. But those high-level A-players,
the kind of candidates your competition would kill for? They’re NOT everywhere. So searching
for them, finding them, and identifying them will be more difficult if the first three steps in the
process have not been undertaken.

5—Recruiting of A-level candidates


Once viable candidates have been identified, they must be recruited. In other words, they must
be sold on not only the opportunity, but also on the organization. Some organizations miss this
important distinction. Top candidates are not just interested in a great new job. They’re
interested in a great new job with a great new employer. If they like the job, but they don’t also
like the employer, then they’re not going to take the job. As mentioned above, recruiting is a
major facet of the recruitment process.

6—(Telephone) screening
Sure, you have a batch of viable candidates, most likely passive candidates, who are interested
in the position. But not every single one of them are going to make it through the process. That
brings us to the first screening stage of the process, the telephone interview. Ideally, you would
have a list of 10 to 15 very strong candidates, all of whom are interested in the position. The
phone screening serves to whittle that list down, so that you can move to the next stage of the
process, which is . . .

7—(Face-to-face) interviewing
There are two important aspects of this part of the recruitment process:
1. It can’t stretch out too long, or candidates involved will lose interest.
2. Employers must communicate to candidates where they are in the process and what to
expect in the near term or they will start looking elsewhere. This is a particular danger with
top candidates, since they are more than likely interviewing with more than one
organization.
Sure, there are other important aspects of the interview stage, but these are the two that
companies neglect the most, with predictably dire consequences.

8—Offering of employment
The offer stage is one of the most delicate stages of the recruiting process. A hiring manager
should never take for granted that a candidate is going to accept an offer. However, if they’ve
done all of the proper work beforehand and they’ve double and triple-checked everything, then
the candidate should accept the majority of the time. Here’s an important note: if an organization
is working with a search consultant, the hiring manager of that organization should let the search
consultant extend the offer. That’s what the candidate expects, and that’s what should happen.

23 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
9—Hiring of the candidate
Why are the offer step and the hire step not combined into one step? Because not every offer of
employment is accepted. If every offer was accepted, then yes, we could do that. If a #1 candidate
rejects the offer, then the company might extend the offer to their #2 candidate . . . or their #3
candidate, if #2 falls through. Once a candidate does accept the offer of employment, though,
that’s when the official hire can be made.

10—Onboarding of the candidate


What’s the point of hiring the best candidates in the marketplace if you can’t retain those
candidates after you’ve hired them? A comprehensive onboarding process is perhaps the most
crucial steps in the recruiting process. When we refer to onboarding, we’re talking about more
than just new employee paperwork and knowing where the bathrooms are located. We’re talking
about continuing to make the candidate/new employee feel wanted before they officially join
the organization. Many a company has failed to do that, only to see their new employee never
show up for their first day of work.

Methods Of Recruitment and Selection


Internal Sourcing

Internal sourcing is the practice of advertising a new or recently vacated position within a
business to existing employees. More businesses have come to use internal sourcing as a method
to recruit employees upward or laterally within the company because little or no training is
needed, and expenses that include advertising for a new employee and running background
checks are spared. It also fosters loyalty and parity among team members.

External Sourcing
External sourcing is a method of recruitment that conducts an employee candidate search
through external recruitment tools, such as job boards, newspaper advertisements and trade
publication announcements. This method favors bringing in job candidates that may or may not
have direct experience in your small business' line of work; a candidate within a satellite field
may offer a fresh, out-of-the-box perspective to the organization. External sourcing is also used
when the open position is not able to be filled by a current employee because of the technicality
or specialty of the position. Small Business recommends that you know exactly what type of job
candidate you are looking for before advertising the position and accepting resumes.
Third-Party Sourcing
Third-party sourcing involves using a placement agency or headhunter to find qualified job
candidates. These third-party sources use various techniques and tools to find appropriate job
applicants, such as extending offers of improved salary compensation and more flexible benefits
packages.

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Interviewing/Pre-Selection
All Business suggests that you should schedule interviews when you know you will have
uninterrupted time to review the job candidate's resume and conduct an insightful interview.
When conducting the interview, do not focus solely on the applicant's credentials or experience.
Instead, present hypothetical scenarios to the candidate and ask how she would evaluate and
solve the presented problems. Listen to her answers without interruption and take notes on key
points.
Candidate Selection
Using the interview notes you have taken, compare each interviewee with his resume and look
to see if you have missed anything while reading his resume the first time. Make your candidate
selection on the basis of how competently he answered your questions and what questions he
asked during the interview. Interviewees who do not ask questions are either shy or uninterested
in your business.
2.6. PLACEMENT

Introduction
Placement is a process of assigning a specific job to each of the selected candidates. It
involves assigning a specific rank and responsibility to an individual. It implies matching the
requirements of a job with the qualifications of the candidate
After an employee has been hired and oriented, he or she must be placed in his/her right
job. Placement is understood as the allocation of people to jobs. It is the assignment of re-
assignment of an employee to a new of different job.

Definition
Placement may be defined as “The determination of the job to which an accepted candidate
is to be assigned, and his assignment to that job, It is a matching of hat the supervisor has reason
to think he can do with the job demands (job requirements);
Significance of Placement
 It improves employee morale
 It helps in reducing employee turnover
 It helps in reducing absenteeism
 It helps in reducing accident rates
 It avoids misfit between the candidate and the job
 It helps the candidate to work as per the predetermined objectives of the organization

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Process of Placement
Collect details about the employee

Construct his or her profile

Which subgroup profile does the individual’s profile best fit?

Compare subgroup profile to job family profiles

Which job family profile does subgroup profile best fit?

Assign the individual to job family

Assign the individual to specific job after further counseling and assessment

2.7. PROMOTION AND TRANSFER


PROMOTION
A promotion is the advancement of an employee's rank or position in an organizational
hierarchy system. Promotion may be an employee's reward for good performance, i.e., positive
appraisal. Before a company promotes an employee to a particular position it ensures that the
person is able to handle the added responsibilities by screening the employee with interviews
and tests and giving them training or on-the-job experience. A promotion can involve
advancement in terms of designation, salary and benefits, and in some organizations the type of
job activities may change a great deal. The opposite of a promotion is a demotion.

Definition:

Promotion is vertical movement of an employee within the organization. In other words,


promotion refers to the upward movement of an employee from one job to another higher one,
with increase in salary, status and responsibilities. Promotion may be temporary or permanent,
depending upon the needs of the organization.

Advantages of Promotion
 Promotion, paves the way for employee self employment
 It enhances employee to use his knowledge and skills

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
 It inspires employees to compete and get a head of others
 It encourages them to remain royal and committed to their jobs and the organization

Purposes:

The following are the purposes or objectives of promotion:

 1. To recognize an employee’s skill and knowledge and utilize it to improve the


organizational effectiveness.
 2. To reward and motivate employees to higher productivity.
 3. To develop competitive spirit and inculcate the zeal in the employees to acquire skill,
knowledge etc.
 4. To promote employees satisfaction and boost their morale.
 5. To build loyalty among the employees toward organization.
 6. To promote good human relations.
 7. To increase sense of belongingness.

Bases of Promotion
 Merit – Based Promotions
 Seniority – Based promotions
Merit –Based Promotions: - occur when an employee is promoted because of superior
performance in the current job. Merit here denotes an individual’s knowledge, skills, abilities
and efficiency as measured from his educational qualifications, experience, and training and
past employment record. The advantages of this system are fairly obvious:
Seniority-based promotions: - Seniority refers to the relative length of service in the same
organization. Promoting an employee who has the longest length of service is often widely
welcomed by unions because it is fairly objective. It is easy to measure the length of service and
judge the seniority. There is no scope for favorism, discrimination and subjective judgment.
Everyone is sure of getting the same.
Differences Between Seniority And Merit Based Promotions

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
TRANSFER

“a lateral shift causing movement of individuals from one position to another usually without
involving any marked change in duties, responsibilities, skills needed or compensation”

Definition

Transfer is defined as “… the moving of an employee from one job to another. It may involve a
promotion, demotion or no change in job status other than moving from one job to another”.

Purposes of transfer
 To meet the organizational requirements
 To satisfy the employee needs
 To utilize employees better
 To adjust the work force
 To provide relief
 To reduce conflicts
Types of transfer
1. Production transfer
2. Replacement Transfer
3. Rotation Transfer
4. Shift Transfer
5. Remedial Transfer
6. Penal Transfer

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Reasons
Types of Transfer

1. To meet the organizational requirements Production Transfer


2 To satisfy employees’ needs Personal Transfer
3 To utilize employee’s skill knowledge etc
To improve employee’s background by placing him in different
4 Remedial Transfer
jobs of various departments, units etc.
5 To correct inter-personal conflicts
To adjust the workforce of one section/plant in other section/plant
6
during lay-off, closure or adverse business conditions etc.
To give relief to the employees who are overburdened or doing
7 Replacement Transfer
complicated or risky work for a long period
8 To punish the employees who violate the disciplinary rules Penal Transfer
To help the employees whose working hours or place of work is
9 Shift Transfer
inconvenient to them
To minimize fraud, bribe etc which result due to permanent stay
10.
and conduct of an employee with customers, dealers, suppliers etc.
Versatile Transfer
11 To increase the versatility of employees
(Rotation transfer)

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
UNIT – 3
COMPENSATION MANAGEMENT

COMPENSATION

Compensation is the total cash and non-cash payments that you give to an employee in exchange
for the work they do for your business. It is typically one of the biggest expenses for businesses
with employees. Compensation is more than an employee’s regular paid wages. It also includes
many other types of wages and benefits.

Types of compensation

 Base pay (hourly or salary wages)


 Sales commission
 Overtime wages
 Tip income
 Bonus pay
 Recognition or merit pay
 Benefits (insurances, standard vacation policy, retirement)
 Stock options
 Other non-cash benefits

Components of Compensation

Compensation will be perceived by employees as fair if based on systematic components. Various


compensation systems have developed to determine the value of positions. These systems utilize many
similar components including job descriptions, salary ranges/structures, and written procedures.

The components of a compensation system include

 Job Descriptions A critical component of both compensation and selection systems, job
descriptions define in writing the responsibilities, requirements, functions, duties, location,
environment, conditions, and other aspects of jobs. Descriptions may be developed for jobs
individually or for entire job families.

 Job Analysis The process of analyzing jobs from which job descriptions are developed. Job
analysis techniques include the use of interviews, questionnaires, and observation.

 Job Evaluation A system for comparing jobs for the purpose of determining appropriate
compensation levels for individual jobs or job elements. There are four main techniques:
Ranking, Classification, Factor Comparison, and Point Method.

 Pay Structures Useful for standardizing compensation practices. Most pay structures include
several grades with each grade containing a minimum salary/wage and either step increments

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
or grade range. Step increments are common with union positions where the pay for each job is
pre-determined through collective bargaining.

 Salary Surveys Collections of salary and market data. May include average salaries, inflation
indicators, cost of living indicators, salary budget averages. Companies may purchase results of
surveys conducted by survey vendors or may conduct their own salary surveys. When
purchasing the results of salary surveys conducted by other vendors, note that surveys may be
conducted within a specific industry or across industries as well as within one geographical
region or across different geographical regions. Know which industry or geographic location the
salary results pertain to before comparing the results to your company.

 Policies and Regulations

COMPENSATION MANAGEMENT
INTRODUCTION
Compensation management is designing and implementing total compensation package
with a systematic approach to providing value to employees in exchange for work performance.
Compensation is a systematic approach to providing monetary value to employees in
ecvhange for work performed. Compensation may acheve several purposed assisting in
recruitment, job performance and job satisfaction.
Objectives
 To recruit & retain qualified employees
 To increase or maintain morale.
 To determine basic wage & salary
 To reward for job performance
Importance of compensation Management
Compensation is an integral part of human resource management which helps in
motivating the employees and improving organizational effectiveness. Effectiveness in terms of:
 Attracting & Retaining Talent
 Motivating talent for better performance
 Cost effectiveness

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Direct compensation

It refers to monetary benefits offered and provided to employees in return of the services they
provide to the organization. The monetary benefits include basic salary, house rent allowance,
conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, PF/Gratuity,
etc. They are given at a regular interval at a definite time.

Indirect Compensation

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
It refers to non-monetary benefits offered and provided to employees in lieu of the services
provided by them to the organization. They include paid leave, car/transportation, Medical Aids and
assistance, Insurance (for self and family), Leave travel Assistance, Retirement Benefits, Holiday Homes

3.2.WAGE AND SALARY ADMINISTRATION

Wage and salary administration is a collection of practices and procedures used for
planning and distributing company-wide compensation programs for employees. These practices
include employees at all levels and are usually handled by the accounting department of a
company. Wage and salary administration procedures usually involve activities such as
calculating the number of hours worked in order to determine compensation, administering
employment benefits, and answering payroll questions from employees. At the majority of
companies and organizations, wages are usually dispersed to all employees on a specific date.
The workers in charge of salary administration may also be charged with ensuring that the
company adheres to federal and local compensation laws.

WAGE

A wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an


employer to an employee in exchange for work done.

SALARY

A salary is a form of payment from an employer to an employee, which may be specified in an


employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid
separately, rather than on a periodic basis. From the point of view of running a business, salary can also
be viewed as the cost of acquiring and retaining human resources for running operations, and is then
termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.

Objectives

Organisational Objectives:

The compensation system should be duly aligned with the organisational need and should also be
flexible enough to modification in response to change.

Accordingly, the objectives of system should be to:

1. Enable an organisation to have the quantity and quality of staff it requires.

2. Retain the employees in the organisation.

3. Motivate employees for good performance for further improvement in performance.

4. Maintain equity and fairness in compensation for similar jobs.

5. Achieve flexibility in the system to accommodate organisational changes as and when these
take place.
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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
6. Make the system cost-effective.

Individual Objectives:

From individual employee’s point of view, the compensation system should have the
following objectives:

1. Ensures a fair compensation.

2. Provides compensation according to employee’s worth.

3. Avoids the chances of favoritism from creeping in when wage rates are assigned.

4. Enhances employee morale and motivation.

Collective Objectives:

These objectives include:

1. Compensation in ahead of inflation.

2. Matching with market rates.

3. Increase in compensation reflecting increase in the prosperity of the company.

4. Compensation system free from management discretion.

3.3. INFLUENCING FACTORS THAT AFFECT COMPENSATION

1) Productivity of workers: to get the best results from the employees and to increase the
productivity compensation has to be productivity based.

2) Ability to pay: it depends upon the employer’s ability to pay wages to the workers. This
depends upon the profitability of the firm. If the firm is marginal and can’t afford to pay higher
than the competitors then the employees will go to other firms while if the company is successful
then they can easily pay their employees as they wish.

3) Government: government has also fixed the rules for protecting the interest of the employees.
The organizations are liable to pay as per the government instructions. Wages can not be fixed
below the level prescribed by the government.

4) Labor union: labor union also helps in paying better wages to the workers. Higher wages have
to be paid by the firm to its workers under the pressure of the trade unions.

5) Cost of living: wages depends upon the cost of living if it is high wages will also hike.

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ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
6) Demand and supply of labor: it is one of the important factors affecting wages. If the demand
of labor is more they will be paid high wages otherwise vice versa. If the supply of the employees
is more than they will be paid less and vice versa.

7) Prevailing wage rate: wages also depends upon the prevailing wage rate as the organizations
have to pay accordingly to keep the employees with them.

These are the 7 factors affecting compensation.

3.4. MONETARY AND NON MONETARY BENEFITS.

They say that money makes the world go around. However, this may not be true all the time,
especially when you are talking about motivating your employees.

Based on Maslow’s hierarchy of needs, wages are highly important and usually one of the
common motivators. They satisfy the immediate necessities of men such as food, clothing, and
shelter. But what is really essential are the needs found on the higher levels, and they are not
associated with money.

Here are the six non-monetary benefits you can provide to your employees:

1.Flexibility
It is a mandate for employees to follow their bosses, but if supervisors get all the say, they will
immediately feel limited. Workers still require a room where they can voice out their opinion and
ideas, as well as the liberty to be versatile on their approaches to conflicts and problems.

You can also emphasize flexibility in terms of work hours. Most of the career people these days
are moms and dads who have greater personal responsibilities. To be able to work at their own
pace will permit them to take care of all their obligations (both at home and at the office).

2.Recognition
Who does not want to be recognized? Yet many employees are not given even a pat in the back
or a handshake by their bosses. If they give employers the privilege to criticize, it is only right for
the managers to give away praises.

Recognition can come in different forms. A simple e-mail blast can already do wonders. You may
also hold an informal appreciation ceremony for all those who have excelled expectations for a
given month.

3.Training
When you train your employees, it means there is plenty of room for them to grow. They don’t
have to feel stuck to a routine job. They can look forward to much bigger challenges. Trainings
give good types of stress, something that motivates employees to push themselves to the limit.
Personally, it gives them a good idea of their own strengths and weaknesses.

35 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Trainings, however, should be in line with the career path the employee wants to take.
Otherwise, they cannot use the learning to the fullest. It is best to conduct skill assessment before
creating training programs.

4.Belongingness
Sickness is just one of the least causes of absenteeism. It is actually conflict and politics in the
workplace that makes workers hate coming to the office. Though most employees understand
the employee-manager relationship, it is also important to them that they can sense a feeling of
friendship and belongingness.

Take time to come up with team-building activities. It does not have to be very long or tedious.
Your team simply has to strengthen trust, respect, and accountability with each other.

5.Chance to Contribute
You can greatly motivate your employees if you can make them feel that the success of your
organization also depends on them. You can do this by allowing them to head projects as well
as getting their consensus on major decisions that can affect your business and organization.

6.FringeBenefits
Fringe benefits include additional allowances, leaves, health insurance plans, and other perks
that they can enjoy alone or with their loved ones.

36 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
UNIT – 4

HUMAN RESOURCE DEVELOPMENT

4.1.HUMAN RESOURCE DEVELOPMENT

In 1970, Leonard Nadler published his book “Developing Human Resources” in which he
coined the term ‘human resource development’ (HRD). Human resource refers to the talents and
energies of people that are available to an organization as potential contributors to the creation
and realization of the organization’s mission, vision, values, and goals.
Human resource development is the integrated use of training, organization, and career
development efforts to improve individual, group, and organizational effectiveness. HRD
develops the key competencies that enable individuals in organizations to perform current and
future jobs through planned learning activities.
Definitions of HRD:
1. According to South Pacific Commission ‘human resource development is equipping people
with relevant skills to have a healthy and satisfying life’.

2. According to Watkins, ‘human resource development is fostering long-term work related


learning capacity at individual, group and organizational level’.

3. The American Society for Training and Development defines HRD as follows: ‘human resource
development is the process of increasing the capacity of the human resource through develop-
ment. It is thus the process of adding value to individuals, teams or an organization as a human
system’.

Features of HRD:
1. Systematic approach:
HRD is a systematic and planned approach through which the efficiency of employees is
improved. The future goals and objectives are set by the entire organization, which are well
planned at individual and organizational levels.

2. Continuous process:
HRD is a continuous process for the development of all types of skills of employees such as
technical, managerial, behavioural, and conceptual. Till the retirement of an employee
sharpening of all these skills is required.

37 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
3. Multi-disciplinary subject:
HRD is a Multi-disciplinary subject which draws inputs from behavioural science, engineering,
commerce, management, economics, medicine, etc.

4. All-pervasive:
HRD is an essential subject everywhere, be it a manufacturing organization or service sector
industry.

5. Techniques:
HRD embodies with techniques and processes such as performance appraisal, training,
management development, career planning, counselling, workers’ participation and quality
circles.

Scope of HRD:
Human resource management (HRM) deals with procurement, development, compensation,
maintenance and utilization of human resources. HRD deals with efficient utilization of human
resources and it is a part of HRM.

Human resource being a systematic process for bringing the desired changes in the behaviour
of employees involves the following areas:
1. Recruitment and selection of employees for meeting the present and future requirements of
an organization.

2. Performance appraisal of the employees in order to understand their capabilities and


improving them through additional training.

3. Offering the employees’ performance counselling and performance interviews from the
superiors.

4. Career planning and development programmes for the employees.

5. Development of employees through succession planning.

6. Workers’ participation and formation of quality circles.

7. Employee learning through group dynamics and empowerment.

8. Learning through job rotation and job enrichment.

9. Learning through social and religious interactions and programmes.

38 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
10. Development of employees through managerial and behavioural skills.

Objectives of HRD:
The prime objective of human resource development is to facilitate an organizational
environment in which the people come first. The other objectives of HRD are as follows:

1. Equity:
Recognizing every employee at par irrespective of caste, creed, religion and language, can create
a very good environment in an organization. HRD must ensure that the organization creates a
culture and provides equal opportunities to all employees in matters of career planning,
promotion, quality of work life, training and development.

2. Employability:
Employability means the ability, skills, and competencies of an individual to seek gainful
employment anywhere. So, HRD should aim at improving the skills of employees in order to
motivate them to work with effectiveness.

3. Adaptability:
Continuous training that develops the professional skills of employees plays an important role in
HRD. This can help the employees to adapt themselves to organizational change that takes place
on a continuous basis.

HRD Functions:
HRD functions include the following:
1. Employee training and development,

2. Career planning and development,

3. Succession planning,

4. Performance appraisal,

5. Employee’s participation in management,

6. Quality circles,

7. Organization change and organization development.

39 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
4.2.TRAINING AND DEVELOPMENT

Human resource management regards training and development as a function concerned with
organizational activity aimed at bettering the job performance of individuals and groups
in organizational settings. Training and development can be described as "an educational process
which involves the sharpening of skills, concepts, changing of attitude and gaining more
knowledge to enhance the performance of employees". The field has gone by several names,
including "Human Resource Development", "Human Capital Development" and "Learning and
Development".
Training and development encompasses three main activities: training, education, and
development.

 Training: This activity is both focused upon, and evaluated against, the job that an
individual currently holds.
 Education: This activity focuses upon the jobs that an individual may potentially hold in the
future, and is evaluated against those jobs.
 Development: This activity focuses upon the activities that the organization employing the
individual, or that the individual is part of, may partake in the future, and is almost
impossible to evaluate.

METHODS OF TRAINING

Management development is a systematic process of growth and development by which the


managers develop their abilities to manage. It is concerned with not only improving the
performance of managers but also giving them opportunities for growth and development.

There are two methods through which managers can improve their knowledge and skills. One is
through formal training and other is through on the job experiences. On the job training is very
important since real learning takes place only when one practices what they have studied.

40 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
1. On-the-job Training (OJT) Methods:
This is the most common method of training in which a trainee is placed on a specific job and
taught the skills and knowledge necessary to perform it.

The advantages of OJT are as follows:


1. On the job method is a flexible method.

2. It is a less expensive method.

3. The trainee is highly motivated and encouraged to learn.

4. Much arrangement for the training is not required.

On-the-job training methods are as follows:


1. Job rotation:
This training method involves movement of trainee from one job to another gain knowledge and
experience from different job assignments. This method helps the trainee understand the
problems of other employees.

2. Coaching:
Under this method, the trainee is placed under a particular supervisor who functions as a coach
in training and provides feedback to the trainee. Sometimes the trainee may not get an
opportunity to express his ideas.

3. Job instructions:
Also known as step-by-step training in which the trainer explains the way of doing the jobs to the
trainee and in case of mistakes, corrects the trainee.

4. Committee assignments:
A group of trainees are asked to solve a given organizational problem by discussing the problem.
This helps to improve team work.

5. Internship training:
Under this method, instructions through theoretical and practical aspects are provided to the
trainees. Usually, students from the engineering and commerce colleges receive this type of
training for a small stipend.

2. Off-the-job Methods:

41 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
On the job training methods have their own limitations, and in order to have the overall
development of employee’s off-the-job training can also be imparted. The methods of training
which are adopted for the development of employees away from the field of the job are known
as off-the-job methods.

The following are some of the off-the-job techniques:


1. Case study method:
Usually case study deals with any problem confronted by a business which can be solved by an
employee. The trainee is given an opportunity to analyse the case and come out with all possible
solutions. This method can enhance analytic and critical thinking of an employee.

2. Incident method:
Incidents are prepared on the basis of actual situations which happened in different organizations
and each employee in the training group is asked to make decisions as if it is a real-life situation.
Later on, the entire group discusses the incident and takes decisions related to the incident on
the basis of individual and group decisions.

3. Role play:
In this case also a problem situation is simulated asking the employee to assume the role of a
particular person in the situation. The participant interacts with other participants assuming
different roles. The whole play will be recorded and trainee gets an opportunity to examine their
own performance.

4. In-basket method:
The employees are given information about an imaginary company, its activities and products,
HR employed and all data related to the firm. The trainee (employee under training) has to make
notes, delegate tasks and prepare schedules within a specified time. This can develop situational
judgments and quick decision making skills of employees.

5. Business games:
According to this method the trainees are divided into groups and each group has to discuss
about various activities and functions of an imaginary organization. They will discuss and decide
about various subjects like production, promotion, pricing etc. This gives result in co-operative
decision making process.

42 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
6. Grid training:
It is a continuous and phased programme lasting for six years. It includes phases of planning
development, implementation and evaluation. The grid takes into consideration parameters like
concern for people and concern for people.

7. Lectures:
This will be a suitable method when the numbers of trainees are quite large. Lectures can be very
much helpful in explaining the concepts and principles very clearly, and face to face interaction
is very much possible.

8. Simulation:
Under this method an imaginary situation is created and trainees are asked to act on it. For e.g.,
assuming the role of a marketing manager solving the marketing problems or creating a new
strategy etc.

9. Management education:
At present universities and management institutes gives great emphasis on management
education. For e.g., Mumbai University has started bachelors and postgraduate degree in
Management. Many management Institutes provide not only degrees but also hands on
experience having collaboration with business concerns.

10. Conferences:
A meeting of several people to discuss any subject is called conference. Each participant
contributes by analyzing and discussing various issues related to the topic. Everyone can express
their own view point.

4.3.PERFORMANCE APPRAISAL

A performance appraisal is a regular review of an employee's job performance and overall


contribution to a company. Also known as an "annual review," "performance review or
evaluation," or "employee appraisal," a performance appraisal evaluates an employee’s skills,
achievements and growth, or lack thereof. Companies use performance appraisals to give
employees big-picture feedback on their work and to justify pay increases and bonuses, as well
as termination decisions. They can be conducted at any given time but tend to be annual, semi-
annual or quarterly.

Performance appraisals also help employees and their managers create a plan for employee
development through additional training and increased responsibilities, as well as to identify
shortcomings the employee could work to resolve.

43 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Ideally, the performance appraisal is not the only time during the year that managers and
employees communicate about the employee’s contributions. More frequent conversations help
keep everyone on the same page, develop stronger relationships between employees and
managers, and make annual reviews less stressful.

METHODS OF PERFORMANCE APPRAISAL


Each method of performance appraisal has its strengths and weaknesses may be suitable for one
organisation and non-suitable for another one. As such, there is no single appraisal method
accepted and used by all organisations to measure their employees’ performance.

All the methods of appraisal devised so far have been classified differently by different authors.
While DeCenzo and Robbins’^ have classified appraisal methods into three categories: absolute
methods, relative methods and objective methods; Aswathappa has classified these into two
categories past-oriented and future-oriented.

Traditional Methods:
Ranking Method:
It is the oldest and simplest formal systematic method of performance appraisal in which
employee is compared with all others for the purpose of placing order of worth. The employees
are ranked from the highest to the lowest or from the best to the worst.

In doing this the employee who is the highest on the characteristic being measured and also the
one who is L lowest, are indicated. Then, the next highest and the next lowest between next
highest and lowest until all the employees to be rated have been ranked. Thus, if there are ten
employees to be appraised, there will be ten ranks from 1 to 10.

However, the greatest limitations of this appraisal method are that:


(i) It does not tell that how much better or worse one is than another,

44 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
(ii) The task of ranking individuals is difficult when a large number of employees are rated, and

(iii) It is very difficult to compare one individual with others having varying behavioural traits. To
remedy these defects, the paired comparison method of performance appraisal has been
evolved.

Paired Comparison:
In this method, each employee is compared with other employees on one- on one basis, usually
based on one trait only. The rater is provided with a bunch of slips each coining pair of names,
the rater puts a tick mark against the employee whom he insiders the better of the two. The
number of times this employee is compared as better with others determines his or her final
ranking.

Grading Method:
In this method, certain categories of worth are established in advance and carefully defined.
There can be three categories established for employees: outstanding, satisfactory and
unsatisfactory. There can be more than three grades. Employee performance is compared with
grade definitions. The employee is, then, allocated to the grade that best describes his or her
performance.

Such type of grading is done is Semester pattern of examinations and in the selection of a
candidate in the public service sector. One of the major drawbacks of this method is that the
rater may rate most of the employees on the higher side of their performance.

Forced Distribution Method:


This method was evolved by Tiffen to eliminate the central tendency of rating most of the
employees at a higher end of the scale. The method assumes that employees’ performance level
confirms to a normal statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful for
rating a large number of employees’ job performance and promo ability. It tends to eliminate or
reduce bias.

It is also highly simple to understand and easy to apply in appraising the performance of
employees in organisations. It suffer from the drawback that improve similarly, no single grade
would rise in a ratings.

Forced-Choice Method:
The forced-choice method is developed by J. P. Guilford. It contains a series of groups of
statements, and rater rates how effectively a statement describes each individual being

45 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
evaluated. Common method of forced-choice method contains two statements, both positive
and negative.

Check-List Method:
The basic purpose of utilizing check-list method is to ease the evaluation burden upon the rater.
In this method, a series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are
prepared by the HR department (see Figure 28-2). The check-list is, then, presented to the rater
to tick appropriate answers relevant to the appraisee. Each question carries a weight-age in
relationship to their importance.

Critical Incidents Method:


In this method, the rater focuses his or her attention on those key or critical behaviours that
make the difference between performing a job in a noteworthy manner (effectively or
ineffectively). There are three steps involved in appraising employees using this method.

First, a list of noteworthy (good or bad) on-the-job behaviour of specific incidents is prepared.
Second, a group of experts then assigns weightage or score to these incidents, depending upon
their degree of desirability to perform a job. Third, finally a check-list indicating incidents that
describe workers as “good” or “bad” is constructed. Then, the check-list is given to the rater for
evaluating the workers.

The basic idea behind this rating is to apprise the workers who can perform their jobs effectively
in critical situations. This is so because most people work alike in normal situation. The strength
of critical incident method is that it focuses on behaviours and, thus, judge’s performance rather
than personalities.

Its drawbacks are to regularly write down the critical incidents which become time-consuming
and burdensome for evaluators, i.e., managers. Generally, negative incidents are positive ones.
It is rater’s inference that determines which incidents are critical to job performance. Hence, the
method is subject to all the limitations relating to subjective judgments.

Graphic Rating Scale Method:


The graphic rating scale is one of the most popular and simplest techniques for appraising
performance. It is also known as linear rating scale. In this method, the printed appraisal form is
used to appraise each employee.

The form lists traits (such as quality and reliability) and a range of job performance characteristics
(from unsatisfactory to outstanding) for each trait. The rating is done on the basis of points on
the continuum. The common practice is to follow five points scale.
46 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA
ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
The rater rates each appraisee by checking the score that best describes his or her performance
for each trait all assigned values for the traits are then totaled. Figure 28-3 shows a typical graphic
rating scale.

This method is good for measuring various job behaviours of an employee. However, it is also
subjected to rater’s bias while rating employee’s behaviour at job. Occurrence of ambiguity in
design- mg the graphic scale results in bias in appraising employee’s performance.

Essay Method:
Essay method is the simplest one among various appraisal methods available. In this method, the
rater writes a narrative description on an employee’s strengths, weaknesses, past performance,
potential and suggestions for improvement. Its positive point is that it is simple in use. It does
not require complex formats and extensive/specific training to complete it.

47 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
However, essay method, like other methods, is not free from drawbacks. In the absence of any
prescribed structure, the essays are likely to vary widely in terms of length and content. And, of
course, the quality of appraisal depends more upon rater’s writing skill than the appraiser’s actual
level of performance.

Moreover, because the essays are descriptive, the method provides only qualitative information
about the employee. In the absence of quantitative data, the evaluation suffers from subjectivity
problem. Nonetheless, the essay method is a good start and is beneficial also if used in
conjunction with other appraisal methods.

Field Review Method:


When there is a reason to suspect rater’s biasedness or his or her rating appears to be quite
higher than others, these are neutralised with the help of a review process. The review process
is usually conducted by the personnel officer in the HR department.

The review process involves the following activities:


(a) Identify areas of inter-rater disagreement.

(b) Help the group arrive at a consensus.

(c) Ensure that each rater conceives of the standard similarity.

However, the process is a time-consuming one. The supervisors generally resent what they
consider the staff interference. Hence, the method is not widely used.

Confidential Report:
It is the traditional way of appraising employees mainly in the Government Departments.
Evaluation is made by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on employee’s strength
weakness, intelligence, attitude, character, attendance, discipline, etc. report.

Modern Methods:
Management by Objectives (MBO):
Most of the traditional methods of performance appraisal are subject to the antagonistic
judgments of the raters. It was to overcome this problem; Peter F. Drucker propounded a new
concept, namely, management by objectives (MBO) way back in 1954 in his book.

The Practice of management. The concept of MBO as was conceived by Drucker, can be described
as a “process whereby the superior and subordinate managers of an organization jointly identify

48 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
its common goals, define each individual’s major areas of responsibility in terms of results
expected of him and use these measures as guides for operating the unit and assessing the
contribution of each its members”.

In other words, stripped to its essentials, MBO requires the manager to goals with each employee
and then periodically discuss his or her progress toward these goals.

In fact, MBO is not only a method of performance evaluation. It is viewed by the Practicing
managers and pedagogues as a philosophy of managerial practice because .t .s a method by
wh.ch managers and subordinates plan, organise, communicate, control and debate.

Behaviourally Anchored Rating Scales (BARS):


The problem of judgmental performance evaluation inherent in the traditional methods of
performance evaluation led to some organisations to go for objective evaluation by developing
a technique known as “Behaviourally Anchored Rating Scales (BARS)” around 1960s. BARS are
descriptions of various degrees of behaviour with regard to a specific performance dimension.

It combines the benefits of narratives, critical incidents, and quantified ratings by anchoring a
quantified scale with specific behavioural examples of good or poor performance. The
proponents of BARS claim that it offers better and more equitable appraisals than do the other
techniques of performance appraisal we discussed so far.

360 – Degree Appraisal:


Yet another method used to appraise the employee’s performance is 360 – degree appraisal. This
method was first developed and formally used by General Electric Company of USA in 1992. Then,
it travelled to other countries including India. In India, companies like Reliance Industries, Wipro
Corporation, Infosys Technologies, Thermax, Thomas Cook etc., have been using this method for
appraising the performance of their employees. This feedback based method is generally used
for ascertaining training and development requirements, rather than for pay increases.

Under 360 – degree appraisal, performance information such as employee’s skills, abilities and
behaviours, is collected “all around” an employee, i.e., from his/her supervisors, subordinates,
peers and even customers and clients.

In other worlds, in 360-degree feedback appraisal system, an employee is appraised by his


supervisor, subordinates, peers, and customers with whom he interacts in the course of his job
performance. All these appraisers provide information or feedback on an employee by
completing survey questionnaires designed for this purpose.

49 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
All information so gathered is then compiled through the computerized system to prepare
individualized reports. These reports are presented to me employees being rated. They then
meet me appraiser—be it one’s superior, subordinates or peers—and share the information they
feel as pertinent and useful for developing a self-improvement plan.

In 360 – degree feedback, performance appraisal being based on feedback “all around”, an em-
ployee is likely to be more correct and realistic. Nonetheless, like other traditional methods, this
method is also subject to suffer from the subjectivity on the part of the appraiser. For example,
while supervisor may penalise the employee by providing negative feedback, a peer, being
influenced by ‘give and take feeling’ may give a rave review on his/her colleague.

4.4.CAREER PLANNING AND DEVELOPMENT


Definitions:
1. A career may be defined as ‘ a sequence of jobs that constitute what a person does for a
living’.

2. According to Schermerborn, Hunt, and Osborn, ‘Career planning is a process of systematically


matching career goals and individual capabilities with opportunities for their fulfillment’.

Career planning encourages individuals to explore and gather information, which enables them
to synthesize, gain competencies, make decisions, set goals and take action. It is a crucial phase
of human resource development that helps the employees in making strategy for work-life
balance.

Features of Career Planning and Career Development:


1. It is an ongoing process.

2. It helps individuals develop skills required to fulfill different career roles.

3. It strengthens work-related activities in the organization.

4. It defines life, career, abilities, and interests of the employees.

5. It can also give professional directions, as they relate to career goals.

Objectives of Career Planning:


The major objectives of career planning are as follows:
1. To identify positive characteristics of the employees.

2. To develop awareness about each employee’s uniqueness.


50 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA
ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
3. To respect feelings of other employees.

4. To attract talented employees to the organization.

5. To train employees towards team-building skills.

6. To create healthy ways of dealing with conflicts, emotions, and stress.

Benefits of Career Planning:


1. Career planning ensures a constant supply of promotable employees.

2. It helps in improving the loyalty of employees.

3. Career planning encourages an employee’s growth and development.

4. It discourages the negative attitude of superiors who are interested in suppressing the
growth of the subordinates.

5. It ensures that senior management knows about the calibre and capacity of the employees
who can move upwards.

6. It can always create a team of employees prepared enough to meet any contingency.

7. Career planning reduces labour turnover.

8. Every organization prepares succession planning towards which career planning is the first
step.

51 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
UNIT – 5
RECENT TRENDS IN HRM

5.1.OUTSOURCING

What is 'Outsourcing'

Outsourcing is the business practice of hiring a party outside a company to perform


services and create goods that traditionally were performed in-house by the company's own
employees and staff. Usually done as a cost-cutting measure, it can affect jobs ranging from
customer support to manufacturing to the back office.

Outsourcing was first recognized as a business strategy in 1989 and became an integral
part of business economics throughout the 1990s. The practice of outsourcing is subject to
considerable controversy in many countries. Those opposed argue it has caused the loss of
domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for
businesses and companies to allocate resources where they are most effective, and that
outsourcing helps maintain the nature of free market economies on a global scale.

In business, outsourcing is an agreement in which one company contracts its own internal
activity to different company.[1] It involves the contracting out of a business process (e.g. payroll
processing, claims processing) and operational, and/or non-core functions (e.g.
manufacturing, facility management, call center support) to another party (see also business
process outsourcing). The concept "outsourcing" came from the American Glossary 'outside
resourcing' and it dates back to at least 1981.[2][3] Outsourcing sometimes, though not always,
involves transferring employees and assets from one firm to another. Outsourcing is also the
practice of handing over control of public services to private enterprise.[4]
Outsourcing includes both foreign and domestic contracting,[5] and sometimes
includes offshoring (relocating a business function to a distant
[6]
country) or nearshoring (transferring a business process to a nearby country). Outsourcing is
often confused with offshoring, however, they can be distinguished: a company can outsource
(work with a service provider) and not offshore to a distant country. For example, in 2003 Procter
& Gamble outsourced their facilities' management support, but it did not involve offshoring. [7]
Financial savings from lower international labor rates can provide a major motivation for
outsourcing or offshoring. There can be tremendous savings from lower international labor rates
when offshoring.
In contrast, insourcing entails bringing processes handled by third-party firms in-house, and is
sometimes accomplished via vertical integration. However, a business can provide a contract
service to another organization without necessarily insourcing that business process.

Two organizations may enter into a contractual agreement involving an exchange of services,
expertise, and payments. Outsourcing is said to help firms to perform well in their core
52 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA
ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
competencies, fuel innovation, and mitigate a shortage of skill or expertise in the areas where
they want to outsource.
Reasons for outsourcing
Companies primarily outsource to reduce certain costs, which may include peripheral or "non-
core" business expenses,[19] high taxes, high energy costs, excessive government regulation or
mandates, and production or labor costs. The incentive to outsource may be greater for U.S.
companies due to unusually high corporate taxes and mandated benefits like social
security, Medicare, and safety protection (OSHA regulations).[20] At the same time, it appears U.S.
companies do not outsource to reduce executive or managerial costs. For instance, executive pay
in the United States in 2007 was more than 400 times more than average workers—a gap 20
times bigger than it was in 1965.[21] Other reasons include:

 Reducing and controlling operating costs.


 Improving company focus.
 Gaining access to world-class capabilities.
 Freeing internal resources for other purposes.
 Streamlining or increasing efficiency for time-consuming functions.
 Maximizing use of external resources.

5.2.QUALITY WORK LIFE (WORK LIFE BALANCE)

The present era is an era of knowledge workers and the society in which we are living has come,
to be known as knowledge society. The intellectual pursuits have taken precedence over the
physical efforts.
Some knowledge workers work for more than 60 hours a week. As a result of this, their
personal hobbies and interests clash with their work. Life is a bundle that contains all the
strands together and hence the need to balance work life with other related issues.’

One must have both love and work in one’s life to make it healthy. Gone are the days when the
priority of employees used to be for physical and material needs. With the increasing shift of
the economy towards knowledge economy, the meaning and quality of work life has undergone
a drastic change.

Meaning:
Quality of work life (QWL) refers to the favourableness or unfavourableness of a job
environment for the people working in an organisation. The period of scientific management
which focused solely on specialisation and efficiency, has undergone a revolutionary change.

53 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
The traditional management (like scientific management) gave inadequate attention to human
values. In the present scenario, needs and aspirations of the employees are changing.
Employers are now redesigning jobs for better QWL.

Definition:
The QWL as strategy of Human Resource Management has assumed increasing interest and
importance. Many other terms have come to be used interchangeably with QWL such as
‘humanisations of work’ ‘quality of working life, ‘industrial democracy’ and ‘participative work’.

There are divergent views as to the exact meaning of QWL.

A few definitions given by eminent authors on QWL are given below:


1. “QWL is a process of work organisations which enable its members at all levels to actively;
participate in shaping the organizations environment, methods and outcomes. This value based
process is aimed towards meeting the twin goals of enhanced effectiveness of organisations
and improved quality of life at work for employees. ”

—The American Society of Training and Development

2. “QWL is a way of thinking about people, work and organisations, its distinctive elements are
(i) a concern about the impact of work on people as well as on organisational effectiveness, and
(ii) the idea of participation in organisational problem-solving and decision making. ” —Nadler
and Lawler

3. “The overriding purpose of QWL is to change the climate at work so that the human-
technological-organisational interface leads to a better quality of work life.”

-Luthans

4. “QWL is based on a general approach and an organisation approach. The general approach
includes all those factors affecting the physical, social, economic, psychological and cultural
well-being of workers, while the organisational approach refers to the redesign and operation
of organisations in accordance with the value of democratic society. ”

—Beinum

From the definitions given above, it can be concluded that QWL is concerned with taking care
of the higher-order needs of employees in addition to their basic needs. The overall climate of
work place is adjusted in such a way that it produces more humanized jobs.

54 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
QWL is viewed as that umbrella under which employees feel fully satisfied with the working
environment and extend their wholehearted cooperation and support to the management to
improve productivity and work environment.

Quality of work life involves three major parts:


1. Occupational health care:
Safe work environment provides the basis for people to enjoy his work. The work should not
pose health hazards for the employees.

ADVERTISEMENTS:

2. Suitable working time:


Companies should observe the number of working hours and the standard limits on overtime,
time of vacation and taking free days before national holidays.

3. Appropriate salary:
The employee and the employer agree upon appropriate salary. The Government establishes
the rate of minimum salary; the employer should not pay less than that to the employee. Work
represents a role which a person has designated to himself. On the one hand, work earns one’s
living for the family, on the other hand, it is a self-realization that provides enjoyment and
satisfaction.

ADVERTISEMENTS:

Work-Life Quality — defined, as the balance between an employee’s work demands and
outside interests or pressures — is a long-standing but ever-evolving area of corporate social
responsibility. Some organizations view QWL as important, but do not formally link it to their
strategic or business plans.

Nature and Scope of Quality of Work Life:


Quality of work life is the quality of relationship between employees and total working
environment.

A Great Place to work is where “You Trust the people you work for, have pride in what you do,
and enjoy the people you work with.”

Quality of work life represents concern for human dimensions of work and relates to job
satisfaction and organisational development.

55 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
The following aspects improve the QWL:
1. Recognition of work life issues:
Issues related to work life should be addressed by the Board and other important officials of
the company like why people are not happy, do they need training, why employee morale is
poor and numerous other issues. If these are addressed properly, they will be able to build,
“People-Centred Organisations”.

2. Commitment to improvement:
QWL can be improved if the staff is committed to improvement in productivity and
performance. This issue can be taken by the board through staff recognition and support
programmes. Board should prepare QWL reports on periodic basis to boost the system. They
can also introduce reward system which will be of help to them.

3. Quality of work life teams:


Board members should form the combined team of managers and workers and all the issues
and common themes must be identified.

Work Life Teams = Managers + Staff

All issues must be addressed like loss of morale, lack of trust, increased intensity of work,
reward, recognition etc. and commonly, managers and staff should arrive at solutions.

4. Training to facilitators:
Both the leader and staff can assess the job requirement and decide jointly what type of
training is required to improve the quality of work life

5. Conduct focus groups:


Formation of focus groups can affect the QWL and discuss the questions in a positive way
like:
(a) What brought you here today?

(b) What do you feel are the top three issues that affect your quality of work life?

(c) What do you want the organisation should do for you?

(d) Do you want company to increase the salary, etc.

6. Analyze information from focus group:

56 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
After the formation of focus groups and their discussion on different issues and collection of
information, the information should be analysed to give right direction to organisational
activities.

7. Identify and implement improvement opportunities:


It is important to identify and implement improvement opportunities like communication,
recognition and non-monetary compensation. Improving support structure, constant review of
reward and recognition system etc. would help in formulating communication strategies,
focusing on linkages between managers and staff.

8. Flexible work hours:


The diverse work force of today does not want to work for fixed hours or days. They want
flexibility in their work schedule so that professional and personal life can be managed
together.

Flexibility can improve the QWL in the following ways:


i. Work for longer hours in a day with less number of working days in a week.

ii. Going to office for fixed hours but in different time slots rather than fixed working hours.
Many companies even provide the flexibility of work from home.

9. Autonomy to work:
Delegation is an essential element of organisation structure. People want freedom to work in
their own way, in terms of forming teams and making decisions. If they are allowed to do so, it
enhances the QWL. An organisation with high quality of work life is “an organisation that
promotes and maintains a work environment that results in excellence in everything it does –
by ensuring open communication, respect, recognition, trust, support, well being and
satisfaction of its members, both, personally and professionally”.

Importance of Quality of Work Life:


Many companies find that paying attention to the needs of employees can benefit the company
in terms of productivity, employee loyalty and company reputation.

QWL is important because of the following reasons:


1. Enhance stakeholder relations and credibility:
A growing number of companies that focus on QWL improve their relationships with the
stakeholders. They can communicate their views, policies, and performance on complex social
issues; and develop interest among their key stakeholders like consumers, suppliers, employees
etc.

57 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
2. Increase productivity:
Programmes which help employees balance their work and lives outside the work can improve
productivity. A company’s recognition and support — through its stated values and policies —
of employees’ commitments, interests and pressures, can relieve employees’ external stress.

This allows them to focus on their jobs during the workday and helps to minimize absenteeism.
The result can be both enhanced productivity and strengthened employee commitment and
loyalty.

3. Attraction and retention:


Work-life strategies have become a means of attracting new skilled employees and keeping
existing ones satisfied. Many job seekers prefer flexible working hours as the benefit they
would look for in their job. They would rather have the opportunity to work flexible hours than
receive an additional increment in annual pay.

a. More employees may stay on a job, return after a break or take a job with one company over
another if they can match their needs better with those of their paid work.

b. This results in savings for the employer as it avoids the cost of losing an experienced worker
and recruiting someone new.

c. Employers who support their staff in this way often gain loyalty from the staff.

4. Reduces absenteeism:
a. Companies that have family-friendly or flexible work practices have low absenteeism.
Sickness rates fall as pressures are managed better. Employees have better methods of dealing
with work-life conflicts than taking unplanned leave.

b. Workers (including the managers) who are healthy and not over-stressed are more efficient
at work.

5. Improve the quality of working lives


a. Minimising work-life role conflict helps prevent role overload and people have a more
satisfying working life, fulfilling their potential both in paid work and outside it.

b. Work life balance can minimise stress and fatigue at work, enabling people to have safer and
healthier working lives. Workplace stress and fatigue can contribute to injuries at work and
home.

58 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
c. Self-employed people control their own work time to some extent. Most existing information
on work-life balance is targeted at those in employment relationships. However, the self-
employed too may benefit from maintaining healthy work habits and developing strategies to
manage work flows which enable them to balance one with other roles in their lives.

6. Matches people who would not otherwise work with jobs:


a. Parents, people with disabilities and those nearing retirement may increase their work force
participation if more flexible work arrangements are made. Employment has positive individual
and social benefits beyond the financial rewards.

b. Employers may also benefit from a wider pool of talent to draw from, particularly to their
benefit when skill shortages exist.

7. Benefiting families and communities:


a. In a situation of conflict between work and family, one or other suffers. Overseas studies
have found that family life can interfere with paid work. QWL maintains balance between work
and family. At the extreme, if family life suffers, this may have wider social costs.

b. Involvement in community, cultural, sporting or other activities can be a benefit to


community and society at large. For instance, voluntary participation in school boards of
trustees can contribute to the quality of children’s education.

While such activities are not the responsibility of individual employers, they may choose to
support them as community activities can demonstrate good corporate citizenship. This can
also develop workers’ skills which can be applied to the work place.

8. Job involvement:
Companies with QWL have employees with high degree of job involvement. People put their
best to the job and report good performance. They achieve a sense of competence and match
their skills with requirements of the job. They view their jobs as satisfying the needs of
achievement and recognition. This reduces absenteeism and turnover, thus, saving
organisational costs of recruiting and training replacements.

9. Job satisfaction:
Job involvement leads to job commitment and job satisfaction. People whose interests are
protected by their employers experience high degree of job satisfaction. This improves job
output.

10. Company reputation:

59 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Many organizations, including Governments, NGOs, investors and the media, consider the
quality of employee experience in the work place when evaluating a company. Socially
responsible investors, including some institutional investors, pay specific attention to QWL
when making investment decisions.

Significance of Good Work-life Quality:


1. Decrease absenteeism and increase turnover,

2. Less number of accidents,

3. Improved labour relations,

4. Employee personification,

5. Positive employee attitudes toward their work and the company,

6. Increased productivity and intrinsic motivation,

7. Enhanced organizational effectiveness and competitive advantage, and

8. Employees gain a high sense of control over their work.

Problems in Improving the QWL:


Though every organisation attempts to improve the employer-employee relations and through
it, the quality of work life of employees, problems may occur in effective implementation of
QWL programmes.

These problems may occur because of:


1. Poor reward and recognition:
People will not do their best when they feel that employers’ commitment in terms of reward
and recognition is lacking. Commitment is a mutual phenomenon. When employers want to get
the best from employees but do not give them reward and recognition, people will not be
committed to work.

2. Dead-end jobs:
Work which does not offer opportunities for growth and promotion is one of the greatest
reasons for employees’ de-motivation and non-commitment. Jobs which deprive employees of
self-development and growth opportunities lead to high dissatisfaction and disloyalty.

3. Managing by intimidation:

60 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
Mistreating people and managing them by threats and embarrassment leads to employees’
dissatisfaction and weakens their commitment. In a best seller book” The Loyalty Link” Dennis
G. Mc Carthty has identified managing by intimidation as one of the seven ways which
undermine employees’ loyalty.

4. Negative working environment:


Non-acceptance by colleagues, non-cooperation, too much politics, and negative behaviour by
colleagues, supervisors and other people in the company also hamper commitment. At the end
of the day people want peace of mind, which if not available in the work environment will
discourage them to show total support to the company.

5. No job security:
One of the major needs of employees is job security. If the employee feels that he can lose his
job anytime, he would not be committed towards company’s goals.

6. Negative attitude:
Some people by nature are not committed to anything and anyone and as such they would not
be committed to their employers also. Commitment is an attitude and those who lack it will not
be committed to their jobs.

5.3.QUALITY CIRCLES
A quality circle is a volunteer group composed of workers , usually under the leadership of their
supervisor , who are trained to identify, analyze and solve work-related problems and present
their solutions to management in order to improve the performance of the organization, and
motivate and enrich the work of employees. When matured, true quality circles become self-
managing, having gained the confidence of management.
Qualitycircle
Participative management technique within the framework of a company wide quality system in
which small teams of (usually 6 to 12) employees voluntarily form to define and solve a quality
or performance related problem. In Japan (where this practice originated) quality circles are an
integral part of enterprise management and are called quality control circles.
Quality Circles (QC) or Quality Control Circles (QCC) : History

 Pioneered by Japanese.
 Japanese nomenclature: Quality Control Circles (QCC), generally now known as Quality Circles (QC) or
some call it as Small Group Activity (SGA).
 1962: First QC Circle was registered with QC Circle Head Quarters in Japan.
 1974: Lockheed Company, USA started Quality Circle movement.
 1977: International Association of Quality Circles (IACC) was formed in USA.
 1980: BHEL, Hyderabad first in India to start Quality Circles.
 1982: Quality Circle Forum of India (QCFI) was founded.

61 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
BENEFITS OF QUALITY CIRCLES

There are no monetary rewards in the QC’s. However, there are many other gains, which largely benefit the individual
and consecutively, benefit the business. These are:

 Self-development: QC’s assist self-development of members by improving self-confidence, attitudinal


change, and a sense of accomplishment.

 Social development: QC is a consultative and participative programme where every member cooperates
with others. This interaction assists in developing harmony.

 Opportunity to attain knowledge:QC members have a chance for attaining new knowledge by sharing
opinions, thoughts, and experience.

 Potential Leader: Every member gets a chance to build up his leadership potential, in view of the fact that
any member can become a leader.

 Enhanced communication skills:The mutual problem solving and presentation before the management
assists the members to develop their communication skills.

 Job-satisfaction: QC’s promote creativity by tapping the undeveloped intellectual skills of the individual.
Individuals in addition execute activities diverse from regular work, which enhances their self-confidence and
gives them huge job satisfaction.

 Healthy work environment: QC’s creates a tension-free atmosphere, which each individual likes,
understands, and co-operates with others.

 Organizational benefits: The individual benefits create a synergistic effect, leading to cost effectiveness,
reduction in waste, better quality, and higher productivity.

All these benefits are lasting in nature, which bring about progress over a period of time.

5.4.TOTAL QUALITY MANAGEMENT

Total Quality Management (TQM) describes a management approach to long-term success


through customer satisfaction. In a TQM effort, all members of an organization participate in
improving processes, products, services, and the culture in which they work.

Total Quality Management Principles: The 8 Primary Elements of TQM

Total quality management can be summarized as a management system for a customer-focused


organization that involves all employees in continual improvement. It uses strategy, data, and
effective communications to integrate the quality discipline into the culture and activities of the
organization. Many of these concepts are present in modern Quality Management Systems, the
successor to TQM. Here are the 8 principles of total quality management:

62 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
1. Customer-focused

The customer ultimately determines the level of quality. No matter what an organization does
to foster quality improvement—training employees, integrating quality into the design process,
upgrading computers or software, or buying new measuring tools—the customer determines
whether the efforts were worthwhile.

2. Total employee involvement

All employees participate in working toward common goals. Total employee commitment can
only be obtained after fear has been driven from the workplace, when empowerment has
occurred, and management has provided the proper environment. High-performance work
systems integrate continuous improvement efforts with normal business operations. Self-
managed work teams are one form of empowerment.

3. Process-centered

A fundamental part of TQM is a focus on process thinking. A process is a series of steps that
take inputs from suppliers (internal or external) and transforms them into outputs that are
delivered to customers (again, either internal or external). The steps required to carry out the
process are defined, and performance measures are continuously monitored in order to detect
unexpected variation.

4. Integrated system

Although an organization may consist of many different functional specialties often organized
into vertically structured departments, it is the horizontal processes interconnecting these
functions that are the focus of TQM.

 Micro-processes add up to larger processes, and all processes aggregate into the business
processes required for defining and implementing strategy. Everyone must understand the
vision, mission, and guiding principles as well as the quality policies, objectives, and critical

63 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.
processes of the organization. Business performance must be monitored and communicated
continuously.
 An integrated business system may be modeled after the Baldrige National Quality
Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique
work culture, and it is virtually impossible to achieve excellence in its products and services
unless a good quality culture has been fostered. Thus, an integrated system connects business
improvement elements in an attempt to continually improve and exceed the expectations of
customers, employees, and other stakeholders.

5. Strategic and systematic approach

A critical part of the management of quality is the strategic and systematic approach to
achieving an organization’s vision, mission, and goals. This process, called strategic planning or
strategic management, includes the formulation of a strategic plan that integrates quality as a
core component.

6. Continual improvement

A major thrust of TQM is continual process improvement. Continual improvement drives an


organization to be both analytical and creative in finding ways to become more competitive and
more effective at meeting stakeholder expectations.

7. Fact-based decision making

In order to know how well an organization is performing, data on performance measures are
necessary. TQM requires that an organization continually collect and analyze data in order to
improve decision making accuracy, achieve consensus, and allow prediction based on past
history.

8. Communications

During times of organizational change, as well as part of day-to-day operation, effective


communications plays a large part in maintaining morale and in motivating employees at all
levels. Communications involve strategies, method, and timeliness.

64 HRM BY K ASHOK KUMAR, ASSISTANT PROFESSOR, DEPT OF MBA, SREE RAMA


ENGINEERING COLLEGE, KARAKAMBADI ROAD, TIRUPATI.