FChapter 1 Introduction to human resource management

• Definition of HRM
• Features
• Scope / functions of HRM
• Definition of Personnel mgmt
• Evolution of HRM / Trends in HRM
• Difference b/w HRM & PM
• Challenges before the HR manager
• Role of HR manager
• Traits / characteristics of workforce
• Personnel Philosophy
• Personnel Mannual

Introduction:

The advent of the era of liberalization and globalization along with

the advancements in information technology (IT) has transformed
the world around us. It has brought to centre stage the importance
of HR, more than ever before. The purpose of HRM is to enable
appropriate deployment of HR.

In a competitive scenario, effective utilization of HR has become

necessary and the primary task of organizations is to identify, recruit
and channel competent HR into their business operations for
improving productivity and functional efficiency.

Effective utilization of HR would lead to both accomplishment of

individual and organizational goals and creation of assets at the
national level.

Meaning of HRM:

HRM is a part of the management process which is primarily

concerned with human constituents of an organization, so as to
achieve objectives of the organization and potential of employees.
Growth of organizations can partly be stopped or hampered as they
can’t maintain an efficient and enthusiastic HR functions. Like- wise
the procurement, development compensation, integration and
maintenance of human factor in the organization is highly important
for organization’s success. HRM looks after all these functions and
are part of HRM.
Objectives of HRM:

• To contribute to strategic business goals.

• To acquire right men at right jobs at right time in right number.
• To train and develop the procured people adequately.
• To compensate and reward them adequately.
• To motivate, satisfy and maintain high morale of employees.
• To ensure respect to these employees and establish
harmonious relations.
• To integrate them into the organization by achieving
employees and organization goals.
• To develop value based organization culture towards
organization development and high performance.

Definition: (concept for 3 marks) - Edwin Flippo defines HRM as

“planning, organizing, directing, and controlling of procurement,
development, compensation, integration, maintenance and
separation of human resources to the end that individual,
organizational and social objectives are achieved.”

Features of HRM or characteristics or nature (3 or 4 marks)

1. HRM involves management functions like planning, organizing,

directing and controlling

2. It involves procurement, development, maintenance of human

resource

3. It helps to achieve individual, organizational and social

objectives

4. HRM is a multi-disciplinary subject. It includes the study of

management, psychology, communication, economics and
sociology.

5. It involves team spirit and teamwork.

Scope of HRM

The scope of HRM refers to all the activities that come under the
banner of HRM. These activities are as follows

1. Human resources planning: -

Human resource planning or HRP refers to a process by which
the company 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
newspapers. This is recruitment. 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 area of HRM.

4. Orientation and induction: -

Once the employees have been selected an induction or
orientation program is conducted. This is another important
area of HRM. The employees are informed about the
background of the company, explain 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 has a lot of experience.
This is called refresher training. Training and development is
one area where the company spends a huge amount.

6. Performance appraisal: -
Once the employee has put in around 1 year of service,
performance appraisal is conducted that is 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. The HR department also
handles this.

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.

Challenges before the HR manager/before modern personnel

management

INTRODUCTION

Globalization of Indian economy is compelling organizations to

rethink their future strategies. It is now widely recognized that
transformation is a pre-requisite to their survival and growth.
Business organization in India especially public enterprises are
experiencing winds of change. For the HR function, there would not
be a more existing and challenging opportunity than managing the
complexities of change and transformation. HR today is playing a
lead role along with business functions in creating the necessary
momentum and internal capabilities. Also, globalization has elevated
the importance of HRM development in organization. These changes
have led to the notion of the HR system as a strategic asset.
1. Corporate reorganizations:
The last 2-3 decades have been characterized by acquisition and
mergers of almost unbelievable proportions as well as other forms of
corporate reorganization. There have been instances of one
corporation purchasing another, two corporations joining forces,
companies undergoing massive reorganization. Virtually in every
major industry, the number of major players is shrinking. The
reorganization continues in an effort to improve competitiveness,
either by cutting layers of managers and restructuring the work
forces or by gaining economies through combining efforts.

It is difficult to imagine circumstances that pose a greater challenge

for HR management. Large mergers also involves overlapping
companies (HP & Compaq), seeking economies of scale thru
combined efforts.
Even, sometimes complexity of the situation may slow down the
entire process. In the meantime, employees are left wondering
what, if any, role they will play in the “new organizations.”
Employees may face these potential changes: (jet airways – air
sahara merger)

• Loss of job, pay, benefits.

• Job changes, including new roles and assignments.
• Transfer to a new geographic location.
• Changes in compensation and benefits.
• Staff changes, including new bosses, colleagues, and
subordinates.
• Change in corporate culture, loss of identity.

2. Workplace flexibility: It is expected to be on the rise as the

future workplace, the ‘virtual office’ is characterized by creative and
flexible work arrangements. As more employees work off-site-up,
there will be an increase in emphasis on performance and results
as opposed to the number of hours worked. In addition, off-site
employees can expect to attend fewer meetings. Specified work will
become much more collaborative and management will spend
nearly all its time managing cross-functional work teams (A cross-
functional team is a group of people with different functional
expertise working toward a common goal. It may include people
from finance, marketing, operations, and human resources
departments.), which will enjoy a lot of autonomy. In essence, there
will be a movement, a trend towards a decentralized model of HR.

HR managers will have to accommodate employees in their virtual

work locations and find ways to manage corporate culture,
socialization and employee orientation. In order to obtain and
maintain a competent workforce, they must act as organizational
performance experts and shape employees behavior without face to
face meetings. (HRM Review – May 2010 pg.16)

3. Retention of the employees: -

One of the most important challenge the HR manager faces is
retention of labor force. Earlier was the time, when an employee
would join the organization for a longer period of time. But with
ample opportunities available to a candidate, he/she may not have
such a long time vision to be with the organization. This may affect
the company and its productivity apart from harming the candidate
on his personal front. Due to this, many companies have a very high
rate of labor turnover therefore HR manager are required to take
some action to reduce the turnover. Higher the rate of turnover,
lower the good will of the organization.

4. Retrenchment during recession and other face: The recent

recessionary face was very challenging for HR managers across the
world. In many places companies reduced the work force due to
changing economic situations. Workers / employees who were
displaced faced severe problems. Such a situation also leads to a
negative atmosphere and attitude among other employees. It leads
to fear and increasing resentment against the management. The
challenge before the HR manager lies in implementing the
retrenchment policy without hurting the sentiments of the workers,
without antagonizing the labor union and by creating positive
attitude in the existing employees. (HRM Review may 2010- pg 15,
“innovative practices of cost-cutting)

5. Women in the work force: -

The number of women who have joined the work force has
drastically increased over a few years. Women employees face
totally different problems. They also have responsibility towards the
family. The organization needs to consider this aspect also. The
challenge before the HR manager lies in creating gender sensitivity
and in providing a good working environment to the women
employees. (6 months leave for central/state govt.. women
employees) (woman child example, journalism example-time shifts,
facilities to pregnant woman) (may not be a part of policy, work
timing flexibility) (HRM Review May 2010, pg12, “second career
internship program”, May 2010, pg 12)

6. Handicapped employees: -
This section of the population normally faces a lot of problems on
the job, very few organization have jobs and facilities specially
designed for handicapped workers. Therefore the challenge before
the HR manager lies in creating atmosphere suitable for such
employees and encouraging them to work better.

Significance/importance/need of HRM (5/10mks)

HRM becomes significant for business organization due to the

following reasons.

1. Objective: -
HRM helps a company to achieve its objective from time
to time by creating a positive attitude among workers.
Reducing wastage and making maximum use of resources etc.
 2. Facilitates professional growth: -
Due to proper HR policies employees are trained well and
this makes them ready for future promotions. Their talent can
be utilized not only in the company in which they are currently
working but also in other companies, which the employees
may join in the future.

3. Better relations between union and management: -

Healthy HRM practices can help the organization to
maintain co-ordinal relationship with the unions. Union
members start realizing that the company is also interested in
the workers and will not go against them therefore chances of
going on strike are greatly reduced.

4. Helps an individual to work in a team/group: -

Effective HR practices teach individuals teamwork and
adjustment. The individuals are now very comfortable while
working in team thus teamwork improves.

5. Identifies person for the future: -

Since employees are constantly trained, they are ready to
meet the job requirements. The company is also able to
identify potential employees who can be promoted in the
future for the top-level jobs. Thus one of the advantages of
HRM is preparing people for the future.

6. Allocating the jobs to the right person: -

If proper recruitment and selection methods are followed, the
company will be able to select the right people for the right
job. When this happens the number of people leaving the job
will reduce as the will be satisfied with their job leading to
decrease in labor turnover.

7. Improves the economy: -

Effective HR practices lead to higher profits and better
performance by companies due to this the company achieves a
chance to enter into new business and start new ventured thus
industrial development increases and the economy improves.

Personnel Vs Human Resources at Various levels

Human Resources denotes the total sum of all the components -

skills, creative ability etc. - with all the people (employed, self-
employed, unemployed, employers, owners etc.) whereas personnel
are limited to employees of organizations only.
Human Resources, even at the organization level, includes all
resources of all the people who contribute their services to the
achievement of organizational goals and also others who contribute
their services to create hurdles in the achievement of the said goals.

Functions of Human Resources Management:

.
There are two broad functions of H R M. They are:

1. Managerial Functions
2. Operational Functions

Managerial Functions:
Managerial functions of Personnel management include planning,
organizing, directing, co-ordinating and controlling.

Planning:
It is the charting out of programmes and changes in advance in the
achievement of organizational goals. Hence, it involves planning of
human resources requirements, recruitment, selection, training etc.
It also involves forecasting of personnel needs, changing values,
attitudes and behaviour of their employees and their impact on the
organization.

Organizing:
In the words of J.C. Massie, an organization is a "structure and
process by which co-operative groups of human beings allocated its
tasks among its members, identifies relationships and integrates its
activities towards a common objective." Given the complex
relationships that exist between specialized departments and the
general departments, many top managers seek the advice of
personnel manager. In this manner, the organization establishes
relationships among the employees so that they can together
contribute to the achievement of organizational goals.

Directing:
After planning and organizing comes the execution of the plan. The
willing and effective co-operation of employees towards the
achievement of organization’s goal has to be brought about by
proper direction. Identifying and utilizing maximum potentials of
people is possible through motivation and command. Direction,
therefore, is an important managerial function in ensuring optimum
employee contribution.

Co-ordinating:
It is the task of matrixing various employees’ efforts to ensure
successful goal achievement. The Personnel manager co-ordinates
various managers at different levels as far as the personnel
functions are concerned.

Controlling:
After planning, organizing, directing and coordinating, the various
activities, the performance is to be verified in order to know, at
various points of time, whether the activities are performed as per
plans and directions. It involves checking, verifying and comparing
actual with the plans, identification of deviations if any and
correcting the deviations. Auditing training programmes, analyzing
labor turnover, overseeing morale surveys, conducting exit
interviews are some of the controlling functions of personnel
management.

Operative Functions:
The operative functions of H R M relate to employment,
development, compensation and relations. All these are interacted
by managerial functions. Also, they are to be performed in
conjunction with management functions.

Human Resources Planning

Recruitment
EMPLOYMENT Selection
Induction
Placement

Performance Appraisal
Training
HUMAN RESOURCE Management Development
DEVELOPMENT Career Planning &
Development
Organization Change &
Organization Development

Job Evaluation
COMPENSATION Wage & Salary Administration
MANAGEMENT Fringe Benefits

Motivation
 Morale
HUMAN RELATIONS Job Satisfaction
Communication
Grievance & Disciplinary
Procedures
Quality of Work Life & Quality
Circles

Definition of Personnel Management:

Role of HR Manager:

The role of the HR manager must parallel the needs of his or her
changing organization. Successful organizations are becoming more
adaptive, flexible, quick to change direction and customer-centered.
Within this environment, the HR professional, who is considered
necessary by line managers, is a strategic partner, an employee
sponsor or advocate and a change mentor.

Strategic Partner

In today’s organizations, to guarantee their viability and ability to

contribute, HR managers need to think of themselves as strategic
partners. In this role, the HR person contributes to the development
of and the accomplishment of the organization-wide business plan
and objectives.

The HR business objectives are established to support the

attainment of the overall strategic business plan and objectives. The
tactical HR representative is deeply knowledgeable about the design
of work systems in which people succeed and contribute. This
strategic partnership impacts HR services such as the design of work
positions; hiring; reward, recognition and strategic pay; performance
development and appraisal systems; career and succession
planning; and employee development.

Employee Advocate (support)

As an employee sponsor or advocate, the HR manager plays an

integral role in organizational success via his knowledge about and
advocacy of people. This advocacy includes expertise in how to
create a work environment in which people will choose to be
motivated, contributing, and happy.

Fostering effective methods of goal setting, communication and

empowerment through responsibility, builds employee ownership of
the organization. The HR professional helps establish the
organizational culture and climate in which people have the
competency, concern and commitment to serve customers well.

In this role, the HR manager provides employee development

opportunities, employee assistance programs, gain sharing and
profit-sharing strategies, organization development interventions,
due process approaches to problem solving and regularly scheduled
communication opportunities.

Change Champion

The constant evaluation of the effectiveness of the organization

results in the need for the HR professional to frequently champion
change. Both knowledge about and the ability to execute successful
change strategies make the HR professional exceptionally valued.
Knowing how to link change to the strategic needs of the
organization will minimize employee dissatisfaction and resistance
to change.

The HR professional contributes to the organization by constantly

assessing the effectiveness of the HR function. He also sponsors
change in other departments and in work practices. To promote the
overall success of his organization, he champions the identification
of the organizational mission, vision, values, goals and action plans.
Finally, he helps determine the measures that will tell his
organization how well it is succeeding in all of this.

The HR manager’s role is very delicate otherwise, as he is caught

between the conflicting interests of management and labor. He has
to be loyal to the management but also should honor his duties to
the workers.

PERSONNEL VS HUMAN RESOURCES MANAGEMENT

Personnel Human Resources

Management Management
1. Personnel means 1. Human Resources
persons employed. management is the
Personnel management management of
is the management of employees’ knowledge,
people, skills employed. abilities, talents,
aptitudes, creative
abilities etc.
2. Employee in personnel 2. Employee in
management is mostly human resource
treated as an economic management is treated
man as his services are not only as economic
exchanged for wage / man but also as social
salary. and psychological man.
Thus, the complete man
 is viewed under this
approach.
3. Employee is viewed as 3. Employee is treated as
a commodity or tool or a resource.
equipment which can be
purchased.
4. Employees are treated 4. Employees are treated
as cost centres and as profit centres and
therefore management therefore, invests capital
controls the cost of for human resource
labor. development and future
utility.
5. Employees are used 5. Employees are used
mostly for the for the multiple benefits
organizational benefit. of the organisation,
employees and their
family members.
6. Personnel function is 6. Human resources
treated as only a management is a
secondary function. Strategic Management
function.

EVOLUTION OF HRM

HRM emerged during the 1970s. People continued to refer to it by

its older, more traditional title such as personnel management.

With the change in time, even the trend of calling PM changed to

HRM. The concern for the welfare of workers in the management of
business enterprises has been in existence since ages. Kautilya’s
Arthashastra states that there existed a sound base for systematic
management of resources during as early as the 4th century BC.

Elsewhere, HR in organizations received the management’s

attention much earlier. As early as in 1800 BC itself, ‘minimum wage
rate’ and ‘incentive wage plan’ were included in the Babylonian
Code of Hammurabi.

Experts of HRM in our country have tried to chronicle the growth of

the subject only since the 1920s. This was the period when state
intervention to protect the interests of workers was felt necessary
because of the difficult conditions which followed the First World
War (1914 – 1918), and the emergence of trade unions. The royal
Commission (1931) recommended the appointment of labor-welfare
officers to deal with the selection of workers and to settle their
grievances. The factories act 1948, made appointment of welfare
officers compulsory in industrial establishments employing 500 or
more workers each.

In course of time, two professional bodies, the Indian Institute of

Personnel Management (IIPM) and the National Institute of Labor
Management (NILM), were set up. IIPM had its headquarters at
Kolkata and NILM at Mumbai. These two places were the premier
centers of traditional industry (jute and cotton respectively) in pre-
independent India.

The aftermath of Second World War (1939 – 1945) and the country’s
political independence witnessed increased awareness and
expectations of workers. During the 1960s the personnel function
began to expand beyond the welfare aspect, with labor welfare. IR
and personnel administration integrating into the emerging
profession called personnel management (pm). Simultaneously, the
massive thrust given to the heavy industry in the context of planned
economic development, particularly since the 2nd Five year plan and
the accelerated growth of the public sector in the national economy
resulted in a shift in focus towards professionalization of
management.

By the 1970s, a shift in professional values was visible. It shifted

from a concern for welfare to a focus on efficiency. In the 1980s,
professionals began to talk about new technologies, HRM challenges
and HRD. The two professional bodies, IIPM & NILM, merged in 1980
to form the National Institute of Personnel Management (NIPM).

In the 1990s, the emphasis shifted to human values and productivity

through people. Reflecting this trend, the American society for
personnel administration (ASPA) was renamed as the Society for
Human Resource Management (SHRM). Thus, beginning in the
1920s, the subject of HRM has grown into a matured profession.

TRAITS/CHARACTERISTICS OF THE WORKFORCE:

In every country, working population occupies a prominent
position in all aspects including industry, commerce, services
and so on. It comprises persons who are actively engaged in
any productive work/activity.

Workforce or working class is a class of wage workers/earners

earners who do not have their own means of production and
who earn a living by selling their labor to the employer.
Workforce consists of three main forces, industrial workers,
farm / agricultural workers and office or shop employees.
Each category has its own professional skill, development and
changes in numerical strength and composition. The
industrial workers, being the core o f the working class, remain
as the most powerful, numerous and influential workforce.
The present workforce in India includes unskilled, semi-skilled
and skilled workers. In addition, it also includes technicians,
engineers as well as experts in the field of
telecommunication, computer programming and so on. We
are mainly concerned with industrial labor force which
functions in the field of industrial production.

Important Characteristics of Today's Workforce are as

follows:

(1) Composition of Workforce: According to National Sample

Survey Organization (1999 - 2000), the total employment in
both organized and unorganized sector in India was 397 million.
Of this, 28 million (7.1 percent) were in the organized sector
and the remaining 369 mn (92.9 %) were in the unorganized
sector i.e. in agriculture, construction, trade, transport,
communication and manufacturing, etc.
Out of a total of 28.1 million worker in the organized sector,
19.4 million (69%) were employed by the public sector and
nearly 8.7 million (31%) were employed by the private sector.
This suggests that the share of the organized private sector in
total employment was barely 2.2 per cent of total
employment. At present, private sector is given ample scope
to expand activities. As a result, large scale employment
opportunities will be available in the organized private sector
in India in the near future.

(2) Employment in Factories: In 1999, the employment in

factories (Under Factories Act, 1948) was of the order of 7.44
million. Taken together (factories, mines and plantations) it
accounted for 9 million in 1999 which is just 2.2 per cent of the total
workforce estimate of 402 million. In short, factory workforce is a
very small portion of total labor force in the country. However, this
industrial laborforce/workforce is given special attention by the
government because of its contribution in the industrial production.
This category of workforce is growing rapidly.

(3) Roots in villages: Industrial workforce has its roots in

villages. Workers have left their traditional occupations and have
migrated to cities and urban areas for employment. Many of
them have still retained their attachment to land and rural
life. However, the situation is fast changing in recent years.
The migratory character of industrial workforce has practically
ended in recent years. Now, we have industrial workers well
settled in big cities for two or more generations. A new class
of industrial laborforce (without roots in villages and
agriculture) is emerging in our towns and cities. This is visible
in cities like Mumbai, Kolkata, Ahmadabad and so on. Direct
recruitment, provision of training facilities to employees etc.
are, now, possible due to stable and urban based industrial
workforce.

(4) Limited education: Industrial workforce in India was largely

uneducated over years. As a result, they were paid less and also
exploited. Their participation in management was practically
absent. The general trend was to organize strike for meeting
their demands. However, the situation has changed due to their
long period stay in cities. The labor force is now educated. They
also take the benefit of training facilities provided by the
employer. Workers, even, demand training opportunities for
promotions and responsible positions within the organisation.
Due to training programmes, they get higher salaries, quick
promotions and responsible positions. In certain sectors,
workforce includes even diploma holders, engineers and software
and hardware experts. Indian labor force is now better equipped
to face the challenges of new technology, new production
techniques and other challenges of globalisation.

5) Labor turnover among industrial workforce: This

problem was serious in the olden days due to rural socio-
economic background, easy availability of jobs, wage payment
difference and so on. However, turnover is now reducing among
industrial workforce. This is due to non-availability of new jobs,
training needs of new jobs and more or less uniform pay scales
and working conditions in industrial townships. As a result,
shifting of jobs is difficult and also not attractive. Mobility of labor
is no more a serious problem in many organized industries.

In brief, rapid changes are taking place in industrial workforce in

India. This relates to magnitude, structure, sectoral composition
and earnings. These changes indicate that the position of
industrial workforce is much better today as compared to what it
was previously. At present, industrial workforce is improving as
regards educational background, social status, earnings and
urbanization. Workforce is now united in regard to various
problems faced by them. In the near future, industrial workforce
will increase in number and will make substantial contribution in
raising industrial production and productivity. This workforce will
also share fair benefits of industrial growth and prosperity.

A NOTE ON PERSONNEL PHILOSOPHY:

Personnel policies, procedures and actions in any company or

organization are guided by the philosophy of personnel
management which the company may agree for dealing with
the people. Such philosophy exists for every company but
may or may not be available in written form. Sometimes,
documents of the company (e.g. M/A or A/A ), personnel
manual or annual reports may refer to this personnel
philosophy. However, the top management and top
managers of the company are aware of the basic aspects of
such philosophy and follow the same while framing personnel
policies and while dealing with· various personnel problems.

Personnel philosophy of a company has different sides and it

covers different aspects of personnel management of a
company. For example, employees working in the company
may be viewed as a technical factor, which may passively or
actively oppose managerial leadership. It is always a desirable
policy to mould the attitude of employees and see that they
offer willing co-operation for achieving the objectives of the
company. Developing such co operative outlook among the
employees is beneficial to employees and the organization.
Company's personnel philosophy should be for treating
employees with dignity and securing their willing co-
operation. In short, management's attitude towards
employees is one major area which relates to the personnel
philosophy of the company.

The attitude of progressive/professional managements is

normally favorable to employees. They are not treated like
other material resources or as a commodity of exchange.
Employees are regarded as partners in the production or as a
precious asset with constructive potentials. An enlightened
management can utilize this manpower resource fully for the
benefit of the organization through progressive personnel
policies. Such policies relate to the personnel philosophy
.accepted by the management. Such management gives fair
treatment to employees with liberal opportunities to grow, to
develop and to reach to higher positions in the organization.
In brief, the importance attached to labor force is based on
the personnel philosophy of the management.

The personnel philosophy of the management is reflected in

its outlook as regards the manner in which work is to be
completed. Management means getting the work done by and
through others i.e. employees. Here, management may force
people to work and see that results are achieved. Autocratic
leadership will be introduced and the production activity will
be completed as per target/ requirement but by using force.
The other alternative is to achieve the organizational
objectives with the support, co operation and involvement of
the people. Here, democratic leadership will be introduced.
There will be delegation of authority, motivation of employees
through suitable measures and effective control within the
organization. Out of the two, which alternative is to be used
depends on the philosophy of personnel management
accepted. In fact, the personnel philosophy of the
management will be reflected in the personnel policies
introduced by the management from time to time.

FACTORS INFLUENCING PERSONNEL PHILOSOPHY:

(1) Top management philosophy: The personnel philosophy of a
business organization is reflected in the overall policy statements
issued by the top level management of the company. Such policy
statements are given in the annual reports, personnel manuals and
so on. One example of TISCO may be quoted here. The personnel
management philosophy of TISCO is based on the views of its
founder Shri. J.N. Tata whose concerns for the man and his welfare
have been prime. The personnel philosophy of TISCO is reflected in
the following statement." (i) Realistic and. generous understanding
and acceptance of their needs, rights and on enlightened awareness
of the social responsibility of industry; (ii) Adequate wages, good
working conditions, job security, an effective machinery for speedy
redressal of grievances and suitable opportunity for promotion and
self-development; (iii) Promoting feelings of trust and loyalty
through a humane and purposeful awareness of their needs and
aspirations; (iv) Creating a sense of belonging and team spirit
through their closer association with management at various levels".

(2) Motivation of employees: Managers have to motivate

employees and get the expected results from them. Different
methods of motivation are available and can be used. These
methods directly or indirectly influence the personnel
philosophy.

(3) Basic assumption about people (i.e. employees): The top

management has certain well accepted assumptions about
people i.e. employees working in the organization. The
personnel philosophy of the management is based on the
assumptions accepted. Even the personnel policies are
adjusted accordingly.

(4) Changes in the environment: The personnel management

philosophy is influenced by the changes in the environment
within which people/ employees are required to be treated
by the management. Such environmental factors include
changes in the labor laws, basic work values, requirements
of new life styles accepted by the people, difficulties in the
motivation of people and so on. The personnel philosophy of
the company is adjusted by the top management as per such
environmental changes.

What is a personnel policy??

A personnel policy is a pre-determined course of action set in order

to guide personnel to perform their work so as to meet the
objectives of the organization. Personnel policies furnish general
standards.

Personnel Policy Manual:

A personnel policy manual is a booklet, which contains a

comprehended form of the organizations policies regarding
personnel. These policies deal with different aspects like employee
benefits, employee discipline, company policies regarding unions
etc. These policies prove to be guidelines for the functioning of an
employee as an individual and also the functioning of the
organization in totality. These policies avoid any sort of confusion
when they are in written form. A personnel manual acts a guide to
employees, managers and supervisors. A personnel manual should
be provided to all managerial employees as a reference book for
their task performance.

CONTENTS OF THE PERSONNEL MANUAL

1. Organization goals and objectives.

 2. Personnel Policy.
3. The role of the Personnel Department.
4. Human Resource Planning.
5. Job Design, Job Analysis, Job Evaluation.
6. Recruitment and Selection.
7. Orientation, Induction and Placement.
8. Training and Development.
9. Performance Appraisal.
10. Remuneration, Rewards, Incentives.
11. Employee Benefits and Services.
12. Promotions, Transfers, Separations.
13. Employee Welfare/Employee Relations.
14. Safety and Health, Counseling.
15. Employees Participation.
16. Industrial Relations.

BENEFITS OF PERSONNEL POLICY MANUAL

1) Clear explanation of existing policies:

One major benefit is that a written manual of policy provides
everyone in management with a clear explanation of all existing
company policies and practices. This acts as an invaluable asset to
communications. Policy manual acts as a self-explanatory document

2) Useful tool in supervisory training:

Personnel policy manual provides excellent material that can be
used in conducting supervisory training courses for new supervisors
and for refreshing their understanding of past company policy.
Results of supervisory training will be available if company develop
a comprehensive and integrated company policy manual and use it
as a basis for supervisory training programme, personnel policy
manual acts as a cornerstone of supervisory training programmed in
human relation case studies, role playing, and other problem solving
techniques can be designed around the policy manual. Discussion
among supervisors in the context of the company’s policy manual
generates comment and criticism that are invaluable feedback for
consideration of further modification.

3) Document to company’s faith on fair personnel polices:

Personnel policy manual serves as written documentation of a
company good faith in providing fair employment practices and
equal employment opportunities for present employees and future
job applicants of the company.

4) Readymade guide or personnel policies and procedures:

A company needs well-trained and properly qualified managers who
are capable of administering company’s policy in fair and a
consistent manner. For this managers should know how to interpret
company policy effectively clearly and promptly personnel policy
acts as a guide to supervisory staff in regard to personnel policies
and procedures.

5) Training manual for supervisory staff:

Personnel policy manual act as a training manual for all ranks of
supervision and key personnel officers in clearly understanding the
personnel policies firmly, fairly equally to all employees regardless
of their race color religion. Members of management can support
the personnel policies and practices towers providing equal
employment opportunities only to the degree of understanding of
such policies and practices.

6) Avoid indecision on personnel matters:

Personnel policy manual avoids indecision in regard to personnel
matters. This reduces the tension on the part of management. It is
in a position to reach to decisions in relation to operating personnel
policies and practices.

7) Avoids unfair employment practices:

Supervisors are suppose to know how to interpret companies
personnel policies effectively and correctly so that employees or
trade union will not be able to charge management with unfair
employment practices. This manual provides with necessary
information explanation and guidance to managers and avoid
misinterpretation of personnel policies and practices of the company
by the managers and supervisors. This protects goodwill and
reputation of the company.

8) Act as a communication tool:

Personnel policy manual is useful as a tool of communication with
the users it act as two-way communication tool in development
stage and an authorized announcement method after policy has
been approved. The view of supervisors can be collected and
studied before changing the policies incorporated in the manual. The
official announcing of the new policy is made through the manual.
This provides the details that answers question before they are
asked. In brief policy manual acts as a useful communication device
within the organization.
CHAPTER 2 – PERSONNEL PLANNING,

Importance of Human resource:

Human resources are one of the most important features of many

businesses - especially in an economy where there is an increasing
shift towards service-based industries. Human resources account for
a large proportion of many businesses' costs and it is the people
that invariably drive a business. Management of these resources
therefore is an integral part of business success.

Background

There is no doubt that a business which does not plan its human
resource requirement for current and future will experience a
number of problems and may not be able to achieve above
mentioned performance standard.

Personnel / Human Resource Planning:

Like corporate and strategic management, human resource
management has a role to play in the continuity and longevity of the
organisation. It does this by ensuring that the company’s corporate
functions (such as marketing, production, etc.) are staffed – and that
these staff is able to contribute to corporate success. HRM facilitates
this by systematic human resource planning. Human resource
planning (HRP) has been defined as a technique to facilitate the
acquisition, utilization, development and retention of a company’s
human resources. These resources are considered by some to be
the organization’s most valuable asset and, therefore, need to be
deployed with the maximum efficiency and effectiveness.

The term “Manpower planning” or “Human resource planning” are

synonymous. HRP or MPP is the process by which a management
determines how an organization should move from its current
manpower position to its desired manpower position. Through
planning, the organization strives to have the right number and the
right kinds of people at the right places, at right time to do things
which results in both the organization and the individual receiving
the maximum long-range benefit.
Why is Human Resource Planning Important?

• It allows your business’ strategic plan to be carried out.

• Reflects the emphasis on people in organization’s Mission
Statement.
• Helps to identify critical HR Gaps and how the organization will
address them.
• Results in a more disciplined approach to the management of the
organization’s most critical resource – its people across your
management teams.

DEFINITION OF HRP:

According to Coleman, “The process of determining manpower

requirements and the means for meeting those requirements in
order to carry out the integrated plan of the organization.”

According to Stainer, “Strategy for the acquisition, utilization,

improvement and preservation of an enterprise’s human resources.
It relates to establishing job specifications or the quantitative
requirements of jobs determining the number of personnel required
and developing sources of manpower."

Thus, we can say that HRP is the process of forecasting a

firm’s future demand for, and supply of, the right type of
people in the right number.

Area of HRP:

FORECASTING

ACQUIRING

TRAINING & DEVELOPMENT

MAINTAINING

 Forecasting the manpower requirements of the organization

 Acquiring people from internal and external sources of
recruitment
 Developing manpower thru education, training and
development programs.
  Maintaining stable manpower through attractive pay packages
and other facilities.

IMPORTANCE OF HRP: (should be understood keeping in

light the broad areas mentioned above)

The penalties for not being correctly staffed are costly. Understaffing
loses the business economies of scale and specialization, orders,
customers and profits. Overstaffing is wasteful and expensive, if
sustained, and it is costly to eliminate because of modern legislation
in respect of redundancy payments, consultation, minimum periods
of notice, etc.

Very importantly, overstaffing reduces the competitive efficiency of

the business. Staffing level planning requires that an assessment of
present and future needs of the organization be compared with
present resources and future predicted resources.

The following points outline the importance of human

resource planning:

1. Solves problem of over / under staffing: Successful

planning helps determining and satisfying future personnel
needs. Surplus or deficiency in staff is the result of the
absence of or defective planning. Many public sector
enterprises have found themselves overstaffed and the
main cause of this is poor / lack of planning by them. The
outcome was that many organizations had to resort to the
VRS i.e. “Voluntary retirement schemes”. In PSUs the hiring
process went on without proper planning until late 1980 and
then a ban came which was very late.
2. Able to cope change: the external environment for any
organization is never static. Changes taking place in
competitive forces, markets, technology, products and
government regulations. Successful planning enables
organization to cope with such changing external
environment.
3. Creating a pool of talented employees: with the advent
of globalization and 3 faced competitions, it has become
almost challenging for companies to attract and retain
qualified and skilled personnel. For e.g. L&T an engg
company has MBAs, Engineers and technicians who
collectively constitute 70% of the total employee strength.
These people are also known for job hopping, thereby
creating frequent shortages in the organization. The HR
 manager must use his skills to attract & retain qualified and
skilled people.
4. It provides a base for Personnel Functions: Only
properly done man power planning provides essential
information for designing and implementing personnel
functions such as recruitment, selection, transfer,
promotion, training and development.
5. Organization increases its assets: The organization
makes an investment for an employee in terms of either
training or job assignment and in turn it leads to the
employee gradually developing in his skills and abilities.
When such employee is retained in the organization he/she
proves to be an asset to the organization.
6. Leading to reduction in cost of production: Due to
proper HRP, the organization gets best possible employees
who are highly skilled, experienced (in some cases), and
well trained. The proposed turnover rate of labor also
reduces. Stability is one of the factors leading to reduction
in the cost of production.

Thus, HRP is a double-edged weapon. If used properly then it

leads to

 The maximum utilization of human resources

 Reduces the problem of over employment / under
employment.
 Reduces excessive labor turnover and high absenteeism.
 Improves productivity and helps achieving organization
objectives.

FACTORS AFFECTING HRP

HRP is influenced by several considerations. The important ones are

as follows:

1. Type of Organization: The very important factor affecting

the Human Resource Planning is what type of organization is it?
Whether the organization has Manufacturing – cum – Marketing
Unit? Or just Manufacturing Unit? Or just marketing Unit? The HR
Planning structure of any organization having Manufacturing Unit is
more complex than the other types.

2. Strategy of Organization: What strategy has the

organization designed for itself? Is another important question
pertaining to HRP. For e.g. if the organization has planned a strategy
of Acquisition or Merger, then, it will need to plan for layoffs, since
mergers tend to create duplicate or overlapping positions that can
be handled more efficiently with fewer employees.

The other part of planning is, whether the organization wants to be

proactive or reactive? The proactive strategy carefully anticipates
the needs and systematically plans them to fill them far in advance.
The reactive strategy may lead organization to react to needs as
they arise.

Some organizations may have a broad focus in planning. They select

all aspects of Human Resource Management such as recruitment,
selection, training, development, promotion, transfer etc. whereas,
some organizations may adopt to narrow aspect such as just
planning one or two areas such as recruitment, selection etc. and
leave the rest for time to come.

Whatever may be the focus of organization in the area of HRP, the

most important part here, which every organization should take into
consideration while planning the resources is that flexibility – the
ability of the plan to deal with contingencies so as to reduce
uncertainty.

3. Organization Cycle: Like every human being, the

organization has life cycle, thru which it passes. The introduction
(Birth) stage, growth stage, maturity stage and decline stage.

Small organizations, during the introduction stage may not give due
importance to planning. Need for planning is felt when the
organization enters the growth stage. HR forecasting becomes
essential. Internal development of people also begins to
receive attention in order to keep up with the growth.

During the maturity period of the organization, the growth slows

down, the work force becomes old, and few young people are hired.
Planning during this stage becomes more formalized. Issues like
retirement and possible retrenchment dominate planning.

Finally, in the declining stage, HRP takes a different focus. Planning

is done for layoffs, retrenchment and Voluntary Retirement.

4. Environmental Uncertainties: In very rare cases, the

organization has the privilege to operate under stable environment.
Every organization is affected by external environmental factors
such as change in the policy of government, technological changes,
and socio-economic changes. The organization requires planning
very carefully its recruitment, selection, training & development,
promotion and retirement policies.

There are plans either for short term i.e. for upto 3 years or for
longer term i.e. from 3 years to 20 years. Companies operating
under uncertain environment should always plan for shorter period.
Plans for others where environment is fairly stable, may be for a
longer term.

In short, the greater the uncertainty, the shorter the plan’s time
horizon and vice versa.

5. Type of Vacancies: in an organization, job vacancies arise

due to separations, promotions, and expansion strategies. It is easy
to employ shop-floor workers, but a lot of sourcing is necessary for
hiring managerial personnel. Therefore, the personnel department
should always anticipate vacancies, as far as in advance, to provide
sufficient lead time to ensure that suitable candidates are recruited.

6. Off-loading the work: Many organizations off-load part of

their activities in the form of sub-contracting. If so, the HR planning
should consider this aspect also. For e.g. company like HLL has
given the subcontract for manufacturing of many of its products to
local manufacturer. This saves cost on investment as well as
employee recruitment.

The following example explains how HR planning is done at

Shopper’s Stop.

 In order to determine the number of personnel required for its

new stores, the company takes the look at the operations of its
previous stores. It considers the number of people, the
quantum of sales activity.
 It also considers the size of the stores, which it plans to set up.
Depending upon the size of the store, the number of Customer
Care Associates (CCA) required is calculated.
 On an average, there should be 1 CCA for every 50 sq. ft. of
store area.
 It takes into consideration, the number of counters for
concessional brands. These are the brands offered by other
companies such as Avon, maybeline etc. Shopper’s Stop does
not have to plan its HR for concessional brands.
 Within the selling area of Shopper’s Stop brands there are
some sales counters which do not require many sales
assistance, e.g. readymade garment counters.
  There are a few counters such as jewellery it requires at least
2-3 CCAs at all 11 hours that the store function.
 Apart from the CCAs every store that is set up will have
following personnel:
o Unit Head
o HR Personnel
o Person in-charge of maintenance
o Electrician
o Accountant
o Cashier

Features of MPP:

1. Facilitates the control of manpower cost:

a. Manpower cost is very imp to organization

b. Proper HRP avoids overstaffing
c. Recruitment is done as per the requirement of
organization

2. Enables proper placement to the right jobs

a. Placement is made as per the qualities of the persons
and the requirements of different jobs.
3. Filling up of vacancies
a. Due to retirement, turnover
4. Facilitates growth of the employees
a. Due to proper training and development

Objectives of HRP:

1. To ensure optimum use of human resource

a. Current and future thru…
i. Proper placement, training and development prog,
2. Meeting future manpower needs
3. Ensure availability of adequate manpower as per diff dept.
4. Development of Manpower: Manpower development is
possible through manpower planning.

Needs of MPP:

1. To meet the manpower needs of business enterprise

2. To arrange for the replacement of existing manpower
 a. In the event of retirement, transfer, removal, turnover of
employees.
3. To meet growing manpower requirement of the orgn:
a. In the event of modernization, expansion undertaken by
orgn, additional manpower requirement has to be done.
4. To meet challenges of changing technological env
5. To place an employee at correct position.
6. To avoid surplus/shortages of employees.

Advantages of MPP:

1. Enables proper recruitment and selection policy

2. Ensures orderly working and growth of orgn
3. Regulates cost factor
4. Motivates existing employees
5. Prevents sudden shortage of employees

Limitations of Personnel Planning:

1. Future manpower needs are uncertain

2. Time-consuming and process
3. Surplus manpower makes HRP redundant: HRP exercise is
useful in countries where manpower available is less than
requirement. In India, due to over-population, many
management (conservative ones) do not give much
importance to HRP.
4. Shortage of skilled labor and labor turnover

Role of Human Resource Planning

The prime role of HRP is to ensure that an organisation has the right
quantity and quality of employees doing the right things in the right
place at the right time and at the right cost to the organisation. In
achieving this, HRP has a number of more specific roles, as follows:
• To determine and facilitate the levels and types of recruitment
that may be required
• To assess current levels and attributes of staffing and
determine whether reductions are
• Necessary (redundancy)
• To assess whether redeployment can be used as an alternative
to downsizing
• To identify the need for training and development
 • To assess current employment costs in relation to other
organizational costs (wage costs account for over 60% of an
organization’s expenses)

HRP plays a vital role in the formulation of strategy within the

organisation. An organisation cannot function without people; thus
the human resource planning activities become all the more
important because they forecast how many employees are required
to carry out the organization’s activities and help it to meet
customer demand for its products or services. HR directors are
usually members of the board and, as such, they have a specific role
to play in the formulation of HR objectives, policies, procedures,
plans and strategy. These highlight the type of plans that contribute
to the overall corporate and strategic plan and, along with the
finance plan, operational plan, marketing plan, etc, help in the
formulation of the overall corporate and strategic plan.
What Does Human Resource Planning Involve?

• A comprehensive look at Human Resources covering everything

from:

• Strategy - Outline how your organization’s HR strategy will

integrate with your overall business strategies;

• Organizational Design - Define the organizational design.

• Recruitment and Orientation - Create objectives for the

recruitment and orientation of your team that will address all of the
details of recruiting sources, interviewing techniques, etc.

• Retention Plan - Indicate how your organization will retain and

motivate its employees;

• Performance Management – Outline how your organization will

manage the performance of its employees.
PROCESS OF HRP
The process of HRP is one of the most crucial, complex and
continuing managerial function. The process involves many steps
mainly involving forecasting personnel needs (demand), assessing
personnel supply and matching demand-supply factors through
personnel related programmes. The HRP process is influenced by
overall organizational objectives. The process has gained
importance in India with the increase in the size of business
enterprises, complex production technology, and the adoption of
professional management technique.

HRP Steps / Process / How organizations plan for their HR

effectively:

N
E

Organization
Objective &
Policy

HR Needs(DD) Forecast HR SS Forecast

HR
programming

HRP
implementation

Control & Evaluation

of prog.

Surplus
restricted hiring, Shortage Rec. -
reduced HRs, Selection
VRS layoff,etc.
Explanation of the above stated diagram:

Environmental Scanning:

It refers to the systematic monitoring of the external forces

influencing the organization. These factors are:

• Economic Factor
• Technological changes
• Demographic changes
• Social concerns, including child care, educational facilities

By scanning the environment, for changes that will affect an

organization, managers can anticipate their impact and make
adjustments early.

1. Organizational objectives and Policies:

HR plans need to be based on organizational objectives. Objectives

of HR plans must be derived from organizational objectives. Even,
number and characteristics of employees should be derived from
the organizational objectives.

Organizational objectives are defined by the top management and

the role of HRP is to subserve the overall objectives by ensuring
availability and utilization of human resources.

Once the organizational objectives are specified, the HR department

must specify its objectives with regard to HR utilization in the
organization. In developing these, specific issues as stated below
must be addressed to:

• Are vacancies to be filled by promotions from within or hiring

from outside?
• What union constraints are encountered in HRP and what
policies are needed to handle these constraints?
• How to enrich employee’s job?
• How to downsize the organization to make it more
competitive?
• To what extent production and operations be automated?
What can be done about those displaced?

2. HR needs (Demand) forecast: Needs forecasting is the

process of estimating the future quantity and quality of people
required. The basis of the forecast must be the annual budget and
long term corporate plan, translated into activity levels for each
function and department. It is done by translating the corporate plan
into activity levels for each function and department.

• For e.g. in a manufacturing company, the sales budget would

be translated into a production plan giving the number and
type of products to be produced in each period.
• From this information, the number of hours to be worked by
each skilled & unskilled category to make the quota for each
period would be calculated.
• Once the hours are available, determining the quality and
quantity of personnel will be logical step.

Demand forecasting must consider several factors – both

external as well as internal.
External Internal
a. Domestic and international a. budget constraints
competition. b. New products and
b. Laws services.
c. Changes in technology
c. Organizational
d. Socio-economic factor structure (flat / tall)

Demand forecasting helps organizations

• To qualify the jobs necessary for producing a given number of

goods or offering services.
• Determine what staff-mix is desirable in future;
• Assess appropriate staffing levels in different parts of the
organizations so as to avoid unnecessary costs;
• Prevent shortages of people where and when they are needed
the most; &
• Monitor compliance with legal requirements with regard to
reservation of jobs.

2.a. Forecasting techniques:

Organizations generally follow more than one technique to forecast

its HR requirements. These techniques vary from simple to
sophisticated ones. Some of them are:

2.a.I. Managerial Judgement: This techniques being the

simplest, here, the managers sit together, discuss and arrive at a
figure which would be further demand for labor.
 • The technique involves a “bottom-up” or a “top-down”
approach.
• In case of “bottom-up” approach line managers submit
their departmental proposals to top managers who arrive
at the company forecast.
• In other case, top managers prepare company and
departmental forecasts.
• These forecasts are reviewed with dept heads and agreed
upon.
• In both techniques, while implementing the same, the
dept heads are provided with broad guidelines.
• With the help of guidelines and in consultation with the
HRP section in the HRM dept, dept managers can prepare
forecasts for their respective depts.
• HR managers prepare the company forecasts and thus
arrive at overall forecast.
• A committee comprising dept managers and HR
managers will review the two sets of forecasts; arrive at a
unanimity, which is then presented to top managers fore
their approval.
• This technique is used in smaller organizations.

2.a.II. Ratio-trend analysis:

• This is the quickest forecasting technique.

• The technique involves studying past ratios, and forecasting
future ratios, making some allowance for changes in the
organization or its methods.
• The following table shows how an analysis of actual and
forecast ratios, between the number of routine proposals to be
processed by an insurance company’s underwriting
department and the number of underwriters employed could
be used to forecast future requirements.
 Year No of employees Ratio
No. of Underwrite Underwriter:Proposal
Proposals r
Actual -3 1500 150 1:10
-2 1800 180 1:10
Last yr 2000 180 1:11
Next yr 2200 200 1:11
Forecast +2 2500 210 1:12
+3 2750 230 1:12

2.a.III. Work-study Technique:

• Work-study technique can be used when it is possible to apply

work measurement to calculate the length of operations and
the amount of labor required.
• For e.g. starting point of any manufacturing unit will of course
be production unit. The production budget of the unit is
prepared in terms of volumes of saleable products for the
company as a whole, or volumes of output for individual
departments.
• The budgets of productive hours are then compiled using
standard hours for direct labor.
• The standard hour per unit of output are then multiplied by the
planned volume of units to be produced to give the total
number of planned hours for the period.
• This is then divided by the number of actual working hours for
an individual operator to show the number of operators
required.
• Following is an example in terms of numbers.

Planned output for next year 20,000 Units

b) Standard hours per unit 5 hours

c) Planned hours for the year 1,00,000 (20,000 * 5)
d) Productive hours per man/year (allowing 2000
absenteeism, normal overtime and idle
time)
e) Number of direct workers required (c/d) 50

Organizations follow more than one technique for forecasting their

people’s needs. L&T, for e.g. follows “bottom-up” of management
judgement and work-study technique for demand forecasting.
Forecasting process in L&T begins during November of every year.
The department heads prepare their personnel estimates based on
details of production budget supplied to them and submit the
estimates to the respective personnel managers. (L&T has around
11 plants in the country). The personnel heads will review the
estimates with the departmental heads and will send final reports to
the Mumbai office where a centralized HR department is located.
Estimates are reviewed by the HR department and final figures are
made known to those personnel managers who initiate steps t hire
the required number of people in the following year. The forecast is
made for a period of 5years, nut is broken down to yearly
requirement.

3. HR Supply forecast:

• Personnel demand analysis provides the manager with the

means of estimating the number and kind of employees that
will be required.
• The next logical step for the management is to
determine whether it will be able to procure the
required number of personnel and the sources for such
procurement.
• This information is provided by supply forecasting. As it
measures the number of people likely to be available from
within and outside an organization, after making allowance for
absenteeism, internal movements and promotions, etc.

HR Programming:

Once an organization’s personnel demand and supply are forecast,

the two must be reconciled or balanced in order that vacancies can
be filled by the right employees at the right time. HR programming
is a very important step and therefore assumes greater importance.

HR Plan implementation:

Implementation requires converting an HR plan into action. A series

of action programmes are initiated as a part of HR plan
implementation. Some such programmes are recruitment, selection
and placement; training and development; retraining & succession
plan.

Control & Evaluation:

Control & Evaluation represents the fifth and final phase in the HRP
process. The HR plan should clarify responsibilities for
implementation and control, and establish reporting procedure
which will enable achievements to be monitored against the plan. If
there is surplus of employees, then strategies such as restricted
hiring, VRS, Layoffs etc can be implemented. If there is shortage of
employees, then recruitment and selection can be implemented.

FACTORS AFFECTING HR PLANNING

OR

WHY HR PLANNING DOES NOT WORK?

OR

LIMITATIONS OF HR PLANNING

Effective HR Planning is a pre-requisite for successful HRM practices.

However, there are certain factors – internal as well as external
which affect the effectiveness of HR planning adversely.

1. Improper linkage between HRP and corporate strategy. (HR

strategies always follows corporate strategies)
2. Inadequate importance to HRP
3. Environmental uncertainty.
4. Rigidity in attitudes
5. Inappropriate HRIS
6. Conflict between long term and short term HRP

PART – II HR PLANNING

• HRIS
• Downsizing
• VRS
• Outsourcing
• Demotion
• Separation
• Layoff
• Retrenchment
• Discharge / termination
• Pink slip
• Contracting & subcontracting
• Promotion
 • Transfer

Human Resource Information System (HRIS)

Human Resource Information System (HRIS) is basically a software

or online solution for managing the day-to-day needs of the human
resource department, including payroll management, and
accounting functions within a business. It is an integration of HRM
and information technology and is managed by a group of
technology professionals. Tannenbaum (1990) defines HRIS as “a
technology-based system used to acquire, store, manipulate,
analyze, retrieve, and distribute pertinent information regarding an
organization's human resources.” Furthermore, HRIS merges the
discipline of HRM and the basic HR policies and the activities with
information technology. Thus, HRIS not only includes the system and
software applications but also includes the people, policies, data and
procedures required to manage the HR function. It is a new world of
technology used to manage human resources in the organization. A
typical HRIS can aid the companies in:

• Management of all the information related to the employees

• Recruitment
• Tracking employee attendance
• Tracking employee pay
• increments, positions held
• Benefits administration
• Tracking improvement employees
• Tracking training received by the employees
• Talent management

An effective HRIS is one that provides all the information

that a company needs to track and analyze the employees,
former employees and applicants. This system should help the
company to plan and manage the HR costs, increase the efficiency
of the HR function and produce reports that are capable of
improving decision-making. The HRIS so developed must be aligned
with the business goals and the data available with the system
should be accurate and must be integrated with all the other
functions in the organizations.

The HRIS must have an integrated database and must serve as a

powerful reporting and analyzing power so that it serves the
requirements of managers to manage the workforce.

Peoplesoft is one of the well-known software on HRIS

SEPARATIONS

Separation occurs when an employee leaves the organization.

Reasons for separations may be voluntary or involuntary. In
voluntary separation, initiation is taken by the employee
himself/herself. Where the employer initiates separation for an
employee, it becomes involuntary separation. Here, employee
entertains the feeling of injustice and seeks legal protection to undo
it.

Voluntary separation, as stated above, occurs when the

employee decides to terminate the relationship with the
organization. An employee decides to quit when he/she is at a level
of dissatisfaction with the present job or a lucrative offer is
awaiting..

During economic boom when jobs are available in plenty, quits

becomes quite common.

Involuntary Separation:
Organization often encourage quits through cash incentives.
Popularly called VRS, these separations are resorted to when
organizations experience losses. They resort to cost saving.

VRS schemes were introduced in banks for downsizing the

staff. This was necessary due to extensive use of computers.
It may be noted that downsizing is one challenging job before
HR personnel. This problem is complicated as management
wants downsizing while employees oppose to such downsizing
as it leads to retrenchment of staff.

VRS is a popular form of downsizing. In India, downsizing

strategy is normally implemented through VRS in which
attractive compensation package is offered to employees
opting for VRS. HR personnel should help the top
management while preparing a compensation package which
will be attractive and beneficial to both-organization and
employees.

VRS is also called Golden Hand Shake Plan. This practice of

removing indirectly unwanted/surplus employees (officers
and workers, etc.) is followed in the public sector as well as in
the private sector organizations. Here, the organization
announces the voluntary retirement scheme and interested
employees are asked to submit applications for voluntary
retirement from the organization. They are relieved from the
job as per the terms and conditions mentioned in the scheme.
VRS involves separation of employees from the organization
on the basis of mutual agreement between the two. Many
banks, state governments and private sector organizations
have introduced such schemes in the recent period. Voluntary
retirement is different from dismissal, removal and
retrenchment of employees.

Under VRS, handsome compensations are paid to those who

opt to leave/retire. Thus, surplus employees are offered
monetary incentives for early retirement. The incentives may
be in the form of:

(a) Pension and lump sum gratuity, (b) Loyalty bonus,

(c) Employee Stock Ownership Plans (ESOPs),
(d) Prizes and rewards for long service in the organization.

VRS is advocated on the following grounds:

(a) To reduce financial burden on the organization.
(b) To reduce surplus labor.
(c) To ensure optimum utilization of operating manpower in an
organization.
(d) To introduce new technology in manufacturing process and
also in corporate office management.
(e) To introduce extensive use of computers and new
techniques in information technology (IT).

Discharge: It takes place when the employer discovers that it is no

more desirable to keep an employee any longer, discharge, also
called as termination, and should be avoided as far as possible. Any
termination is reflection on the company’s HR system. Also, it is
expensive as the firm must seek replacement, hire and train the
new hiree.

Discharge is initiated by the employer. It is a drastic step and should

be taken after careful thought. This step needs to be supported by
just and sufficient reasons.

The following reasons lead to the dismissal of an employee:

• Excessive absenteeism
• Serious misconduct
• False statement of qualification at the time of employement.
• Theft of company’s property.
Layoff is a temporary separation of an employee by the employer
under specific circumstances. A lay-off may be for a definite period
and on the expiry of the period, an employee will be called back and
the separation comes to an end. Such lay-off may be due to various
reasons such as shortage of raw materials, accumulation of stocks,
and breakdown of machinery and so on.

Retrenchment is a sort of permanent separation by an employer

with due notice as per statutory provisions. The employee is also
paid compensation.
Retrenchment of an employee for economic reason is quite
common in India at present. The Industrial Disputes Act 1947
defines retrenchment as the "termination by the employer of
the services of workmen for any reason." It may be noted that
termination of services as a punishment given or disciplinary
action or retirement either voluntarily or on reaching the age
of superannuation or continued ill-health or on the closure and
winding up of a business, does not constitute retrenchment.
The term is applied to continuing operations where a part of
the work force is found to be superfluous (surplus). The
principle in the procedure of retrenchment is that the last
person employed in each category must be the first person to
be retrenched i.e. "last come, first go." As and when vacancies
arise after retrenchment, the employer given an opportunity
to the retrenched worker to offer themselves for re-
employment; and they are given preference. Such vacancies
are generally notified at least 10 days before they are filled
up. Retrenchment is unfortunate for concerned worker as he
becomes unemployed till Securing new job. It creates
hardships to him as well as to his family members. However, it
is inevitable when the organization is facing serious problems.

Downsizing:

Organization Downsizing: In any business organization, there

should be adequate staff (employees) as per the need.
Excess employees or inadequate employees are undesirable
as both the situations are harmful. The term downsizing is
used to indicate reduction of excess manpower by suitable
measures. Downsizing of an organization means reducing the
number of employees and adjusting the manpower as per
need of the organization so that the problem of excess
manpower will be solved smoothly /peacefully. In order to
overcome the problem of surplus staff, downsizing strategy is used
extensively.
The objective of downsizing strategy is to achieve
rightsizing. This means to adjust manpower as per the need
of an organization. The excess manpower (over-staffing) in
an organization may be due to:

(1) Faulty human resource planning because of which

assessment of manpower requirement proves faulty.

(2) Change in the man-machine ratio due to technological

advances. Use of computer technology creates the problem
of surplus manpower in many service organizations including
banks.

Outsourcing of certain business functions leads to surplus

manpower in an organization.

Downsizing plan prepared will indicate:

(I) Who is to be made redundant and where and when,

(II) Steps to be taken to help redundant employees find new
jobs,
(III) Policy for declaring redundancies and making
redundancy payments, and
(IV) Programme for consulting unions or staff associations
and informing those likely to be affected.

For reducing surplus employees, some other methods can also

be used. Such methods are:
(1) To retain all existing employees but to reduce the work
hour for reduction in the total salary payment.
(2) To transfer or reassign employees in other units of the
organization where there is need of additional employees.
(3) To offer incentives for early retirement in the form of VRS.
(4) To declare lay-off for dealing with surplus staff.

Downsizing also becomes necessary when market demand

reduces or when new technology is introduced (in banks,
surplus staff is due to extensive use of computer technology)
or when certain business activities are closed down.

The term downsizing is normally used in the case of excess

jobs/employees. However it is also used in regard to
production activities. For example, recently, Century Textiles
and Industries (Worli, Mumbai) is planning to downsize its
production capacity through downsizing of spinning and
spindle capacity. Ultimately, this will lead to pruning of its
workforce by almost 2,000 out of the present workforce of
about 6,000 odd people.

OUTSOURCING:

The term outsourcing is used extensively in the present

business world. Since 1980s, there is a clear trend towards
vertical disintegration in the USA and other countries. Such
outsourcing is done on large scale in the production as well as
service sector. Outsourcing is very common in the IT sector.
Many Indian IT companies get the benefit of such outsourcing
from foreign companies. Similarly many automobile companies
get components by others. Such components are assembled
by the automobile company.
Here, automotive manufacturers have out sourced
component 'l1anufacturing that was previously conducted in
house. Outsourcing is becoming popular in the present global
business.
The term outsourcing has been defined in different ways as
mentioned below:
Make or buy practice is quite old in business. Make means
doing things internally. Buy means getting things done
externally. The latter aspect is becoming more common in
the present large scale business in the form of outsourcing.
Outsourcing means sending work outside the organization to
be done by individuals not employed full time with the
organization. In various business activities, the practice of
outsourcing is popular and used extensively. The concept of
outsou rcing has entered in a big way in HRM in overseas
companies. This trend has now entered in the Indian business.
Right from recruitment, training profiling, compensation
management and pay roll outsourcing also form a part of HR
outsourcing. Outsourcing of HRM functions in India has big
scope.
It may be noted that all HRM functions cannot be outsourced
as HR service outsourcing is not like the product outsourcing.
This is because HRM functions require certain confidentiality.
However, all HR functions are not of the same confidential
nature. Those HR functions which are not confidential can be
or may be outsourced. Similarly, functions with less criticality
can also be outsourced. In brief, confidentiality and criticality
are two factors which need careful consideration before going
for outsourcing. Every organisation has to decide what to
outsource and what not to outsource because all HRM
functions cannot be outsourced safely. For example,
preliminary work relating to recruitment and selection,
administrative work relating to employee benefits, employee
welfare services, pay role and compensation management,
staff training and the HRM functions which are not performed
on regular basis such as human resource planning,
preparation of appraisal forms, job design, job evaluation,
installation of safety measures, etc can be outsourced easily,
economically and without any adverse effect on
confidentiality.

BENEFITS OF OUTSOURCING:

(1) By transferring or outsourcing non-critical HRM functions,

the organisation can concentrate on critical HRM functions
and perform them efficiently. HR professionals will not lose
sight of critical HRM functions when routine and non-critical
functions are outsourced.

(2) Performing non-critical HRM functions internally is not cost

effective as such functions prove costly.

(3) BPO (HR) vendors with infrastructure and requisite skills

can provide efficient services at much less cost. This gives
benefit to companies in regard to outsourcing.

(4) Outsourcing results into higher return on investment

through significant savings on operational and capital costs.

(5) It enables organisations to focus on "core" activities. They

dm shift their policies from tactical control to strategic
planning.

(6) Outsourcing enables organisations to exploit more

advance technologies available· with the supplies. This
improves quality of production and creates market
reputation.

(7) It helps to undermine the power of trade unions.

(8) Outsourcing simplifies organisation structures and makes

them flatter and more agile.
DEMERITS OF OUTSOURCING:

(1) Outsourcing leads to job loss in the organisation. Large

scale outsourcing leads to unemployment to people within
the country and outflow of funds from the country in the form
of fees and service charges.

(2) Outsourcing brings creeping privatization in the public

sector organisations.

(3) Difficulty in deciding what and how much to outsource.

(4) Dependence on supplier for vital components is

undesirable and may prove dangerous to the main
organization where outsourcing is substantial.

(5) Difficulties in managing new relationships with the

outsource agencies.
Due to recent recession in the USA and European countries,
the general opinion was unfavorable to large scale
outsourcing. The Obama Administration has imposed
restrictions and financial pressure on companies which are
outsourcing to countries like India. However, companies
from many countries including USA continued the practice of
outsourcing because it proved economical to them. India is
favorable to outsourcing because our IT and other
companies get business as well as high profit due to
outsourcing practice. India has immense potential as more
than 80 per cent of fortune 1,000 companies are discussing
HR outsourcing as a way to cut costs and increase
productivity.

Demotion is the exact opposite of promotion wherein an

employee is demoted to the post at a lower level. For
example, a manager may be demoted as supervisor.
Demotion is lowering of status, salary and responsibilities of
an employee. It is a type of punishment for serious mistakes
or irregularities on the part of an employee. It is a lesser
punishment as compared to dismissal. Demotions are given
in companies, banks and government departments.
Promotions are very common but demotions are rare and
used as a method of last resort. Moreover, demotion
creates adverse psychological effects on the employee.
Pink Slip: It is an American term that refers to being fired or
laid off from one's job. It is an official notice sent to an
employee informing him that you have been fired from your
job. Synonyms to pink slip are: dismissal or dismission. This
means the person is removed from his job. It is as good as
discharged, dismissed, dropped or terminated removed from
the service.

In the USA, companies used to dismiss employees by

distributing notices printed on pink slips of paper. American
workers from all walks of life fear of one day receiving "Pink
Slips" from their employers. These are notices printed on pink
paper (usually distributed with paychecks) informing
employees that their services are no longer required.

Pink slips have long since become symbolic rather than literal.
Perhaps the "pinkslip" doesn't have anything to do with color
at all. It only indicates a practice followed by companies
since long while removing him from the service.

CONTRACTING AND SUB-CONTRACTING:

Along with outsourcing, contracting and sub-contracting are

two methods / techniques used for transferring certain jobs
to outside agencies on contract basis. The purpose is to
reduce cost and to get the routine and simple type of work
done from other agencies so that time of internal will not be
used for such less important as well as repetitive type of
work.
The practice of contracting and sub-contracting are used in
production sector as well as in services sector. In building
construction work, such contracting is quite common when
the construction project is very big and is required to be
complete within specific time limit. For example, a builder
may give contract of coloring or tiling work or plumbing work
to a contractor. He has to complete the work as per
specification and will be paid as per amount fixed. Supposed
the contractor has taken a plumbing work contract of ten
identical building. He may appoint a sub-contractor for
plumbing work of five buildings. Here, sub-contractor will
work as per the instructions of the main contractor and will
be paid as per the amount decided between the contractor
and sub-contractor. This briefly suggests how contracting
and sub-contracting practice is followed in the building
construction activity. Large housing construction projects are
completed quickly due to the practice of contracting and sub -
contracting. We observe plastering, tiling, plumbing,
electrification work going on simultaneously in the housing
complex due to this practice of contracting and sub-
contracting. This practice reduces the cost, brings division of
work and specialization, speeds up the work and also gives
relief and convenience to the builder who finds it difficult to
give attention to each and every work relating to a housing
complex. Contractors may operate as independent
contractor, general contractor or sub-contractor.

An independent contractor is a natural person, business or

corporation that provides goods or services to another entity
under terms specified in a contract or within a verbal
agreement. Unlike an employee, an independent contractor
does not work regularly for an employer but works as and
when required. Independent contractors are usually paid on
a freelance basis. Contractors often work through a limited
company, which they themselves own, or may work through
an umbrella company.

A sub-contractor is an individual or in many cases a

business that signs a contract to perform part 'or all of the
obligations of another's contract.
A sub-contractor is hired by a general contractor to perform
a specific task as part of the overall project. Such sub-
contractors are most common in building works and civil
engineering.

A general contractor is a group or individual that contracts

with another organization or individual (the owner) for the
construction, renovation or demolition of a building, road or
other structure.
In addition to building construction work, contractors and
sub contractors also operate in the field of industrial
production and services. They are appointed for providing
certain services or contract is given to them for supplying
certain components or services. The following examples are
worth noting in this regard.
A manufacturing of automobiles may not manufacture each
and every component required at its plants. It may decide to
give contract to an outside agency or agencies for the supply
of components as per its specification. A regular contract will
be made and the contractor will start supplying components
as per the terms and conditions agreed in the contract. This
is contracting for the supply of components. The automobile
company makes such contract for its benefits and
convenience. The contractor also gets new job work and also
earns out of such contract. He may even appoint a sub-
contractor for some service, etc. This is an example of
contracting for supply of products/ components.
One more example of a service organization can be given.
XYZ is one IT company doing good work. It may be engaged
in outsourcing. The company may have more than 1,000
qualified employees. However, this manpower is inadequate
due to increase in the volume of work. Here, the IT company
may select some less important, simple and repetitive work
and decide to get it done from other IT service providers.
Regular contract will be made for providing the required
services and the contractor will start supplying the services
accordingly. In this case also sub contracting is possible.
It may be noted that the concept of contracting, sub-
contracting and outsourcing are rather identical Human
resource outsourcing (HRO) is gaining ground among Indian
corporates who are looking at expanding the scope of their
service. HR is getting outsourced to third party providers who
can offer the benefit of their special skills. Contracting/ sub-
contracting offers benefits to both the parties.
As a result, this practice is followed extensively in the business
world including the construction activities of varied type.

JOB TRANSFER

A Job Transfer involves a change in the job accompanied by a

change in the place of the job of an employee without a change in
responsibilities or remuneration. A transfer differs from a promotion
in that the latter involves a change in which a significant increase in
responsibility, status and income occurs, but all these elements are
stagnant in former.

Reasons for transfer:

The reasons for transfer vary from organization to organization.

Following are the tentative reasons for Job Transfer.

1. Shortage of employees in one department and surplus in the

other department.
2. Correction of faulty initial replacement of an employee.

3. To break monotony of work.

4. Change of climate may be required for better health of an

employee.

5. Family related issues such as marriage of female employee.

Principles of transfer:

1. The frequency of transfer & minimum period between 2

consecutive transfers.

2. The authority which would handle transfers is to be decided

upon. The usual practice is that the person in charge of that
department handles transfers in each department. The best course
is to centralize the authority handling transfers, and make the HR
department responsible for that.

3. The criteria for entertaining transfer need to be laid down and

strictly adhere to.

4. The area of the organization over which transfers can be made

need to be defined.

5. The effect of transfer on seniority of the transferred employee

may be clearly evaluated.

6. It should be clearly defined as temporary or permanent.

7. The interests of the organization are not to be forgotten in

framing a policy of transfer.

TYPES of Transfer:

1. Production Transfer: (As mentioned earlier) a shortage or

surplus of the labor force is common in different departments in a
plant. Surplus employees in a dept have to be laid off, unless they
are transferred to another department. Transfer affected to avoid
such imminent lay-offs are called production transfers.

2. Replacement transfer: Replacement transfers are made for

suitable adjustments of employees in different departments. A
replacement transfer’s purpose is to give protection to senior
employee (long service employee) as long as possible. Here, a junior
employee may be replaced by a senior employee who is
excess/surplus in some other department. This also avoids lay-off of
such senior employee. Replacement transfers are quite common
during the period of recession.

3. Versatility Transfers: It is affected to make employee versatile

and competent in more than one skill. Versatile operations are
valuable assets during rush periods and periods when work is dull. It
may be used as a preparation for production or replacement
transfers.

4. Shift transfer: (industrial establishments operating under more

than one shift)

5. Remedial Transfer: They are affected at the request of an

employee therefore also known as personal transfer. It may also
take place because initial placement of an employee may have been
faulty. Some times a worker may not be getting comfortable with his
/ her colleague / boss. In other incident the worker may be getting
too old to continue the regular job or the type of job or working
condition may not be well adapted to the present health record. In
all such circumstances remedial transfer is adopted as a transfer
strategy.

University Questions:

1. Transfer (2006) (Concept Question)

2. Job Rotation and Job Transfer (2003) (Short Notes)
3. Job Rotation (2002, 2006), (Concept Question)
Promotion Policy

Promotion is defined as, “An improvement in pay, prestige, position

and responsibilities of an employee within his/her organization.”

• A mere shifting of an employee to a different job, which has

better working hours, better location and more, pleasant
working conditions does not lead to promotion.
• The new job is a promotion to an employee only when it
carries increased responsibilities and enhanced pay.

Purpose:

 To motivate employee to higher productivity.

 To attract and retain the services of qualified and competent
people.
 To recognize and to reward the efficiency of an employee.
 To increase the effectiveness of the employee and of the
organization.
 To fill up higher vacancies from within the organization.
 To build loyalty, morale and a sense of belongingness in the
employee.

Principles of promotion

Promotion is a double-edged weapon. If handled carefully, it

contributes to employee satisfaction and motivation. If mishandled,
it leads to discontentment, resentment, frustration, skepticism and
bickering among the employees and culminates in a high rate of
labor turnover.

The HR department has to lay down promotion policy in a very clear

manner.

a. To make clear whether to fill up higher positions by

internal promotions or recruit people from outside. Generally,
positions at lower level are filled up thru internal recruitment and
positions at higher level are filled up thru external recruitment.

b. When higher position has to be filled up thru

internal recruitment then, a further decision on determining the
basis of promotion should be made by the management. The
promotion basis may be seniority or merit or both.
 i. Promotion by seniority: Here, promotion is given on
seniority base i.e. the period/length of service of employee
in the organization. The date of appointment serves as the
base of promotion. Here, the merits (qualification, qualities
etc) are not given any consideration as promotions are
given exactly as per the seniority. This is a general practice
in government departments, banks, and so on. Even
workers and trade unions generally prefer this method. For
promotion by seniority employees are arranged exactly as
per the date of appointment and promotions are given
exactly as per this fixed order.

Merits:
 Easy to administer.
 Less scope for arbitrariness in fixing seniority.
 Labor unions welcome this.
 Seniority and experiences go hand to hand.
 Subordinates are more willing to work under an elder
boss who has given many years to the service.
 Loyalty is rewarded.

Demerits:
• Seniority is no indication of competence.
• No encouragement to learning and growth
• Affects morale of meritorious workers.
• Management not favorable for this method
• Leads to labor turnover.
• Efficient and inefficient workers are treated at par.

ii) Promotion by merits:

This is an alternative to the above given method. Here promotion is

given as per the merits of workers such merits include educational
background, experience and qualities such as honesty, sincerity and
involvement in the work. Here seniority is not given importance.
Management always prefers promotion by merits where as
employees and their union demand promotions by seniority.

In order to introduce promotion by merits, it is necessary to keep up-

to-date records of each employee, production records, special
achievements, merit awards, late coming, leave records etc.
whenever a promotion decision is challenged, these records can be
produced to prove the objectivity an impartiality of the management
and the decision taken. Although this system compared to above is
difficulty to implement, as employee are convinced about the
objectivity of system of performance appraisal, much of their
opposition to merit as a criterion for promotion would disappear

Merits:
 Promotion given to capable to capable person
 Efficiency is encouraged, recognized and rewarded.
 Competent people are retained
 Productivity increases.
Demerits:
 Discontentment among senior employees.
 Scope for favoritism.
 Loyalty is not rewarded.
 Opposition from union leader.

C) To promote the employee against vacancies or non vacancies:

In many organization employees are promoted on a non-vacancy

basis after they complete a minimum period of service. Such
promotions are time-bound and not based on vacancies or merit.
The other practice is to link promotions to vacancies.

d) When promotion is based on competence, opening for promotion

should be displayed prominently at several places to enable people
to reply.

TYPES OF PROMOTION

As noted above, a promotion involves an increase in status, pay and

responsibilities. But in certain cases only the pay increases and
other elements remain stagnant. In other cases, only the status
increases without a corresponding increase in pay or responsibilities.
Depending on which elements increase and which remain stagnant,
promotions may be classified into the following types:

a. Horizontal Promotion: This type of promotion involves an

increase in responsibility and pay, and a change in designation. For
e.g. a lower division clerk is promoted as an upper division clerk. this
type of promotion is referred to as “upgrading” the position of an
employee.

b. Vertical Promotion: This type of promotion results in greater

responsibility, prestige and pay, together with a change in the
nature of the job. A promotion is vertical when a canteen employee
is promoted to an unskilled job.

c. Dry Promotion: Dry promotions are given as an alternative to

increase in remuneration. Here, the promotee may be given one or
two annual increments.
University Questions:

Short Notes:

1. Promotion (2001, 2005)

2. Promotion Objectives (2007)
3. Seniority v/s Merit (2002)

Chapter- 3 - Job Analysis, Design and Evaluation

The chapter HRP has given as an appropriate idea on how to plan

human resources effectively. Now, in order to achieve effective HRP,
the duties involved and the skills required for performing all the jobs
in an organization have to be taken care of. This knowledge is
gained through the analysis of work, popularly called job analysis.

JOB ANALYSIS

An organization requires personnel of different types so that

different jobs are performed effectively. In other words, there is an
attempt to match the jobs and jobholders. For achieving this
matching, detailed knowledge of the nature and the requirements of
different jobs is essential. Job analysis provides this knowledge. Job
analysis is essentially a process of collecting and analyzing relevant
facts of a job with a view to identify its contents and the
characteristics of the person who is likely to perform the job. US
Labor Department has defined job analysis as follows:

“Job analysis is the process of determining, by observation and

study, and reporting pertinent information relating to the nature of a
specific job… It is the determination of the tasks which comprise the
job and of the skills, abilities and responsibilities required of the
worker for a successful performance and which differentiates one
job from all others.”

Flippo has offered a more comprehensive definition of job analysis

which is as follows:

“Job analysis is the process of studying and collecting information

relating to the operations and responsibilities of a specific job. The
immediate products of this analysis of this analysis are job
descriptions and job specification.”
Thus, job analysis involves the process of identifying the nature of a
job (job description) and the qualities of the likely job holder (job
specification).
Importance / Uses of job Analysis

Initially, the concept of job analysis was limited to operative jobs and
it used to be undertaken for providing information to the recruitment
of operatives. However, over the period of time, job analysis has
extended to managerial analysis jobs. Therefore, in the present
context, the uses of job analysis have extended beyond recruitment
of personnel, which are as follows:

a. Organizational Design:

Organizational design involves building a network of relationship

among various functions and positions. The steps involved in
organizational design are identification of various jobs to be
performed, grouping these jobs together on the basis of similarity,
and assigning these jobs to a position. Since assignments of jobs
creates responsibility, commensurate authority is delegated so that
the relevant information for completing the total steps of
organizational design. It provides the bas4e for identifying the
contents of different jobs, their interrelationship and
interdependence, responsibility involved in a job, and
interdependence, responsibility involved in a job, and authority that
may be required to perform the job.

b. Acquisition of Personnel:

Acquisition of personnel involves human resource planning,

recruitment and selection, and orientation and placement. In each
area, job analysis helps in the following ways:
b.1. Human Resource planning: Human resource planning, as
discussed earlier, involves determination of number and type of
personnel required in future by the organization. The basis of this
determination is the types of jobs that may be required to be
performed in order to achieve organizational objectives. Job analysis
provides information for forecasting human resource needs in terms
of knowledge, skills and experience. It also provides help in planning
for promotions and transfers by indicating lateral and vertical
relationship among different jobs.

b.2. Recruitment and Selection: Recruitment and selection, taken

together, involve the identification of sources from where the
personnel will be acquired, motivating them for making themselves
available for selection and selecting those who meet the criteria as
provided in job description and job specification. The total process of
recruitment and selection is based on the principle of matching jobs
and individuals. In this process, various job-related factors in the
form of tasks and responsibilities and individual- related factors in
the form of knowledge, skills and experience are matched. Both
types of information are provided by jobs analysis.

b.3. Orientation and placement: Job analysis helps in orientation

and placement of personnel by further matching between jobs and
individuals. This further matching is required when personnel are
selected for a group of jobs rather than for specific jobs. In many
cases, individuals are selected for a group of jobs such as
management trainees, consultants, etc. Their match with job
requirements determines their placement in specific jobs. Job
analysis helps in providing information about such job requirement.

c. Human Resource Development: In the dynamic environment,

human resource development (HRD) is undertaken as a continuous
process to match individuals and job requirements. Such matching is
indicated by the information provided by job analysis. Thus, job
analysis helps in the following areas of human resource
development:

c.1. Career Planning: Career planning involves determination of path

of upward movement of individuals in the organization. The
individuals join the organization at a particular level and make
upward progression at various levels in their career. Job analysis
provides information about the opportunities in terms of career
paths and jobs availability in the organization. In the light of this
information, both individuals and organization make suitable efforts
for career planning and development.

c.2. Training and development: Career planning itself is not

sufficient but it requires the efforts in the form of training and
development so that the individuals are equipped to meet the
requirements of their jobs to be performed at valuable information
to identify training and development needs of various individuals. A
clear idea of what is required on the job help in deciding what is
learnt and developed in order to be effective.

d. Job Evaluation and compensation: Job evaluation is the process

of determining the relative worth of different jobs in an organization
with a view to link compensation, both basic and supplementary,
with the worth of the jobs. The worth of a job is determined on the
basis of job analysis provides both in the forms of job description
and job in the forms of job description and job specification.

e. Performance Appraisal: Performance appraisal involves

assessment of actual job performance by an employee in the light of
what is expected of him. Such an assessment is used for promotion,
pay increase, and identification of training needs. Job analysis helps
in determining performance standards against which the actual job
performance is measured.

f. Safety and Health: Job analysis helps in taking preventive

measures for maintaining safety and health of employees at the
workplace by providing information about unhealthy and hazardous
environmental and operational conditions in various jobs. Heat,
noise, fumes, etc. are examples of such conditions, which cause
occupational diseases if proper preventive measures are not
adopted.

The process of the job analysis

The following figures illustrate the process of job analysis. The figure
also points out the use of information about jobs. As may be seen
from the figure, job analysis is useful for several purposes, such as
personnel planning, performance appraisal and the like. Each phase
in the process of job analysis is as follows: -
 Strategic Choices

Gather
Informatio
n

Process
Informatio
n

Uses of Job Description &

Job Specification
Job Description o Personnel
o Planning
o Performance Appraisal
o Hiring
Job Specification o Training &
Development
o Job Evaluation &
Compensation
o Health & Safety
o Employee Discipline
o Work Scheduling
o Career Planning

Strategic Choices

With regards to job analysis, an organization is required to make at

least five choices
• The extent of employee involvement in the job analysis
• The level of details of the job analysis
• Timing and frequency of analysis
• future oriented job analysis
Employee Involvement

As was stated above, the job analysis involves collecting job related
information duties, responsibilities, skills and knowledge required to
perform their jobs. It may be stated that in job analysis, information
about a job is collected and not about incumbent, however, the
jobholder is consulted. Employees are often asked to supply vital
information about the content of jobs given the familiarity of it.

To what extent involvement is needed to be in is an important point.

Too much involvement may result in biased Decision making, as the
employee is likely to inflate the duties and responsibilities of his
drops, just to make it appear more important than it actually is. On
the other hand, if employees are not involved or only minimal
involvement, they tend to become suspicious about the motive
behind the talk analysis. Besides, lack of involvement from
employees may eat to in at a rate and incomplete information. The
extent to which employees are involved depends upon the needs of
both the organization and the employees.

The Level of Details

The level of the details required in job analysis also depends upon
the purpose for which job related details are being collected. For
example, if the primary purpose for analyzing the job is of mass
input for intensive training programmes or an input for assessing
how much the job is worth, the level of the details required may be
great. However, if the job analysis is being done to add clarification
to the rules and responsibilities of the less detailed job analysis is
need.

When And How Often

Under the strategic choice relates to the timing and frequency of

conducting the job analysis is generally conducted when
(1) The organization is
newly established and that job analysis is initiated for the first
time.
(2) A new job is created
in an established company.
(3) A job is a changed significantly due to change in technology,
methods, procedures or system.
(4) The organization is considering a new remuneration plan.
(5) The employees or managers feel that there exist certain
inequities between job demands and the remuneration it carries.
Future Oriented

If an organization is changing rapidly due to fast growth or

technological change, a more future oriented approach to job
analysis may be desired. Traditional job analysis information
describes how the job has been done in the past and the manner in
which it is being currently done. If necessary, a future orientation
can be given to the job analysis and predictions may be made as to
how the job will be done in the future and the way it should be done.
This will allow organizations to begin hiring and training people for
these jobs prior to the actual changes. For example, personal
computers began to replace electronic typewriters, thus changing
the characters of many typist jobs. Many companies anticipated
these changes and began retraining their typist before changing
over to PC's.

(1) Gather Information:

Information Collection: After defining the uses of job analysis,

relevant information is collected to ascertain the various
characteristics of the job. Various aspects on which information is
collected are activities involved in the job, responsibilities associated
with the job, the type of environment in which in the person who will
perform the job. The relevant information may be collected through
a number of present employees performing similar job, critical
incidents involved, checklist prepared for analyzing the job, and
questionnaire.

METHODS OF COLLECTING JOB DATA

The methods of collecting job-related data are presented in the

diagram given below:
Observation: In this method, the Job analyst carefully observes the
job holder at work and records what she does, how she does and
how much time is needed for completion of a given task. This
method has both, positive and negative side. On the positive side,
the method is simple, and the data collected are accurate because
of direct observation. On the flip side, the method is time consuming
and inapplicable to jobs which involve high proportion of
unobservable mental activities and those which do not have
complete and easily observable job cycles. The analyst needs to be
trained to carefully observe and record the competence of a job
incumbent (officer). Training also means additional cost, considering
all these, the observation method may be used for analyzing
repetitive, short-cycle, unskilled and semi-skilled jobs. Better results
will be available when the observation method is used along with
the other method/s of job analysis.

Interview: In this, the analyst interviews the job holder and his
supervisor to elicit information about the job. Usually, a structured
interview form is used to record the information. During the
interview, the analysts must make judgment about the information
to be included and its degree of importance. The interview method
is time consuming. The time problem will be compounded if the
interviewer talks with two or more employees doing the same job.
Also, professional and managerial jobs are more complicated to
analyze and usually require a longer interview. There is also a
problem of bias on the part of the analyst and the job holder may
cloud the accuracy and objectivity of the data obtained. The positive
feature of this method is, it involves talking to the job holders who
are in a good position to describe what they do, as well as the
qualifications needed to perform their duties in a competent
manner.

Questionnaire: Job holders fill in the given structured

questionnaires, which are then approved by their supervisors. The
filled-in-questionnaires offer enough data on jobs. Standard
questionnaires are available or they may be prepared for the
purpose by the analysts. Standard or prepared questionnaires
should contain the following information:

a. The job title of the job holder;

b. The job title of the job holder’s manager or supervisor;
c. The job titles and numbers of the staff reporting to the job
holder ;
d. A brief description of the overall role and purpose of the job
and;
e. A list of the main task or duties that the job holder has to carry
out.

On positive side,

• This method provides comprehensive information about the

job which makes job analysis complete and satisfactory.
• This method enables the analyst to cover large number of jobs
within a short time.
• This method gives opportunity to all job holders to participate
in the method and express themselves freely.

On negative side;

• It is very costly and at times time consuming method.

• There is no direct contact between the analyst and job holders.
• Due to the above factor, the co-operation and response of the
respondents tend to be low.

Checklist method:

This is similar to questionnaire method, but the response sheet

contains fewer subjective judgements and tends to be either-yes-or-
no variety. It may cover as many as 100 activities and jobholder tick
only those tasks those are included in their jobs. Preparation of
checklist is a challenging job. The work should preferably be given to
specialists. Well prepared checklist is sent to the job holder. He is
asked to check all listed tasks and indicate the amount of time spent
on each task as well as the training and experience required in order
to be proficient in each task. The holder may also be asked to write
additional task which performs but is not mentioned in the checklist.
On positive side:
• It is useful in large organizations that have large number of
people assigned to one particular job;
On negative side:
• It is lengthy and costly. Also, not suitable for small organization
with limited manpower employed.
Technical Conference Method: In this method, services of
supervisors (who are experts) who possess extensive knowledge
about a job are obtained. Here, a conference of supervisors is used.
The analysts initiate discussion which provides details about jobs.
Though a good method of data collection, it lacks accuracy as actual
job holders are not involved in collecting information.

Diary Method: this method requires the job holders to record in

detail their activities each day. If done faithfully, this technique is
accurate and eliminates errors caused by memory lapses, the job
holder makes while answering questionnaires and checklists. This
method is also time consuming because recording of tasks may
have to be spread over a number of days. Diary method is not used
much in practice.

C. Information Processing:
The last step in job analysis process is information processing which
involves editing and classifying information in to different relevant
categories. Based on this exercise, job description and specification
are prepared which are used for various purposes as identified in the
beginning of job analysis.
(d)

JOB ANALYSIS

A Process of obtaining all pertinent job facts.

Job Description.

A statement contains Job Specification.

items
Such as: - • A statement of human
qualifications necessary
o Job Title to do the job. Usually
o Location contains such item as:-
o Job Summary
o Duties • Education
o Hazards • Experience
o Machines, Tools • Training
& • Judgment
Equipments • Initiative
o Materials & • Physical efforts
Forms used • Physical skills
o Supervision • Responsibilities
given or • Communication skills
Received. • Emotional characteristics
• Usually sensory demands
such as sight, smell,
hearing etc.
Chapter- 3 - Job Analysis, Design and Evaluation

The chapter HRP has given as an appropriate idea on how to plan

human resources effectively. Now, in order to achieve effective HRP,
the duties involved and the skills required for performing all the jobs
in an organization have to be taken care of. This knowledge is
gained through the analysis of work, popularly called job analysis.

JOB ANALYSIS

An organization requires personnel of different types so that

different jobs are performed effectively. In other words, there is an
attempt to match the jobs and jobholders. For achieving this
matching, detailed knowledge of the nature and the requirements of
different jobs is essential. Job analysis provides this knowledge. Job
analysis is essentially a process of collecting and analyzing relevant
facts of a job with a view to identify its contents and the
characteristics of the person who is likely to perform the job. US
Labor Department has defined job analysis as follows:

“Job analysis is the process of determining, by observation and

study, and reporting pertinent information relating to the nature of a
specific job… It is the determination of the tasks which comprise the
job and of the skills, abilities and responsibilities required of the
worker for a successful performance and which differentiates one
job from all others.”

Flippo has offered a more comprehensive definition of job analysis

which is as follows:

“Job analysis is the process of studying and collecting information

relating to the operations and responsibilities of a specific job. The
immediate products of this analysis of this analysis are job
descriptions and job specification.”
Thus, job analysis involves the process of identifying the nature of a
job (job description) and the qualities of the likely job holder (job
specification).

Importance / Uses of job Analysis

Initially, the concept of job analysis was limited to operative jobs and
it used to be undertaken for providing information to the recruitment
of operatives. However, over the period of time, job analysis has
extended to managerial analysis jobs. Therefore, in the present
context, the uses of job analysis have extended beyond recruitment
of personnel, which are as follows:
a. Organizational Design:

Organizational design involves building a network of relationship

among various functions and positions. The steps involved in
organizational design are identification of various jobs to be
performed, grouping these jobs together on the basis of similarity,
and assigning these jobs to a position. Since assignments of jobs
creates responsibility, commensurate authority is delegated so that
the relevant information for completing the total steps of
organizational design. It provides the bas4e for identifying the
contents of different jobs, their interrelationship and
interdependence, responsibility involved in a job, and
interdependence, responsibility involved in a job, and authority that
may be required to perform the job.

b. Acquisition of Personnel:

Acquisition of personnel involves human resource planning,

recruitment and selection, and orientation and placement. In each
area, job analysis helps in the following ways:
b.1. Human Resource planning: Human resource planning, as
discussed earlier, involves determination of number and type of
personnel required in future by the organization. The basis of this
determination is the types of jobs that may be required to be
performed in order to achieve organizational objectives. Job analysis
provides information for forecasting human resource needs in terms
of knowledge, skills and experience. It also provides help in planning
for promotions and transfers by indicating lateral and vertical
relationship among different jobs.

b.2. Recruitment and Selection: Recruitment and selection, taken

together, involve the identification of sources from where the
personnel will be acquired, motivating them for making themselves
available for selection and selecting those who meet the criteria as
provided in job description and job specification. The total process of
recruitment and selection is based on the principle of matching jobs
and individuals. In this process, various job-related factors in the
form of tasks and responsibilities and individual- related factors in
the form of knowledge, skills and experience are matched. Both
types of information are provided by jobs analysis.

b.3. Orientation and placement: Job analysis helps in orientation

and placement of personnel by further matching between jobs and
individuals. This further matching is required when personnel are
selected for a group of jobs rather than for specific jobs. In many
cases, individuals are selected for a group of jobs such as
management trainees, consultants, etc. Their match with job
requirements determines their placement in specific jobs. Job
analysis helps in providing information about such job requirement.

c. Human Resource Development: In the dynamic environment,

human resource development (HRD) is undertaken as a continuous
process to match individuals and job requirements. Such matching is
indicated by the information provided by job analysis. Thus, job
analysis helps in the following areas of human resource
development:

c.1. Career Planning: Career planning involves determination of path

of upward movement of individuals in the organization. The
individuals join the organization at a particular level and make
upward progression at various levels in their career. Job analysis
provides information about the opportunities in terms of career
paths and jobs availability in the organization. In the light of this
information, both individuals and organization make suitable efforts
for career planning and development.

c.2. Training and development: Career planning itself is not

sufficient but it requires the efforts in the form of training and
development so that the individuals are equipped to meet the
requirements of their jobs to be performed at valuable information
to identify training and development needs of various individuals. A
clear idea of what is required on the job help in deciding what is
learnt and developed in order to be effective.

d. Job Evaluation and compensation: Job evaluation is the process

of determining the relative worth of different jobs in an organization
with a view to link compensation, both basic and supplementary,
with the worth of the jobs. The worth of a job is determined on the
basis of job analysis provides both in the forms of job description
and job in the forms of job description and job specification.

e. Performance Appraisal: Performance appraisal involves

assessment of actual job performance by an employee in the light of
what is expected of him. Such an assessment is used for promotion,
pay increase, and identification of training needs. Job analysis helps
in determining performance standards against which the actual job
performance is measured.

f. Safety and Health: Job analysis helps in taking preventive

measures for maintaining safety and health of employees at the
workplace by providing information about unhealthy and hazardous
environmental and operational conditions in various jobs. Heat,
noise, fumes, etc. are examples of such conditions, which cause
occupational diseases if proper preventive measures are not
adopted.

The process of the job analysis

The following figures illustrate the process of job analysis. The figure
also points out the use of information about jobs. As may be seen
from the figure, job analysis is useful for several purposes, such as
personnel planning, performance appraisal and the like. Each phase
in the process of job analysis is as follows: -
 Strategic Choices

Gather
Informatio
n

Process
Informatio
n

Uses of Job Description &

Job Specification
Job Description o Personnel
o Planning
o Performance Appraisal
o Hiring
Job Specification o Training &
Development
o Job Evaluation &
Compensation
o Health & Safety
o Employee Discipline
o Work Scheduling
o Career Planning

Strategic Choices

With regards to job analysis, an organization is required to make at

least five choices
• The extent of employee involvement in the job analysis
• The level of details of the job analysis
• Timing and frequency of analysis
• future oriented job analysis
Employee Involvement

As was stated above, the job analysis involves collecting job related
information duties, responsibilities, skills and knowledge required to
perform their jobs. It may be stated that in job analysis, information
about a job is collected and not about incumbent, however, the
jobholder is consulted. Employees are often asked to supply vital
information about the content of jobs given the familiarity of it.

To what extent involvement is needed to be in is an important point.

Too much involvement may result in biased Decision making, as the
employee is likely to inflate the duties and responsibilities of his
drops, just to make it appear more important than it actually is. On
the other hand, if employees are not involved or only minimal
involvement, they tend to become suspicious about the motive
behind the talk analysis. Besides, lack of involvement from
employees may eat to in at a rate and incomplete information. The
extent to which employees are involved depends upon the needs of
both the organization and the employees.

The Level of Details

The level of the details required in job analysis also depends upon
the purpose for which job related details are being collected. For
example, if the primary purpose for analyzing the job is of mass
input for intensive training programmes or an input for assessing
how much the job is worth, the level of the details required may be
great. However, if the job analysis is being done to add clarification
to the rules and responsibilities of the less detailed job analysis is
need.

When And How Often

Under the strategic choice relates to the timing and frequency of

conducting the job analysis is generally conducted when
(6) The organization is
newly established and that job analysis is initiated for the first
time.
(7) A new job is created
in an established company.
(8) A job is a changed significantly due to change in technology,
methods, procedures or system.
(9) The organization is considering a new remuneration plan.
(10) The employees or managers feel that there exist certain
inequities between job demands and the remuneration it carries.

Future Oriented

If an organization is changing rapidly due to fast growth or

technological change, a more future oriented approach to job
analysis may be desired. Traditional job analysis information
describes how the job has been done in the past and the manner in
which it is being currently done. If necessary, a future orientation
can be given to the job analysis and predictions may be made as to
how the job will be done in the future and the way it should be done.
This will allow organizations to begin hiring and training people for
these jobs prior to the actual changes. For example, personal
computers began to replace electronic typewriters, thus changing
the characters of many typist jobs. Many companies anticipated
these changes and began retraining their typist before changing
over to PC's.

(2) Gather Information:

Information Collection: After defining the uses of job analysis,

relevant information is collected to ascertain the various
characteristics of the job. Various aspects on which information is
collected are activities involved in the job, responsibilities associated
with the job, the type of environment in which in the person who will
perform the job. The relevant information may be collected through
a number of present employees performing similar job, critical
incidents involved, checklist prepared for analyzing the job, and
questionnaire.

METHODS OF COLLECTING JOB DATA

The methods of collecting job-related data are presented in the

diagram given below:
Observation: In this method, the Job analyst carefully observes the
job holder at work and records what she does, how she does and
how much time is needed for completion of a given task. This
method has both, positive and negative side. On the positive side,
the method is simple, and the data collected are accurate because
of direct observation. On the flip side, the method is time consuming
and inapplicable to jobs which involve high proportion of
unobservable mental activities and those which do not have
complete and easily observable job cycles. The analyst needs to be
trained to carefully observe and record the competence of a job
incumbent (officer). Training also means additional cost, considering
all these, the observation method may be used for analyzing
repetitive, short-cycle, unskilled and semi-skilled jobs. Better results
will be available when the observation method is used along with
the other method/s of job analysis.

Interview: In this, the analyst interviews the job holder and his
supervisor to elicit information about the job. Usually, a structured
interview form is used to record the information. During the
interview, the analysts must make judgment about the information
to be included and its degree of importance. The interview method
is time consuming. The time problem will be compounded if the
interviewer talks with two or more employees doing the same job.
Also, professional and managerial jobs are more complicated to
analyze and usually require a longer interview. There is also a
problem of bias on the part of the analyst and the job holder may
cloud the accuracy and objectivity of the data obtained. The positive
feature of this method is, it involves talking to the job holders who
are in a good position to describe what they do, as well as the
qualifications needed to perform their duties in a competent
manner.

Questionnaire: Job holders fill in the given structured

questionnaires, which are then approved by their supervisors. The
filled-in-questionnaires offer enough data on jobs. Standard
questionnaires are available or they may be prepared for the
purpose by the analysts. Standard or prepared questionnaires
should contain the following information:

f. The job title of the job holder;

g. The job title of the job holder’s manager or supervisor;
h. The job titles and numbers of the staff reporting to the job
holder ;
i. A brief description of the overall role and purpose of the job
and;
j. A list of the main task or duties that the job holder has to carry
out.

On positive side,

• This method provides comprehensive information about the

job which makes job analysis complete and satisfactory.
• This method enables the analyst to cover large number of jobs
within a short time.
• This method gives opportunity to all job holders to participate
in the method and express themselves freely.

On negative side;

• It is very costly and at times time consuming method.

• There is no direct contact between the analyst and job holders.
• Due to the above factor, the co-operation and response of the
respondents tend to be low.

Checklist method:

This is similar to questionnaire method, but the response sheet

contains fewer subjective judgements and tends to be either-yes-or-
no variety. It may cover as many as 100 activities and jobholder tick
only those tasks those are included in their jobs. Preparation of
checklist is a challenging job. The work should preferably be given to
specialists. Well prepared checklist is sent to the job holder. He is
asked to check all listed tasks and indicate the amount of time spent
on each task as well as the training and experience required in order
to be proficient in each task. The holder may also be asked to write
additional task which performs but is not mentioned in the checklist.

On positive side:
• It is useful in large organizations that have large number of
people assigned to one particular job;
On negative side:
• It is lengthy and costly. Also, not suitable for small organization
with limited manpower employed.
Technical Conference Method: In this method, services of
supervisors (who are experts) who possess extensive knowledge
about a job are obtained. Here, a conference of supervisors is used.
The analysts initiate discussion which provides details about jobs.
Though a good method of data collection, it lacks accuracy as actual
job holders are not involved in collecting information.

Diary Method: this method requires the job holders to record in

detail their activities each day. If done faithfully, this technique is
accurate and eliminates errors caused by memory lapses, the job
holder makes while answering questionnaires and checklists. This
method is also time consuming because recording of tasks may
have to be spread over a number of days. Diary method is not used
much in practice.

C. Information Processing:
The last step in job analysis process is information processing which
involves editing and classifying information in to different relevant
categories. Based on this exercise, job description and specification
are prepared which are used for various purposes as identified in the
beginning of job analysis.
Job Specification.
(d)
Job Description.
• A statement of human
JOB ANALYSIS contains qualifications necessary
A statement
to do the job. Usually
items
A Process contains such item as:-
Such as: -of obtaining all pertinent job facts.
• Education
o Job Title
• Experience
o Location
o Job Summary • Training
o Duties • Judgment
o Hazards • Initiative
o Machines, Tools • Physical efforts
& • Physical skills
Equipments • Responsibilities
o Materials & • Communication skills
Forms used • Emotional characteristics
o Supervision • Usually sensory demands
given or such as sight, smell,
Received. hearing etc.
JOB DESCRIPTION

Job description is a written statement showing job title, tasks, duties

and responsibilities involved in a job. It also prescribes the working
conditions, hazards, stress that it can produce and the relationship
with other jobs. Job description is necessary to do the job
satisfactorily.

Flippo has defined job description as follows:

“A job description is an organized, factual statement of duties and
responsibilities of a specific job. In brief, it should tell
• what is to be done,
• how it is done and
• Why.
It is a standard of function, in that it defines the appropriate and
authorized content of a job.”

Generally, a job description contains the following information:

1. Job title, code number, department / division.
2. Job contents in terms of activities or tasks performed.
3. Job responsibilities towards effective performance of the job.
4. Working conditions specifying specific hazards.
5. Social environment prevailing at the workplace.
6. Machine tools and equipments.
7. Extent of supervision given and received.
8. Relationship with other jobs-vertical, horizontal and diagonal.

The following figure gives an example of a Job Description.

Once the job description has been written and finalized with the line
manager (who will be responsible for the post-holder), the next
stage in the recruitment process is the drafting of the personnel
specification.

JOB DESCRIPTION
Job Title: Human Resources Manager
Reports to: Human Resources Director
Immediate Subordinates: Human Resources Officer
Safety Officer
Training and Development Officer
Occupational Health Nurse
Purpose of the Job:
Within the limits of human resources policies, to provide a full
human resources service to line management and to provide a
framework for maintaining good relationships between management
and staff (including staff representatives).
Responsibilities:
1. Ensuring the efficient recruitment and selection of suitable and
sufficient employees to meet vacancies identified by department
managers.
2. Implementing the company’s remuneration policy in accordance
with laid-down procedures.
3. Advising line managers on employee relations and legal matters
during negotiations with trade union representatives, at branch and
local level.
4. Establishing and maintaining a regular programme of joint
consultation with employee representatives and senior
management.
5. Providing adequate training programmes for the induction of new
recruits and training and development for managers and employees.
6. Advising department managers on management development
programmes.
7. Maintaining adequate records for employees.
8. Providing a routine health and welfare service for all employees
including arrangements for giving first aid.

Economic Conditions:
Salary will be commensurate with the grade and scope of the post,
as laid out in the contract of employment.

37 hours per week with five weeks’ holiday per year.

Company car will be provided.

Qualifications Required:
Over 3 years’ experience in human resources management.
Previous experience of negotiating with trade union representatives.
Professional qualifications (including membership of the Institute of
Personnel and Development) essential.

Uses of Job Description:

. 1. Job grading and job classification
2. Providing base for preparing job specification, leading to
recruitment and selection.
3. Procurement and placement of employees.
4. Developing career path.
5. Training and development.
6. Setting performances standards and appraisal.
7. Promotion and transfer.
8. Developing work procedures and processes.
9. Taking preventive measures to minimizes the impact of
hazardous conditions
 10. Employee counseling and vocational guidance

OBJECTIVES OF JOB DESCRIPTION

Job descriptions help in getting the things done through people and
it helps management to accomplish following objectives:
1. Efficient organization of jobs.
2. Proper recruitment or staffing in the organization.
3. Assigning jobs to people by communicating to them their
duties and responsibilities and by setting job standards.
4. Reviewing performances of the people.
5. Improving performance through appraisal and training.
6. Rewarding employees.
Therefore, job descriptions play a very crucial role in key
management activities.

JOB SPECIFICATION

Job specification, also known as man or employee specification is a

statement of minimum acceptable qualities required in a job
incumbent for the effective performances of the job. In contrast to
job description, which provides various features of the job, job
specification specifies various features of the jobholder. Flippo has
defined job specification as follows: “Job speficification is a
statement of minimum acceptable human qualities necessary to
perform a job properly. It is a standard of personnel and designates
the qualities required for acceptable performance”.

A job specification is prepared on the basis of job

description. Its basic contents are as follows:
1. Personal characteristics such as age, sex, education, job
experience and extra –and co-curricular activities.
2. Physical characteristics such as height, weight, chest, vision,
hearing, health, voice, poise and hand and foot coordination.
3. Mental characteristics such as general intelligences, memory,
judgment, foresight, ability to concentrate, etc.
4. Social and psychological characteristics such as emotional
stability, flexibility, manners, initiative, drive, conversational ability,
creativity, etc.
Various contents of a job specification can be prescribed in three
forms: (1) essential attributes which a person must possess, (2)
desirable attributes which a person may possess, and (3) contra-
indicators which will become a handicap to successful job
performance.
JOB DESIGN

Definition
Work arrangement (or rearrangement) aimed at reducing or
overcoming job dissatisfaction and employee alienation arising from
repetitive and mechanistic tasks. Through job design,
organizations try to raise productivity levels by offering non-
monetary rewards such as greater satisfaction from a sense of
personal achievement in meeting the increased challenge and
responsibility of one's work. Job enlargement, job enrichment, job
rotation, and job simplification are the various techniques used in a
job design exercise.

Job design has emerged as important area for work motivation

because the traditional job design has produced job unfriendliness
resulting into monotony, powerlessness, meaninglessness,
employee absenteeism, and employee turnover. Any person who
works for living speeds a significant amount of his time at the
workplace executing the requirement, duties, and activities involved
in jobs.
The basic objective of a job design is to find fit between a job and
job holder so that job is performed well and the job holder
experiences satisfaction and puts his best effort for job
performance. Job design involves integration of tasks, duties, and
responsibilities in to a unit of work to achieve certain objectives.

Mathis and Jackson have defined job design as follows:

“Job design integrates work content (tasks, functions, relationships),
the rewards (extrinsic and intrinsic), and the qualifications required
(skills, knowledge, abilities) for each job in a way that meets the
needs of employees and the organization.

FACTORS AFFECTING JOB DESIGN

Job design is dependent upon the following factors:

1. Organizational Factors
2. Environmental Factors
3. Behavioral factors
Organizational Factors:
This includes characteristics of task, workflow, ergonomics and work
practices.

Characteristics of Tasks: Job design depends upon the task to be

carried out. The designs may differ if one person carries various
tasks or if the task is to be performed by together

Work Flow: The flow of work in an organization strongly influenced

by the nature of product or service. Jobs must be designed in such a
way the flow of work is not obstructed and the employee movement
is least.

Ergonomics: Ergonomics is the study of people’s efficiency in the

working environment. Ergonomics helps the employer to design jobs
in such a way that the workers physical abilities and job demands
are balanced.

Work Practices: Work Practices are the set of ways of performing a

task. Work practices develop over a period of time. Therefore all the
jobs must be designed so as to confer to the existing practices.

Environmental Factors

Environmental factors include employee abilities and availability,

social and cultural expectations.

Employees’ Abilities and Availability:

Efficiency consideration must be balanced against the abilities and

availability of the people who are to do the work to be done
efficiently.. Also the design depends upon the availability of persons
to do a particular job. For example an organization, which does not
have employees with the knowledge to operate a computer, cannot
design a job, which requires the employee to necessarily work on
the computer and therefore in order to do the same amount of work
in time it must employ additional employees. Another example can
When Henry Ford made use of the assembly line, for e.g., he was
aware that most potential workers lacked any automobile – making
experience. So, jobs were designed simple and required little
training.

Social and Cultural Expectations:

With the inflow of globalization the expectations of the employees

with regards to their jobs has raised. Hence it is necessary to create
or design jobs that fulfill their expectations. Hence it is necessary to
create or design jobs that fulfill their expectations. Also the
employees respect certain social needs like religious beliefs,
sophistication in the work etc…such needs must keep in mind while
designing jobs.

Behavioral Factors

Behavioral factors include feedback, autonomy, and use of abilities,

variety.

Feedback:

Ideally a job must be designed such that a single person must

be able to do it completely or at least a significant part of it.
This helps him to get meaningful feedback, which in turn
helps him to do the job better.

Autonomy:

Every job must be designed in such a way that the concerned

person has a certain amount on autonomy to take his own
decisions. This makes him feel responsible for the job thus
increasing his self-esteem and his performance.

Use of abilities:

The job must be designed in such a way that the abilities of

the employees are used to there fullest. This will not only
improve the quality of the job but also give the employee
self-satisfaction.
Variety:

Monotony of work causes boredom, which is directly related

to their performance and also employee turnover. Thus
employees must be given an opportunity to try their
abilities at different jobs depending upon skills.

MAIN APPROACHES TO JOB DESIGN:

1. Job Rotation: Job Rotation is the movement between different

jobs. One day a person may be working in one part of the factory
and the next day they may work in a different part. This avoids the
employee becoming bored as with Job Rotation they are doing
different jobs all the time and learning new skills. Multi skilling is
when people have many skills so they are able to carry out many
different jobs. Multi skilling benefits the employer as if they are short
of staff in one area, they can move people across.

Job Rotation is closely related to Job Transfer. Transfer of employees

from one job to the other or from one department to the other is
quite common in all organizations. Management can transfer the
services of employees as per the requirements of the organization.
The effect of Job Transfer and rotation is similar. Both bring
movement of worker from one job to the other but the background
is different.

Thus, Job Rotation implies systematic movement of employees from

one job to the other. Job remains unchanged but employees
performing them shift.

With Job Rotation, an employee is given an opportunity to perform

different jobs, which enriches his skills, experience and ability to
perform different jobs.
RENEWAL: Reduction of boredom, making new
ADVANTAGES

contacts, thinking about new options,

change viewpoint
EXPLORATION: Trying new things, developing new
relationships, testing administrative skills.

SPECIALIZATION: Re-education, in-depth exploration, using

special skills, meeting a need that was
underserved.
BALANCE: Time allocation, taking time from regular
assignment, balancing workload.
DISADVANTAGES CLARITY: Lack of information needed to be
successful, lack of clear plans and goals,

ORIENTATION: Lack of structured instructions to special

assignments, new skills not being taught
properly, difficulties in learning new
assignments,

2. Job Enlargement : It means expanding the number of tasks,

or duties assigned to a given job. Adding more tasks or duties to a
job does not necessarily mean that new skills and abilities are
needed. There is only horizontal expansion. It is with same skills
taking additional responsibilities like increasing the number of
machines operators under a supervisor from 10 to 15. Job
enlargement may involve breaking up of the existing work system
and redesigning a new work system. For this employees also need to
be trained to adjust to the new system. Job enlargement is said to
contribute to employee motivation but the claim is not validated in
practice.

3. Job Enrichment : Job enrichment is to add a few more

motivators to a job to make it more rewarding. A job is enriched
when the nature of the job is exciting, challenging, rewarding and
creative or gives the job holder more decision-making, planning and
controlling powers. An enriched job will have more authority,
responsibility, autonomy (vertical enrichment), more variety of tasks
(horizontal enrichment) and more growth opportunities. The
employee does more planning and controlling with less supervision
but more self-evaluation. For example: transferring some of the
supervisor’s tasks to the employee and making his job enriched. As
per Hertzberg, who was the father of this term, an enriched job has
eight characteristics:

(a) Direct Feedback: Employee should be able to get

immediate knowledge of the results they are achieving as it
acts as motivator.
(b) Client Relationship: An employee who serves a client
or customer directly has an enriched job.
(c) New Learning: An enriched job allows its incumbent to feel
that he is growing intellectually.
(d) Scheduling Own Work: Freedom to schedule own work
(autonomy) is job enrichment. Deciding when to tackle
which assignment is an example of self-scheduling.
Employees who perform creative work have more
 opportunity to schedule their assignments than those who
perform routine jobs.
(e) Unique Experience: An enriched job has some unique
qualities or features.
(f) Control over Resources: One approach to Job enrichment
is for the each employee to have control over his or her
resources and expenses. For e.g. he/she must have
authority to order supplies necessary for completing his job.
(g) Direct Communication Authority: An enriched job
allows worker to communicate directly with people who use
his or her output.
(h) Personal Accountability: An enriched job holds the
incumbent responsible for the results. He or she receives
praise for good work and blame for poor work.
Problems with Job Enrichment
(a) Job enrichment is not a substitute for good governance. If
other environmental factors in the business are not right,
mere job enrichment will not mean much.
(b) Job enrichment may have short term negative effects till the
worker gets used to the new responsibility.
(c) Job enrichment itself might not be a great motivator since it
is job-intrinsic factor. As per the two-factor motivation
theory, job enrichment is not enough. It should be preceded
by hygienic factors etc.
(d) Job enrichment assumes that workers want more
responsibilities and those workers who are motivated by
less responsibility, job enrichment surely de-motivates them
(e) Workers participation may affect the enrichment process
itself.
(f) Change is difficult to implement and is always resisted as
job enrichment brings in a changes the responsibility.

Autonomous or Self-Directed Teams : Empowerment

results in self-directed work teams. A self-directed team is a group
of employees responsible for a whole work segment. They work
together, handle day-to-day problems, plan and control, and are
highly effective team.

There are some limitations of such empowered teams. For

example, the union response to self directed teams may not
be positive. Secondly, getting worker co-operation for work
teams may not be encouraging, as there is psychological
unwillingness to accept responsibilities. Even managers and
supervisors doubt the role of empowered teams as they are
losers in terms of status, authority and power. Implementation
of work team technique is difficult.

Advantages of Teams:
(a) Greater employee involvement and motivation.
(b) Higher productivity.
(c) Improved sense of responsibility among team members.
(d) Wide learning opportunities to team members.
(e) Management can meet new challenges through special
teams.

Disadvantages of Teams:
(a) Compensating team members as per their contributions is
difficult.
(b) Decisions may be delayed.
(c) Not suitable for individual-oriented employees. (d)
Team performance is difficult to measure.
This advocates of self-directed teams claim that such teams
give better results as compared to benefits available from
individual motivation through job rotation, job enlargement
and job enrichment.

EXAMPLE

Job Design Around the World

Many contemporary breakthroughs and innovations to job design

were developed and pioneered abroad. As far back as 1951, for
example, researchers at the London Tavistock Institute conducted
important pioneering studies of jobs in the coal-mining industry in
England. They examined a wide variety of work arrangements and
found the fact that flexibility in the manner in which jobs were
performed improved interpersonal relationships among employees
could be a critical part of organizational effectiveness. Another
research, conducted in textile units in India, focused on the
relationship between people and technology. The findings led
managers to better appreciate the importance of both technical
systems and social systems in organizations.

But, perhaps, the most ambitious experiment in job design took

place in Sweden. In, the early 1970s, Volvo was planning to build a
new assembly plant near the town of Kalmar. In designing the new
factory, the firm's managers decided to see if they could change the
traditional approach to jobs in the automobile industry to make up
for many of the negative factors associated with traditional
assembly-line work. They constructed the entire facility to promote a
better job design and a more pleasant work environment for Volvo
employees. For example, each worker was assigned a space that felt
like a small workshop rather than a large factory. Natural lighting
was emphasized, and each area had a separate lounge and rest
facilities for the workers assigned there.

Instead of using a traditional assembly line, the firm installed

computer-guided trolleys that rolled along the floor. The workers
moved around the trolleys to perform their tasks rather than
standing stationery, while the car moved past them. This gave them
the flexibility to move the trolley off the line when a serious problem
arose with the car on that particular trolley. Thus, the problem could
be attended to without slowing down the entire line.
While construction costs in the factory are about 10 per cent more
than a traditional automobile plant, Volvo management believed
that improvements in the quality of both work life and products that
resulted, compensated for at least some of the additional costs.

MECHANISM OF JOB DESIGN

Every work undergoes constant modification because of the impact

of mechanization and automation. Some jobs become redundant
while others are created and still others are altered in content. This
necessitates different types of education, experiences and other
attributes. Also for effecting job design, the organization needs to
respects the unions, who otherwise may stall the move on one
ground or the other. While designing a job, management must also
be concerned with the practical considerations of quantity and
quality available personnel (both within the organization and in the
labor market). Personality conflict and friction, problem of the
human relations, boredom, obsessive thanking, etc, also needs to be
taken care of.

Mechanism of job design considers two aspects of a job-number of

tasks in a job complexity of task, a job containing few specific tasks
is a simple one; job containing many tasks becomes difficult. Task
complexity is the factor associated with the performance of a job. A
job is less complex when considering a limited number of factors can
perform it; a more complex job requires the considerations of large
number of factors. Considering these two factors taken together, the
nature of a job is important because it determines the skill
requirement in performing the job. A job with a few tasks of similar
nature of a job is a routine one and requires fewer skills, for
example, the job of a nurse. On the other hand, a job with a variety
of tasks of different nature requires high skills, for example, the job
of an executive at higher level in the organization. Each job offers
variety, responsibility.
JOB EVALUATION

Job evaluation is the process of determining the worth of one job in

relation to that of another without regard to the personalities. It
analyses and assesses the content of jobs, to place them in some
standard rank order. The end result is used as the basis for a fair
and logical remuneration system. A properly devised job evaluation
scheme provides management with definite, systematic and reliable
data for working out wage and salary scales. Thus, logical wage
negotiation reduces wage grievances and dissatisfaction with wage
differentials and ensures fair treatment for each employee. It also
provides a logical basis for promotion. A survey of British institute of
Management indicated the following reasons for its use:
1. To reduce layout turnover,
2. To increase output,
3. To improve morale,
4. To reduce loss of time due to wage negotiation and disputes,
5. To reduce the complaints regarding wages,
6. To reduce wage and salary anomalies.

Steps in Job Evaluation

1. Thorough examination of the job (job assessment),
2. Preparation of job description (recording its characteristics to
suit assessment of method).
3. Preparation of job analysis to set out the requirements of the
job under various factor headings,
4. Comparison of one job with another,
5. Arrangement of jobs in a progression,
6. Relating the progression of jobs to a money scale.

LIMITATIONS OF JOB EVALUATION

Job evaluation alone cannot establish a wage scale. For wage

fixation, we need to take into cognizance statutory requirements,
like minimum wages Act, 1948. Similarly, other factors of wage
fixation like capacity to pay, inter-industry wage variation, inter-
regional wage variation, collective bargaining agreement, if any,
also need to be given importance. Job evaluation is highly subjective
(being based on judgmental estimate). Similarly, it cannot take into
account the cyclical effect of market value of occupations. For
example, finance jobs were highly priced in the market at one point
of time (now IT and marketing has taken its place). Despite such
limitations, job evaluation technique is considered very useful for
reasons explained earlier.
Methods of job evaluation

1. Ranking Method

 This is one of the simplest methods of job evaluation,

 Each job is compared to every other job in the organization,
 Based on overall worth of the job to the organization,
The ‘worth’ of a job is usually based on the judgments of skill,
efforts, responsibility and working condition.

2. Classification method

 Jobs are categorized into existing grade/category structure of

hierarchy
 Each level in the grade/category structure has a description
and associated job title
 Each job is assigned to the category providing closest match to
the job
 The classification of position is decided by comparing the
whole job with the appropriate job grading standards
 To ensure equity in job grading and wage rates, a common set
of job grading standards and instructions are used

3. Factor Comparison Method :-

This is the more scientific and systematic method of Job Evaluation.

Here instead of ranking complete jobs, each job is ranked according
to the series of factors such as skill, responsibilities, working
conditions and efforts. Pay will be assigned by comparing the
weights of the factors required for each job.

4. Point Method: -

Each organization identifies its “key factors” and points are assigned
to each factor in order of importance. The points are summed up to
determine the wage rate for the job. Jobs with similar point’s totals
are placed in similar pay grades.
PROCEDURE OF JOB EVALUATION

Gaining acceptance and creating job

evaluation committee

Finding jobs to be evaluated and analyzing and

preparing job description

Selecting the method and classifying the

jobs accordingly

Installing the program

Review periodically
 (1) Securing acceptance from employees: Before
undertaking job evaluation, top management of the
company must explain the purpose and uses of the job
evaluation programme to the employees and their
unions. In order to bring clarity to the programme, oral
presentations could be made. Letters, circulars and
booklets could also be used to classify all relevant
aspects of the job evaluation programme. This will avoid
possible misunderstanding and confusion among
employees about the job evaluation programme/ process
which company desires to introduce. There will be overall
acceptance to the programme by the employees and
their unions. This will also avoid possible opposition from
them in the near future.

(2) Finding / deciding the jobs to be evaluated: Every job

available in an organization need not be evaluated. Such
exercise may prove too taxing, costly and time-consuming.
Here, certain key jobs in each department may be
identified. While selecting jobs for evaluation purpose, care
needs to be taken to ensure that they (jobs selected)
represent the type of work performed in that department.

(3) Analyzing and preparing job description: In this stage of

job evaluation process, the job selected for evaluation will be
studied / analyzed in detailed. This is necessary for the
preparation of a job description and also for an appropriate
analysis of job needs for successful performance.

(4) Selecting the method of evaluation: Here, the method of

job evaluation will be selected. The most appropriate method
of evaluating the jobs must be identified here, keeping the job
factors as well as organizational demands in mind. This stage
in the job evaluation process is important as the benefits of
job evaluation will be available only when the method of job
evaluation selected is appropriate.

(5) Installing the programme: Once the job evaluation process is

over and a plan of action is ready, the management must explain it
to employees and put it into operation in the whole organization.
This step is essential in order to clear the doubts, etc of the
employees and union leaders. It is important to note that the job
evaluation programme will be acceptable to employees when the
prograrrune is explained to them properly.
(11) Periodical review: The \jobs in an organization need
periodical review in the light of changes in environment
conditions (technology, products, services, etc.) which may
change from time to time. For example, the traditional clerical
functions have undergone a rapid change in various sectors
such as banking, insurance, railways and finance after
computerization. New job descriptions need to be written and
the skill requirements of new jobs need to be duly
incorporated in the evaluation process. In the absence of such
periodical review, employees may feel that all the relevant job
factors have not been evaluated properly, based on which
their pay scale has been determined. This suggests the
importance of periodical review in the process of job
evaluation.
CASE STUDY: 3 Global Services - BPO

3 Global (3G) is a subsidiary of Hutchison Essar group and

operates back-office work of 3G mobile services in Australia.
In India it is located in Mindspace, Malad. In this country this
sector thrives on the availability of quality HR. Hence, this
company is the best example for knowing about the
application of techniques like job analysis, job evaluation, and
job design.

Job Analysis at 3G

An operations manager heads each and every process in 3G.

He analyses the process and then lists down his requirements
with regards to manpower, both technical and non-technical.
He then works with the HR department and selects the
employees from their database of job applicants. The
recruitment is then done for various designations like CCE, TL,
QL, training personnel etc , but a major chunk i.e. about 90%
of it is done for the position of CCE. The minimum
requirements for the post of CCE as given out by the
operations manager are as follows:

1. Should be above 18 yrs of age.

2. Should have at least completed HSC.

3. Knowledge of Excel and basic computing is preferred.

4. People with prior experience in this field are an added

advantage.

Once the job applicants are recruited, the HR department

imparts the necessary training and within a span of two to
three weeks the employees become ready to take calls.

Job Design at 3G

3G mainly practices ‘job rotation’ as a part of job design. This

is because many of their employees complain about the
monotonous nature of work. Suppose the main job of an
employee at 3G is taking customer calls; but for some days
the operations manager shifts him to some other work like
assisting the team leader. This kind of movement among jobs
ensures that the morale of employees is always high and also
increases employee efficiency. Promotions are a part of job
design, but this is done only after the employee has
completed at least 2 yrs at 3G.

Job Evaluation at 3G

In any company remuneration has to be paid according to the

work done by the employee. For this, evaluation of the work
done becomes important. Here the employees are paid their
basic salary according to their designations and add-ons and
performance incentives and attendance incentives are also
paid. The quality management department mainly does the
job evaluation in this company and later it gives the report to
the HR department and then the salaries are given according
to the reports given to them.

University Questions:

1. Define the term “Job Evaluation” Explain the process of JOB

evaluation. (2007)
2. State Bank of India has lost a lot of customers in the last few
years to multinational banks that adopt a modern
operational style preferred by customers. As part of an
organizational revamp, State Bank of India authorities have
decided to study all existing jobs and redesign the work
content, if necessary. Describe any three techniques that
State Bank of India can use to collect information for
analysing jobs. (2005)

Short Notes:
1. Job Evaluation (2002, 2004)
2. Job Description (2006)
3. Objectives of Job Evaluation (2003)

Pittance
Concept Questions:

1. Job Analysis (2201, 2003, 2004)

2. Job Design (2001)
 RECRUITMENT, SELECTION & INDUCTION

HR Planning determine the number and type of people a firm needs.

Job analysis and job design specify the tasks and duties of jobs and
the qualifications expected from prospective job holders. After Job
Analysis & HR planning, the next logical step is to hire the right
number of people of the right type to fill the jobs.

The procurement function in the human resource department of a

company includes the following major sub-functions.

1. Recruitment: It means search of the prospective

employee to suit the job requirements as represented by
job specification – a technique of job analysis.
2. Selection: Out of the prospective applicants, right type of
persons is selected to match the jobs.

Recruitment involves attracting and obtaining as many applications

as possible from eligible job seekers. Theoretically, recruitment
process is said to end with the receipt of applications, in practice the
activity extends to the screening of applications so as to eliminate
those who are not qualified for the job.

Need for recruitment:

The need for recruitment may be due to the following

reasons/situations:

(a) Vacancies due to promotions, transfers, retirement,

termination, permanent disability, death and labor turnover.
(b) Creation of new vacancies: due to growth, expansion,
merger, diversification etc activities of business.

Recruitment forms the first stage in the process, which continues

with selection and ceases with the placement of the candidate.
Meaning and Definition:

“The process of attracting individuals on a timely basis, in sufficient

numbers, and with appropriate qualifications, and encouraging them
to apply for jobs with an organization.”

“It is the process of finding and attracting capable applicants for

employment. The process begins when new recruits are sought
and ends when their applications are submitted. The result is a
pool of applicants from which new employees are selected.”
 Practically, recruitment process extends to the screening of
applications so as to eliminate those who are not qualified for the
job.

Purpose / Importance of Recruitment

The method of recruitment that an organization uses directly

affects the efficiency of its selection and placement programme
in following ways.

• It determines the present and future requirements of the

organization in conjunction with its personnel planning and job-
analysis activities.
• Increase the pool of job candidates
• Helps increase the success rate of the selection process by
reducing the number of visibly under qualified or overqualified
job applicants.
• Begins identifying and preparing potential job applicants who
will be appropriate candidates.
• Increases organizational and personal effectiveness in the
short and long term.

Something important about recruitment:

• Recruitment represents the first contact that a company

makes with potential employees. It is through recruitment that
many individuals will come to know a company, and eventually
decide whether they wish to work for it.
• A well-planned and well-managed recruitment effort will result
in high-quality applicants, whereas, a haphazard and
piecemeal effort will result in mediocre ones.
• High quality employees cannot be selected when better
candidates do not know of job openings, are not interested in
working for the company, and do not apply.
• The recruitment procedure should inform qualified individual
about employment opportunities, create a positive image of
the company and provide enough information about the jobs
so that applicants can make comparisons with their
qualifications and interests.

The failure to generate an adequate number of reasonably qualified

applicants can prove costly in several ways.
 • Poor quality of selection means extra cost on training and
supervision.
• When recruitment fails to meet organizational needs for talent,
a typical response is to raise entry-level pay scale.

FACTORS GOVERNING RECRUITMENT

Recruitment is subject to influence several factors. These include

external as well as internal forces.

External Forces

a. SS & DD of specific skills in the labor market: if the dd for a

particular skill is high relative to the supply, an extraordinary
recruiting effort may be needed. For e.g. the dd for programmers is
likely to be higher than their supply as opposed to the dd-ss
relationship for non-technical employees.

b. Unemployment rate: when unemployment rate in a given area

is high, the company’s recruitment process may be simpler. The
number of unsolicited applicants is usually greater, and the
increased size of the labor pool provides better opportunities for
attracting qualified applicants. As the unemployment rates drops,
recruiting efforts are increased and new sources are explored.

c. Political and legal consideration: Reservations of job for SC, ST,

minorities and other backward classes is a political decision. There is
a strong case for giving preference to people hailing from less-
advantaged sections of the society. Reservation has been accepted
as inevitable by all sections of the society. The Supreme Court has
also agreed upon 50% reservation of seats and jobs.

d. Company’s image: It also matters in attracting large number of

job seekers. Blue Chip companies attract large number of
applications. Often, it is not the money but the perception of the job-
seekers about the company also matters in attracting qualified
prospective employees.

Internal Forces

a. Recruitment Policy:

Organizations may have an internal recruitment policy (to recruit

people from within the organization - its own employees) or external
policy. Generally, internal policy is given more preference due to
many advantages.
b. Temporary and Part-Time employees: An organization hiring
temporary or part-time employees have less advantage in attracting
sufficient applications.

c. HRP: Whether company has implemented proper HRP or not is

also another important factor. The positions cannot be filled up
overnight; it takes time to examine the alternative regarding the
appropriate sources of recruitment. If organization believes in HRP
then, it can well in advance determine its requirement and
implement recruitment process accordingly.

d. Size of organization: Another internal factor having its

influence on the recruitment process. An organization with one
thousand employees will find it less problematic to recruit than an
organization with lesser number of employees.

e. Cost of recruiting: Yet another factor that has to be considered.

Recruiting costs are calculated per new hire and the figure is
considerable now a days. Recruiters must, therefore, operate within
budgets. Careful HRP can minimize recruitment costs. The best
solution is to use proactive personnel practice to reduce employee
turnover, thus, minimizing the need for recruiting.

Although it is not easy to control attrition rate or to ensure that a

person who has appeared for an interview will be a happy employee
later, certain strategy can help organization from avoiding
appointment of candidates who will choose to leave organization in
a very short span of time after being appointed. Genpact, the BPO
pioneering uses a pre-hiring process to aid in arresting attrition. The
organization brings people before they join and have them look at
the workplace. If the people choose not to join, that reduces
potential attrition. The company also offers education at the
workplace as young recruits tend to leave the organization for
higher education. The attrition levels are half now for those
personnel who have made use of this opportunity.

SOURCES / METHODS OF RECRUITMENT:

DIAGRAM: SOURCES OF RECRUITMENT

Internal Sources:

• Promotion
• Transfer
• Internal notification
• Retirement (renewal of the contract of the person retiring.)
 • Former employees (rehiring or re-employment)

There is no surity in the organizations that only non-performers

leave the organization. Even the star performers may leave the
organization for greener pasture. For organizations, holding on to
their former employees (best ones) is one way. For eg. Quatrro BPO
Solutions has nurtured a concept of keeping in touch with high
performers who leave the organizations and give them an
opportunity whenever they want to come back.

External Sources:

• Press advertisement
• Employment exchange
• Walk-ins
• Consultants
• Contractors
• Mergers and acquisition
• Competitors
• E-recruiting

Former employees: WIPRO (SCIP), Holding on to employees

Evaluation of Internal sources of recruitment

Advantages

• Economical
• Develop loyalty towards firm
• Acts as a motivator
• Security and continuity of employment
• Reduce labor turnover
• People recruited internally, does not require induction.

Disadvantages:

• A feeling of discontent among those who are not promoted.

• Prevents entry of young blood in the organization
• Promotion to key post may not turn possible due to non-
availability of competent persons.
• May encourage favoritism and biasness.

EXTERNAL SOURCES:

Press Advertisements:
 • Concept
• Blind ads

It is the one, in which there is no identification of the firm is

mentioned in the ad. Respondents are asked to reply to a post box
number or to a consulting firm that is retained by the organization.
Large companies will seldom/maynot use blind ads to fill vacancies
(generally at lower level). However, when organization doesnot wish
to publicize the fact that it is seeking to fill an internal position, or
when it seeks to recruit for a position in the place of a person likely
to be displaced, a blind ad may be appropriate. Also, company need
to respond to only those individuals the company wishes to see.
Other applications are ignored as if they were never received.

Getting low response for blind ad has many reasons to it including

the goodwill of the organization.
Employment Exchanges: Employment exchanges have been set
up all over the country in deference to provisions of the Employment
Exchanges (Compulsory Notification of Vacancies) Act, 1959. The
Act applies to all industrial establishments having 25 workers or
more each. The Act requires all the industrial -establishments to
notify the vacancies before they are filled. The major functions of
the exchanges are to increase the pool of possible applicants and to
do preliminary screening. Thus, employment exchanges act as
between the employers and the prospective employees. These
offices are particularly useful in recruiting blue collar, white-collar
and technical workers. As on today, there are 965 exchanges across
the country with 46 million people registered seeking jobs. Till now,
all these exchanges have found jobs for only 260,000, a success
rate of 0.56%.
Walk-ins: the most common and least expensive approach for
candidates is direct application, in which job seekers submit
unsolicited application letters or resumes. Direct applications
can also provide a pool of potential employees to meet future
needs. From employees' viewpoint, walk-ins are preferable as
they are free from the hassles associated with other methods of
recruitment. Direct applications are particularly effective in
filling entry-level and unskilled vacancies.
Consultants: ABC Consultants, Ferguson Associates,
Human Resource Consultants, Head Hunters, Batliboi Co,
Analytic Consultancy Bureau, Aims Management Consultants
and The Search House are some among numerous recruiting
agencies. These and other agencies in the profession are
retained by organizations for recruiting and selecting
managerial and executive personnel.
Consultants are useful in as much as they have nation-wide contacts
and lend professionalism to the process. They also keep prospective
employer and the employee anonymous. But, the cost can be a
deterrent factor. Most consultants charge fees ranging from 20 to 50
per cent of the first year salaries of individuals placed.
Contractors : Contractors are used to recruit casual
workers. The names of the workers are not entered e
company records and, to this extent, difficulties experienced
in maintaining permanent workers are avoided.
Acquisitions and Mergers: Another method of staffing firms is a
result of the merger or acquisition process. When organizations
combine into one, they have to handle a large pool of employees,
some of who may no longer be necessary in the new organization.
Consequently, the new company has, in effect, a pool of qualified
job applicants (although they are current employees). As a result of
the merger or acquisition, however, new jobs may be created as
well. Both new and old jobs may be readily staffed by drawing the
best-qualified applicants from this employee pool.

In contrast to the other external methods, this one can facilitate the
immediate implementation of an organization’s strategic plan. This
ready pool may enable a firm to pursue a business plan, such as
entering a new product line that would otherwise be unfeasible
using standard recruiting methods.
Competitors: Rival firms can be a source of recruitment. Popularly
called poaching' or 'raiding', this method involves identifying the
right people in rival companies, offering them better terms and
luring them away. Firms poach on right people in rival companies by
offering better terms and lure them away. Poaching has legal
implication in as much as the employee needs to obtain clearance
from his/her employer before hopping on to another.

E-Recruiting

This is one of the fastest growing methods of recruitment. Employer

can electronically screen candidates’ attributes. Companies benefit
immensely through cost savings, speed enhancement and extended
world-wide candidate reach which the internet offers. From the job-
seekers perspective, the internet allows for searches over a broader
array of geographic than was possible before.

www.naukri.com
www.monsterindia.com
www.jobsahead.com
www.timesjobs.com

SELECTION

After recruitment, selection is the next logical step in the HR

process.

Selection is the process of picking individuals (out of the pool of the

job applicants) with requisite qualifications and competence to fill
jobs in the organization. Thus,

“Selection is the process of differentiating between applicants in

order to identify and hire those with a greater likelihood of success
in a job.”

Selection of suitable candidates is a matter of special importance in

personnel management. It is the starting point of the whole human
resource management process. Inefficiency, low productivity, high
wastages, industrial accidents, ineffective execution of training
programmes, etc are due to faulty selection of candidates.

Importance of Scientific selection process:

Unsuitable candidate becomes a permanent problem as long as he

is in the organization. This is because he has no liking to the job, no
interest, no initiative in the job and finally, no capacity to handle the
job independently. For progress and prosperity a company needs a
team of efficient, loyal, capable and co-operative young workers and
managers. Such team is available only when the selection is made
systematically. Selection of unsuitable persons finally brings the
future of a company in danger. Unsuitable employees become
liability of a company. They create problems and remain as
obstacles. This suggests the significance of scientific selection in
personnel management.
IMPORTANCE OF “RIGHT” SELECTION

 Work performance depends on individuals. The best way to

improve performance is to hire people who have the
competence and the willingness to work.
 Cost incurred in recruiting and hiring personnel speaks
volumes about the role of selection.
 Objective of right man for right job is achieved.
 Labor turnover is minimized.
 Expenditure on frequent selection of candidates is avoided.
 Training provided to properly selected candidates gives
promising results.

Example:

Pepsi had gone on a crash recruitment drive. Six people from the
company took over the entire Oberoi Business Centre in Mumbai for
six days; 3000 applications in response to an advertisement issued
earlier were scanned; applicants were asked to respond by fax
within 100 hours; finally, the shortlisted persons were flown in and
interviewed. In the US, it is much more expensive. The cost of
searching for and training a top level executive may run into $
2,50,000.

As was pointed out above, consultants charge fees ranging from 20

to 50 per cent of the first year's salary of an employee selected.
Assuming a manager is assured of a compensation of Rs 2 lakh the
retainer's fee works out to be Rs 40,000 to Rs 1,00,000.

Costs of wrong selection are much greater. Figure below shows four
possible outcomes of a selection decision.

DIAGRAM: OUTCOMES OF SELECTION DECISION

Succes False Negative

True Positive
s Error
False Positive
Failure True Negative
Error

Failure Success
Predicted Predicted
two of the above – “true positive” & “true negative” are right
selection. The other two outcomes represent selection error. In
“False negative error”  an applicant who would have succeeded is
rejected based on predictions of failure. Whereas, in case of “False
positive error”  a decision is made to hire an applicant based on
predicted success.

Most false negative error go unnoticed. Cost associated with this

type of error is generally difficult to predict.

A company with a false positive error incurs three types of

costs.

• Employment cost: production or profit losses, damaged

company reputation, accidents due to negligence, absenteeism, and
the like.
• Training cost, transfer or termination cost.
• Replacing cost (again hiring, training etc)

A careful selection will help a firm avoid costs associated with both,
false positive error and false negative error.

Selection Process

Selection being very long process commences from the preliminary

interview of the applicants and ends with the contract of
employment. In practice, the process differs among organizations
and between two different jobs within the same company. Selection
procedure for senior managers will be long-drawn and rigorous, but
it is simple and short while hiring shop-floor workers.

The following figure shows generalized selection process. In the

practice, the process differs from organization to organization.
 EXTERNAL
INTERNAL
ENVIRONMENT

R
E PRELIMINARY INTERVIEW
J
E
C
T SELECTION TEST
E
D
EMPLOYMENT INTERVIEW
A
P
REFERENCE & BACKGROUND
P
L ANALYSIS
I
C
A SELECTION DECISION
N
T
S PHYSICAL EXAMINATION

JOB OFFER

EVALUATION OF
SELECTION PROGRAM
Environmental Factors affecting selection

Selection is influenced by several factors. Supply and demand of

specific skills in labor market always influences this process. Other
factors are unemployment rate, legal and political considerations,
company’s policy, HRP and cost of hiring.

1. Preliminary Interview: The purpose of Preliminary Interview is

more or less the same as scrutiny of applications, that is,
elimination of unqualified applications. Scrutiny enables the HR
specialists to eliminate unqualified job seekers based on the
information supplied in their application forms. PI helps reject
misfits for reasons, which did not appear in the application
forms.

2. Selection Tests: The applicants who pass the Preliminary

Interview are called for tests. Different types of tests may be
administered, depending upon the job and the company. Generally
tests are used to determine the applicant’s ability, aptitude and
personality. Ability Test helps in determining how well an
individual can perform tasks related to the job. For e.g. An aptitude
test is designed to measure the candidate’s capacity to perform a
task in a particular way. Personality Test can be used to get a
generalized overview of an individual's character, for example their
anxieties, whether they are sociable, assertive, extroverted or
introverted. Their suitability for the job can be judged from their
responses. For example successful sales staff should be outgoing,
financially motivated, confident and persuasive. Graphology Test:
Graphology is a test that seeks to predict success or failure through
one's handwriting. It is vastly used in the U.S. but is yet to make its
presence felt in India.

3. Employment Interview: The next step in the selection process

is employment interview. This interview is formal, in-depth
conservation conducted to evaluate the applicant’s acceptability.
Often the first interview is carried on telephone. This interview
process gives a company to meet the applicants personally.
Typically conducted in-person, this is an in-depth meeting to discuss
the specific areas of expertise of a candidate.

Based upon a two-way dialogue, this interview is designed to predict

performance and is driven by a series of questions that validate the
knowledge of each candidate in his/her specialty disciplines.

E.g.
At Essar, the selection process depends on the level of the position a
candidate is applying for. For entry-level positions, they assess the
person through aptitude tests, group discussions and personal
interviews. At the senior level, the selection process consists of
discussions with the human resources head, functional experts
within Essar and sometimes the promoter-directors.
Types of interviews:

• Structured Interview
• Unstructured Interview
• Mixed (a blend of structured and unstructured)
• Group interview (Group Discussion)
• Panel Interview
• Behavioural (hypothetical situation)
• Stress

4. Reference / Background check

Many employers request names, addresses, and telephone numbers

or references for the purpose of verifying information and, perhaps,
gaining additional background information on an applicant. When
the labor market is very tight, firms sometimes hire applicants
before checking references.

Previous employers, known public figures, university professors,

neighbors or friends can act as references. Previous employers are
preferable because they are already aware of the applicant's
performance. But, the problem with this reference is the
tendency on the part of the previous employers to over-rate
the applicant's performance just to get rid of the person.

Reference checks cover the following:

• Criminal record checks
• Previous employment check
• Educational record checks
• Credit record checks
• Union affiliation checks
• Character reference check

Background checks and fraud detection have become easy as there

are agencies which specialize in the task. KPMG India, for example,
has a 130-strong team to detect frauds. Similarly, E&Y has a 40-
member team.

Reference checks serve two important purposes. One purpose is to

gain insight about the potential employee from the people who have
had previous experience with him or her. This is a good practice
considering the fact that between 20 to 25 per cent of job applicants
there is at least one fraudster
The second purpose for reference checks is to assess the potential
success of a prospect. Who else can give an objective assessment of
an individual than his or her previous employer or a person known
to him or her?

But one should guard against the following while considering to

employ a prospect:

• The prospect is likely to approach those persons who

would speak well about him or her.
• People may write favorably about the candidate in order
to get rid of him or her.
• People may not divulge the truth about a candidate, lest it
might damage or ruin his or her career.

5. Selection Decision: The final decision is to be made from pool

of individuals who pass the tests, interviews, and reference checks.
(our experience – Infosys-BLR - 2003 for 10,000 jobs – received 1 mn
applications.) the opinion of Line manager is also considered here,
while hiring the employees as he is going to be responsible for the
performance of the new employee.

6. Physical Examination:

• To detect if the individual carries any infectious diseases.

• The test assists in determining whether an applicant is
physically fit to perform the work.
• The physical examination information may be used to
determine if there are certain physical capabilities which
differentiate successful and less successful employees.
• Medical check-up protects applicants with health defects from
undertaking work that could be detrimental to themselves.
• Such examination will protect the employer from worker’s
compensation claims that are not valid because the injuries or
illness were present when the employee was hired.

7. Job Offer: The next step in the selection process is job offer to
those applicants who have crossed all the previous hurdles. Job
offer is made through a letter of appointment. Such a letter
generally contains a date from which the appointee must report on
duty. The appointee must be given reasonable time for reporting.
This particularly necessary when he or she is already in
employment, in which case the appointee is required to obtain a
relieving certificate from the previous employer. Again, a new job
may require movement to another city which means considerable
preparation.

8. Evaluation of Selection Program: It is very important to have

evaluation of selection program. The selection program if done
properly will ensure availability of proper employees. Periodic audit
should be done to ensure evaluation of selection program. Audit
must be done by people who work independent of the HR
department.

BARRIERS TO EFFECTIVE SELECTION

Certain barriers defeat the purpose of selecting right kind of people.

The obstacles which check effectiveness of selection are perception,
fairness, reliability and pressure.

Perception: The inability to understand others accurately is the

most fundamental barrier to selecting the right candidate. Right kind
of selection demands to assess and compare the respective
competencies of others, with the aim of choosing the right persons
for the jobs. But our views are highly personalized. We perceive the
world differently. Our limited perceptual ability is obviously a
stumbling block to the objective and rational selection process.

Fairness: This requires that no individual should be discriminated

against on the basis of religion, race or gender. But the low numbers
of women and other less-privileged sections of the society in middle
and senior management positions and open discrimination on the
basis of age in job advertisements would suggest that all the efforts
to minimize inequity have not been very effective.

Reliability: A reliable method is one which will produce consistent

results when repeated in similar situation. Even sometimes a
reliable test may fail to predict job performance with precision.

Pressure: Pressure is brought on the selectors by politicians,

bureaucrats, relatives, friends and peers to select particular
candidates. Candidates selected because of compulsions are
obviously not the right ones. Appointments under public sector
undertaking generally take place under such pressures.
The Halo Effect
This is where the interviewer or interviewers see the person in an
“exalted” way because they have the same hobbies or interests,
belong to the same golf club, went to a top school, are smartly
dressed, etc. These perceptions often cloud the mind and judgement
of the interviewer and the candidate gains a halo whether they are
good or bad at doing their job.

The Horns Effect

This is the opposite of the halo effect. The interviewer takes a dislike
to the candidate, their personality, the way they dress, etc. This
alters the interviewer’s perception of the candidate and, no matter
how good that candidate may be at doing the job, s/he gains a set of
“horns”! Once the interviewer adopts this perception of the
candidate, it is very difficult to shake off. This is why it is often
important to have more than one person interviewing; it helps to
avoid scenarios such as the halo and horns effect happening.

Stereotyping
This is where the interviewer’s perception of a candidate alters
because the individual is a
woman, black, Asian or disabled, etc. Some common societal
stereotypes or preconceptions about the above groups are:
(i) That a woman’s place is in the home
(ii) That it will be difficult to get a group of white workers to work
under a black or Asian team leader/supervisor
(iii) That disabled people are difficult to employ

ORIENTATION

After an applicant is hired, he/she must be oriented and placed on

the chosen job.

Orientation / Induction:

It is designed to provide a new employee with the information he or

she needs to function comfortably and effectively in the
organization.

“Orientation is planned introduction of employees to their jobs, their

co-workers and the organization.”

Orientation covers three types of information:

• General information about the daily work routine;

• A review of the organization’s history, founders, objectives,
operations and products or services, contribution of
employee’s job towards organization’s needs
• A detailed presentation about company’s policies, work rules
and employee benefits.
 PURPOSE

• Induction / orientation program is conducted to make the new

employees feel ‘at home’ at the same time to introduce the
new employee to the organization in a systematic way.
• It is a process of welcoming of a new worker and creating a
sense of understanding and confidence in his mind.
• Effective induction program reduces the anxiety of new
employees by providing them information on the job
environment and on co-workers and supervisors.
• It gives adequate information about the organization, rules and
regulations at the work place and incentives for self
development.
• It helps the employee in gaining the confidence in his work,
and organization he has joined.

Induction at TCS:

After the employee has joined the organization, this is the time for
the organization to carry out the alliance and build the real
relationship. Induction is the time to set up expectations and
capture critical potential indicators.

Good induction program: A good induction program is about

communication. Treat the new recruit with respect and as a mature
and responsible individual. Welcome him and make sure that he is
comfortable. Introduce him to all relevant people individually.

Present the organization: The induction program is the time to

manage the inductees’ expectations. Make the presentations as
professional and business like as possible. The expectations you set
here will come back to haunt you later.

Lay down the organization’s expectations: This is also the time for
you to lay down your expectations in terms of performance,
professionalism and other values you want to espouse.

Clarity on organization values and policies: Walk the inductee

through every policy and rules manual, this will help him know the
organization better and not feel lost once he goes to work.

Lay down the PMS system: Clearly say your Performance

Management System. It is very critical for an employee to know
what is expected out of him and what the performance parameters
are.

Also invest in soft skill programs (preferably in-house to get the right
flavor). It shows an inductee the focus of your organization’s way of
doing things. i.e. communication and team building.

Buddy scheme: Design a Buddy or Mentoring scheme (they are two

distinct approaches) to help understand the new inductee into your
organization smoothly.

Outsourcing (or contracting out) is often defined as the

delegation of non-core operations or jobs from internal production to
an external entity (such as a subcontractor) that specializes in that
operation. Outsourcing is a business decision that is often made to
focus on core competences. A subset of the term (offshoring) also
implies transferring jobs to another country, either by hiring local
subcontractors or building a facility in an area where labor is cheap.
It became a popular buzzword in business and management in the
1990s.

The areas that can be covered under induction program:

• The basics involved in the functions / operations including a

broad perspective of the technological aspects, if any;
• The administrative and operational policies, practices and the
business goals of the employing organization.
• Coverage of organization’s products and clientele portfolio;
• Codes of conduct and protocols adopted by employers &
• Career path and advancement prospects.
Different Types of Orientation programs

A firm needs to make four strategic choices before designing its

orientation program. They are:

1. Formal or Informal: An orientation can be either formal or

informal. In case of formal orientation, the management has
structured program which is executed when new employee joins the
organization. In contrast, in case of informal orientation, new
employee is directly put on the jobs and he/she is expected to adjust
him/her self with the work and the organization.

The choice between formal and informal will depend upon the
management’s goals. If the orientation is formal, then the new
entrant is more likely to acquire a known set of standards and act
like an executive, a trainee etc. but in case of informal program, it is
desirable to maintain individual indifferences.

2. Individual or collective: Another choice to be made by the

management is whether the new hires should be induced
individually or in groups. Individual orientation is more likely to
preserve individual differences and perspectives. Orienting each
person separately is an expensive and time-consuming process. It
also denies the new hire the opportunity of sharing anxieties with
fellow appointees.

Whereas, collective orientation of the new hires solves the problems

stated above. Most large organizations tend to have collective
orientation approach. But small firms which have fewer new
appointees to socialize use the individual approach frequently.

3. Serial or Disjunctive: Orientation becomes serial when an

experienced employee inducts the new entrant. When new hire do
not have predecessor available to guide him the orientation
becomes disjunctive. Serial orientation maintains traditions and
customs. On the other side, disjunctive induction is likely to
generate more inventive and creative employees as the new hire is
not burdened by traditions.

Both these options have its’ own advantage and disadvantage.

Serial orientation maintains traditions and customs. Consistent use
of this strategy will ensure a minimum amount of change within the
firm over time. On the contrary, if the experienced employee is
frustrated and apathetic towards work and organization, it is likely
that he or she would pass on the same to the new hire.
If the organization follows disjunctive induction, it is very much
possible that the individual is more likely to fail to understand how
their job is to be done – due to an inadequate role model.

REQUISITES OF AN EFFECTIVE ORIENTATION PROGRAM

Orientation program, to be effective, must be based on serious

consideration to attitudes, behaviour, and information that the new
employee need. Following are some of the requisites of an effective
system.

1. Prepare for new employees: New employees must, feel initially

that they belong to the organization and are important. Therefore,
the organization and the dept unit must be prepared to receive the
new employee. In addition, co-workers must be ready and be aware
of new employee. The management must take the present
employees into confidence and convince them about the need for
hiring the new employee. This is to be done generally when the
arrival of new employee is likely to erode the position and status
enjoyed by the current employees.

2. Determine following information:

• What things would new employees need to know about their

work environment that would make them more comfortable?
• What impression and impact would the employer want to make
on a new employee on the first day?
• Which key policies and procedures must new employees be
aware of on the first day?
• What positive experiences can the employer provide for new
employees, which they could discuss with their families?

3. Determine how to present information: Line managers and HR

representatives should determine the most appropriate way to
present the orientation information. Presentation could be in the
form of policy manual, verbal or anything that could serve the
purpose.

4. Completion of paper work: All paper work of new employee

must be completed when he is in orientation status, so that he gets
paid on time. Various tax and insurance forms as well as other items
such as his Identity card should be done on time. There is nothing
more agonizing for a new employee than to miss the first pay
cheque or to be paid improperly because the correct forms were not
completed accurately.
Benefits of induction program:

• Reduction in degrees of uncertainty in the employee’s mind.

• Increase in the level of employee’s mental comfort.
• Quicker adaptation of suitable behavior and attitude;
• Reduction in employee turnover / absenteeism.
• Increased productivity of the workforce.
• Creates a positive perception of the organization and an
understanding of the corporate values and culture in the
employees.
• Increase the commitment level of the employees.
• Improves communication within the employees.

PLACEMENT

Immediately after selection and appointment, a newly

selected employee is sent to a particular department for
actual work. This is called placement. It is a process of placing
the right man on the right job. A worker should be placed on a
position where he can use his knowledge, education, skills,
etc. in the best possible manner. Wrong placement means not
using the qualities of a newly appointed person for the benefit
of the organization. A misplaced employee is a frustrated
person and may leave the job as the job is not as per his
education, skills and liking. His morale will be low. Proper
placement reduces labor turnover, absenteeism and accidents
to the lowest level. It also ensures full utilization of the
capacity and ability of an employee.
Placement is allocation of people to jobs. It is placement or
assignment of an employee to a new job. Placement is
necessary when
• A new candidate is selected and appointed.
• It is required after promotion, transfer or demotion of an
existing employee.
Placement should be always based on the qualifications and
qualities of the candidate selected. It should also be based
on the staff requirement of different departments. Placement
is basically the responsibility of the Personnel Department. In
other words, right man for the right job within an
organization is possible through proper placement of
selected/appointed candidates.
DEFINITION OF PLACEMENT:
(1) According to Dale Yoder, placement means "The
determination of the job to which an accepted candidate is to be
assigned and his assignment to that job".

The placement arrangement should be ready before the

joining date of newly selected candidates. For this, all
necessary details about selected candidates should be
collected and employee's profile should be constructed for
review and placement. Placement should be always scientific
and fair. It should be beneficial to the organization as well as
attractive and agreeable to selected candidates. It need not
be done quickly and in a casual manner. Moreover, faulty
placement may prove costly to the organization itself. The
placement in the initial period may be temporary as changes
are likely after the completion of training.

IMPORTANCE OF PLACEMENT:

• The capacity of an employee can be utilized fully if the

candidate is placed in the most suitable department.
• Wrong placement affects the morale of an
employee. He may even leave the job and the
organization if he is given the work which is not as per his
qualifications, qualities and liking.
• Proper placement ensures full utilization of capacity
of every employee for the benefit of the company.
CHPT – 5 - TRAINING AND DEVELOPMENT

After the selection of people for various jobs, the next function of
management is to arrange for their training and development. This
is because a person, however carefully selected is not molded to
specifications and rarely meets the demands of his job adequately.
Workers must be trained to operate machines, reduce scraps and
avoid accidents. It is not that only workers need training.
Supervisors, managers and executives also need to be developed in
order to enable them acquire growth and maturity in thinking and
actions. Formerly it was thought that the training of personnel was
unnecessary on the ground that the new techniques of production
are becoming more and more complicated, it is being increasingly
realized that the formal training is important not only for new
recruits but also for existing employees. Training function, in fact,
has become the corner stone of sound management. Thus, training
is an ongoing process. It is the act of increasing the knowledge and
skills of an employee for doing a particular job. It is concerned with
imparting specific skills for the particular purposes.

Two terms: Training and Development

Training is a process of learning a sequence of programmed

behavior. It is application of knowledge. It gives people an
awareness of the rules and procedures to guide their behavior.

Development is a related process. It covers not only those activities,

which improve job performance but also those, which bring about
growth of the personality; help individuals in the progress towards
maturity and actualization of their potential capacities so that they
become not only good employees but also better men and women.

Definition of Training: According to Edwin Flippo, “training is the act

of increasing the knowledge and skills of an employee for doing a
particular job.”

Thus:

Training is short-term process utilizing a systematic and organized

procedure by which non-managerial personnel learn technical
knowledge and skills for a definite purpose. Whereas development is
a long-term educational process utilizing a systematic and organized
procedure by which managerial personnel learn conceptual and
theoretical knowledge for general purpose."
Training is not given only once to new employees. Every employee
in the organization requires training throughout his or her stay in the
organization. Thus we can say that a systematic training program:
 • Increases the productivity
• Improves quality of work
• Helps a company fulfill its future personnel needs.
• Improves safety by reducing accidents in organizations
• Obsolescence prevention: fostering the initiative and creativity
of employees and help to prevent manpower obsolescence,
which may be due to age, temperament or motivation or the
inability of a person to adapt himself to technological
changes."

Need for training programme

I. An increased use of technology in production;

II. Labor turnover arising from normal separations due to death or
physical incapacity, for accidents, disease, voluntary
retirement, promotion within the organization and change of
job.
III. Need for additional hands to cope with an increased production
of goods and services;
IV. Employment of inexperienced labor requires detailed
instruction for an effective performance of a job.
V. Old employees need refresher training to enable them to keep
abreast of the changing methods, techniques and use of
sophisticated tools and equipment;
VI. Training enables employees to do the work in a more
effective way, to reduce learning time, reduce supervision
time, reduce waste and spoilage of raw material and produce
quality goods and develop their potential.

The need for training and development is determined by the

employee’s performance deficiency, computed as follows:

Training and Development need = Standard performance – Actual

performance.

We can make a distinction among training, education and

development. Such distinction enables us to acquire a better
perspective about the meaning of the terms. Training, as was
started earlier, refers to the process of imparting specific skills.
Education, on the other hand, is confined to theoretical learning in
the classrooms.
TRAINING AND EDUCATION DIFFERENTIATED:

Training Education

 Theoretical oriented
Application oriented  Classroom learning
Job experience
 General concepts
Specific tasks
 Broad perspective
 Narrow perspective

Development refers to those learning opportunities designed to help

employees grow. Development is not primarily skill-oriented.
Instead, it provides general knowledge and attitudes, which will be
helpful to employees in higher positions. Efforts towards
development often depend on personal drive and ambition.
Development activities, such as those supplied by management
development programmes, are generally voluntary.

Management development as a process is usually considered to be

something for senior management in the organization. Of course,
the development of managers is part of the general training and
development processes ensuring competence at all levels in the
organization, but the development of senior management is
generally a little different. Significantly, it is less about the
development of managers than the development of “management”.
This implies a strong corporate focus and a team approach as well
as the concern for individual effectiveness.

Thus, three dimensions may be seen:

At the personal level – the ongoing acquisition of the skills and

abilities necessary for the management of oneself and others, allied
at this senior level with effective performance in respect of team
working, high level communication skills (both within and outside
the organization) and, importantly, working with boards and
committees in both formal and informal structures in the interplay of
policy and decision making;

In respect of the management team – the need to build and

consolidate strong, innovative working relationships which provide
for mutual respect and allow for individual abilities and aptitudes to
be recognized and brought to bear as appropriate in corporate
decision making;
From the organizational perspective – the definition and
development of the purposes and ethos of management itself within
the organization, and the structures and processes through which
these may be effected.
Training Development
Training is skills focused Development is creating
learning abilities
Training is presumed to have a Development is not education
formal education dependent
Training needs depend upon Development depends on
lack or deficiency in skills personal drive and ambition
Trainings are generally need Development is voluntary
based
Training is a narrower concept Development is a broader
focused on job related skills concept focused on personality
development
Training may not include Development includes training
development wherever necessary
Training is aimed at improving Development aims at overall
job related efficiency and personal effectiveness
performance (including job efficiencies)

Types of Employee Training:

1. Induction (Orientation) Training: Induction training is basically

for introducing the organization to newly appointed employees. The
purpose is to give them “birds eye view” of the organization. It is
very short informative type of training. It creates a feeling of
involvement in the minds of newly appointed employees. All MNCs
and big Indian companies arrange of this training program for its
employees. This training creates favorable impression on the newly
appointed employees and this impression remains in their mind over
a long period. It is a simple, economical and quick method, which
introduces the company to newly, recruited employees in an orderly
manner.

2. Job Training: Job training relates to specific job which worker

has to handle. It gives information about machines, process of
production, instructions to be followed, methods to be used and
precautions to be taken while performing the job. This training
develops skills and confidence among the workers and enables them
to perform the job efficiently.

3. Training for promotion: Promotion means giving higher

position. Training must be given for performing duties at a higher
level efficiently. This facilitates easy and quick adjustment with the
new job and also develops new insight into duties and
responsibilities assigned. For this, training is given after promotion
and before actually joining the new assignment.

4. Refresher Training: The purpose of refresher training is to

refresh professional skills, information and experience of persons
occupying important executive positions. It gives information about
new developments and techniques to trainees and enables them to
use new methods, techniques and procedures for raising efficiency.
This training is of short duration and is given by
professionals/institutions.

Advantages of employee training:

a. Advantages to Employer / Management / Company:

1. Improves efficiency
2. Improves quality of production
3. Reduces industrial accidents
4. Lesser expenditure on supervision
5. Provide stable labor force
6. Provides skilled manpower
7. Creates cordial industrial relations
8. Reduces labor absenteeism
9. Facilitates the introduction of new management
techniques
10. Creates a pool of capable employees

b. Advantages to managers/employees:
1. Creates confidence among employees
2. Develops skills among employees
3. Quick promotion
4. Offers monetary benefits
5. Creates adaptability among employees
6. Facilitates self-management
7. Updates knowledge
8. Creates positive attitude
9. Creates a pool of trained personnel
THE TRAINING PROCESS

Organizational
Objectives and

Assessment of Training
Needs

Establishment of
Training Goals

Devising Training
Programme

Implementation of
Training programme

Evaluation of Results

(1) ORGANIZATIONAL OBJECTIVES AND STRATEGIES:

The first step in the training process in an organization is the
assessment of its objectives and strategies. What business are we
in? At what level of quality do we wish to provide this product or
service? Where do we want to be in the future? It is only after
answering these and other related questions that the organization
must assess the strengths and weaknesses of its human resources.

(2) ASSESSMENT OF TRAINING NEEDS:

Organizations spend vast sums of money on training and
development. Before committing such huge resources, organizations
would do well to assess the training needs of the employees.
Organizations that implement training programmes without
conducting needs assessment may be making errors.
Needs assessment occurs at two levels:
a) Individual
b) Group

Individual:
An individual obviously needs training when his or her training falls
short of standards, that is, when there is performance deficiency.
Inadequacy in performance may be due to lack of skill or knowledge
or any other problem. The problem of performance deficiency is
caused by absence of skills or knowledge can be remedied by
training. Faulty selection, poor job design, uninspiring supervision or
some personal problem may also result in poor performance.
Transfer, job redesign, improving quality of supervision, or discharge
will solve the problem.
Individuals may also require new skills because of possible job
transfers. Although job transfers are as common as organizational
personal demands vary, they do not necessarily require elaborate
training efforts. Employees commonly require an orientation to new
facilities and jobs. Recently, however, economic forces have
necessitated significant retraining efforts in order to assure
continuous employment for many individuals.

Group:
Assessment of training needs occurs at group level too. Any change
in the organization’s strategy necessitates training groups of
employees. For example, when the organization decides to
introduce a new line of products, sales personnel and production
workers have to be trained to produce, sell and service the new
products. Training can also be used when high scrap or accident
rates, low morale and motivation, or other problems are diagnosed.

(3) ESTABLISHMENT OF TRAINING GOALS:

Once the training needs are assessed, training and developmental
goals must be established. Without clearly set goals, it is not
possible to design a training and development programme and, after
it has been implemented, there will be no way of measuring its
effectiveness. Goals must be tangible, verifiable, and measurable.
This is easy where skill training is involved. For example, the
successful trainee will be expected to type 55 words per minute with
two or three errors per page. But behavioral objectives like
attitudinal changes can be more difficult to state. Nevertheless,
clear behavioral standards of expected results are necessary so that
the programme can be effectively designed and results can be
evaluated.

(4) DEVISING THE TRAINING AND DEVELOPMENT PROGRAMME

Every training and development programme must address the
following vital issues:
 Who are the Who are the What methods
trainees? trainers? & techniques?

What should be What Where to

the level of principles of conduct the
training? learning? program?

Who are the trainees?

Trainees are selected on the basis of:

 Self Nomination
 Recommendations of the Supervisor
 By the HR Department itself
Whatever is the basis, it is advisable to have two or more target
audiences. For example, rank-and-file employees and their
supervisors may effectively learn together about a new process and
their respective roles. It also helps facilitate group processes such as
problem solving and decision – making.

1. Who are the trainers?

Training and development may be done by:
 Immediate Supervisors
 Co – workers
 Personnel Staff
 Specialists in other parts of the company
 Outside Consultants
 Industry Associations
 Faculty Members at Universities

Who among these are selected to teach, often depends on where

the program is held and the skill that is being taught.

What Methods and Techniques of Training should be used?

A multitude of methods and techniques is used to train employees.
Training techniques are the means employed in the training
methods. Training methods are categorized into two groups – on-
the-job methods and off-the-job methods. The most commonly used
techniques are shown in the table given below.
 METHODS & TECHNIQUES OF TRAINING

On-the-Job Method
Off-the-Job Method
Orientation

Counseling Simulation • Lecture

Understudy assignment • Films & Television
• Conference/Discussion
Job Rotation Case Study • Programmed
Vestibule Instruction
Delegation Role Play
On-the-Job Method
Appointment (OJT):to”
as “Assistance

Project assignment

Majority of industrial training is on the job training type. OJT

method is mainly adopted while orienting new employees,
introducing innovations in products & services and in special skills
training. OJT is conducted at the work site and in the context of
the job. Often, it is informal, as when an experienced worker
shows a trainee how to perform the job tasks.

 Off-the-Job Training Method:

Off-the-job training is mainly adopted for orienting new
employees, introducing innovations in products and services,
special skills training, safety education, creative, technical &
professional education and sales, administrative, supervisory and
managerial education. The advantages and disadvantages of
some of the important techniques of off-the-job methods are
listed below:
a) Lectures:
Lecture is a verbal presentation of information by an instructor to
a large audience. This method can be made effective when
combined with other means of training.
b) Audio-Visuals:
These include television slides, overheads, video-types, films and
LCD Projectors.
c) Programmed Instruction (PI):
 Training is offered without the intervention of the trainer.
Information is provided to the trainee in blocks, either in a book
form or through a teaching machine. PI involves:
1. Presenting questions, facts, or problems to the learner.
2. Allowing the person to respond.
3. Providing feedback on the accuracy of his or her answers.
4. If the answers are correct, the learner proceeds to the next
block.
d) Simulations:
A simulator is any kind of equipment or technique that duplicates
as nearly as possible the actual conditions encountered on the
job. It is an attempt to create a realistic decision – making
environment for the trainee. The advantage of simulation is the
opportunity to ‘create an environment’ similar to real situations
the managers incur, but without the high costs involved should
the actions prove undesirable.

The other techniques of training are:

 Leadership games: exercises to teach different styles of
leadership.
 Skill Games: Tests to develop analytical skills.
 Communication Games: exercises to build bias – free listening
and talking.
 Strategic Planners: Games to test ability to plan ahead.
 Team – building games: Exercises requiring collaborative efforts.
 Lateral Thinking: thinking randomly to come up with new ideas.
 Cross – cultural training: Programmes to teach specifics of varied
cultures.

2. What should be the level of learning?

The inputs passed on to trainees in training and development
programmes can be taught at three basic levels.
Level I The trainee must acquire fundamental knowledge. This
means developing a basic understanding of a field and
becoming acquainted with the language, concepts and
relationships involved in it. E.g. Orientation Training
Level II The goal is skill development, or acquiring the ability to
perform in a particular skill area.
Level Aims at increased operational proficiency. This involves
III obtaining additional experience and improving skills that
have already been developed.

All the inputs of training can be offered at the three levels. How
effectively they are learned depends upon several principles of
learning.
 3. Where to conduct the programme?
A training and development programme can be conducted:
i. At the job itself
ii. On site but not the job – for example, in a training room in the
company.
iii. Off the site, such as in a university or college classroom, hotel, a
resort, or a conference center.

(5) IMPLEMENTATION OF THE PROGRAMME:

Once the training programme has been designed, it needs to be
implemented. Implementation is beset with certain problems:
a) Most managers are action oriented and frequently say they are
too busy to engage in training efforts.
b) Availability of trainers is a problem. In addition to possessing
communication skills, the trainers must know the company’s
philosophy, its objectives, its formal and informal organizations,
and the goals of the training programme. Training requires a
higher degree of creativity than, perhaps, any other personnel
specialty.
c) Scheduling training around the present work is another problem.

Programme implementation involves action on the following lines:

a) Deciding the location and organizing training and other
facilities
b) Scheduling the training programme
c) Conducting the programme
d) Monitoring the progress of trainees

(6) EVALUATION OF THE PROGRAMME:

The last stage in the training and development process is the
evaluation of results. Since huge sums of money are spent in
training and development, how far the programme has been
successful must be judged or determined. Evaluation helps
determine the results of the training and development programme.
In practice, however, organizations either overlook or lack facilities
for evaluation.

Objectives of Training and Development

Staying ahead in today's business world is more challenging than

ever. Building trust and promoting teamwork are just two
expectations of any business leader.
Training and development programs are designed to keep an
organization at the front of its industry maximize performance and
energize every level of the organization. Training and Development
is also seen to strengthen the tie between employee development
and strategic operation objectives.

The objectives of Training and Development are as follows: -

 Efficiency: Employees
become efficient after undergoing training. Efficient employees
contribute to the growth of the organization.
 Fewer accidents: Accidents,
scrap and damage to machinery and equipment can be avoided or
minimized through training. Even dissatisfaction, complaints,
absenteeism, and turnover can be reduced if employees are
trained well.
 Meeting manpower needs:
Future needs of employees will be met through training and
development programmes. Training serves as an effective source
of recruitment. Training is an investment in human resource with
promise of better returns in future.
 Improves quality: Better-
informed workers are likely to make less operational mistakes.
Quality of products or services will definitely increase. This can be
well measured through the reduction in rejections.
 Personal growth: Training
programmes also deal with personality development of the
employees (through goal setting, motivation, leadership skills, etc.)
thus they personally gain through exposure to training
programmes.
 Obsolescence prevention:
Training and development programs foster the initiative and the
creativity of the employees and help to prevent the manpower
obsolescence, which may be due to age, temperament, or the
inability of the person to adapt himself to technological changes.

• Versatility in operations: Training makes the employees

versatile in operations. All rounder can be transferred to any
job. Flexibility is therefore ensured. Growth indicates
prosperity, which is reflected in profits every year.

• Employee stability: Training contributes to employee stability

in at least 2 ways. Employees become efficient after
undergoing training. Efficient employees contribute to the
growth of the organization. Growth renders stability to the
work force. Further trained employees tend to stay with the
organization.
Criteria for effective training program

1. Employee Motivation-motivation to learn is the basic requisite to

make training and development programmes effective. Motivation
comes from awareness that training fetches some rise in status and
pay. Motivation alone is not enough; the individual must have the
ability to learn.

2. Recognition of individual differences

Regardless of individual differences, and whether a trainee is
learning a new skill or acquiring knowledge of a given topic, the
trainee should be given the opportunity to practice what he is
taught. Practice is essential after individual is successfully trained.

3. Schedule of learning
Duration of practice sessions, duration of rest sessions and
positioning of rest pauses are the three schedules, which must be
carefully planned and executed for an effective training programme.

Besides, Training can be made effective, if action on the following

lines is initiated: -

1. It should be ensured that the management commits itself to

allocate major resources and adequate time to training. This is what
high performing organizations do. For example XEROX, invest 300 $
million annually or about 2.5% of its revenue on training. Similarly
Hewlet Packard spends about 5% of its annual revenue to train
87000 workers.

2. It should be ensured that training contributes to competitive

strategies of the firm. Different strategies need different HR skills for
implementation. Let training help employees at all levels acquire the
needed skills.

3. Ensure that a comprehensive and systematic approach to training

exists, and training and retraining are done at all levels on a
continuous and ongoing basis.

4. Training can be made effective by making learning as one of the

fundamental values of the company. This philosophy should
percolate down to all employees in the organization.

5. It should be ensured that there is proper linkage among

organizational, operational and individual training needs.
6. And finally to make training effective a system to evaluate the
effectiveness of training needs to be prepared so that the shortfalls
can be easily looked at.

Why Training Fails?

 The benefits of training are not clear to the top management.
 The top management hardly rewards the supervisors for carrying
out effective training.
 The top management rarely plans and budgets systematically for
training
 The middle management, without proper incentives from top
management does not account for training in production
scheduling
 Without proper scheduling from above, first line supervisors have
difficulty in production norms if employees are attending training
programmes.
 Trainers provide limited counseling and consulting services to the
rest of the organization.

Methods of training

A. On-the-job training (OJT)

The most common, most widely used and accepted and m0st
necessary method of training. Trainees earn as they learn under the
watchful eyes of a master mechanic or crafts man, receive
immediate feedback, practice in the actual work environment and
associate with the same people they will work after training.
Employees are coached and instructed by skilled co-workers, by
supervisors etc. They learn the job by personal observation and
practice as well as occasionally handling it. It is learning by doing
and it is most useful for jobs that are either difficult to stimulate or
can be learned quickly by watching and doing.

Merits:
Trainee learns on the actual equipment in use and in the true
environment of his job. He gets a feel of actual working conditions
and requirements. This method is highly economical since no
additional personnel or facilities are required. Trainee learns the
rules, regulations procedures by observing their day-to-day
applications.

Demerits:
 • Instruction is often highly disorganized and haphazard and not
properly supervised due to inability of experienced employee
to impart skills to the trainee.
• Learners are more often subjected to distractions of a noisy
shop or office.
• This further leads to low productivity, mainly when the
employee is unable to fully develop his skills.
• Most suitable for supervisors and executives.

B. Vestibule training (Training Centre Training)

It is a classroom training, which is often imparted with the help of
the equipment and machines, which are identical with those in use
in the place of work. This technique enables the trainee to
concentrate on learning the new skill rather than on performing an
actual job. Theoretical training is given in the classroom, while
practical work is done on the production line.
It is very efficient method of training semi-skilled personnel,
particularly when many employees have to be trained for the same
kind of work at the same time. It is often used to train machine
operators, typists etc.

Merits: as training is given in a separate room, distractions are

minimized.
A trained instructor, who knows how to teach, can be more
effectively utilized.
The correct method can be taught without interrupting production.
It permits trainee to practice without fear of supervisor's
observation.

Demerits:

Splitting of responsibilities leads to organizational problems.

An additional investment in equipment is necessary.
Training situation is somewhat artificial.
However, when number of trainees is large, vestibule schools are
generally utilized; but when the number is small, on-the-job training
is preferred.

C. Apprenticeship
For training in crafts, trades, and in technical areas, apprenticeship
training is the oldest and most commonly used method, especially
when proficiency in a job is the result of a relatively long training
period of 2 years to 3 years. In the fields of draughtsman, a
mechanist, tool-maker, carpenters etc this type of training is given.
Advantages: a skilled workforce is maintained.
The workmanship is good.
It increases opportunities for growth very frequently.

OFF-THE-JOB METHODS
Under this method of training, the trainee is separated form the
job situation and his attention is focused upon learning the material
related to his future job performance. Since the trainee is not
distracted by job requirements, he can place his entire
concentration on learning the job rather than spending his time in
performing it. There is an opportunity for freedom of expression for
the trainees. Off-the-job training methods are as follows:
a) VESTIBUTE TRAINING:-
In this method, actual work conditions are simulated in a class room.
Material, files and equipments those are used in actual job
performance are also used in training. This type of training is
commonly used for training personnel for clerical and semi-skilled
jobs. The duration of this training ranges from days to a few weeks.
Theory can be related to practice in this method.
b) ROLE PLAYING:-
It is defined as a method of human interaction that involves realistic
behaviour in imaginary situations. This method of training involves
action, doing and practice. The participants play the role of certain
characters, such as the production manager, mechanical engineer,
superintendents, maintenance engineers, quality control inspectors,
foreman, workers and the like. This method is mostly used for
developing interpersonal interactions and relations.
© LECTURE METHOD:-
The lecture is a traditional and direct method of instruction. The
instructor organizes the material and gives it to a group of trainees
in the form of a talk. To be effective, the lecture must motivate and
create interest among the trainees. An advantage of lecture method
is that it is direct and can be used for a large group of trainees.
Thus, costs and time involved are reduced.
c) CONFERENCE OR DISCUSSION:-
It is a method in training the clerical, professional and supervisory
personnel. This method involves a group of people who pose ideas,
examine and share facts, ideas and data, test assumptions, and
draw conclusions, all of which contribute to the improvement of the
job performance. Discussion has the distinct advantage over the
lecture method, in that the discussion involves two-way
communication and hence feedback is provided. The participants
feel free to speak in small groups. The success of this method
depends on the leadership qualities of the person who leads the
group.
EVALUATING THE EFFECTIVENESS OF TRAINING
PROGRAMME

Evaluation of training programme is necessary in order to

find out the extent to which training objectives are
achieved. Even the cost effectiveness can be estimated
through evaluation.

Finally, evaluation of training is needed in order to raise the

effectiveness of training. Remedial measures can be
adopted in regard to weak points in the training process.
Credibility of training is considerably enhanced when it is
proved that the organization got good dividend out of its
training and development programme.

The evaluation of training programme should be based on

objective methods and standards. Evaluation should be
specific and also continuous. Such evaluation should be
made immediately after the training programme is over.
Evaluation of training need not be treated as routine activity.
Scientific evaluation requires the services of experts and
their services should be used. Suitable data need to be
collected for such evaluation. Such data may be related to
behavior change, organizational results and reactions of
trainees. The data collected are useful for assessing the
results of training on the work group or the entire company.
One simple method/technique of evaluation is to send a
questionnaire to the trainees after the completion of training
programme and to collect their opinions about different
aspects of the programme. Their interviews can also be
arranged for data collection (for evaluation). Analysis of such
data gives broad conclusions about the effectiveness of
training. Follow-up action is required to ensure
implementation of evaluation report at every stage of
training.

HR manager of any organization (manufacturing company,

airways, insurance company, hospital or any other service
organization) can design training programme for its
employees as per the guidelines noted above. Training will
be effective only when it is planned, implemented and
evaluated in a systematic manner. Attention needs to be
given to these three aspects while designing a training
programme / package for employees of an airways or staff of
the hospital. Initially, the training needs need to be
examined properly. For this, organizational analysis and
manpower analysis will be necessary. Thereafter, training
objectives need to be decided. The objectives decided may
be innovative, problem solving or regular. This will be
followed by selecting the methods suitable for training
purpose. The methods selected will be used for giving actual
training to employees.

Finally, evaluation of training programme will be

undertaken. Here, the contribution of training in achieving
training objectives will be analyzed for the introduction of
remedial measures, if required.

University Questions:

1. What is training? Explain its importance. (2001)

2. Explain the training process in brief. (2001)
3. What is training? How would you conduct a training programme?
(2003)
4. Suggest some of the on-the-job training and off-the-job training
methods and their features. (2003)
5. How does one evaluate a Training Programme? (2004)
6. As an HR Manager of Hinduja Hospital design a Training
programme for hospital staff. (2007)
7. Define management development. Explain any 5 methods of
Management Development programme. (2004)

Short Notes:

1. Principles of Training (2005)

2. Employee Training (2006)
CHAPTER – 6 - PERFORMANCE APPRAISAL
Once the employee has been selected, trained and motivated he is
then appraised for his performance. P.A. is the step where the
management finds out how effective it has been at hiring and
placing employees. If any problems are identified, steps are taken to
communicate with the employee and to remedy them. A “P.A. is the
process of evaluating an employee’s performance of a job in terms
of its requirements.”

A Performance Appraisal is an objective assessment of an

individual’s performance against well defined benchmark.

Relationship of Performance Appraisal & Job Analysis

Needs / Importance and purposes:

P.A. has been considered as a most significant and indispensable

tool for an organization, for the information it provides is highly
useful in making decisions regarding various personal aspects such
as promotions and merit increases. Formal P.A. plans are designed
to meet three needs, one of the organization and the other two of
the individual, namely:

a. They provide systematic judgments to back up salary

increases, transfers, demotions or terminations.
b. They are means of telling a subordinate how he is doing, and
suggesting needed changes in his behavior attitudes, skills or
 job knowledge. They let him know “where he stands” with the
boss.
c. They are used as a base for coaching and counseling the
individual by the superior.

Main objectives of employee performance appraisal are:

a. To enable an organization to maintain an inventory of the

number and quality of all managers and to identify and meet
their training needs and aspirations;
b. To determine increments rewards, and provide a reliable index
for promotions and transfers to positions of greater
responsibility.
c. To maintain individual and group development by informing
the employee of his performance standard;
d. To suggest ways of improving the employee’s performance
when he is not found to be up to the mark during the review
period.
e. To identify training and development needs.

What should be rated?

The criteria for assessing performance are:

1. Quality: the degree to which the process or result of carrying
out an activity approaches perfection.
2. Quantity: the amount produced, expresses in monetary terms,
number of units.
3. Timeliness:
4. Need for supervision
5. Interpersonal impact: the degree to which a performer
promotes feelings of self-esteem, goodwill and co-operation
among co-workers and subordinates.
6. Training: need for training for improving his skills knowledge
(whether he requires any training further)
The above criteria relate to past performance and behavior of an
employee. There is also the need for assessing the potential of an
employee for future performance, particularly when the employee is
likely to be promoted.

Who should evaluate the performance?

 Individual
supervisor

Who should
evaluate
employee’s
Clients performance??? Subordinates

Peers

In the principles mentioned below, it is clearly suggested that atlest

two raters should ideally carry out the performance of an employee.
The individuals who are given the responsibility of performance
appraisal are known as raters. Following are the ideal suggested
raters.

Individual supervisor: supposed to be most appropriate candidate to

appraise the performance of his subordinates. Since he is closely
associated with his subordinates and is familiar with the
subordinate’s performance, he can give correct picture of his
subordinate’s performance. The supervisor is not also useful for
correct PA but also can decide correctly the immediate requirement
for training and development just after the PA.

Subordinates: Can assess the performance of their superiors. This

method may be useful in assessing an employee’s ability to
communicate, delegate work, allocate resources, disseminate
information, resolve conflicts and deal with employees on a fair
basis.

Peers: are in a better position to evaluate certain facts of job

performance, which the superiors and subordinates cannot do. Such
facts include contribution to workgroups, projects, interpersonal
skills, reliability, and initiative and communication skills. They are in
better position to act as raters due to their closeness of working
relationship and amount of personal contact with the ratee.
Clients: are seldom used for rating employee performance. Clients
may be members within the organization who have close and direct
contact with the ratee and make use of an output this employee
provides. Service providers such as Hutch make use of client for
rating employee performance.

Principles of Effective P.A.

Systematic P.A. should be accurate and reliable one. Following are

the principles of a good or effective P.A.

1. Single employee should be rated by two raters. Then

comparison should be made to get accurate rating.

2. Continuous and personal observation of an employee is

essential to make effective P.A.

3. The rating should be done by immediate superior of any

subordinate in an organization.

4. A separate dept may be created for effective P.A.

5. The rating should be conveyed to the concerned employee as

it helps him to understand his position where he stands and
where he should go.

6. The plus points of employees should be recognized and minus

points should not be too highlighted but they should be told to
the employees by taking him into confidence.

MULTIPLE PURPOSES OF PERFORMANCE ASSESSMENT

General Applications Specific Purpose

Developmental Uses • Identification of individual needs
• Performance feedback
• Determining transfers and job
assignments
• Identification of individual
strengths & developmental needs
Administrative Uses / • Salary
Decisions • Promotion
• Retention or termination
• Recognition of individual
 performance
• Lay-offs
• Identification of poor performers
Organizational • HR Planning
maintenance / Objectives • Determining organization training
needs
• Evaluation of organizational goal
achievement
• Information for goal identification
Documentation • Helping to meet legal
requirements
 Performance Appraisal Process

(1) Establishing Performance Standards: The first step in the

performance appraisal process is to set performance
standards for appraising the performance of an employee.
This step is finalized with the help of job analysis which
reveals the contents of a job. The standards decided should
be clear, objective and noted in writing also it should be
discussed with the supervisors to ensure that all the relevant
factors have been properly included. Performance criteria
will be clear when it is in the form of output which can
be measured in precise terms. If work performance
cannot be measured in quantitative form, the personal
characteristics such as work quality, honesty, reliability, co-
operation and team work, job knowledge, leadership,
initiative, safety consciousness, etc. which contribute to
employee performance must be determined. These
standards should be indicated on the Performance Appraisal
Form.

(2) Communicating the standards to employees: In this

second step in the performance appraisal process, the
performance standards specified in the first step are
communicated and explained to the employees so that they
will know precisely what is expected of them. In the absence
of such communication, the employees will find it difficult to
guess what is expected of them. The reactions of employees
to the standards decided should be obtained. If necessary,
the standards decided should be revised/modified in the light
of feedback obtained from the employees. This is necessary
for avoiding possible sharp reactions from the employees in
due course.

(3) Measuring actual performance: In this third step in the

performance appraisal process, actual performance of
employees is measured in the light of the standards decided
and communicated to employees. Such measurement
requires selecting the right technique of measurement,
identifying the internal and external factors influencing
performance and collecting information on results achieved.
Data on performance of employees are collected through
different means such as personal observations, written
reports and face to face communication. The performance of
different employees should be recorded in such a way that
the data collected will be easily comparable. Here, what is
measured is as important as how it is measured for appraisal
purpose.

(4) Comparing actual performance with the standards

decided:
In this fourth step of performance appraisal process, actual
performance of the worker is compared with the pre -
determined performance standards. This type of comparison
between actual performance with standard performance will
clearly reveal the deviations which may be negative or even
positive. Positive deviations occur when actual performance
exceeds the standards fixed. Negative deviations occur when
actual performance is below the standards fixed. Positive
and negative deviations are exactly opposite. Positive
deviations are good and favorable to workers while negative
deviations are bad/undesirable and also unfavorable to
workers. Through comparison, the employee is appraised
and judged of his potential for growth and advancement.

(5) Discussing actual performance: In this fifth step of

performance appraisal, the results of appraisal are
communicated to and discussed with the employees. The
deviations and the reasons behind such deviations are
analyzed in full and discussed. Such discussion is important
as it enables an employee to know his weaknesses and
strengths (weak and strong points). This will motivate him to
improve his performance in future. The impression which the
subordinate worker received about his performance has a
positive impact on his subsequent performance. In fact, the
information which the subordinate receives about his
performance assessment has a great impact on his self-
esteem and on his subsequent performance. The impact
should be position. However, actual impact (positive or
negative) depends on how the appraisal feedback is
presented and discussed with the employee. Here, the role of
rater/superior is important and crucial 'Conveying good news
about performance is considerably less difficult for both the
manager and the subordinate than when performance has
been below expectations. ..\VIDEOCLIP\Performance
Appraisals - Be Prepared-GOOD.flv

(6) Offering guidance/taking corrective actions: In this sixth

and the last step of performance appraisal process, the
corrective steps required to be taken (remedial measures)
for improving performance are identified and initiated. For
this or prior to this, mutual discussion with concerned
employee is essential as remedial measures will give positive
results only when they are introduced after full and fair
discussion with the employee. For this, appraisal interview is
necessary and should be conducted properly by the rater.
Follow-up measures for self development will be taken
properly by the ratee if this interview is conducted properly.
It should be a problem-solving interview. Employee will take
initiative and interest in the corrective measures if he has
noted the importance and positive benefits of appraisal
interview. Corrective measures may be in the form of special
training, counseling, coaching and offering guidance in the
work assigned. This will improve the performance of worker
before next round of performance appraisal Improvement in
the performance will give good dividend to worker as well as
to the organization in due course.

HOW PERFORMANCE APPRAISAL CAN CONTRIBUTE TO FIRM’S

COMPETITIVE ADVANTAGE (SELF STUDY)
 Strategy &
behaviour

Minimizing job
Improving
dissatisfaction
performance & turnover
Competitive
Advantage

Marking
Ensuring legal
correct
Compliance
decisions

Ensuring legal compliance: promotions made on factors other

than performance might land up a firm in a legal battle, thus
diverting its focus on non-productive areas. Companies can
minimize costly performance-related litigation by using appraisal
systems that give fair and accurate ratings.

Procedure of Employee Performance Appraisal

a. Supervisory Responsibilities

1. Clear Performance Standards: Each supervisor is responsible for

setting and communicating clear performance standards for his/her
employees at the beginning of, and throughout, the review period.

b. In evaluating employees, supervisors shall consider factors such

as the experience and training of the employee, the job description,
and the employee’s attainment of previously set goals and
objectives.

2.
Informal Appraisals
Each supervisor is also responsible for observing and discussing with
his/her employees both positive and negative aspects of the
employee’s performance throughout the review period. Written
records of each significant incident requiring supervisory input shall
be kept by all supervisors.
3. Formal Appraisals
On a regular basis and as described in this policy, each supervisor is
responsible for conducting formal performance appraisals on each
subordinate employee. Performance appraisals shall include a
summary of all past discussions related to performance during the
review period and future performance goals.

4. Accountability
Supervisors will be held accountable for the performance of their
employees and for the negligent retention of an employee that
consistently performs below City standards.

B.
Timing:
1. Frequency
Employee Performance Appraisals: Regular employees will receive a
mid-point review and an annual appraisal each calendar year.
Midpoint reviews will be conducted halfway through the calendar
year and annual appraisals will be conducted at the end of the
calendar year. All forms must be completed, approved, and
submitted to the Human Resources Department following the
performance appraisal discussion.

2.
Timely Processing
The Human Resources Department will maintain a system to assist
supervisors to complete performance appraisals on time. The timely
processing of performance appraisals is one of the most important
leadership responsibilities for those in supervisory positions.

C.
Self Evaluations
In addition to regular and periodic review by supervisors, each
employee is asked to perform an annual evaluation of their own
performance during the proceeding year. In this regard:

1. Employees are asked to submit to their supervisors a signed self-

evaluation form.
2. A copy of the self-evaluation form can be obtained from the
Human Resources Department.

D.
Approvals
Performance appraisals shall be reviewed with the next level of
management before a supervisor may discuss and review the
performance appraisal with the employee.
E
Performance Appraisal Discussion
1.
Supervisors will hold a discussion with the employee regarding the
performance appraisal. The purpose of the discussion is to review
past performance, address any questions about the performance
review, and to set goals and objectives for the period ahead.

2.
The discussion should be held at a prearranged time in a private
location free from interruptions.

F.
Employee Signature
1.
The employee will be asked to comment on the appraisal and
acknowledge it by signing and dating the form.

G
Information derived from the performance review may be
considered when making decisions affecting training, pay,
promotion, transfer, or continued employment.

Methods (Types / Kinds) of P.A.

Traditional methods
1. Ranking method:
 This is the oldest and simplest method. An employee is ranked
is ranked one against the other in the working group under this
method.
 For e.g. If there are 10 workers in the working group, the most
efficient worker is ranked as number 1 and least efficient is
ranked as number 10.
 A small organization can get maximum benefits through this
method.

2. Grading method:
 Under this system, the rater considers certain features and
marks them accordingly to a scale.
 Categories are established earlier and carefully defined.
 An organization can select features such as ability to get the
work done, friendliness, co-operativeness, and dependability,
self-expression, job knowledge, leadership etc.
 The grading may be a – outstanding, b- very good, c- good, d –
average, e-poor etc.
  The actual performance of an employee is then compared with
these grade definitions.

3. Check list method

 The appraisal of the ability of an employee thru getting
answers for a number of questions is called C.L. Method.
 A person (s) is / are appointed as rater who indicates the
answers of an employee against each question by putting a
tick mark. There are two columns provided to each question as
yes or no. Following is the model.

Checklist Yes no

A. Is the employee satisfied with job?

B. Does he finish the job accurately?
C. Is his attitude friendly with other
Staff members?
D. Is he ready to accept responsibility?

4. Forced choice method

 A series of statements are prepared positively or negatively,
both statements describes characteristics of employee.
 The rater is forced to tick any one of the statements either out
of positive statements or of negative statements:
Few statements:
a) Completes target on time.
b) Willingly accepts additional responsibility.
c) Is dishonest and disloyal.
d) Is overbearing and disinterested in work.
 The favorable terms earn a plus credit while unfavorable terms
get no credit.
 This method is not very favorable, trained technicians are
required to prepare sets of series for each occupational group.

5. Free essay method.

 Under this method, the supervisor makes a free form, open-
ended appraisal of an employee in his own words and puts
down his impressions about the employee. Following factors
are considered:
 Relationship with fellow members and seniors.
 General ability.
 Job knowledge and potential;
 Employee attitudes;
  Understanding and implementing company policies and
procedures;
 Production, quality and cost control etc

6. Critical incident method:

 The essence of this system is that it attempts to measure
workers’ performance in terms of certain “events”
 The basis of this method is on the principal that “there are
certain significant acts in each employee’s behavior and
performance which make all the difference between success
and failure on the job.”
 The supervisor keeps a written record of the events (good or
bad) that can be recalled and used in the course of a
periodical or formal appraisal.

Sample items from an incident checklist

a) Refused to take an important & risky decision in his own name.

b) Refused to work on Sundays in Aug ‘05 although it was highly
required.
c) Convinced a buyer to keep our stock in large quantity.
d) Failed to reply an important call, which led the organization to
a loss of a particular Amount.
e) Gave his valuable suggestion in changing the design of one of
the products, which helped in improving the business.

6. Group appraisal method:

 Under this method, employees are rated by an appraisal
group, consisting of their supervisor and three or four other
supervisors who have some knowledge of their performance.
 The supervisor explains to the group the nature of his
subordinate’s duties. The group then discusses the standards
of performance for that job, the actual performance of the
jobholder, and the causes of their particular level of
performance, and offer suggestions for future improvements, if
any.

Newer or modern methods of appraisal

360 - degree appraisals

Briefly put, the 360-degree method evaluates an employee's

performance by assembling it with the feedback sought from
everybody else: peers, managers, direct reports as well as
assessment from customers. This, along with the employee's self-
evaluation forms the final appraisal. The method has been
successfully employed by over 90% fortune 1000 companies over
the past decade. The fact, that in India also several well-known
companies like Hughes software systems, ITC, Escotel, etc., have
adopted this technique validates its popularity as an hr tool. It has
been used in making decisions relating to promotions, terminations,
pay hikes, etc, in identifying training and developmental needs of
the employees or validating ongoing training programme.

It's effective...

The concept, by and large, is most democratic as it takes into

account the perception of not only your supervisors, but also of
several others. The employee also perceives an element of
impartiality here. However, its greatest strength lies in designing
future development programme for employees. "Our 360-degree
programme is just one year old, but we have begun to notice
significant changes in employee-personalities and their way of
functioning," reveals Rajan Dutta, chief, hr & quality, Escotel mobile
communications. "It’s a powerful tool for employee growth and
building a positive work culture," he adds. Adesh Goyal, VP (H.R.),
Hughes software systems, agrees. "The concept has been very
successful in providing developmental inputs to managers in our
organization," he says.

But...

The implementation is not so easy. "Organizations need a minimum

level of maturity to adopt this concept," says T. Sridhar, executive
director - TMI network, whose company embraced 360-appraisal a
year ago. There is also the culture factor. "Indian society does not
encourage criticism of authority figures. Therefore, the feedback to
the boss is also not always unbiased," says Kris Lakshmikanth, CEO -
Prizedjobs.com. The biggest stumbling block, however, lies
somewhere else - in the unwillingness of the top management to
accept feedback from the rank. "it takes courage and extreme
candidness to accept that," says Dutta.

The pros definitely outweigh the cons. While traditional feedback

processes have failed miserably, the 360-degree feedback has
proved to be magical. As opposed to the conventional appraisal
system, wherein the immediate supervisor provides the employee
with unidirectional comments, the 360-degree relies on a multi-
dimensional feedback.

How does it work?

The most popular model used, namely the skill model, lists the skills
and behavior necessary for effective job performance. The employee
recommends eight to twelve people, for his 360-degree review. They
can be direct reports, peers, bosses, internal customers or any
individual who could provide relevant performance feedback on the
employee. Some companies also ask external customers to rate the
individual’s performance. The supervisor then selects six to ten
participants from the list for appraisal. The employee is also
required to assess himself.

The employee is rated in each of the requisite skill areas and the
survey responses are compiled accordingly. The individual receives
a report summarizing others’ perceptions of his performance,
highlighting his strengths and development needs.

How to implement 360 degree?

Firstly, human resource personnel and senior management need to

determine the usefulness of this feedback. Then they have to

• Define the skill model to be used.

• Explain the purpose of the process, the use of the data
collected, and the steps involved to everyone concerned.
• Distribute questionnaires.
• Complete questionnaires.
• Process questionnaires.
• Meet with employee to discuss results and plan future
development.
• Provide feedback.

Warning

For the absolute success of this system care need to be taken, as to

who rates the employee? Also, caution is advised during compilation
of the data. Design and development of the model must also
dependent on several factors such as in-house technology,
confidentiality safeguards, and time frame required to complete the
feedback and the applicability.

Outcome

The 360-degree feedback allows better understanding of others’

perspectives of the employee’s strengths and weaknesses.
Employee development efforts are more focused and effective.
Feedback being anonymous is more honest. Thus a better
communication between supervisor and employees is a substantial
result of this system.

2. Assessment Centre methods:

Assessm ent Centres : Mainly used for executive hiring, assessment

centres are now being used for evaluating executive or supervisory
potential. An assessment centre is a central location where
managers may come together to have their participation in job-
related exercises evaluated by trained observers. The principal idea
is to evaluate managers over a period of time, say one to three
days, by observing (and later evaluating) their behaviour across a
series of select exercises or work samples. Assessees are requested
to participate in in-basket exercises, work groups (without leaders),
computer simulations, role paying, and other similar activities which
require the same attributes for successful performance, as in the
actual job. Raters, after recording their observations, meet to
discuss these observations. The decision regarding the performance
of each assessee is based upon this discussion of observations. Self-
appraisal and peer evaluation are also thrown in for final rating.
The characteristics assessed in a typical assessment centre include
assertiveness, persuasive ability, communicating ability, planning
and organizational ability, self-confidence, resistance to stress,
energy level, decision-making, sensitivity to the feelings of others,
administrative ability, creativity, and mental alertness. It is quite
difficult to measure these activities accurately over three days,
though there would be sizeable number of trained observers and
psychologists.
First developed in the US and the UK in 1943, the assessment centre
is gaining popularity in our country. Crompton Greaves, Eicher, HUL
and Modi Xerox are using the technique with results being highly
positive.
The problem with the assessment centres is their cost. Not only are
the assessees away from their jobs while the company pays for their
travel and lodging, but the evaluators are often company managers
who are assigned to the assessment centre for short durations.
These managers are often supplemented by psychologists and HR
specialists who run the centre and also make evaluations. Hence
this approach is cost-effective only in large organizations.
• Employees who receive a poor report from the centre may
react in negative ways. Ideally, a rejected employee would
return to his / her former job, satisfied that he / she would not
be promoted to a job he / she could not handle. However, a
good performer at one level may leave the organization in
order to remove the bad assessment report from his / her work
record.
 Assessment centre: a practical look:
• Ranbaxy retained the services of a team of psychologists from
the UK-based Kelly & King to take executives (of Ranbaxy) through
an assessment center. 20 star managers went through the exercise.
• Santrupt Misra, Director- Birla Management Corporation had
plans for a similar exercise to be held at Gyanodaya, the Aditya Birla
learning centre. Misra first used the assessment centre concept 4
yrs ago on 150 middle and senior level managers.
• Tatas have created their own assessment centers, and so have
the talent centric companies like Wipro and Cognizant.
• SHL, a HR consulting firm has worked with over 100
companies conducting close to 1,000 assessment centres.
• ICICI bank uses assessment centre as a recruitment and
selection tool to find the best talent, while GE India subsidiary
GECIS has used it on 20% of its middle managers.

Management by Objective: (MBO)

Management By Objectives term was first popularized by Peter

Drucker in 1954 in his book 'The Practice of Management'.

How MBO works can be described in four steps:

The first step is to establish the goals each subordinate is to attain.
In some organizations, superiors and subordinates work together to
establish goals. In others, superiors establish goals for subordinates.
The goals typically refer to the desired outcome to be achieved.
These goals can then be used to evaluate employee performance.
The second step involves setting the performance standard for the
subordinates in a previously arranged time period. As subordinates
perform, they know fairly well what there is to do, what has been
done, and what remains to be done.
In the third step, the actual level of goal attainment is compared
with the goals agreed upon. The evaluator explores reasons for the
goals that were not met and for the goals that were exceeded. This
step helps determine possible training needs. It also alerts the
superior to conditions in the organization that may affect a
subordinate but over which the subordinate has no control.
The final step involves establishing new goals and, possibly, new
strategies for goals not previously attained. At this point,
subordinate and superior involvement in goal-setting may change.
Subordinates who successfully reach the established goals may be
allowed to participate more in the goal-setting process the next
time. The process is repeated.
Psychological Appraisals: Large organizations employ full-time
industrial psychologists. When psychologists are used for
evaluations, they assess an individual’s future potentials and not
past performance. The appraisal normally consists of in-depth
interviews, psychological tests, discussions with supervisors and a
review of other evaluations. The psychologists then writes an
evaluation of the employee’s intellectual, emotional, motivational
and other-related characteristics that suggest individual potential
and may predict future performance. The evaluation by the
psychologists may be for a specific job opening for which the person
is being considered, or for an assessment of his future potential.
From these evaluations, placement and development decision may
be made to shape the person’s career.

Limitations or problems of P.A.

 The ideal approach to performance evaluation is that in, which

the evaluator is free from personal biases, prejudices.
 However, a single foolproof evaluation method is not available.
Inequalities in evaluation often destroy the usefulness of the
performance system – resulting in inaccurate, invalid
appraisals, which are unfair too.
 The halo effect or error: when employee’s performance is
appraised on the basis of halo effect the evaluation is generally
not free from error.
 Leniency or strictness in evaluation: some supervisors are very
free where as some may be very strict in evaluating the same
person. When an evaluator is positively lenient in his appraisal,
an individual’s performance becomes overstated, i.e. rated
higher than it actually should. Similarly, under the negative
tendency, performance is understated than what it should be.
 The central tendency problem: the most commonly found
error. It assigns “average ratings” to all the employees with a
view to avoiding commitment or involvement or when rater is
in doubt or has inadequate information or lack of time at his
disposal. Such tendency seriously distorts the evaluations,
making them most useless for promotions, salary etc
 Similarity error: this error occurs when the evaluator rates
other people in the same way he perceives himself. For e.g. If
the evaluator perceives himself as aggressive may evaluate
others by looking for aggressiveness. Those who show this
characteristic may be benefited while others may suffer.
 Miscellaneous biases: bias against employees on the ground of
sex, race, and religion etc.
Why appraisal techniques prove failure?

 The dual and conflicting role of supervisor.

 Too many objectives often cause confusion.
 The supervisor feels that subordinate appraisal is not
rewarding.
 A considerable time gap exists between two-appraisal
programmes.
 Poor communication keeps employees in the dark about what
is expected of them.
 Feedback on appraisal is generally unpleasant for both
supervisor and subordinate.
 Unwillingness on the part of supervisors to tell employees
plainly how to improve their performance.

University Questions:

1. What are some of the commonly used techniques of

performance appraisal system? Write about their merits and
demerits. (2003)
2. “Assessment centers are more accurate than supervisionary
judgment in predicting the potentiality.” Explain the statement
with emphasis on the aim and process of Assessment Center.
(2004)
3. (a) “Regular feedback improves the performance of
employees”. Explain the importance of performance appraisal.
(b) Discuss any one-performance appraisal technique used at
managerial level. (2005)
4. Describe in detail performance appraisal. (2006)
1. “Participative management results in improved Performance”.
Explain (2007)

Concept Questions:

1. 360 degree PA (2001, 2007)

2. Assessment Centre (2005)
CHAPTER 8
COMPENSATION MANAGEMENT
MEANING OF WAGE / COMPENSATION PAYMENT /
COMPENSATION PACKAGE:
Wage is a monetary payment/compensation made by the employer
to his employee for the work done or services rendered. A worker
may be paid Rs. 100 per day or 6,500 per month. This is wage
payment. It is like give and take. The workers give services and
takes payment called wage payment. Industrial workers are paid
remuneration for their services in terms of money called wage
payment. Wages are usually paid in cash at the end of one day, one
week or one month. Money wage is the monetary compensation or
price paid by the employer to his employee for the services
rendered. Such compensation is also called wage or salary or reward
given by organization to a person in return to a work done.
Normally, compensation payable to an employee includes the
following components:
(a) Basic compensation for the job (wage/salary);
(b) Incentive compensation for the employee on job (D.A., profit
sharing, bonus, etc;
(c) Supplementary compensation paid to employees (fringe benefits
and employee services).
IMPORTANCE OF WAGE PAYMENT TO EMPLOYEES/WORKERS:
Wages payment is important to all categories of workers. It is the
income earned by hard work. It provides bread (if not butter) to the
worker and his family members. Wage is a matter of life and death
to workers/ employees. Their life, welfare and even social status
depend on wage payment. It is the only source of income to large
majority of workers. They and their unions always demand higher
wages and other monetary benefits. This rule is applicable to factory
workers and also to other categories of workers including bank
employees, government servants, teachers, and so on.
Majority of labor problems and disputes are directly related to wage
payment. The efficiency of workers and their interest and
involvement in the work depend on wage payment. Even their
attitude towards employer/management depends on the wage
payment. In brief, wage payment is a matter of greatest importance
to workers. Wage problem is the most pressing and persistent
problem before the entire labor force.
Minimum Wage: Providing for
sustenance of life plus for
preservation of the efficiency of
worker.

Fair Wage: Equal to the rate

prevailing in the same trade and in
the neighborhood or equal to the
predominant rate for similar work
throughout the country.
Living Wage: Higher than fair wage.
Provides for bare essentials plus
frugal comforts.
IMPORTANCE OF WAGE PAYMENT TO EMPLOYER:
Wage payment is equally important to employers as their profit
depends on the total wage bill. An employer, in general, is
interested in paying low wages and thereby controls the cost of
production. However, low wages are not necessarily economical. In
fact, they may prove to be too costly to the employer in the long
run. An employer has social responsibility to pay fair wages to his
workers as they are equal partners in the production process. He
should introduce fair wage payment system which will give benefits
to both the parties. Employees will offer full co-operation to the
management when they are paid attractive wages. On the other
hand, strikes and disputes are likely to develop when workers are
paid low wages or when they are dissatisfied and angry due to low
wage rates. It is possible to earn more profit by paying attractive
wages to workers.
IMPORTANCE OF WAGE PAYMENT TO GOVERNMENT:
Government also gives special importance and attention to wages
paid to industrial workers as industrial development, productivity,
industrial peace and cordial labor - management relations largely
depend on the wage payment to workers. Government desires to
give protection to the working class and for this Minimum Wages Act
and Other Acts are made. In India, wages are now linked with the
cost of living. This is for the protection of workers. Government is
the biggest employer in India and the wage rates of government
servants and employees of public sector organizations are decided
by the government only. Revision of pay scale of government
employees is made for adjusting their wages as per the cost of
living. For this "Pay Commission" is appointed. And pay scales are
adjusted as per the recommendations made.
In India, wage payment is a very critical, controversial and delicate
issue for all categories of work force. This is due to poverty, rising
prices, mass unemployment and rising population. In India, all
categories of workers (a factory worker drawing Rs. 4,000 salary and
a bank manager drawing Rs. 15,000or more as total salary) demand
higher wages. Due to rising prices and new life styles, such demand
is unavoidable. Majority of industrial disputes move around the wage
payment. Wage payment is indeed a problem and needs to be
tackled from economic, social and humanistic angles. It is a human
problem and certainly not a simple arithmetic exercise.
FACTORS INFLUENCING/DETERMINING WAGE RATES:
(1) Demand and supply position in the employment/labor
market: If the demand for labor is more, wages paid are higher and
when the demand for labor is less, the rates of wage payment are
also low. In Western countries, wage rates are high, while in India,
they are comparatively low due to demand supply similarly, wage
rates are high during the period of inflation and prosperity and they
are low during the period of depression. In brief, demand for and
supply of labor influence wage and salary fixation. .
(2) Nature and features of the job (Job Requirement): The
wage rate depends on the qualities and qualifications required for
performing the job. When the nature of job is hard, higher wages are
paid. Similarly, wage rate is high in the case of jobs where special
qualifications and experience are required. For example, an
engineer is paid more than a typist/clerk. Jobs are graded according
to the skills required for performing them and accordingly, wage
rates are fixed.
(3) Cost of living: Wage rates are raised when the price level
increases. This is necessary for adjusting wages as per the cost of
living. At present, wages of central government employees or of
factory workers are raised when the cost of living index goes up. The
rate of D. A. increases or decreases as per the movement of the
consumer price index (PI). Linking of wages with the cost of living is
necessary for the protection of life and welfare of the workers. The
living wage criterion is quite suitable for determining wage rate as
living wage enables an employee to maintain himself and his family
at a reasonable level of existence.
(4) Bargaining power of workers:. When the trade union is
strong, the workers get the benefit of higher wages. This is because
of the bargaining power of the trade union leadership. Strong trade
unions organize strikes, etc. for raising the wage rate. Unorganized
workers are even paid less than the minimum wage as they are not
united and do not have bargaining power.
(5) Efficiency and productivity of work force: Efficient workers
are paid more as they give more production. The wage payment
increases along with the increase in the productivity of work force.
(6) State regulations: Wage rate depends on the law regarding
wage payment i.e. Minimum Wages Act and linking of wages with
the cost of living. Wages must be paid as per the legal provisions
made by the government from time to time. This is applicable to
organized workers as well as to workers from the unorganized
sector. (e.g. agricultural workers, etc.) In brief, labor laws have their
positive influence on wage rates. Such laws are for the benefit and
protection of working class.
(7) Ability of the employer to pay: Wage rage depends on the
ability of the employer to pay. Such ability depends on the profits
earned, financial position of the company and so on. This is one
important factor that determines the wage rate. Wage rate depends
on the ability of the employer to pay. Workers are paid attractive
wages when company gets huge profit (e.g. Software Company). An
organization will not be able to pay more than its ability to pay.
(8) Wage rates in other enterprises in the same locality:
Prevailing wage rate in the locality is the most widely used criterion
for determining the wage rate at the organization’s levels. In India,
wage rates are related to region-cum-industry base.
Normally, wage rates in a specific area or locality are identical. The
wage rates in two or more textile mills are rather identical.
(9)The present stage of economy: The wage rates are related to
the position of national economy. High wage rates are not possible
when there is recession. There will be increase in the labor supply in
a depressed economy. This, in turn, should serve to lower the going
wage rates. Wage rates are normally high during the period of
prosperity. Inflation leads to increase in wage payment.
(10) Internal factors determining wage rates: Such factors
include business strategy of the company, job evaluation and
performance appraisal and employee related factors such as
individual performance, seniority, experience and potential. When
the strategy of the enterprise is to achieve rapid growth,
remuneration should be higher than what competitors pay. When
the strategy is to maintain and protect current earnings, the
remuneration level needs to be average or even below average.
COMPONENTS OF EMPLOYEE REMUNERATION/
COMPENSATION PACKAGE:

REMUNERATION PACKAGE

WAGE/SALAR Perquisite Non-

Y Incentives Fringe B. Monetary
s
Financial Benefits Benefits

Total Compensation Payable

(Wage / salary & Incentives  Direct, Perquisites & Fringe benefits
 indirect)

FINANCIAL BENEFITS
1. Wage/Salary: Wage is the payment as per the pay scale decided
by the employer. Wage represents hourly-rate of day while salary
refers to the monthly rate of pay, irrespective of the number of
hours put in by an employer. Salary payment includes dearness and
other approved allowances payable to employees. There is a
provision of annual increment in the pay scale given to employees.
Salary payment is made regularly on the specific day decided by the
management. Salary payment is not uniform to all employees as it
depends on the nature of the job, responsibilities assigned, merits
available, status of the post, and seniority of the employee and so
on. Salary payment is now made attractive to all categories of
workers. It constitutes major source of regular income to large
majority of industrial and other categories of employees. Wages are
now linked with the cost of living. The term 'Take Home Pay' is also
used to indicate the quantum of money available to an employee
after statutory deductions (income tax, P.F., etc.) are made.
2. Incentives:
Also called “payment by results”, incentives are paid in addition to
wages and salaries. Incentives depend upon productivity, sales,
profit or cost reduction efforts. There are:
• Individual incentive schemes &
• Group incentive schemes
Individual incentives are applicable to specific employee
performance. Where a given task demands group effort for
completion, incentives are paid to the group as a whole.
3. Fringe Benefits: these include employee benefits such as
provident fund, gratuity, medical care, hospitalization, accident
relief, health and group insurance, canteen, uniform, recreation and
the like.
4. Perquisites:
These are allowed to executives and include company car, club
membership, paid holidays, furnished house, stock option program
and the like. They are offered to retain competent executives.
Non-monetary benefits (related to job content): These include
challenging job responsibilities, recognition of merit, growth
prospects (career development), competent supervision,
comfortable working conditions (job design), job sharing and flexi-
timing.

A NOTE ON SALARY SLIP:

An employee is given full details of compensation payment on
a printed small slip called salary slip.
The Salary slip is given to every worker along with salary.
This slip gives full details of salary payment. This includes
basic pay, allowances, incentive payments, house rent and so
on. The slip indicates the total salary payable (gross amount)
to an employee. In addition, the deductions made from salary
payment an account of P.F., loan repayment, tax deducted, if
any, etc. are also shown. The net amount payable is also
shown in the slip and accordingly. The payment is made. This
slip is one useful document and useful to workers for
information, record and reference.
The primary part of pay package is basic pay. Along with
basic salary, allowances are given to employees. Allowances
include the following:
(a) Dearness Allowance (DA): It is as per the cost of living.
It is paid as a percentage of basic pay.
(b) House Rent Allowance (HRA): It is paid to employees
to whom living accommodation is not provided. It is
calculated as a percentage of basic pay.
(c) City Compensatory Allowance (CCA): It is paid to
employees in metros and big cities.
(d) Transport Allowance (TA): Some employers pay such
allowance. It is a fixed amount payable every month.
Salary payment is not uniform to all employees as it depends
on the nature of the job, responsibilities assigned, merits
available, status of the post, and seniority of the employee
and so on. Salary payment is now made attractive to all
categories of workers. It constitutes major source of regular
income to large majority of industrial and other categories of
employees. Wages are now linked with the cost of living. The
term 'Take Home Pay' is also used to indicate the quantum of
money available to an employee after statutory deductions
(income tax, P.F., etc.) are made. The details of salary
payment are given in pay slip which is given to every
employee along with salary payment.

FRINGE BENEFITS
According to William B. Werther and Keith Davis, "fringes
embrace a broad range of benefits and services that employees receive as
part of their total compensation package
... pay or direct compensation
... is
based on critical job factors and performance. Benefits and services,
however, are indirect compensation because they are usually extended as a
condition of employment and are not directly related to performance".
In addition to regular wages, allowances and bonus payment,
industrial workers are given other benefits and services called
fringe benefits. They are called so because they are offered
by the employer as a fringe. This means such benefits are
supplementary to regular wages and allowances. They also
support regular wage payment to employees.
The purpose of fringe benefits is to retain efficient & capable
people in the organization. They foster loyalty and act as a
security base for the employees.
Such benefits include benefits such as provident fund,
gratuity, medical care, hospitalization, paid vacation,
pension, accident relief, health and group insurance,
canteen, uniform, recreation, and the like. Such benefits are
based on critical job factors and performance. They
constitute indirect compensation
as they are usually extended as
a condition of employment and not directly related to
performance of concerned employee.
Characteristics of Fringe Benefits:

IMPORTANCE / RELEVANCE OF OFFERING FB:

TYPES OF FRINGES
OTHER USEFUL SERVICES (AT NO COST OR MINIMUM COST)

INCENTIVES / PERFORMANCE BASED INCENTIVES: (PLI)

Incentives are variable rewards granted to employees according to
variations in their performance. The other name for incentives is
“payment by results”. But the word incentive is most appropriate
due to its motivational content.
Incentives are monetary benefits paid to workmen in recognition of
their outstanding performance. Popularly called variable pay,
incentives are defined as, “variable rewards granted according to
variation in the achievement of special results.”
Unlike salaries and wages which are relatively fixed, incentives
generally vary from person to person and from time to time for the
same person.

TYPES OF
INCENTIVE
PLANS

Individual incentive plan

Halsey Premium
Rowan Plan
Taylor’s Differential Piece rate
system
Emerson’s efficiency bonus
plan Group incentive plan
Bedeaux point premium plan
Gnatt task & bonus plan

Plan
HALSEY PREMIUM PLAN: Under Halsey plan, standard time is
fixed for the completion of a job and the rate per hour is then
determined. If the worker takes the standard time or more to
complete the job, he gets paid at the standard time rate. In other
words, time wages are guaranteed even if the output of the worker
is below standard. Where the work is done in less than the standard
time, he gets paid for the actual time, at the time-rate plus a bonus
which is calculated at a specified percentage of the saved time. The
percentage varies from 30-70 %. The usual rate is 50%.

e.g.
standard time: 10 hrs
Rate per hour: Re 1
Case (i)
Time taken: 10 hrs
Earnings: 10 * 1 = Rs. 10.00
Case (ii)
Time taken: 12 hrs
Earnings: 12 * 1 = Rs. 12.00
Case (iii)
Time taken: 8 hrs
Earnings:
Time wages: 8*1= Rs. 8.00
Bonus: ½ * 2 * 1 =Rs. 1.00
========
Rs. 9.00

Advantages of PLI
• Motivating
• Improve standard of living
• Improves productivity of workers
• Increase quantity of production/employee performance
• It is attractive and profitable.
• Due to above advantages,
o Limited supervision of employees
o Reduction in wastages
o Reduction in labor turnover / absenteeism
o Cordial labor relationship
o Increased output
FEATURES/REQUISITES OF A GOOD INCENTIVE PLAN:
(1) Simplicity: A good incentive plan is one which is easy to
understand and simple to operate. An average worker must be able
to know the incentive offered and what is expected to do. The
monetary as well as non-monetary benefits offered must be made
clear to all workers.
2) Encourages Initiative: A good incentive plan should create
initiative among workers to work more and to earn more. It must
offer more income to workers and more profit/production to the firm
or company.
3) Definiteness and flexibility: A good incentive plan should be
definite. This means frequent changes should not be made as
regards rates, etc. as such changes create confusion and doubts in
the minds of workers. Such plan must give clear benefits to workers.
In addition, an ideal incentive plan should be flexible. It should take
care of technological and other changes taking place from time-to-
time. There should be suitable provision for such adjustment.
Flexibility makes incentive plan adaptable.
4) Prompt payment: Incentive payment must be made in cash and
also regularly and promptly. Extra payment for extra effort should
be made soon after the work is completed. Employees are always in
need of money (cash). Naturally, the promptness in payment raises
the popularity of an incentive plan. .
5) Properly communicated to employees: A good incentive plan
needs effective publicity. It should be communicated properly to all
employees. This will lead to their effective participation. A good
incentive plan may not get popular support unless it is
communicated properly to employees. The wider, the exposure, the
better will be the support from the employees.
6) Wide coverage and equitable: A good incentive plan should
not be for employees in certain sections/ departments only. It should
have wide coverage and almost all employees should be covered in
such plan. Such wide coverage makes the plan popular at all levels
and among all categories of workers.
An incentive plan should be equitable. This means it should provide
equal opportunity to all employees to show efficiency and earn
more. This avoids dissatisfaction among employees and makes the
plan just and fair to all employees.
(7) Guarantee of minimum wage payment: An incentive wage
plan should include certain minimum wage payment to every worker
per month. This should be irrespective of the production he gives.
Such provision of guarantee payment creates a sense of security
and confidence among workers.
(8) Scientific fixation of standard workload: Under the
incentive plan, extra payment is given for the extra work i.e. work
which is over and above certain standard quality. Such standard
work-load must be clear, specific and fixed with scientific time
studies so that majority of the employees will be able to give extra
production for extra payment. Incentive wage plan will be
meaningless if majority of workers remain away from its benefits.
(9) Justice to employer and employees: A good incentive plan
should do justice to both parties. The employer must get additional
production along with extra profit and the workers must get extra
payment for extra production given.
(10) Direct efforts-reward relationship: In a good incentive
wage plan, direct efforts reward relationship should be established.
Every worker must get extra payment in proportion to extra efforts
made by him, Such payment must be recorded correctly and paid
promptly. This is necessary as workers will not take interest in the
work if the benefit (in terms of money) is made available after a long
period.
(11) Acceptable to workers: A good incentive plan is one which is
prepared after consultation with workers and their representatives.
The benefits of incentive will be available only when workers accept
and support it.
(12) Grievance procedure: In a good incentive plan, records
regarding extra production and payment should be maintained
properly. In addition, suitable grievance procedure should be
introduced so as to enable every worker to place his complain as
regards wage payment and get it solved to his full satisfaction. This
creates sense of confidence among workers.
CHPT – 8 - CAREER PLANNING
INTRODUCTION:-
The term career planning is frequently used in relation young boys
and girls studying at the college level. College students are
expected to consider their qualities (physical and mental),
psychological make-up, likes and dislikes, inclinations, etc. and
decide what they want to be in their life. In other words, they should
decide what they want to achieve in their life and adjust their
education and other activities accordingly. This means they have to
plan their career. In such career planning, parents, family members
and college teachers offer helping hand and guide young boys and
girls in selecting the most suitable career. Lot of literature,
psychological tests etc. are also available on career planning. Even
lectures, workshops and TV programmes are arranged for guiding
students on career selection (particularly after the declaration of
HSC results). Career planning enables them to use their
abilities/qualities fully and make their life happy, prosperous and
rich in quality. At present, even experts are available to help youth
in their career planning. IQ and other tests are also conducted for
this purpose.
The term career planning and development is used extensively in
relation to business organizations. It is argued that if the
organizations want to get the best out of their employees, they must
plan the career development programmes in their organization
effectively. Such programmes offer benefits to employees and also
to the organizations. The employees will develop new skills will be
available to the organization. This type of career planning can be
described as organizational career planning.

MEANING OF CAREER (WHAT IS CAREER?):-

A career is a progress or general course of action of a person in

some profession or in an organization. Further, career includes the
specific jobs that a person performs, the kinds of responsibilities that
comprise those jobs, movements and transitions between jobs and
an individual’s overall assessment of and feeling of satisfaction with
these companies of his / her career.

According to Edwin B. Flippo “a career is a sequence of separate

but related work activities that provide continuity, order and
meaning to a person’s life”. Career of an employee represents
various jobs performed by him during the course of his working life.
This is described as career path. In the case of an ordinary worker,
the career path includes the following job positions:
Unskilled worker – Semi-skilled worker – Skilled worker – Highly
skilled worker – Assistant foreman – Foreman.

Employees (of all categories) want to grow in their careers as this

provides more salary, higher status and opportunity to use
knowledge, education and skills effectively. An individual with
potentials joins a firm not for job but for career development. An
organization has to provide better opportunities to its employees in
their career development and also use their efficient services for the
benefit of the organization.

MEANING OF CAREER PLANNING (WHAT IS CAREER

PLANNING?):-
Career planning is a process whereby an individual sets career goals
and identifies the means to achieve them. Where the organization
intervenes in planning, it becomes organizational career
planning. In other words, organizational career planning is
the planned succession of jobs worked out by a firm to
develop its employees.

Career planning is one important aspect of human resource planning

and development. Every individual who joins an organization desires
to make a good career for himself within the organization. He joins
the organization with a desire to have a bright career in terms of
status, compensation payment and future promotions. From the
point of view of an organization, career planning and development
have become crucial in management process. An organization has
to provide facilities/opportunities for the career development of
individual employees.

If the organizations want to get the best out of their employees, they
must plan regularly the career development programmes in their
organizations. In brief, career planning refers to the formal
programmes that organizations implement to increase the
effectiveness and efficiency of the human resources available.
Career planning and development is the responsibility of the HR
department of the organization. As already noted, every person
joining an organization has a desire to make career as per his
potentiality, ability, skills and so on.

NEED/PURPOSE/OBJECTIVES OF CAREER PLANNING:-

1) To map out careers of employees as per their ability and
willingness and to train and develop them for higher positions.
2) To attract and retain the right type of persons in the
organization.
 3) To utilize available managerial talent within the organization
fully.
4) To achieve higher productivity and organizational
development.
5) To provide guidance and assistance to employees to develop
their potentials to the highest level.
6) To improve employee morale and motivation by providing
training and opportunities for promotion.
SCOPE OF ORGANISATIONAL CAREER PLANNING:-
The following activities/areas are covered within the scope of
organizational career planning:
a) HUMAN RESOURCE FORECASTING AND PLANNING:-
Here, efforts will be made to identify the number of employees
required in future. In addition, the selection procedure will be
adjusted with the overall strategic goals of the organization.

b) CAREER INFORMATION:-
Here, information relating to career opportunities (promotions,
training for self development, etc) will be supplied to employees.
Supplying career information/opportunities has special significance
as this motivates employees to grow and reach to higher position.

c) CAREER COUNSELLING:-
Such counseling is next to supplying career information. Career
counseling is possible by senior executives through periodic
discussions with their subordinates. Such career guidance
encourages subordinate employees to take interest in certain areas
where suitable opportunities of career development are available. It
is a type of internal guidance and motivation of employees for the
selection of possible career paths. Such counseling is needed when
employees have to plan their own careers and develop themselves
for career progress.

d) CAREER PATHING:-
Management now plans job sequences for transfers and promotions
of their employees. This makes transfers and promotions
systematically with advance information to employees. Career path
creates suitable mental makeup of employees for self-
development.

e) SKILL ASSESSMENT TRAINING:-

Training is essential for career planning and also for manpower
development. Along with job analysis, organizational and job
manpower requirement analysis should be undertaken by the
management. This prepares proper background for the introduction
of career planning programmes for employees.
ADVANTAGES OF CAREER PLANNING:-
A properly designed system of career planning can provide the
following benefits:
i. Career planning helps an employee to know the career
opportunities available in an organization.
ii. Career planning encourages him to avail of the training and
development facilities in the organization so as to improve his
ability to handle new and higher assignments.
iii. Career planning involves a survey of employee abilities and
attitudes. It becomes possible, therefore to group together
people talking on a similar wavelength and place them under
supervisors who are responsive to that wavelength.
iv. Career planning anticipates the future vacancies that may
arise due to retirement, resignation, death, etc. at managerial
level. Therefore, it provides a fairly reliable guide for
manpower forecasting.
v. Career planning facilitates expansion and growth of the
enterprise. The employees required to fill job vacancies in
future can be identified and developed in time.
DISADVANTAGES/LIMITATIONS OF CAREER PLANNING:-
The main problems in career planning are as follows:
i. Career planning can become a reality when opportunities for
vertical ability are available. Therefore, it is not suitable for a
very small organization.

ii. In a developing country like India, environmental factors such

as government policy, public sector development, growth of
backward areas, etc. influence business and industry.
Therefore, career plans for a period exceeding a decade may
not be effective.

iii. Career planning is not an effective technique for a large

number of employees who work on the shop floor, particularly
for illiterate and unskilled workers.

iv. In family business houses in India, members of the family

expect to progress faster in their career than their professional
colleagues. This upset the career planning process.

v. Systematically career planning becomes difficult due to

favoritism and nepotism in promotions, political intervention in
appointments and reservations of seats for scheduled
castes/tribes and backward classes.
HOW TO INTRODUCE CAREER-PLANNING PROGRAMME?
(PROCESS OF CAREER PLANNING)

It is not easy to introduce career development programme at the

level of an organization. Moreover, such career development
planning is a continuous activity. What is happening in most of the
organizations is that this concept is given only lip service and
theoretical importance. If the organization wants to get the best out
of their employees, it must plan the career developments
programmes continuously and effectively in its organization.

DIAGRAM: STEPS IN CAREER PLANNING

 PROCESS OF / STEP IN CAREER PLANNING:-
1) ANALYSIS OF PERSONEL SITUATION:-
This is the first step, which needs to be completed before the
introduction of career planning programme. This relates to a time
from which career planning is to be introduced. Here, the base line
will be prepared to help the planners to make projections for the
planning period and to help in the evaluation of plans. In order to
analyze the present career situation, the following information will
be required:

i. Total number of employees – their age distribution,

qualifications, positions, specializations, etc.
ii. Structure – broad as well as detailed and the qualifications
required for each grade.
iii. Personnel need of the organization. (Category wise)
iv. Span of control available within the organization.
v. Field staff at head office with necessary details, and
vi. Facilitates available for training and development within and
outside the organization.

The information collected on these aspects serves as the base for

the preparation of career development plan for the future period.

2) PROJECTION OF PERSONNEL SITUATION:-

In this second step, an attempt is being made to find out the
situation likely to develop after the completion of career
development plan. This can be done on the basis of assumption,
which can predict what is likely to happen at the close of the career
development plan.
3) IDENTIFYING OF CAREER NEEDS:-
In this third step of career development plan, efforts are made to
find out precisely the career development needs of the future
period. It is possible to identify the scope and limitations of career
development needs on the basis of the data collected (through
personnel inventory of the organization, employee potentials, and
appraisal of employees).

4) SELECTION OF PRIORITIES:-
It is rather difficult to meet all the needs of the employees and the
organization for career development immediately i.e. through one
career development plan. Naturally, there is a need to select the
pressing and urgent problems of employees and organization. In
addition, other factors such as technical, financial and
administrative must be taken into consideration while finalizing the
priorities.
5. DEVELOPMENT OF CAREER PLAN:-
This is the most important step in the whole process of career
developing plan. Such plan must describe the following in concrete
form/forms:

a. The employees involved,

b. The department in which the proposed plan will operate;
c. The length of time required the achieving the goals.
In order to execute the career development plan, the organization
should:
a) Introduce systematic policies and programmes of staff
training and career development for all categories of
employees so as to enable them to:
I. Improve their level of skill and knowledge;
II. Gain wider experiences; and
III. Assume higher responsibilities.
b) Establish and effectively implement a system of
study leave;
c) Develop the experience of the employees by
encouraging their rotation from one region to
another;
d) Take positive steps to encourage career
development, such as:
I. Providing within the organization;
II. Giving priorities in the filling of vacancies in
the following order for:
1. promotion within the organization;
2. Transfer within the organization;
3. Outside recruitment.
III. Removing artificial barriers to promotion;
IV. Establishing a register of employees for
promotion on merit-cum-seniority basis;
6) WRITE-UP OF FORMULATED PLAN:-
After deciding the priorities of career development plan, the next
major step is to prepare a write up (brief report) of the career plan.
This writ-up should contain all necessary details such as schedule
(time sequence of plan), procedures and other details so that the
evaluation of the plan will be easy and meaningful.

7) MONITORING PLANNING i.e. MONITORING OF CAREER

DEVELOPMENT PLAN:-
Monitoring of the plan is essential for its effective execution.
Expected results/benefits will be available only when the plan is
implemented properly. Planned (expected) targets and targets
actually achieved can be compared through suitable monitoring of
the plan. The gap between the two (i.e. short falls) can be located
quickly. In addition, suitable remedial measures can be taken to
rectify the shortfalls.
8) IMPLEMENTATION (OF CAREER DEVELOPMENT PLAN):-
Implementation/execution of the plan is an integral aspect of
planning process itself. For effective implementation, co-operation
and co-ordination at all levels is necessary. The implementation
needs proper monitoring so as to avoid possible shortfalls.
9) REVIEW AND EVALUATION OF CAREER PLANS:-
A plan needs periodical review. Such evaluation avoids mistakes,
deficiencies, etc during the implementation stage. It is built-in
device to measure the effectiveness of the plan. Actual benefits
available will be known only through such review and evaluation.
Such evaluation should be done by experts. It should be conducted
systematically and also impartially.
10) FUTURE NEEDS:-
This is the last step/stage of the current career development plan
and the first step/stage of the next plan. Here, on the basis of the
achievements of the current plan, the career needs of the future
period (of employees and also of the organization) are estimated.
The new priorities are decided and the details of the new career
development plan are prepared. Planning is a continuous
process/activity. This rule is applicable to career development plans
of an organization.

CAREER STAGES:-
Education is thought of in terms of employment. People go for
school and college education and prepare for their occupation. Very
few people stick to the same job throughout their life. Most of them
switch job either within the organization or in some other
organization. Chances are they change jobs, depending on available
opportunity, several times before retirement. Where opportunity is
restricted they continue with the same job. They go through the
following stages:
 1) EXPLORATION:-
Almost all candidates who start working after college education start
around mid-twenties. Many a time they are not sure about future
prospects but take up a job in anticipation of rising higher up in the
career graph later. From the point of view of organization, this stage
is of no relevance because it happens prior to the employment.
Some candidates who come from better economic background can
wait and select a career of their choice under expert guidance from
parents and well-wishers.
2) ESTABLISHMENT:-
This career stage begins with the candidate getting the first job
getting hold of the right job is not an easy task. Candidates are likely
to commit mistakes and learn from their mistakes. Slowly and
gradually they become responsible towards the job. Ambitious
candidates will keep looking for more lucrative and challenging jobs
elsewhere. This may either result in migration to another job or he
will remain with the same job because of lack of opportunity.
3) MID-CAREER STAGE:-
This career stage represents fastest and gainful leap for competent
employees who are commonly called “climbers”. There is
continuous improvement in performance. On the other hand,
employees who are unhappy and frustrated with the job, there is
marked deterioration in their performance. In other to show their
utility to the organization, employees must remain productive at this
stage. “climbers” must go on improving their own performance.
Authority, responsibility, rewards and incentives are highest at this
stage. Employees tend to settle down inn their jobs and “job
hopping” is not common.
4) LATE CAREER:-
This career stage is pleasant for the senior employees who like to
survive on the past glory. There is no desire to improve performance
and improve past records. Such employees enjoy playing the role of
elder statesperson. They are expected to train younger employees
and earn respect from them.
5) DECLINE STAGE:-
This career stage represents the completion of one’s career usually
culminating into retirement. After decades of hard work, such
employees have to retire. Employees who were climbers and
achievers will find it hard to compromise with the reality. Others
may think of “life after retirement”.

CONCEPT/INTRODUCTION TO CAREER DEVELOPMENT:-

Career development consists of the personal actions one undertakes
to achieve a career plan. The terms ‘career development’ and
‘employee development’ need to be differentiated at this stage.
Career development looks at the long-term career effectiveness of
employees where as employee development focuses of
effectiveness of an employee in the immediate future. The actions
for career development may be initiated by the individual himself or
by the organization.

a. INDIVIDUAL CAREER DEVELOPMENT:-

Career progress and development is largely the outcome of actions
on the part of an individual. Some of the important steps that
could help an individual cross the hurdles on the way ‘up’
may include:

I. PERFORMANCE:- Career progress rests largely on

performance. If the performance is sub-standard, even
modest career goals can’t be achieved.

Performance Appraisal is an important part of a career development system, since it

identifies how well employee’s performance. The information can be used to plan that
employee’s career path.

II. EXPOSURE:- Career development comes through

exposure, which implies becoming known by those
who decide promotions, transfers and other career
opportunities. You must undertake actions that would
 attract the attention of those who matter most in an
organization.
III. NETWORKING: Networking implies professional and
personal contacts that would help inn striking good
deals outside (e.g., lucrative job offers, business deals,
etc.). for years men have used private clubs,
professional associations, old-boy networks to gain
exposure and achieve their career ambitions.
IV. LEVERAGING:- Resigning to further one’s career with
another employer is known as leveraging. When the
opportunity is irresistible, the only option left is to
resign from the current position and take up the new
job (opportunity in terms of better pay, new title, a
new learning experience, etc.). However, jumping the
jobs frequently (job-hopping) may not be a good
career strategy in the long-run.
V. LOYALTY TO CAREER:- Professionals and recent
college graduates generally jump jobs frequently when
they start their career. They do not think that career-
long dedication to the same organization may help
them further their career ambitions. To overcome this
problem, companies such as Infosys, NIIT, WIPRO (all
information technology companies where the turnover
ratios are generally high) have come out with
lucrative, innovative compensation packages in
addition to employee stock option plans for those who
remain with the company for a specified period.
VI. MENTORS AND SPONSORS:- A mentor is, generally
speaking, an older person in a managerial role offering
informal career advice to a junior employee. Mentors
take junior employees under their charge and offer
advice and guidance on how to survive and get ahead
in the organization. They act as role models. A
sponsor, on the other hand, is someone in the
organization who can create career development
opportunities.

ORGANISATIONAL CAREER DEVELOPMENT:-

The assistance from managers and HR department is equally
important in achieving individual career goals and meeting
organizational needs. A variety of tools and activities are employees
for this purpose.

i. SELF-ASSESSMENT TOOLS:- Here the employees

go through a process in which they think through
their life roles, interests, skills and work attitudes
 and preferences. They identify career goals,
develop suitable action plans and point out
obstacles that come in the way. Two self-
assessment tools are quite commonly used in the
organizations. The first one is called the career-
planning workshop. After individuals complete their
self-assessment, they share their findings with
others in career workshops. These workshops throw
light on how to prepare and follow through
individual career strategies. The second tool, called
as a career workbook, consists of a form of career
guide in the question-answer format outlining steps
for realizing career goals. Individuals use this
company specific, tailor-made guide to learn about
their career chances. This guide generally throws
light on organization’s structure, career paths,
qualifications for jobs and career ladders.

ii. INDIVIDUAL COUNSELLING:- Employee

counseling is a process whereby employees are
guided in overcoming performance problems. It is
usually done through face-to-face meetings
between the employee and the counselor or coach.
Here discussions of employees’ interest goals,
current job activities and performance and career
objectives take place. Counseling is generally
offered by the HR department. Sometimes outside
experts are also be called in. if supervisors act as
coaches they should be given clearly defined roles
and training. This is, however, a costly and time-
consuming process.

iii. EMPLOYEE DEVELOPMENT PROGRAMMES:-

These consist of skill assessment and training
efforts that organizations use to groom their
employees for future vacancies. Seminars,
workshops, job rotations and mentoring
programmes are used to develop a broad base of
skills as a part of such developmental activities.

iv. CAREER PROGRAMMES FOR SPECIAL GROUPS:-

In recent years, there is growing evidence regarding
dual career families developing tensions and
frictions owing to their inability to reconcile the
differences between the family roles and work
demands. When we talk of dual career couples (a
 situation where both husband and wife have distinct
careers outside the home) certain puzzling
questions arise naturally: whose career is
important; who takes care of children; what if the
wife gets a tempting promotion in another location;
who buys groceries and cleans the house if both are
busy, etc. realizing these problems, organizations
are providing a place and a procedure for discussing
such role conflicts and coping strategies. They are
coming out with schemes such as part-time work,
long parental leave, childcare centers, flexible
working hours and promotions and transfers in tune
with the demands of dual career conflicts.

CAREER COUNSELING :

Career counseling means guiding and advising people on

their possible career paths and what they must do to achieve
promotions/ career goals.
Career counseling is one important socio-economic need of
the younger generation of every country including India.
Schools, colleges and social organizations have to provide
such counseling facilities for suitable career development of
the younger generation. Even newspapers and magazines
undertake career planning and counseling activity. At the
business level, business organization has to provide career
guidance and career counseling facilities to their employees.
Such career counseling has wider social significance.
Career planning needs advising and guiding employees in
their possible career paths and the direction in which they
ought to be heading. Such advising and guiding is called
career counseling. The need of counseling arises when
employees have to plan their own careers.

Career counseling is possible by senior executives through

periodic discussions with their subordinates. Even experts
may be appointed for providing career guidance to individual
employees. Such counseling helps them to understand their
strengths and weaknesses in the context of career
opportunities available in the organization. Such career
guidance encourages subordinate employees to take interest
in certain areas where suitable opportunities of career
development are available.

Role of Organization in Career Counseling:

Organizations/managements play positive role in career
development of their employees. They help their employees
through career information, career counseling and motivation
of employees.
Career counseling is one major method by which organization
can help an employee in his career. Employees need
guidance in their career paths and the direction in which they
ought to be heading. This is described as career counseling.
Such counseling is required when employees have to plan
their own careers and develop themselves for career
progression in the organization. This enables a worker to
understand himself more clearly and develop his own thinking
and outlook which is necessary in career planning.
Career counseling is possible by HR managers and also
by departmental managers. The employee can select the
career most suitable to his potential and aptitude due to such
career counseling. An employee is encouraged to avail of the
training and development facilities available within the
organization through career counseling. In brief, career
counseling is one important method by which the
organization can help an employee in his career
development. Professionally run organizations ask their
managers to identify the internal employees having
potentialities and develop them in order to occupy their
positions as and when they fell vacant. This is the manner in
which organization helps an employee in his career
development.

EMPLOYEE RETENTION TECHNIQUES:

An organization prefers to have efficient and stable

manpower. Such manpower provides different benefits to the
organization in the form of efficient production, cordial
industrial relations, low labor turnover, team spirit among
workers, limited accidents and market reputation. In order to
bring stability to labor force, organizations should chalk out
retention strategy and implement it.

Employee retention strategy involves taking actions for

retaining employee over a long period. Research studies
indicate that both high and low achievers have higher quit
rates than average performers. Quitting by high performers
is a matter of serious concern for the organization. Here, the
organization has to introduce strategy to retain high
performers. This is known as selective retention strategy .
This means retaining those who are needed and letting to go
those who are not needed.

DIAGRAM: Measures to retain employees under

retention strategy

(1) Provision of retention bonus: Retention bonus is a

kind of ad hoc payment to best performers to retain them in
the organization. Such retention bonus is offered to mid-level
and rank-and-file employees along with top executives. This
technique is· used when any change like merger and
acquisition or organizational restructuring takes place and
employees tend to leave the organization because of the
possible effect of such change. Here, retention bonus
payment acts as an incentive attraction to employees. Here,
the details of retention bonus need to be decided as per the
needs / expectations of employees as well as those of
organization.

(2) Package of incentives for long-term stay: Here, the

organization designs a. suitable long term package for
employees which will discourage employees from leaving the
organization for some short term benefit. The employee
leaves the organization mainly because he feels that his
market value is more than what his organization is giving at
present. For avoiding this situation, a package of measures
should be introduced. It should include stock options with
provision of higher benefits for longer duration of stay in the
organization. In addition, provision may be included for
cancelling certain incentives/benefits, if the employee leaves
the organization earlier than stipulated time.

(3) Matching jobs and employees: One important reason

of labor turnover is mismatch between employees and their
jobs. This problem develops because of wrong placement,
faulty career path decided for an employee, transfer to the
department or work disliked by an employee, promotion to a
position not liked by an employee. Retention of such
unsatisfied and disturbed employees is possible by
introducing suitable strategy under which proper matching of
an employee and his job will be achieved. In many
companies, employees are given choice to switch from one
line function to staff function and vice-versa or from fast track
project to slow-track project. This type of flexibility reduces
monotony and job stress and increases job satisfaction, job
interest and job liking. As a result, turnover due to mismatch
is minimized. Retention of employees affected by mis-match
is also possible.

(4) Provision of Intangible benefits to employees:

Organizations offer intangible benefits for the retention of
employees. Such benefits (intangibles) include overseas
training opportunity, employment in foreign branches of the
organization, holiday trips for employees and their families,
dinner meetings in five star hotels, meetings' in posh hotels
with employees and their families, etc. Some MNCs use
overseas training and employment abroad as carrots for
retaining their best performers.

(5) Encouraging employee relationship management:

Employee relationship management (ERM) acts as one
employee retention strategy. This facilitates purposeful
communication between employer and employees and avoids
labor turnover. Research studies show that changing job is
painful to an employee as it affects his life as well as family's
stability, children's education, social network and employment.
An employee feels strongly about morale, relation with
immediate superior and opportunities outside. As a result, he
decides to leave the present job. Here, employing organization
should take adequate care and developed employee
relationship. This reduces employee dissatisfaction level and
facilitates employee retention.

(6) By persuasion of employees: Organizations can use

persuasion as one method for the retention of key employees. If
key employees can be brought in the organization from outside
through persuasion, they can also be retained through effective
persuasion. Here, the persuasive skills of the chief executive or
HR personnel play an important role. He can offer certain
incentives and convince the person that it is in his interest to
continue in the same organization rather than joining some
other organization. Many progressive organizations rely on this
technique to retain key employees.

(7) Conducting stay interviews: Companies conduct stay

interviews in order to retain their workforce by making them
feel appreciated and motivated. Contrary to exit interviews,
stay interviews are conducted to understand the reasons why
employees wish to continue working for the same organization.
It is all about their work, the environment, the practices and the
people that appeal to them and motivate them to stay on. Stay
interviews are also held to understand the issues an employee
may be facing. Such interviews focus on what is going right in
the organization, rather than what went wrong. Stay
interviews are an employee sensing exercise. Such interviews
defect early warning signals as regards expectations of
employees. This enables management to take suitable
remedial measures in time and retain the employees for long.
This approach of stay interviews is very positive and helps
management/HRD professionals by providing useful
information which can be used for introducing new techniques
for the retention of employees.
Stay interviews are conducted periodically by the immediate
supervisor. Here, the HRD professionals are also involved as
key partners and facilitators in the process.

(8) In addition to the measures noted above, some more

measures/techniques can be used for the retention of key
personnel including top executives, middle level managers and key
operatives functioning at lower levels. Such measures are as
noted below:
(a) Introduction of scientific recruitment and selection so as to
avoid the tragedy of misfits.
(b) Providing scientific training facilities and career
development opportunities to employees so that they will
prefer to continue in the same organization over a long
period for their benefit.
(c) Providing job security and job satisfaction to employees which
bring stability to workforce.
(d) Providing attractive pay scales and incentives, decent
working conditions, liberal welfare facilities, fair treatment to
workers and finally impartial promotions and transfers.
(e) Cordial/intimate relations with employees through effective
labor management communication. This avoids possible
confusion and misunderstanding among employees. 111ey also
feel that they are important to the organization. This leads to
intimate ties with the organization and facilitates retention of
employees. Even conflict resolution and team building
techniques are useful for the retention of employees.

SUCCESSION PLANNING
Meaning of Succession Planning

Succession planning is the process or activities connected with the

filling of key positions in the organization hierarchy as vacancies
arise. Succession planning focuses on identification of future
vacancies and locating the probable successor. For example in
succession planning the key concern can be who will be next CEO or
what will happen if the Marketing Manager retires in coming March.
Grooming a person to fill an important position may take years.
Succession planning involves identification of key positions in the
company and then scouting for people who can effectively fill those
positions at short notice.

Career planning, manpower planning and succession

planning are complementary and interdependent. All the
three are essential for effective utilization of organization's
human resource development (HRD). Succession refers to
position fallen vacant or likely to fall vacant in the near
future. A succession of persons to fill up key positions over
time is essential for the survival and success of an
organization. The basic purpose of succession planning is to
identify and develop people (human resource development)
to replace current incumbents in key positions in cases of
resignation, retirement, promotions, expansion and creation
of new positions in an organization. Succession by people
from within the organization is desirable as this provides
opportunities to employees for progress in their careers.
Complete dependence on outside talent may cause
stagnation in the career prospects of present employees
which in turn may lead to frustration and high turnover.
Career planning and succession planning are similar but not
synonymous. A succession plan involves identification of
vacancies that are likely to occur in the higher levels and
locate the probable successors. Succession planning
motivates employees and facilitates continuity of the
organization.

Advantages / Importance of Succession Planning

1. Succession planning helps when there is a sudden need due to

job hopping/death of serious injury to a key employee.
2. There is little or no set back due to absence of key employee.
3. Acts as a motivator for the individual employee who comes to
know of the impending promotion in advance.
4. Succession planning helps create loyalty towards the
organization and improved motivation and morale of individual
employees.
5. Organization gains stable workforce and low employee
turnover.
6. Ultimately organization becomes successful in accomplishing
its goals effectively.

CHAPTER – 9 - PARTICIPATIVE MANAGEMENT

Opening examples : Participative management

• Many organizations have achieved substantial value creation due
to their employees sharing wonderful ideas. Toyota is a great
example. Toyota's suggestions scheme, operational for decades
now, nets almost 2,000,000 suggestions per year that is 33
suggestions per employee every year. What's more, 95 per cent
of these are implemented. That makes about 5,000
improvements per day. Employee suggestions helped cut British
Airways cost by 4.5 million pounds. HSBC managed to save up to
Rs 50 lakh per annum just by adopting a single useful suggestion
made by an employee. And British Gas received over 11,000
suggestions, of which 1,100 were implemented and resulted in
cost savings of over 10 million pounds. In India, Gujarat Narmada
Fertilizer Corporation grossed 5,000 suggestions over five years,
with savings of Rs. 6.5 million per annum.
• At TVS Motors, Hosur, two workers: Prasad and Kanaka Raj each
offered 6000 suggestions over a period of time. All these
suggestions being highly useful to the company, the automobile
giant rewarded these two workers handsomely. Each got a
reward of Rs. 22 lakh.
• Satyam started its company-wide suggestion scheme, the Idea
Junction, in June 2001: The proposition behind this initiative was
to enable greater value creation by Sat yam employees (or
associates, as they are called) through ideas, suggestions and
complaints, for new opportunities and definite improvements in
all facets. A key aspect was that the company's overall approach,
policies and practices should result in creating a healthy
environment for associate involvement.

A real-time intelligent web-based portal is present in Intranet, which

is available to all Satyam associates across the globe to support the
entire life cycle of an idea, suggestion or complaint. Satyam
associates are able to log in and provide ideas, suggestions and
complaints, track progress made against the same; participate in
various forums and surveys and obtain information on suggestions
that have been implemented or rewarded. A comprehensive reward
policy is also in place, wherein rewards are envisaged not only for
implemented ideas but also for accepted ideas when these exceed a
certain number. As on March 31, 2003, over 5,814 ideas have been
contributed, more than 1,000 ideas have been accepted and
implemented and over 1,100 reward points have been awarded to
associates.

To ensure that ideas, suggestions and complaints submitted to each

circle are acknowledged, evaluated and taken to a logical
conclusion, a responsible person is identified in each circle to act as
the Circle Idea leader (ClL). The CILs are tracking and evaluating
ideas in addition to facilitating implementation of accepted ideas in
the respective circles and interact with the Idea Junction Team at
the corporate strategy group for company-wide issues.

SCOPE AND WAYS OF PARTICIPATION

Employee participation in management is nothing new. It is as old as

the institution of owners and workers. But its importance has
increased and has been brought into sharp focus with the Industrial
Revolution and the advent of large enterprises.

In its narrow sense, participative management refers to the

constitution of consultative councils and committees, comprising
representatives of employees and employers, to recommend steps
for improving productivity, machine utilization, job loading; for
effecting savings in power, light; for identifying lazy workers, safety,
so on and so forth.

In its real sense participative management exists when employees

are involved in decision making process, not in mere job related
activities, but at all levels of management.

Workers' participation in management is synonymous with co-

determination-a term popularly used in former East Germany to
describe this participation. Participative management is also called
employee empowerment.

There are three groups of managerial decisions which have a direct

impact on the workers of any industrial establishment. They are
social, personnel and economic decisions.

• Economic decisions include financial aspects-the methods of

manufacturing, automation, shut-down, lay-offs, mergers and
similar other functions.

• Personnel decisions refer to recruitment and selection,

promotions, demotions, transfers, grievance settlement, work
distribution, and so on.

• Social decisions relate to hours of work, welfare measures,

questions affecting work rules and the conduct of individual worker's
safety, health, sanitation and noise control. The workers must have
a say in the decisions on the issues mentioned above.
But there is a difference of opinion about the scope and the extent
to which workers can participate in social, personnel and economic
decisions. One school of thought is of the opinion that the workers
or the trade unions should, on parity basis, sit with the management
as 'equal partners and make joint managerial decisions on all
matters. The other school propounds the view that the workers
should only be given an opportunity, through their representatives,
to influence managerial decisions at various levels. The first view
could lead to the workers' actual participation in the decision-
making process of the management, while the second aspect will
work out to be consultation of workers in managerial decisions.

A more easy way of understanding the scope of employee

participation is to describe the levels of participation. Participation
can vary from non-existence of employee involvement in decision
making to the absence of managers themselves in making
decisions.
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Definition: -

In the words of DAVIS,

“It is a mental and emotional involvement of a person in a
group situation which encourages him to contribute to goals
and share responsibilities with them.”

IMPORTANCE OF PARTICIPATIVE MANAGEMENT

The importance of participative management is universally accepted

and efforts are being made for introducing such participation
through suitable agencies and methods.

1. Participative management has wider socio-economic

importance as it gives various advantages to workers,
employers and the society at large. Such participation gives
higher status to workers and enables them to think and
express their views on the working of their company.

2. Industrial peace and cordial industrial relations are also

established through participative management. In addition,
workers’ participation brings industrial democracy in reality.

3. Participative management is important as it satisfies the

psychological need of self - expression of workers. Even
the process of decision-making is made democratic through
workers’ participation.

4. It brings human element or humanitarian approach in

industrial management.
 5. Participative management introduces a new set of values for
the workers and employers in which power is to be replaced by
persuasion and compulsion by co-operation.

6. Employee’s participation is also useful for raising industrial

production and productivity. It helps consumers in an
indirect manner.

7. The national economy also gets certain benefits when

industrial peace and harmony exist over a long period. In brief,
the concept of participative management is important because
of economic, social and human values connected with it.

The ILO [International Labor Organization] has given moral

support to employee’s participation and has advocated its adoption
in all countries. Efforts are being made in all countries in this regard.
In the countries of the West, this experiment is reasonably
successful, while in developing countries including India; the process
is not satisfactory even when consultative machinery exists in many
countries.

PM results in improved performance.

Improved performance is the
outcome of three variables; removal
of conditions of powerlessness,
enhancement of self-efficacy(self-
worth) and employee perception of
empowerment.

PRE-REQUISITES OF PARTICIPATIVE MANAGEMENT

1. The participants, namely, the management and the operatives,

must have clearly defined and complementary objectives. And
the objectives of one party should not work at cross-purposes with
the objectives of the other party.

2. There must be a free flow of information and communication

between the management and the workers. In this way, distrust and
suspicion are avoided, and workers become responsible and mature
when they discuss their demands with the management.
3. The representatives of workers must be drawn from the
workers themselves. The participation of the outside trade union
leaders should be discouraged. This is necessary because the
problems and difficulties of the workers are better understood by
the workers themselves than by others. The workers, therefore, can
put across their points of view to the management with confidence.

4. Strong and effective trade unionism is necessary for the

success of participative management politicization and multiplicity
of trade unions defeat the purpose of participation and
management.

5. Education and training of workers make a significant

contribution to the purposive working of participative management.
Trade unions and the government can play a major and meaningful
role in organizing and conducting training programmes.

6. Neither party should feel that its position is threatened by

participation. If workers think that their status will be adversely
affected, they will not participate. If the managers feel that their
authority is threatened, they will refuse participation or will be on
the defensive.

7. Consultative bodies, collective bargaining and suggestion

schemes make a mockery of participative management. To make
worker’s participation meaningful and purposeful, workers should
be associated at all levels of decision-making.

8. The success of participation depends on a suitable participative

structure and a change of heart on the part of employers and
employees, which may take a long time to develop. To expedite this
development, some sort of legislative action is necessary.

9. There could be the danger of a major portion of the resources of

the enterprises being diverted to workers without much
consideration for further investments. It may be desirable to
reserve a certain percentage of the resources for
reinvestment, either through mutual agreement or legislation.

10. The financial cost of participation should not exceed the

values, economic and otherwise, that come from it. Employees
cannot spend all their time in participation, to the exclusion of other
work.

FORMS / METHODS AND TECHNIQUES OF PARTICIPATIVE

MANAGEMENT:
Participative management is possible by creating suitable agencies,
forum or platform through which effective communication between
workers and management will be possible and joint decision will be
arrived at.

The following methods/technique are normally used in India for the

introduction of participative management:

The methods of participative management noted above are the

different alternatives and employers and workers can select anyone

method which is suitable and convenient. They have to make the

selected method popular and also purposeful. This is natural as the

method selected/used is not important but the result-oriented

participations are important. The method used is a means while

effective participation is end.

1. WORKS COMMITTEE

The Industrial Dispute act, 1947 provided for the setting up of a

works committee consisting of representative of management and
employees in every undertaking employing 100 or more employees.
The committees are for removing the causes of friction between
employer and workers in the day-to-day working of the factory. They
also provides forum for negotiation between employers and workers
at factory level. This joint consultative committee meets frequently
for decision on common problem before workers and the
management. After discussion, joint decisions are taken and such
decisions are binding on both the parties.
Matters like wage payment, bonus, training, discipline, welfare
facilities, working condition, etc.

This committee are extremely popular and effective in

France and England whereas in India it is not popular an
effective.

2. JOINT MANAGEMENT COUNCIL

These councils are similar to works committee with equal

representation to employees. Workers express their views, problem

and difficulties through their representative on such councils.

Various problems such as welfare facilities, discipline, training,

removal of workers, common grievances, etc. are discussed in the

meeting. Such joint consultative committees exist in UK and

Sweden. In India, participative management is mainly through joint

management council but not effectively operated.

3. CO-PARTNERSHIP (PARTICIPATION THROUGH OWNERSHIP)

In co-partnership, workers are converted into shareholders of the

company and are allowed to participate in the management like

others shareholders. The company may give financial assistance to

workers to purchase equity shares. They can elect their

representative on the board of directors. Workers are also allowed to

attend meeting of the company and participate in the discussion.

Voting rights are also given to employees. This makes them to

participate in the decision-making and policy framing of the

company at their highest level. They work in two different

capacities- as workers and as co-workers.

Many companies in India offers theirs shares to the employees but

workers don’t give positive response and hence not encouraging.

This suggests that co-partnership, as a method of participative

management is not effective/popular in India.

61% shares of Otto India, Kolkatta are held by its employees. In

Rajasthan spinning and weaving mills 40% of the shares have been

held by its employees

4. EMPLOYEE DIRECTORS/PARTICIPATION AT BOARD LEVEL:

Here, two or three representative of workers are taken on board of

directors of the company. The employee directors/ workers directors
are elected by workers and they express their view of workers in the
meeting of the board. Here, employee’s directors act as a link
between top management and the workers. Such participation
ensures cordial industrial relation. The representative of workers can
put the view of workers before the directors and can also safeguard
the interests of workers. As a result, the personnel policies will be
fair and favorable to workers. Unfavorable decision to workers will
be avoided and better treatment will be ensures to them.

This mechanism of participation is now used extensively in public

sector undertaking in India as per the initiative taken by the
government.
The GOI took the initiative and introduced a scheme for the
appointment of worker’s representatives on the Boards of
Management of public sector undertaking. As a result, the worker’s
representatives were appointed to the boards of Hindustan
Automobiles, Pimpri; Hindustan Machine Tools (Bangalore). Worker’s
representatives have also been appointed to the Boards of
nationalized bank. In the private sector, Tata, DCM have worker’s
directors on their boards.

5. SUGGESTION SCHEMES / PROGRAMMES:

Under suggestion programme/scheme, workers are asked to give

suggestion to the management on various administrative and other
matters such as machines utilization, waste management, energy
conservation and safety measures. Their suggestions are considered
by a joint committee representing workers, heads of departments
and technical experts. Such suggestions are for improvement in the
existing organizational setup. Suitable suggestions relating to
production activities, cost control, quality improvement, working
condition, etc. are promptly accepted an executed. In addition,
rewards are also given to those who make constructive suggestion.
For collecting suggestion, suggestion boxes are kept in the
organization.

Suggestion scheme of participative management encourages

workers to think (individually or collectively) and participate in
raising the efficiency of the organization. In India companies like
TATA, DCM, etc. adopt this method. This idea of participative
management is now put into operations through quality circles,
which are popular in Japan and now function in many Indians
companies.

6. WORKERS CO-OPERATIVES (AUTO MANAGEMENT):

In this extreme form of labors participation, workers take over the

industrial unit and manage it completely on co-operative basis.
Naturally, the entirely management is by the workers themselves.
This method is also called as auto management.

The basic purpose of above noted scheme of participative

management is to associates workers with the decision making

process. The methods used for workers participation are not

important but the purposeful participation is important.

7. PARTICIPATION THROUGH COLLECTIVE BARGAINING:

The principle of collective bargaining confers on the management

and the workers the right, through collective arguments, to lay down
certain rules for formulation and termination of the contract of
employment, as well as the conditions of service in an
establishment. Such agreements are binding on parties and have
the force of law. Collective bargaining can really work well if the
bargaining parties, namely, the employers and the workers’
representatives, make use of the opportunity for bargaining in the
right spirit and for a positive purpose. Collective bargaining is no-
substitute for workers’ participation in management. Participation
brings both the parties together and develops appropriate mutual
understanding, and brings about a mature and responsible
relationship. Collective bargaining, on the contrary, is based on the
crude concept of power and its exercise for sectional bargaining,
which may end up in mistrust, withholding of information and use of
pressure tactics.

8. PARTICIPATION THROUGH JOB ENLARGEMENT AND JOB

ENRICHMENT:

Job enlargement means expanding the job content – adding task

elements horizontally. Job enrichment means that additional
motivators are added to the job so that it’s more rewarding. The
purpose of job enlargement and job enrichment is to relieve
boredom of the workers, which flow from excessive specialization in
mass-production industries so that the job itself may be a source of
self-satisfaction. Job enlargement and job enrichment do provide for
workers participation because they offer freedom and scope to them
to use their judgment.
However this form of participation provides only limited freedom to
a worker concerning the method of performing his/her job. It will not
give him or her any say in some of the vital questions he or she may
be interested in, such as job and income security, welfare scheme
and other policy decisions of the company which affect him/her
directly.

9. PARTICIPATION THROUGH QUALITY CIRCLES:

A quality circle consists of seven to ten people from the same work
area who meet regularly to define, analyze, and solve quality and
related problems in their area. Membership is strictly voluntary, and
meetings are usually held once a week for an hour. During the
groups initial meetings, members are trained in problem solving
techniques borrowed from group dynamics, industrial engineering
and quality control. These techniques include brainstorming, Pareto
analysis, cause-effect analysis, histograms, control charts,
stratification and scatter diagrams.

Quality circles are credited with producing quick and impressive

results when correctly implemented.

Their advantages include the following:

1. Employees are involved in decision-making. This privilege
makes them acquire communication and analytical skills and
improve their efficiency at the workplace.
 2. Savings-to-costs ratios generally are higher than those
achieved with other productivity improvement programmes.
3. Because the programme is voluntary, employees and unions
do not view them as another cost control effort.
4. Circle members enhance their chances of promotion to
supervisory positions.

LEVELS OF PARTICIPATION:

Under participative management, workers are associated with

the management i.e. decision-making process at different
levels. The nature of association and the coverage 6f decisions
are different at different levels. Such participation is through
the representatives of workers. Normally, the levels of
participation are three. These are as noted below:

(a) Participation of Shop floor Level: Actual production

activity is conducted by workers at the shop floor. Here,
participative management is possible through works committees
in which workers elect their representatives. In such matters
committee meetings relating to day-to-day working/functioning
at the shop floor level are discussed and joint decisions are
taken. Such committees are concerned with following matters:

 Conditions of work (lighting, ventilation, sanitation, etc)

and amenities such as drinking water, canteens, medical and
health services, etc;
 Safety and accident prevention
 Adjustment of festivals and national holidays;
 Administration of welfare fund, educational and
recreational activities,
 Promotion of thrift and savings, and
 Review of decisions arrived in the meetings of works
committees.

Regular meetings of works committees enable workers to get

their day-to-day problems solved promptly. For this, meetings
of committees should be arranged regularly and constructive
decisions should be taken. In India, such committees are not
functioning properly and this affects participative
management at the shop floor level.

(b) Participation at Plant Level: Joint Management Councils

(JMCs) function as consultative agency at the plant level. JMCs
are concerned with the activities at the plant level. In the JMC,
equal representation is given to management and workers. The
maximum membership of JMC is 12. JMC is necessary where five
hundred or more workers are employed. JMC performs functions
on the following matters:

 To deal with matters such as accident prevention at plant

level, management of canteens, water, meals, issue and
revision of work rules, indiscipline, training, absenteeism
and soon.

 To receive information, to discuss and to give

suggestions on production and marketing programmes,
methods of production, general economic situation, state of
the market and so on.

 To have consultations with JMC before introducing changes

in the modes of production, production schedule, general
administration problems and so on. Wages, bonus, individual
grievances of workers, personal problems of workers and matters
of collective bargaining are outside the scope of JMCs. The
performance of JMCs is not satisfactory in India due to the
attitude of workers' representatives, trade union leadership
and negative attitude of managers.

In 1975, another scheme of participative management was

introduced in India. Under this new scheme, at the shop floor
levels, Shop Councils were to be set-up and at the plant
level, Joint Councils were to be set up. In 1977, the scheme
was extended to public sector units employing 100 or more
persons.

(c) Participation at the Corporate Level: This is participative

management at the highest level. Here, the Board of Directors is
the apex body in the administration and decision-making at the
corporate level. The representative of workers is taken on the
Board of Directors. He looks after the protection of interest of
workers. This also improves employer-employee relations and
ensures higher productivity. The workers' representative can
play a useful role in safeguarding the interests of workers. He
can guide the management on personnel and social functions. He
can even suggest to the management not to take certain policy
decisions and measures that would be unpopular with the
employees. Representative of workers can also suggest to the
Board, certain schemes which will motivate workers to take more
interest in the work and will also prove useful for cordial labor
management relations over a longer period.

Participation through workers' representative on the Board of

Directors is, now, introduced in many public sector enterprises
and banks. It may also be noted that participative
management at the corporate level is not effective in India.
This is because of various reasons. The Board, for example,
deals with variety of subjects and personnel matters do not
receive much attention at the Board level. The workers'
representatives on the Board are in minority whereas
decisions taken in the Board are by majority. The
representative of workers on the Board has many limitations
due to educational background, etc. Such director may not be
able to play a constructive role.

CURRENT TRENDS IN PARTICIPATIVE MANAGEMENT:

1. SUBGROUP ORGANISATION AND MANAGEMENT: -

Each subgroup should elect a discussion leader and a recorder. The

responsibility of the discussion leader is to focus group meetings,
and the responsibility of the recorder is to present an accurate
record of the group's activities. Subgroups should meet regularly for
a limited amount of time. An agenda for each meeting is a
necessity; agenda items may be referred by the group or by
members of the management team. It is important for the subgroup
to present a consensus within a set of previously established time
constraints. In other words, with each topic comes a time frame for
ultimate decision. If necessary, the group may issue a majority and
a minority opinion, but only when a group cannot reach a consensus
opinion regarding a single issue.

Participation in each subgroup should be limited to 15 members or

fewer, to facilitate effective decision-making. An odd number of
members in each group will assist in establishing majority versus
minority opinions.

2. MANAGEMENT PARTICIPATION IN GROUP ACTIVITIES: -

Members of the existing management team act as facilitators within

the groups. Each group should include a minimum of one staff
member (a middle or upper manager) with a particular interest or
expertise in the group's topic. This management person should
provide the group with pertinent information and resources
necessary to accomplish the group's task.

The staff member is not necessarily the group leader unless elected
by a majority of the group members. Frequently, the group is better
served by electing a rank-and-file member as group leader, rather
than a management team member. However, the assigned manager
is responsible for assisting the discussion leader in maintaining
decorum and maintaining a focus on the group's assigned activities.
Additionally, the discussion leader, recorder, and management
advisor are jointly responsible for preparing and presenting the
group's decisions and opinions to the Chief Executive Officer (CEO)
or Chief Administrator of the organization.

3. ANNUAL GOAL- SETTING MEETINGS:

The traditional annual goal-setting meeting has value, particularly to

identify training needed to fulfill specific work tasks. An area, which
requires constant attention, is staff development. For leaders to
trust staff with greater autonomy or decision-making power, they
must be confident that staffs have adequate skill levels. Similarly,
most staff are reluctant to take the initiative and accept
responsibility if they are not confident of their ability to succeed.

Use goal-setting meetings to consider career goals and skills and

knowledge needed for future effectiveness.

Laying a foundation of common goals and competent staff is vital for

participative management to succeed. Also absolutely crucial is
promoting an environment of trust where staff can speak out and
take initiative without fear of punishment

INDUSTRIAL DEMOCRACY AND PARTICIPATIVE MANAGEMENT:

Both the concepts are supplementary and complementary in
character and not conflicting and clashing with each other. In fact,
industrial democracy can be introduced through various forums of
participative management. Thus, participative management is
an essential ingredient of industrial democracy. Works
committees, joint management councils, etc are the different
methods useful for the introduction of industrial democracy in
concrete form.

Participative management is the basic requirement of industrial

democracy. It is through such participation that industrial
democracy is put into practice. Labor participation in industry is
rightly viewed as industrial democracy in action. This is how the
workers participation in any suitable form serves as an essential
ingredient of industrial democracy. In industrial democracy, an
effective system of communication and consultation in between the
employer and workers is required and labor participation in
management creates such system/ machinery. Industrial democracy
is not merely an economic concept but an attitude of mind and hits
attitude can be given clear and concrete shape through workers
participation scheme. Thus, participative management prepares
sound and solid base for industrial democracy. There is absolutely
no conflict between the two concepts. Attention to both is needed
for industrial peace, cordial industrial relations and rapid industrial
growth.

PARTICIPATIVE MANAGEMENT AT TATA CONSULTANCY

SERVICES
Mr. Narayan
Sr. Engineer at Tata Consultancy Services

According to Mr. Narayan, Participative management is very useful

to any organization.
It helps boost the morale of the employee by making him aware of
his responsibility towards the organization.

However, the type of organization plays an important role to the

success of participative management. In the case of TCS it is rather
beneficial as the employees are highly educated. It becomes easier
as there is a level of understanding and maturity they possess.
Basically the concepts they all share are similar.

METHODS OF PARTICIPATIVE MANAGEMENT FOLLOWED AT

TATA CONSULTANCY SERVICES:

1) GOAL SETTING:
The employees are divided into groups; each group consists of a
senior executive. The goals set here are job related as well as
Policy related.
When a new policy is implemented, each group is introduced to
the policy. The group that manages to adopt the new policy most
effectively is rewarded.

The same method is followed if a new policy is needed. Here the

groups are entrusted the task of formulating an effective policy.
The group to formulate the most effective policy is rewarded.

This is usually used at times when deadlines are needed to be

met or when there is a need for more productivity.
It has been noticed that employees work best when their views
are taken into consideration.

2) OPEN DISCUSSIONS:
All the employees are allowed to voice their opinions and
suggestions. In this way there is no need to go to the person in
charge to voice your opinions. Red tape is greatly avoided and in
this way there is no filtration of any information.
 3) FLOOR MEETINGS:
These meeting differ from open discussions only because they
are related to a particular floor (project/ function) of employees.
Here immediate problems are discussed and suggestions are
given, the numbers of employees are less as compared to open
discussions. Because only concerned members participate.

They are held weekly, monthly, quarterly or when ever the need
arises.

4) CONFERENCES:
Held every week or when a new project begins.

5. DIRECT APPRAISAL MEETINGS:

Just the same as open discussion, the only difference is that any
effective suggestion is given immediate rewards. The employees
are evaluated. Their performance is judged and rewarded.

This increases the morale of the employees, as they know that

their effort is being recognized and duly rewarded. This
encourages them to work harder.

Short Notes:

1. Participative Management (2001, 2004, 2006)

2. Latest trend of Employee Participative
Management (2003)

Concept Questions:

1. Quality Circles (2002)

2. VRS (2002)
CHAPTER – 10
INDUSTRIAL RELATIONS
Introduction:
Competition is one issue which makes a manager spends sleepless
nights. It is heating up day by day and industrialists find new
strategies to face it. The direct outcome of facing competition is
improved productivity. Improved productivity is the outcome of
cordial industrial relations.
Industrial relations has traditionally been a fire-fighting function in
our country. The IR comes into full play only after the crisis erupts.
IR is concerned with the relationship between management and
workers and the role of regulatory mechanism in resolving any
industrial dispute.
• Specifically IR covers the following areas:

• Collective Bargaining

• Role of management, unions and government.

• Machinery for resolution of industrial disputes.

• Individual grievance and disciplinary policy and practice.

• Labor legislation
HR has moral dimensions too. It is unethical on the part of any
management to take advantage of the helplessness of workers and
exploit them. Unemployment compels workers – particularly
illiterate and unskilled – to accept jobs, inhuman working conditions
and meager wages
The term industrial relations is a wide one and includes relations
between various groups connected with the working of an industrial
unit i.e. employer, employees, trade unions and even consumers. In
a narrow sense, industrial relations mean relations between
employer and employees. Such relations should be always cordial.
Moreover, absence of cordial relations leads to disputes, strikes and
stoppage of work. Maintaining cordial relations is the joint
responsibility of employers and workers.

DEFINITION OF INDUSTRIAL RELATIONS:

(1) According to the ILO, industrial relations comprise relationships

between the State on the one hand and the employers’ and
employees’ organizations on the other hand and the relationship
among the occupational organizations themselves.
(2) Dale Yoder defines industrial relations as "relationships between
management and employees or among employees and their
 organizations that characterize or grow out of employment.

FEATURES OF INDUSTRIAL RELATIONS:

(1) Industrial relations are the relations between two parties
connected with industrial/manufacturing activity, namely
employer and employees. Such relations are the outcome of the
employment relationship in Industry. Employer and employees
are two parties to such relationship. Such relations should be
cordial i.e. away from tensions as both parties are inter-related
and inter-dependent. Both have to work together and live
together. Even future prosperity of both parties is linked
together. Industrial relations include individual relations as well
as collective relations.

(2) The concept of industrial relations is complex and multi-

dimensional. It is also a dynamic and developing concept.

(3) In the olden days, industrial relations were cordial and peaceful.
However, at present, they are not 0 due to increase in the
number of industrial workers, growth of trade unions, growing
demands of workers, political leadership to unions, rapid
industrial growth and exploitation of workers by employers.

(4) Industrial relations do not function in a vacuum. The attitude and

approaches of employers, employees and trade unions are
directly related to industrial relations. In addition, economic and
social factors have their influence on industrial relations.
Industrial relations are an integral part of social relations.

(5) Industrial relations lead to "industrial peace" or "industrial

unrest". Both terms are used in relation to industrial relations.
Cordial industrial relations bring industrial peace i.e. a period
when industrial disputes, strikes, lock-outs, etc. are absent and
production activity is being conducted in a regular and
continuous manner. On the other hand, industrial unrest is a
period when industrial relations in many industrial units are not
cordial leading to large number of disputes and strikes. This also
suggests that industrial unrest is undesirable and should be
replaced by industrial peace which is an ideal situation for
industrial growth.

(6) Cordial industrial relations are always beneficial to all concerned

 parties whereas absence of such relations is harmful to all parties
and even to the national economy.

(7) Shri V.V.Giri has rightly noted the importance of industrial peace
and suggested that such peace is possible if employers and
workers adopt more liberal, democratic and peaceful outlook. He
suggested that mutual settlement of disputes is the best method
for solving the demands, grievances and problems of workers.
This approach (Shri V.V.Giri's approach) is the best method which
can promote cordial labor-management relations at all levels.

IMPORTANCE/BENEFITS OF INDUSTRIAL RELATIONS:

(1) More production: Due to cordial· industrial relations employees

take keen interest in their production activities and work
efficiently. As a result, high production is available. Cordial
industrial relations create favorable atmosphere for rapid
industrial growth and large scale production.

(2) Industrial peace: Cordial industrial relations bring harmony and

remove causes of disputes. This leads to industrial peace which
is an ideal situation on the industrial front.

(3) Encouragement to collective bargaining and labor participation

in management: Cordial industrial relations are extremely
helpful for long-term agreement as regards various issues
between labor and management. Such collective bargaining
agreement and association of employees with decision-making
process are easily possible due to cordial industrial relations.

(4) Better treatment to workers: Due to cordial industrial relations,

workers take interest in the work and bring more production and
profit. As a result, the management usually acts in a liberal
manner and offers various facilities and monetary benefits to
workers. Thus, employees get more benefits from cordial labor-
management relations rather than through disputes and strikes.

(5) Prosperity to employer and employees: Cordial industrial

relations lead to regular and continuous production to the full
capacity. This raises the productivity and profitability of a
business unit. In the long run, such unit moves towards
prosperity. Similarly, the employees get monetary and non-
monetary benefits. They get the share in the profits of their
company. As a result, they secure higher standard of living and
 move towards prosperity.

In brief, cordial industrial relations are necessary and useful t

employers and employees and even to the national economy and
the society at large. It is an ideal situation. Rapid industrial growth
and high industrial productivity are possible only when smooth
industrial relations exist. Along with this, workers get higher wages
and other monetary benefits and the employers get high profits in
their business. The benefits of smooth industrial relations are
available even to consumers as they secure regular and continuous
-supply of goods at fair prices. In brief, smooth industrial relations
are important in the case of every country, particularly in the case
of a developing country like India. All possible efforts should be
made in order to maintain smooth and cordial industrial relations.

India's industrial relations policy has two basic objectives.

These are: (a) prevention and peaceful settlement of disputes/
conflicts, and (b) promotion of good industrial relations.

Approaches to Industrial Relations:

(1) Unitary Approach: Under this unitary approach, industrial

relations is grounded on mutual co-operation, individual treatment
of employees, team-work and shared goals. Work place conflict is
regarded as a temporary deviation due to poor management or
from employees who do not mix well within the organization’s
culture. Unions co-operate with the management and the
management's right to manage is accepted because there is no “we
they" feeling. Here, the basic assumption is that everyone benefits
when the focus is on common interest and promotion of harmony.
Conflict in the form of strike is not only treated as unnecessary but
also destructive.

This approach to industrial relations appears to be good in its

orientation as it emphasises on employees in an organisation.
Advocates of unitary approach emphasise on a reactive industrial
relations strategy. They advocate direct negotiations with
employees. Participation of government, tribunals and unions is not
sought or regarded as being necessary for achieving harmonious
employee relations.

This unitary approach is being criticised as a tool for seducing

employees away from unionism and socialism. This approach is also
criticised as manipulative and exploitative from the point of view of
workers. The approach has failed to consider different variables
affecting IR within individual organisations and industrial sector as a
whole.

(2) Pluralistic Approach: This approach is totally different from the

unitary approach. The pluralistic approach perceives:

(a) Organizations as coalitions of competing interests, where the

management's role is to mediate amongst the different interest
groups. .

(b) Trade unions as legitimate representatives of employee interest.

(c) Stability in industrial relations (IR) as the result of concessions

and compromises between management and unions.

In this approach, authority of management is not automatically

accepted. Conflict between management and employees is regarded
as inevitable and is viewed as conducive for innovation and growth.
Employees join unions in order to protect their interests and
influence decision making by the management. Unions, thus,
balance the power between the management and employees. In the
pluralistic approach, a strong and stable union is not only desirable
but is absolutely necessary. Similarly, the interests of the society are
protected by State intervention through legislation and industrial
tribunals which provide orderly process for regulation and resolution
of conflict.
It may be noted that theories on pluralism were evolved in the mid-
sixties and early seventies when England witnessed a revival of
industrial conflicts. According to pluralistic approach, industrial
conflict is inevitable and it needs to be contained within the social
mechanism of collective bargaining, conciliation and arbitration. The
basic assumption in the approach does not hold good.

(3) Marxist Approach: Marxists, like pluralists, regard conflict

between employers and employees as inevitable. For Marxist, it is a
product of the capitalist society.

Adverse relations in the workplace are simply one aspect of class

conflict. Marxist approach focuses on the type of society in which an
organization functions. Conflict arises not merely because of
competing interests within the organization, but because of the
division within society between those who own or manage the
means of production and those who have only their labor to offer. In
short, industrial conflict is seen/regarded as being synonymous with
political and social unrest.
Trade unions, under Marxist approach, are seen both as labor
reaction to exploitation by capital, as well as a weapon to bring
about a revolutionary social change. Concerns with wage-related
disputes are secondary. Trade unions focus on improving the
position of workers within the capitalist system and not to
overthrow. For the Marxists, all strikes are political.

The Marxist approach treat state intervention via legislation and

industrial tribunals as supporting management's interest rather than
ensuring a balance between the competing groups. This view is in
contrast to the belief of the pluralists, who argue that state
intervention is necessary to protect, the overall interest of society.
According to Marxists, the pluralistic approach is supportive of
capitalism. Consequently, enterprise bargaining, employee
participation, co-operative work culture, etc are not acceptable to
Marxists. 'Such initiatives are regarded as nothing more than
sophisticated management techniques designed to reinforce
management control and the continuation of the capitalist system.
The Marxist approach has some merits but has limited scope in
countries not based on socialism.

(4) V. V. Girl Approach: We have studied three different approaches

to industrial relations. In addition, some more approaches to
industrial relations are available. They include Psychological
Approach, Sociological Approach, Human Relations Approach, V.V.
Giri Approach and lastly Gandhian Approach. Giri Approach and
Gandhian Approach are essentially Indian approaches developed by
Shri V. V. Giri, the late President of India and known labor leader and
Gandhiji. Both are based on their vast experience of labor
movement. Brief details of these approaches are as given below:

Giri Approach: According to Late President of India, Shri V. Giri,

collective bargaining and mutual negotiations between management
and labor are two methods useful for maintaining cordial industrial
relations and industrial peace. Late Shri V. V. Giri was a strong
supporter of collective bargaining agreement (Giri Approach). He
supported collective bargaining due to its in-built capacity to solve
the problems and demands of .workers and also to make trad
unionism strong and popular in India. According to him, it is the best
method for industrial peace. This "Giri Approach" on collective
bargaining has relevance even in the present day industrial
situation.

Shri V. V. Girl wanted compulsory adjudication in India to be

replaced by collective bargaining. This approach based on the spirit
of self-government is popularly known as "Giri Approach". Giri
Approach to industrial relations seeks to encourage mutual
settlement of disputes through the process of collective bargaining
aided by voluntary arbitration when necessary. In 1950, this concept
was introduced in industrial relations machinery in India. Such
agreements are now made in banks, ports, docks and in public
sector undertakings. However, the progress of collective bargaining
is not satisfactory in India. It is not a popular and extensively used
technique in India.

Shri Giri suggested that there should be bipartite (involve two set)
machinery in every industry and every unit of the industry to settle
labor management differences with active encouragement of the
government. Outside interference should not be encouraged. Giri's
stress was on voluntary efforts of the management and trade union
to solve differences and disputes and maintain cordial industrial
relations. He was also favorable to voluntary arbitration but against
compulsory adjudication which is harmful to healthy growth of trade
union movement. He was favorable to mutual settlement of
disputes, collective bargaining and voluntary arbitration. He was
favorable to peaceful settlement of disputes by concerned parties
directly. The philosophy advocated by him has capacity to maintain
cordial industrial relations on long term basis. Unfortunately
collective bargaining is popular in European countries but not in
India. In UK, such agreements are compulsory in the case of
nationalized industries. In Canada, the two parties (management
and union) are required to bargain collectively by law. In France, the
government tries to influence the process of collective bargaining.
However, the progress of collective bargaining in India is not
satisfactory even when government supports collective bargaining
on voluntary basis.

(5) Gandhian Approach: Gandhian approach to industrial relations is

based on the basic principles of truth, nonviolence and non-
possession. He advocated the principle of trusteeship. Employers
should act as the trustees and not the owners of their organizations.
As a result, there will be no scope for conflict of interests between
employer and employees. Workers can use non-eo-operation as a
means to have their grievances redressed. Gandhiji accepted
workers' right to go on strike but they have to use this right in a
nonviolent and peaceful manner. Workers should resort to strike
only for fair and just cause and only when the employer fails to
respond to their moral appeals.
According to Gandhiji, workers should avoid strikes as far as possible
in industries of essential service. They should use strike as a weapon
of last resort i.e. after all other legitimate measures have failed.
When a trade union wants to organise strike, it should seek
authority from all workers to do so through ballot. When direct
settlement of dispute fails, workers should, as far as possible, take
recourse to voluntary arbitration. Gandhiji wanted employers to
follow the principle of trusteeship. This will ensure cordial industrial
relations and disputes will be avoided. The principle of trusteeship is
applicable to production and also other aspects of business.
Gandhian approach is based on ancient Indian philosophy and
thoughts.

PARTIES TO INDUSTRIAL RELATIONS:

In general, major parties (also called variables or participants) to

industrial relations are the employees, employee representatives,
employer, associations of employers, government and courts and
tribunals. The following figure shows major parties to industrial
relations:

(a) Employees:
Employees constitute main party to industrial relations. They are
large in number working in the organized industrial sector.
Employees get employment and regular income from the
employment. Their approach should be positive and, favorable.

They have a right to make fair and reasonable demands. However,

making unreasonable demands is undesirable as such demands
lead to disputes and strikes or lockouts. Employees have to offer co-
operation for cordial industrial relations. They can also spoil
industrial relations by making demands which the employer will not
be able to accept. This suggests that along with employers,
employees have to share major responsibility for maintaining good
industrial relations.
Employees consider industrial relations in terms of opportunity to
voice their grievances (individual and collective), improve their
conditions of employment, participation in management or decision-
making particularly on matters relating to employees and exchange
views, ideas and suggestions with the management. In this regard,
adequate opportunities should be given to them. This ensures
cordial industrial relations.

(b) Employee Associations:

Such associations are called trade unions which operate at plant
level or at industry level. They play a crucial role in maintaining
cordial industrial relations. Trade unions function at two levels - at
the industry level and at the plant level. At the· industry level, the
unions establish joint consultations and joint regulation of wages,
working conditions, incentives and facilities to workers with the
employer's association. At the plant level, the union exercises joint
control with managers and supervisory staff in regard to working
conditions, disciplinary actions, code of conduct and so on. Unions
participate actively for 'national, local and plant level agreements
for meeting the demands of workers and also for maintaining cordial
industrial relations. For this, unions need constructive and non-
political leadership. The unions should try to settle the demands of
workers through peaceful negotiations and not by organising strikes
Or work stoppages. Unions with enlightened leadership can play a
positive role in maintaining cordial industrial relations over a long
period. In the absence of such unions at all levels, the industrial
relations will be adversely affected by the activities of unions. Inter-
union rivalry affects industrial relations in an organization.

(c) Government:
Government is not directly involved in industrial relations but has a
moral and social responsibility to maintain cordial industrial relations
through suitable preventive measures. This is possible through
official intervention, assistance and regulation of working conditions.
This is necessary for industrial growth, promotion of employment
and also for raising national income and large scale exports.
Government has to take suitable measures for promoting industrial
peace and harmony. It has to give protection to the working class by
avoiding the possible causes responsible for disturbing industrial
relations. Government has to support peaceful negotiations for
solving disputes between management and workers so that the
industrial relations are not affected adversely. Here, the role of
government is indirect but equally important. The approach of the
government should be impartial and fair to both the parties. The
government has to support agencies useful for promoting cordial
industrial relations. In the olden days, governments everywhere
followed the laissez1air policy in this regard and industrial relations
were left to managers and workers who were required to solve the
problems themselves. However, at present, the state/government
regulates the relationship between the management and labor and
seeks to protect the interest of both parties. The government has
set up wage boards, labor courts and tribunals for solving problems
of workers. It has enacted suitable labor laws to lay down norms and
to enforce their compliance. In short, the government is now alert in
regard to industrial relations. It has taken preventive and positive
measures for avoiding industrial disputes and also for maintaining
cordial industrial relations.

(d) Employers:
Employers constitute the main party relating to industrial relations.
They are directly involved in disputes between them and the
employees. Employers appoint large number of workers for orderly
conduct 'of production activity. They pay regular wages to
employees for services rendered. At the same time, they are
endowed with certain rights in relation to workers employed. Such
rights and powers can be used by employers for exploitation of
workers. This leads to conflicts. They can introduced many unfair
practices for cheating· the workers or for breaking their unions or
strikes. On many occasions, the employees are not happy or
satisfied due to low wages paid, bad working conductions in
factories, absence of welfare facilities, bad treatment to workers and
so on. This leads to quarrels between employer and workers.
Workers make different demands and when demands are not
granted, industrial relations are adversely affected. This leads to
demonstrations, go slow an even strike by workers for short or long
period. This leads to work stoppage and production activity comes to
standstill. As a result, both employer and workers suffer. For
maintaining cordial industrial relations, employers have to accept
major responsibility. They have to pay attractive wages, provide
healthy working conditions, liberal welfare facilities and other
incentives to workers so that they will be satisfied. In addition,
employers should give attention to the demands and grievances of
workers and solve them promptly. As a result, industrial relations
will be cordial at the factory level. Employers should avoid
exploitation of workers and should be sympathetic towards their
employees. Such attitude will lead to favourable industrial relations.
The employers play a useful role in maintaining cordial industrial
relations.

Employers can introduce many measures for cordial industrial

relations. Such measures include creating and maintaining
employee motivation, sharing decisions with employees, negotiating
terms and conditions of employment with employee
representatives, and achieving high levels of efficiency.

(e) Employers' Associations:

Such associations are started by the employers at local, industry
and all India levels. They are voluntary in character. The
Confederation of Indian Industries (Cll) is a powerful body which
operates at the national level and is playing a positive role in
protecting and promoting the legitimate interests of industries. In
addition to Cll, there are other all India employers' associations such
as ASSOCHAM, FlCCI, AIMO, FlEO and so on. Such associations are
for the protection of interests of employers and are also favourable
to cordial industrial relations at industry level. They also offer co-
operation to government and trade unions in this regard. The
objectives of employers' associations are:

(i) To represent employers in collective bargaining,

(ii) To develop appropriate machinery for avoiding/limiting industrial
disputes,
(iii) To represent members on national issues, and
(iv) To provide information on employee relations and to give
advice.
Employers' associations offer co-operation to the government and
trade unions in creating cordial industrial relations by avoiding
industrial disputes. The role of such associations is indirect in
nature.

(f) Courts and Tribunals:

Courts (i.e. Legal machinery for dealing with industrial disputes) act
as authority to settle legal disputes and thereby facilitate cordial
industrial relations. Laws are made for preventing industrial
disputes. Even positive measures are provided in the legal
machinery. Courts use this machinery for solving the disputes. The
powers of judiciary are useful to settle disputes. This improves
industrial relations considerably. In India, government has made
laws dealing with industrial relations. In addition, government has
set legal machinery (labor courts and tribunals) for resolving
industrial conflicts.

CHAPTER – 11
TRADE UNIONS

Introduction:
Employee associations constitute one of the stakeholders in IR.
These associations are popularly known as trade unions. Trade
unions are not confined to mere striking and negotiation on behalf of
workers. Their role is much wider. They:
• May make their presence felt in recruiting and selection.

• They also decide who is to be hired and under what

conditions.

• Also play important role in who is to be promoted, given a new

job assignment, sent for training, terminated or laid off.

• Decide wage and salary structure and negotiate revisions once

in 3 or 5 years.

• Major unions have political affiliations too.

The role of union in IR is too well-known. It is therefore, essential
that trade unions have to be understood well.
Thus,
Trade union is a voluntary association of workers established
to protect and promote their economic interests through
collective actions and activities. As per the Trade Unions Act
of 1926, a trade union "must work to protect and promote the
interests of the workers and the conditions of their
employment." Individually workers are weak and are at the
mercy of their employers, but collectively they can be a
strong force with capacity to fight for their rights and
demands. "Strength lies in unity" (or unity is strength) is the
basic philosophy behind trade unionism. England is the birth
place of trade unionism.

Trade unions are formal organizations of wage earners. They

bring unity and understanding among workers. They are not
against employers or the society at large. They are
essentially for avoiding the exploitation of workers and also
for promoting their welfare. The benefits of trade unions to
workers depend on the activities undertaken by them. Along
with this, trade unions have to accept certain wider social
responsibilities. They have to protect the interests of workers
but not at the cost of national economy or the society at
large.

DEFINITIONS OF A TRADE UNION:

1. According to Edwin B. Flippo, "a labor union or trade union is
an organization of workers formed to promote, protect and improve,
through collective action, the social, economic and political interests of its
members".
2. According to V. V. Giri, “trade unions are voluntary
organizations of workers formed to promote and protect their
interests by collective action".
3

NATURE / FEATURES OF TRADE UNIONS:

(1) Trade unions are voluntary associations of workers (A

combination of workers) in one or more occupations. Seven or
more workers can form a trade union. A worker can join or have
any trade union as per his wish/ desire. However, it is relatively
permanent combination of workers and is not a temporary or
casual combination. It has to be a long term combination for
achieving its objectives. Membership is voluntary. Large
numbers of workers are away from any trade union.

(2) Trade unions are for the pursuit of common interests of

members. They protect the interests of members and
promote their welfare.

Why do workers join a trade union?

• Dissatisfaction for security, wages, hours of work, type of
work etc.
• For power.

(3) Trade unions act collectively i.e. through united actions

of members. Community of interest motivates them to unite
and act collectively.

(4) Trade unions are concerned with economic, cultural,

political and social life of members. A union covers all
aspects of life of its members but it is mainly for protecting
economic interests of members.
(5) In India, trade unions include unions of workers and
unions of employers as employers can register their unions
under the Trade Unions Act, 1926. A trade union can be
formed by owners of industry as' per the legal provisions.
However, employers' unions are very small in number as
compared to the unions of workers. Naturally, by trade
union, we generally mean the union of workers or wage
earners.

(6) Trade unions function on democratic principles. Their

objective is to protect the interests of workers and avoid
their exploitation in any possible form and by any agency.
Trade unions have democratic setup. Office bearers are
elected by members and major decisions are taken in the
union meetings after discussion and voting.

(7) A trade union acts as a collective bargaining agent for its

members. It acts as an instrument of defense against
injustice and exploitation.

(8) Trade unions are basically concerned with the problems of

workers. They are for the protection of workers. Workers
collectively protect their interests and also avoid their
exploitation. A trade union is. rightly described as an
organised expression of the needs, aspirations and attitudes
of the working class. These are not political associations and
are not concerned with party politics even when they need
the support of political parties for the protection of interests
of the working class. In India, in the olden days, the trade
unions have supported freedom movement of the country.
Even at present, we have trade unions sponsored by or
supported by political parties. Some political leaders also act
as trade union leaders.

(9) Trade unions are given legal recognition. Unions can be

registered under the Indian Trade Unions Act, 1926. Workers
are given right to form unions for their protection and self-
help.

(10) The basic principles of trade unionism are: (a) Unity is

strength.
(b) Equal pay for equal work.
(c) Security of employment/ service.
Trade unions function on the basis of these cardinal
principles. The unions fight back, if anyone of these principles
is threatened.

(11) The character of trade union has been constantly

changing due to economic, social and other factors. In
addition, its origin and growth has been influenced by a
number of ideologies.

FUNCTIONS/ACTIVITIES/OBJECTIVES OF TRADE UNION:

The functions of trade unions are normally classified into

those functions which are militant or protective (i.e. obtaining
better wages and working conditions, etc) and those functions
which are fraternal, ministrant or positive (provision of
benefits such as sickness and accident payments).

Major functions/ activities/ objectives of trade unions are as

noted below:
(1) To make constant efforts for higher wages and other
monetary benefits in the form of bonus and profit-sharing to
members.

(2) To fight for securing better working conditions, security of

employment, monetary benefits and various welfare facilities
like transport, housing and sports facilities to members.

(3) To undertake strike, go slow and other aggressive activities

if injustice cannot be removed through peaceful means like
direct negotiations and collective bargaining.

Trade unions should use strike as a weapon of last resort.

It is to be used only when all other efforts failed to solve the
problems and grievances of workers. Strike should not be
organized frequently and for minor problems of workers which
can be solved easily by negotiating with the management.
The unsuccessful strike of textile workers (organized by Mr.
Datta Samant) in Mumbai city in 1982 has affected the textile
workers severely. Thousands of workers and their families
returned to their villages as alternative employment was not
available to them in Mumbai city. Large majority of textile
mills in Mumbai city were dosed down and Mumbai is no more
a town of textile mills. Big hotels and malls are, now,
constructed in the premises of textile mills. This unsuccessful
strike of longest period of 18 months finally brought tragic
end of textile workers in Mumbai city.

(4) To conduct direct negotiations with the employer as regards

various difficulties, demands and grievances of workers and
also for peaceful settlement of disputes. In addition, to make
collective bargaining agreement with the employer. Here, the
union acts as a representative body of workers. Unions act as
representatives of working class. Trade unions need not restrict
their functions to mere striking and negotiating on behalf of
workers. They can make their presence felt in other areas such
as recruitment and selection, promotions and job assignments,
etc…

(5) To protect the economic interests of workers through certain

economic activities like opening of co-operative store or bank,
etc.
(6) To undertake educational, cultural, social and other
activities for the benefit of workers and thereby to raise their
welfare. Such activities include provision of reading rooms and
library, facilities providing scholarships to children of workers,
arranging cultural competitions etc.

(7) To oppose any political move which is likely to affect the working
class and the trade union movement adversely.

(8) To join hands with other unions for common benefits of

working class and to support other unions if the need arises.

(9) To protect the rights of workers and to see the labor law:
are implemented properly and also for the benefit of the
working class.

(11) To represent the grievances of members, to provide legal

advice to members as regards compensation under different
labor laws.

(12) To oppose to rationalization, automation and other

programmes if they are against the workers and the security of their
employment.

(13) To undertake any other activity which is legal and also

beneficial to the members i.e., workers.

TRADE UNION MOVEMENT IN India

Trade union movement in our country has a century-long history.

The first quarter of the last century saw the birth of the trade union
movement, but the seeds of the movement were sown much earlier.
In the twenties, soon after the First World War, working class in our
country realized the effectiveness of strike as means of obtaining
concessions, higher wages and better working conditions. Many
strikes were declared consequently and most of them were
successful. This success led to the formation of several unions. The
All India Trade Union Congress (AITUC) was set up in 1920 with the
objectives of representing workers' interests, to co-ordinate the
activities of all labor organizations in the country, and to spread the
message about the need for union movement. Hundreds of unions
came into being in big and small industries. Their number, as well as
membership, increased considerably.
A landmark in the history of labor movement was the enactment of
the Trade Unions Act, 1926. The Act gave a legal status to the
registered trade unions and conferred on them and their members a
measure of immunity from civil suits and criminal prosecution.
Registration of unions gave them respectability before employers
and the general public.

Towards the end of 1920s, there was a split in the union movement,
the split being caused by the leaders' ideological differences. The
AITUC was captured by the communists. The moderates formed a
new organization, called the All India Trade Union Federation.
Ideological differences and splits had their effect on strikes too.
Majority of the strikes failed.

Unlike 1920s, the 1930s were not favorable to the trade union
movement. The prosecution of the communists involved in the
Meerut conspiracy case and the failure of the Bombay textile strike
of 1929 brought a lull in trade union activities. Economic depression
of the period also added to the dull phase of union movement.
Retrenchments and strikes were common, the latter being mostly
ineffective. There were further splits in the movement, but just
before the Second World War some unity was achieved.

The unity was shattered during the Second World War because of
ideological differences and mounting cost of living. Industrial unrest
increased and the government banned strikes and lockouts invoking
the Defence of India Rules. Luckily, workers realized the need for an
organized movement to secure relief. This realization led to an
increase in the number of unions.

The aftermath of Independence was not good for unions. The hopes
of workers to secure better facilities and wages from the national
government were not realized. There was large-scale unrest and
strikes and lockouts multiplied. The disunity in the trade union ranks
was aggravated by the starting of three central labor organization
namely, the Indian National Trade Union Congress (INTUC) in 1947;
the Hind Mazdoor Sabha (HMS) in 1948, and the United Trade Union
Congress (UTUC) in 1949.

As years went by, more unions and central organisations came into
being. The movement became well-established.
As of today, there are more than 66,000 registered unions and most
of them are affiliated to one or the other central trade union. Table
23.1 gives details about the central trade unions, their affiliates,
political affiliation, date of establishment and membership claimed.

YEAR NO. OF UNIONS MEMBERSHI

REGISTERED P (‘000)
1990 52016 7019
1991 53535 6100
1992 55680 5746
1993 55784 3134
1994 56872 4094
1995 57952 6538
1996 58805 5613
1997 59968 7408

The above table shows that there has been a steady increase in the
number of registered unions, but their membership fluctuated from
year to year.

WEAKNESSES/DEFECTS OF INDIAN TRADE UNIONS:

Trade unions in India suffer from various weaknesses/short -

comings. Their role or actual contribution in protecting the
workers in limited due to such weaknesses. The major
weaknesses of Indian trade unions are as explained below:

(1) Predominance of small-sized unions: In India, the unions

are many but their membership is limited. Nearly three-
fourths of the unions have a membership of less than 500.
The average membership of unions in India is less than 1000,
(979 in 1998 and 835 in 1997) whereas in UK the average
membership is nearly 17,600 and in the USA 9,500. Due to
limited membership, the unions are financially weak and fail
to undertake different economic and other activities for the
benefit of members.

(2) Existence of rival unions: In India, rival unions exist at all

levels. It is like a house divided against itself. Practically, in
every industrial unit, two or more unions controlled by
different political parties/leaders exist. Such small unions
waste their time, energy and resources while fighting among
themselves rather than fighting for the protection of workers.
There is no unity among unions. In fact, inter-union
competition/rivalry leads to many industrial disputes. Leaders
of rival unions are stabbed or even murdered. The
employers/managements take undue advantage of such rival
unions. The policy of divided and rule is used. The very
purpose of trade unionism is defeated due to multiplicity of
unions.

3) Inadequate coverage: In India, trade union movement

exists throughout the country. But it is restricted to organized
sector only. The progress of the movement is rapid only in
certain States like West Bengal, Kerala, Maharashtra, and
Tamil Nadu. Trade unions are not popular among the working
class in general. Many workers join the union only when the
strike is organized: About 40 per cent of factory workers join
the unions and the rest are away from it. This means unions
do not have popular support base. After liberalization, the
attraction of industrial workers towards trade unionism is fast
decreasing.

(4) Weak financial position: Due to limited membership, small

size of unions, poverty of workers and limited interest of
workers, majority of Indian trade unions are financially weak
and unstable. Naturally, they are not in a position to
undertake various economic, social and cultural activities for
the benefit of members. The contribution of unions in
providing welfare facilities is limited due to financial
difficulties. The total income of the 7,231 trade unions
(submitting returns) with a membership of 54.21akhs was Rs.
7,464 lakhs in 2000. The per member expenditure of the
union works out to only Rs. 110 which is too low. As a result
of very small subscription, the trade unions cannot undertake
labor welfare activities on a large scale.

(5) Political leadership: Most of the trade unions in India have

outside leadership i.e. leadership of professional politicians.
This means the leadership is not from the working class itself
but from political parties. The present leadership of politicians
is interested in exploiting workers for political purposes. The
interest of the working class is not well protected by the
political and professional leaders. Moreover, unions are used
to promote the interests of the political parties.

The political leadership trade unions are actually harmful to

the cause of working class. Strikes are prolonged by political
leader for personal prestige. Very often, negotiations with
employer fail due to uncompromising outlook of political
leadership. Thus, outside leadership is one major weakness of
Indian trade unions.

(6) Absence of full-time paid office-bearers: Majority of

unions do not have whole-time paid office-bears. Many union
leaders work on honorary basis. They devote limited time and
energy to union activities. The office-bearers are also not
trained properly. They lack the knowledge of trade unionism
and labour laws in India. Unions undertake limited activities
due to absence of full time paid office bearers.

(7) Limited stress on welfare activities: Majority of trade

unions in India undertake limited welfare activities. They feel
that their only activity is to fight with the employer for higher
wages and other demands. Other activities like opening a co -
operative bank or store, provision of educational and medical
facilities, provision of welfare facilities, etc. are not
undertaken by large majority of unions. As a result, workers
are not attracted towards the unions and the contribution of
unions in raising labour welfare is also limited.

(8) More reliance on strikes and litigations: Trade unions in

India concentrate attention on strikes and other activities like
go-slow and demonstrations. Trade unions have a right to
strike but strike should be used as a weapon of the last
resort. Unfortunately, strikes are organized very often. Thus,
undue stress on strikes and litigations (in place of direct and
peaceful negotiations) is one basic defect of Indian trade
unionism. Many unions organized strike first and then start
the negotiations. However, the process should be just
opposite.
In the recent years, one major change witnessed in the case
of trade unions is the change in the attitude of unions
towards management, industry, government and the
economy. The unions are becoming increasingly matured,
practical and responsive in their thinking and actions. The
union leaders have, now, become more mature in their
approach. Unions have accepted the realities of economic
reforms and globalization. Their opposition to automation,
retrenchment, voluntary retirement, etc is fast reducing.

(9) Absence of loyalty of workers to unions: In India, workers

migrate from one union to another frequently. Such migration
suggests the absence of loyalty of workers to their unions.
This also indicates absence of confidence in the unions.
Migration of workers affects the financial position of unions
and also their bargaining power.
Large majority of unions have not made honest efforts to
improve and secure the loyalty of workers. Unions take undue
interest in organising strikes at the cost of other useful
activities for the benefit of workers. The unions ignored useful
activities like provision of medical relief, help to dependents
of deceased members, educational and cultural activities and
so on. In brief, Indian trade unions failed to provide
continuous and substantial support to all the activities of
workers.

(10) Lack of public sympathy: Indian trade unions are

interested in disputes, strikes and demonstrations. They give
limited attention to peaceful methods for the settlement of
disputes. The general public gets information about the
unions only when strikes are organized. People feel that
unions are only for strikes and disputes. As a result, public
support or sympathy is not available to trade unions.

(11) Unfavorable attitude of employers/managements: In

India, employers/managements are not favorable for rapid
growth of healthy trade unionism. They do not provide
adequate support and facilities to unions. They also take
interest in the formation of rival unions for their benefit
(divide and rule policy). Trade union leaders are victimized.
Efforts are made to break the union operating in a
satisfactory manner. This conservative attitude of
management harms the growth of healthy trade unionism in
India.

SUGGESTIONS FOR HEALTHY GROWTH OF INDIAN TRADE

UNIONS:

The following suggestions are worth noting for removing the

deficiencies of Indian trade unions and also for healthy
growth of trade unions in India:
(1) Unity among unions: The present weaknesses like small
unions, limited membership, multiplicity of unions, weak
financial position of unions and inter-union rivalries can be
removed if unity is established among the unions. It is
desirable to have a few strong unions with huge membership
rather than large number of weak unions with limited
membership. "One union in one industry" is a golden rule for
Indian trade unions.

(2) Removal "of inter-union rivalries: Inter-union rivalries

affect all unions and also the healthy growth of trade
unionism. Such rivalries are due to multiplicity of unions and
political leadership to unions. The movement lack solidarity
due to inter-union rivalries. It is, therefore, necessary to bring
unity among unions.

(3) Elimination of unhealthy political influence: The present

linking of unions with political parties and politicians is highly
dangerous for the healthy growth of trade unionism in India.
The leadership of "outsiders" is harmful to healthy growth of
trade unions. Trade unions need leadership from working
class itself. Fortunately, depolitication of unions is a
favourable trend witnessed in recent years. For example,
some leading companies such as Telco, Voltas, Siemens and
Blue Star have unions but are not affected by political parties.

Trade unions need working class leadership and not political

leadership. Efforts should be made to develop new leadership
from amongst the working class. Thus, the present political
leadership should .be replaced by responsible trade union
leadership.

(4) Expansion of union activities: Indian trade unions do not

undertake economic, social and cultural activities which are
equally important for raising the welfare of the working class.
Many unions are more or less like strike committees. This
situation is undesirable. Expansion/ Diversification in the
activities of trade unions is essential for raising the utility and
popularity of trade unions. Trade unions should, therefore,
undertake various activities for the benefit of workers.

(5)· Providing financial stability: Most of the trade unions in

India are financially weak. The financial problems of the
unions can be solved by raising the membership and by
collecting more contributions from members. In addition,
special donations should be collected from the members at
the time of bonus payment. Unions can even arrange cultural
programmes for raising funds. Financial stability enables
unions to undertake welfare and other activities.
(6) More stress on peaceful means: Trade unions in India
should replace their aggressive approach in the form of
strikes, gherao, go slow, etc. by peaceful and constructive
approach in the form of direct negotiations and collective
bargaining. The unions can protect the interests of the
working class through peaceful and democratic means.

(7) Promotion of responsible trade union leadership: Trade

union leaders need full knowledge of the constitutional and
legal rights available to unions. They have to use these rights
to secure and promote workers' interests. Personal integrity,
patience, understanding and courage are some of the
qualities required by trade union leaders. Such leaders can
make positive contribution in building healthy trade union
movement in India.

(8) Change in the outlook of Employers: Employers in India

should adopt more liberal and progressive outlook towards
trade unionism. Attempts to discourage the information of
unions, encouragement for the formation of rival unions,
bribing the union leaders and creating difficulties in the
smooth working of unions are undesirable practices and
even dangerous to employers. Such policy of divide-and-rule
will not be profitable to them in the long run.

(9) Education and training of workers: Working class should

be provided suitable education and training. Workers should
be made conscious about their right to form a union.
Progress of the movement will be rapid when adequate
awareness is created among the workers as regards unions
and their positive contribution.

(10) Making workers conscious of their responsibilities:

Unions should make every worker understand fully first his
duties and responsibilities and then his rights and privileges.
Responsible working class is essential for the healthy growth
of trade union movement. Workers interested in their
demands only are not useful for creating strong and stable
trade unions.

(11) Wider coverage: In India, large majority of workers

remain away from the unions. Limited membership makes
the unions weak with limited bargaining power. For healthy
growth of trade unionism, wide coverage of unions is
positive contribution in building healthy trade union
movement in India.

(12) Miscellaneous suggestions for healthy growth of Trade

Unions:
(a) There is a need to eradicate illiteracy among workers and
to enlarge the membership of unions.
(b) There is an urgent need of reforming the structure of
trade unions.
(c) It is necessary to cover unorganized sector within the
scope of trade unionism. The workers from this sector are
large and need protection through unity of actions.
(d) There is a need for widening the philosophical basis of
trade unionism in India.
It may be pointed out that the measures noted above are
useful for making Indian trade union movement strong,
healthy, democratic, peaceful and purposeful to employees
and the national economy. The above noted suggestions are
actually the pre-conditions for the healthy growth of trade
unions in India. For example, unity among the unions,
elimination of inter-union rivalries, elimination of political
domination, stress on constructive activities, financial
stability, wide coverage, more stress on peaceful and
democratic means are some important conditions for the
healthy growth of trade unionism in India.

PROBLEMS BEFORE INDIAN TRADE UNIONS:

The weaknesses of trade unions are actually the problems

before Indian trade unions. Such problems/ challenges are:
(1) How to remove the present multiplicity of trade unions
and how to bring about unity among rival unions.
(2) How to reduce the present domination of politicians and
political parties on the trade unions at all levels and how to
develop new leadership from the working class itself.
(3) How to develop popular support of working class to the
unions and how to achieve wide coverage for the unions. In
other words, how to develop loyalty of workers towards the
trade unions.
(4) How to expand the activities of the unions with
stress on welfare activities so as to provide better welfare
to the working class.
(5) How to replace the present aggressive and strike-
oriented approach of union leaders by compromising,
constructive and peaceful outlook for solving the
problems of workers.
(6) How to make trade unions financially strong and
stable organisations for undertaking variety of activities for
the benefit of working class.
(7) How to secure sympathy from employer,
government and also from the public.
(8) How to introduce unity among all India trade unions for
introducing common policies and ideologies for the benefit of
working class as a whole.
(9) How to remove present weaknesses of trade unions so as
to make them strong, stable and utility-oriented.
(10) How to maintain stable and purposeful existence in the
light of current globalization process?

=======================================
==================

CASE STUDY
ORIENTATION PROGRAMME IN BHARAT FOUNDRY:

BHARAT FOUNDRY is a big company manufacturing and marketing

many engineering products. It has 24 different departments and a
workforce of 450 employees (lower level) and 76 supervisors,
officers and managers. Every month 20-25 new employees were
appointed as the rate of labor turnover was rather high. Upto 1999
the induction/orientation programme in the company was as noted
below:

On the day of appointment, the newly appointed employee was

escorted from the employment office to one of the foundry
departments by an office messenger. The departmental
head/supervisor was not given prior intimation. The new worker was
taken to the superintendent's office. The messenger used to give a
slip with few details of new employee and move away. The
superintendent used to call the new employee as per the time
available and used to give very brief details of rules, job details and
the supervisor under whom he has to work. The whole process was
over within a period of ten minutes. Thereafter, the new worker is
sent to the supervisor who normally asks few routine questions and
asks him to join a specific group from the department. Suitable
introduction, proper information and guidance, job timing, etc. were
absent. As a result, the new employee becomes shy and nervous
after joining the company. He used to feel insecure and uneasy. He
fails to develop good opinion about the company, his superiors and
co-workers. As a result, the rate of labor turnover and absenteeism
was exceptionally high. The matter attracted the attention of top
level management. The situation was treated as insulting to the
company. High labor turnover was treated as disgrace to the
company. Moreover, the company had to' face many problems (in
the normal working/production activities) due to high labor turnover,
low morale and absence of motivation. Series of meetings of senior
managers/departmental heads were arranged to study the problem
of high labor turnover. It was concluded that this situation was
mainly due to ineffective/defective/inhuman induction/orientation
programme of the company. The orientation was not giving any
benefit to the company but it operates against the company. As a
result, stable labor force is not available to the company. Mr. Anil
Sen, the newly appointed but competent personnel manager was
asked to study the problem in depth and introduce new, attractive,
agreeable, scientific and employee friendly induction/orientation
programme. Personnel Manager Mr. Sen gave immediate attention
to the issue and decided to introduce new orientation
plan/programme in consultation with the top management. The
features of new orientation programme/plan/ procedure are as noted
below:

(1) Each new employee is to be presented a small information

booklet containing general information of the company,
organizational details, rules, regulations and procedures followed in
the company, facilities provided to employees and the rules of
discipline, etc. The booklet is to be given on the first day with a
request to study the same within the first few days after joining the
company.
(2) A 30 minute film will be shown to newly appointed employees in
the auditorium of the company. This film is informative and shall
give all broad features of the company. It is an easy introduction to
the company - its products, directors, top officers and so on. The
film will create a feeling of affinity and oneness with the company.

(3) The pay scale, promotion possibilities, career opportunities, code

of conduct, concessions available, etc. are to be discussed in detail,
in a joint meeting with personnel manager and a few other
managers. Two or more such meetings are to be arranged by the
personnel department for the benefit of newly appointed employees.
(4) All facilities available in the plant/production unit are to be
explained and actually shown to new employees. For this, a small
trip to departments, administrative offices, canteen etc. is to be
arranged as a part of orientation programme.

(5) Each employee is to be welcomed properly on the first day of his

joining duties. Prior intimation about his appointment is to be sent in
advance to concerned department with a request to concerned
officer to give personal attention to newly appointed employees for
the first two weeks.

(6) At the conclusion of the orientation, each employee is invited to

come back to the personnel department to discuss and talk over any
problem pertaining to work or personnel matters.

(7) The personnel manager or his assistant will personally escort

each new employee to the department of his work and make proper
introduction. Every possible efforts will be made to create a feeling
of confidence among new employees. Efforts are made to reduce
tension and to create positive impression on their minds as regards
company, its officers and co-workers.

The new orientation programme introduced in Jan, 2001 proved

successful. It gave promising results.

Questions:
(1) Why labor turnover was high under the old orientation
programme?
(2) Do you feel that new orientation is positive and employee
friendly?
(3) What, according to you, will be the promising results of new
orientation programme?
(4) What are the advantages of scientific orientation?
(5) Do you feel that induction/orientation is a neglected' aspect of
personnel management in India?
UNIVERSITY CASE STUDIES

November – 2001

Analysis the following case and answer the questions given

at the end.

'Raka' is a reputed Marketing Research organisation having about

150 operative employees and 70 executives all over the country.
The operative staff is mostly involved in data collection, while the
executives at different levels usually do the research design,
analysis and presentation. .

The company has a performance rating system, which has been in

existence for about 10 years and was designed at that time, by the
head of administration, a clerk who had been promoted into that
position over the years without any formal training. All employees
are rated by their immediate superiors, by means of a rating scale.
Then, the form is evaluated by a superior at the next level, which
the employees are informed of his performance rating. The
employee then signs a form indicating that he/she has been so
informed. The employee's signature does not necessary mean that
he/she agrees with the rating given.

The parameters considered are Quality of Work, Quantity of Work,

Reliability, co-operativeness and Community Service. The employee
is rated on a 5 point rating scale. Rating of each year is maintained
in the employee's file in the HR Development. Ratings are supposed
to be used as a basis for promotions and increments. In practice
however, little use is made of the ratings for anything. A small
informal survey conducted a year ago showed that the superior
spent on an average about 3 minutes filling up a form and less than
10 minutes discussing it
with the subordinate. Employee feelings about the system range
from indifferent to hostility. Most feel that community service is not
a part of their job and should not influence their rating, while
important criteria like leadership potential which indeed should be a
'part of the form are left out.

The system seems to be causing much dissatisfaction and hostility

among the employees of the firm. The managing Director, Mr.
Gandhi feels that it is becoming a dangerous source of friction and
should be done away with all together.

(a) List the important facts of the case and explain the main
problems of the existing Performance Appraisal System.
(5)
(b) Do you agree with the Managing Director that the System of
Performance Appraisal should be discontinued altogether in this
organisation? Justify your view. (5)
(c) Keeping the executives in mind suggest some improvements in
the Performance Appraisal System. Also suggest some additional
techniques of Appraisal that could be used.
(5)
(d) Keeping the operative employees in mind suggest some
improvements in the Performance Appraisal System. Also suggest
some additional techniques of Appraisal that could be used.
(5)
NOVEMBER 2002

Evaluation of Executive Development Programme:

The Indian Cooking Gas Ltd., was established as a public sector

company in 1963. It had its plants in six areas in the. country. The
company provided both in-company and out-company executive
development programmes. In company programmes included
orientation programme for Apprentice Assistant Executive
Engineers. It had a staff college at Bangalore. Programmes were
conducted at staff college for all types personnel. In company
programmes included quality management, participative
management, time management etc. The best faculty was drawn
from Indian Institute of Management, Universities, Professional
Bodies etc., apart from the four permanent and Internal faculty. At
present all the four permanent faculty positions are vacant.

Evaluation of management development programmes is done as a

ritual rather than to make is a part of development process.
Evaluation of in-company programme is done at staff college with
the objective of knowing the participants learning and to know how
far the participants have found the programme useful. The staff
college sends no formal feedback to the functional heads of the
departments and to the corporate personnel and administrative
department. There appears to be no formal system that provides for
the feedback from the participants and out-company programmes to
their respective functional heads. There exists no evaluation model
with pre-training and post-training evaluation and no efforts are
made to develop evaluation techniques.
Analysis 10 mks

Questions:
(1) Find out the reasons for the unsatisfactory conditions of
evaluation of management development programmes?
(5)
(2) How do you improve the conditions of evaluation of management
development programmes?
(5)

November - 2003

Analyse the case given under and answer the questions in

your own words analytically:

Magnum Industries Ltd. has been a Rs. 200 crore consumer durable
manufacturing company located in downtown Mumbai. It employed
about 900 employees and the manufacturing process involved
discharge of toxic chemical effluents and water. However, due to the
persistent pressure from the surrounding community the company
had to shift its plant manufacturing activities to one of the MIDC
areas in the outskirts of Mumbai. It may be given that most of the
employees were largely unqualified and in the age range between
their late thirties and early fifties. Inspite of providing bus transport
facilities from the various town areas of Mumbai to the new plant
location in MIDC 30% of the employees sought severance. The
employees have been from different parts of India hence
cosmopolitan in nature. At the new location the plant had been
upgraded by new technology from a foreign country and new
machineries and plants had been brought to increase the
productivity and improve the product quality to the world class
manufacturing standard. In order to replenish the manpower the
company at the new location recruited approximately 150 new
young persons who were IT! trained with HSC pass background.
These young people have been from the surrounding areas, talukas
of the concerned district. Majority of these young men, though
qualified have had no industrial background. They have been from
agricultural and other types of rural backgrounds. Hence they have
no perception about industrial organization, manufacturing
processes and set up, discipline and every other aspect of the
industry. The new employees were unruly and had no respect for the
old employees. The problems faced by the organization hence, have
been that there was a perceptual and cultural gap between the new
and the old employees. On the one hand the old employees were
demotivated to work in a distant location having to travel 2 hours by
bus. They were voicing about separation through V.R.S. On the other
hand, though the new young employees were good at their work,
they were unruly and highly demanding in every matter. Also they
wanted to assert themselves by capturing. executive positions in the
recognized Trade Union. Whereas the company had the challenge to
integrate the new technology to upgrade production processes,
improve product quality, reduce cost, increase production and
.productivity, and thereby increase rnarket share.

Questions:
(a) What are the HR challenges you see in this case as the HRD
Manager yourself of the company?
(7)
(b) What kind of training programmes would you plan· for the newly
recruited employees to tame them and change their attitudes as
true manpower assets of the company? (6)
(c) What motivational strategies would you initiate for the old
employees of the organization to continue working as well as for the
new employees to build them up? Please suggest.

November – 2004
Case Study
PROMOTING THE PROTEGE

The die was cast. Prem Nath Divan, executive chairman of Vertigo,
the country's largest engineering project organisation, decided to
switch tracks for a career in academics. Divan was still six years
short of the company's retirement age of 65. His premature exit was
bound to create a flutter at the Vertigo board. Having joined Vertigo
as a management trainee soon after college, he had gradually risen
through the hierarchy to take a board position as the marketing
director of the firm at 32. He had become the President five years
later and the youngest chairman of the company at 45. But, by the
time he was 50, the whiz kid had acquired a larger than life image of
a role model for younger managers and a statesman who
symbolised the best and brightest face of Indian management.
On his wife's suggestion that it would be wise to discuss the move
with one of his trusted colleagues before making a formal
announcement of his intention to seek premature retirement. Divan
called on Ramcharan Saxena, a solicitor who has been on the
Vertigo board for over a decade. Saxena was surprised at Divan's
plan. But he was unfazed. "If that is what you want to do for the rest
of your life, we can only wish you well", he told him. "The board will
miss you. But the business should go on. We should get down to the
task of choosing successor. The sooner it is done, the better."
"I think the choice is quite obvious," said Divan, "Ranjan Warrior. He
is good and ... " Divan was taken aback to see Saxena grimace. "You
don't have anything against him, do you?" he asked him. "No, no,"
said Saxena, "He is good. A financial strategist and a visionary. His
conceptual skills have served the company well. But he has always
had staff role with no line experience. What we need is someone
from operations. Like Richard Crasta." "Richard knows things inside
out alright", said Divan, "But he is just a doer. Not fire in the belly.
Vertigo needs someone who understands the value of power and
knows how to use it. Like me. Like Ranjan."
"That is just the problem." said Saxena. "Prem, let me tell you
something: Ranjan is a man in your own image. Everyone knows
that hoe is your protege. And proteges are never popular. He has
generated a lot of resentment among senior Vertigo executives and
there would be a revolt if he were to succeed you. An exodus is
something we can't afford to have on our hands. We should think of
someone else in the interest of stability of top management."
Divan could not believe what he heard. He had always prided
himself on his hands-on style and thought he had his ear to the
ground. "How-could I lose touch?" he wondered, somewhat shaken.
"When you are the-boss, people accept your authority without
question," continued Saxena. "In any case, you have been
successful at Vertigo and it is difficult to argue with success. But the
moment you announce your intention to leave, the aura begins to
fade away. And in deciding on your successor, the board will seek
your opinion, with due regard to your judgement. The board
members must do what in their view is right for the company.
Having said that, may I also mention that if there is a showdown in
the boardroom, you could always choose to stay on? We would like
it. Or we could bring in an outsider."
"I have finalised my career plans and there is no question of staying
on beyond six months from now," said Divan. "The board is
scheduled to meet next month. Let us shelve the matter till then. In
the meantime, I rely on you, Ram, to keep this discussion between
the two of us."
"Of course yes," said Saxena.
On his way home, Divan thought about the matter in detail. Bringing
an outsider would undo all his life's work at Vertigo. There were
considerations like culture and compatibility, which were paramount.
The chairman had to be an inside man. "Richard lacks stature,"
Divan said to himself. "Ranjan is the one I have been grooming, but
heavens, the flip side of it all had missed me completely. There is no
way I can allow a split at the top just before I quit. I must leave on a
high note in my own interest. I must find a way out of the imminent
mess."

What should Divan do?

November - 2005

Analyse the case given below and answer the questions in

your own words analytically.

SAS Pvt. Ltd. is probably the least-well-known major software

company, in India. The company makes statistical analysis software
(hence the acronym SAS). And the company is growing very rapidly
from 1900 employees five years ago, it now has 5400 employees.
But SAS is not your typical software company. It is not your typical
'anything' company. At its headquarters, just outside Bangalore,
there is a 36,000 square-foot gym for employees. There is a full-
length basketball court, pool tables, a private sky-lighted yoga room
and workout areas. Outside, there are soccer and cricket fields.
Massages are available several times a week and classes are offered
in dance and tennis. The company also operates the largest day-
care facility in India. To encourage families to eat lunch together,
the SAS cafeteria supplies baby seats and high chairs. To encourage
families to eat dinner together, the company has a seven-hour work
day, five days a week. Unlike many work-obsessive software firms,
most SAS employees leave the office by 5 p. m. Management likes
to call its work place culture "relaxed".

The list of employee amenities at SAS goes on and on. Unlimited

tea, coffee and juice, One week paid vacation during Diwali. An
onsite health clinic staffed with six nurses and two doctors. Zero
cost to employees for health insurance. Casual dress every day. Is
this any way to run a business? Management thinks so. SAS's
strategy is to make it impossible for people not to do their work.
Even though the company provides no stock option plans and
salaries no better than the competition, the company has built an
unbelievably loyal work force. Whereas competitors typically have
turnover rates above 30 percent, SAS's rate has never been higher
than 5 percent. Management claims that it saves Rs. 75 lakhs a year
just in employee replacement-related costs such as recruitment,
interviews, moving costs for new hires and lost work time. Just in
case anyone wonders if the company makes any money, we'll add
the following. SAS is owned by just two people – Rahul Sharma and
Deepak Ahuja. They were recently_listed as being in the top
100richest people in India.

Questions:
(a) List the important facts in the case.
(5)
(b) Are progressive HR practices like those at SAS, a cause or a
result of high profits? Discuss.
(5)
(c) What possible problems could the management at SAS face
(from employees) due to the benefits offered?
(5)
(d) If you are appointed as the HR manager at SAS, what changes
would you recommend in the compensation structure?
(5)

November – 2006

Mr. Anthony is the Chief Executive of a medium sized Chemical Co.

in Hyderabad. He holds a Ph.D. in Chemistry. However, he has not
been involved in research and development of new products for two
decades. Though turnover is not a problem for the company, Mr.
Anthony and his senior colleagues noticed that the workers on
hourly basis are not working up to their full potential. It is a well
known fact that they filled their days with unnecessary and
unproductive activities. Mr. Anthony knew that workers can be
motivated for giving maximum performance through various
incentive plans. One day Mr. Anthony contacted Personnel Manager
and enquired: "Why our workers are not motivated? We pay them
highest in the industry". The Personnel Manager replied. "I have
already informed you a number of times, that money, working
conditions and benefits are not enough? Hard work and efficiency go
unnoticed and unrewarded in our organization. Our promotions and
benefit plans are tied to length of service. Even the lazy workers,
accordingly, enjoy all the benefits in the organization, which infact,
according to the workers, should go only to those who work hard".
Mr. Anthony then wanted the Personnel Manager to look into the
problem more closely and find out a solution to the problems of
workers on hourly basis.

Questions:

(a) List the important facts in the case.

(6)
(b) Explain the motivational problem in this case.
(6)
(c) If you were the Manager, how would you motivate employees so
that they work better?
(8)

November – 2007 Case Study:

(20)

Rise and Fall

Jagannath (Jaggu to his friends) is'an over ambitious young man. For
him ends justify means. With a diploma in Engineering, Jaggu joined
in 1977; a Bangalore-based company as a Technical Assistant. He
got himself enrolled as a student in an evening college and obtained
his degree in Engineering in 1982. Recognizing his improved
qualification, Jaggu was promoted as Engineer - Sales in 1984. Jaggu
excelled himself in the new role and became the blue - eyed boy of
the management. Promotions carne to him in quick successions. He
was made Manager - Sales in 1986 and Senior Manager - Marketing
in 1988. Jaggu did not forget his academic pursuits. After being
promoted as Engineer - Sales, he joined an MBA (Part-time)
programme. After completing MBA Jaggu became a Ph. D. scholar
and obtained his doctoral degree in 1989. Functioning as Senior
Manager - Marketing Jaggu eyed on things beyond his jurisdiction.
He started complaining against Suresh the Section Head and
Prahalad the Unit Chief (both production) with Ravi, the EVP
(Executive - Vice President). The complaints included delay in
executive orders, poor quality and customer rejections. Most of the
complaints were concocted. Ravi was convinced and requested
Jaggu to head the production Section so that things could be
straightened up there. Jaggu became the Section Head and Suresh
was shifted to sales. Jaggu started spreading his wings. He prevailed
upon Ravi and got sales and quality under his control, in addition to
production. Suresh an equal in status, was now subordinated to
Jaggu. Success had gone to Jaggu's head. He had everything going
in his favour position, power, money and qualification. He divided
workers and used them as pawns. He ignored Prahalad and
established direct link with Ravi. Unable to bear the humiliation,
Prahalad quit the company. Jaggu was promoted as General
Manager. He became a megalomaniac. Things had to end to some
point. It happened in Jaggu's life too. There were complaints against
him. He had inducted his brother-in-law, Ganesh, as an engineer.
Ganesh was by nature corrupt. He stole copper worth Rs. 5 lakh and
was suspended. Jaggu tried to defend Ganesh but failed in his effort
corruption charges were also leveled against Jaggu who was
reported to have made nearly Rs. 20 lakh for himself.
On the New Year day of 1993Jaggu was reverted back to his old
position - sales Suresh was promoted and was asked to head
production. Roles got revered. Suresh became boss to Jaggu. Unable
to swallow the insult, Jaggu put in his papers. Back home, Jaggu
started his own consultancy claiming himself as an authority in
quality management. He poached on his previous company and
picked up two best brains in quality. From 1977 to 1993, Jaggu's
career graph had a steep rise and a sudden fall. Whether there
would be another hump in the cure is a big question.

Questions:
(a) Bring out the principles of promotion that were employed in
promoting Jaggu. (10)
(b) What would you do if you were Ravi?
(5)
(c) Bring out the ethical issues involved in Jaggu's behaviour.
(5)