Human Resource Management: Sub Code 556

Human Resource Management
Sub Code 556
Developed by
Prof. Venkat Iyer
On behalf of
Prin. L.N. Welingkar Institute of Management Development & Research
!  
Advisory Board
Chairman
Prof. Dr. V.S. Prasad
Former Director (NAAC)
Former Vice-Chancellor
(Dr. B.R. Ambedkar Open University)
Board Members
1. Prof. Dr. Uday Salunkhe  2. Dr. B.P. Sabale  3. Prof. Dr. Vijay Khole  4. Prof. Anuradha Deshmukh 
Group Director  Chancellor, D.Y. Patil University, Former Vice-Chancellor  Former Director 
Welingkar Institute of Navi Mumbai  (Mumbai University) (YCMOU)
Management Ex Vice-Chancellor (YCMOU)
Program Design and Advisory Team
Prof. B.N. Chatterjee Mr. Manish Pitke

Dean – Marketing Faculty – Travel and Tourism
Welingkar Institute of Management, Mumbai Management Consultant
Prof. Kanu Doshi Prof. B.N. Chatterjee

Dean – Finance Dean – Marketing
Welingkar Institute of Management, Mumbai Welingkar Institute of Management, Mumbai
Prof. Dr. V.H. Iyer Mr. Smitesh Bhosale

Dean – Management Development Programs Faculty – Media and Advertising
Welingkar Institute of Management, Mumbai Founder of EVALUENZ
Prof. B.N. Chatterjee Prof. Vineel Bhurke

Dean – Marketing Faculty – Rural Management
Prof. Venkat lyer Dr. Pravin Kumar Agrawal

Director – Intraspect Development Faculty – Healthcare Management
Manager Medical – Air India Ltd.
Prof. Dr. Pradeep Pendse Mrs. Margaret Vas

Dean – IT/Business Design Faculty – Hospitality
Welingkar Institute of Management, Mumbai Former Manager-Catering Services – Air India Ltd.
Prof. Sandeep Kelkar Mr. Anuj Pandey

Faculty – IT Publisher
Welingkar Institute of Management, Mumbai Management Books Publishing, Mumbai
Prof. Dr. Swapna Pradhan Course Editor

Faculty – Retail Prof. Dr. P.S. Rao
Welingkar Institute of Management, Mumbai Dean – Quality Systems
Welingkar Institute of Management, Mumbai
Prof. Bijoy B. Bhattacharyya Prof. B.N. Chatterjee

Dean – Banking Dean – Marketing
Mr. P.M. Bendre Course Coordinators

Faculty – Operations Prof. Dr. Rajesh Aparnath
Former Quality Chief – Bosch Ltd. Head – PGDM (HB)
Welingkar Institute of Management, Mumbai
Mr. Ajay Prabhu Ms. Kirti Sampat

Faculty – International Business Assistant Manager – PGDM (HB)
Corporate Consultant Welingkar Institute of Management, Mumbai
Mr. A.S. Pillai Mr. Kishor Tamhankar

Faculty – Services Excellence Manager (Diploma Division)
Ex Senior V.P. (Sify) Welingkar Institute of Management, Mumbai
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1st Edition, December 2016

CONTENTS
Contents
Chapter No. Chapter Name Page No.
1 Introduction to Human Resource Management 4-21

2 Job Analysis 22-42
3 Manpower Planning 43-55
4 Recruitment, Selection and Induction 56-76
5 Motivation 77-105
6 Training and Development 106-123
7 Performance Appraisal 124-146
8 Employee Welfare 147-159
9 Compensation Administration 160-177
10 Separation 178-192
11 Human Resource Information System 193-227
12 Participative Management 228-240
13 Work Life: Quality and Related Issues 241-254
14 Total Quality and Human Resource Management 255-265
15 Human Resource Records, Accounting, Audit and 266-288
Research
16 Recent Techniques in Human Resource Management 289-300

17 Ethics in Human Resource Management 301-319
18 e-Human Resource Management 320-330
! !3
INTRODUCTION TO HUMAN RESOURCE MANAGEMENT
Chapter 1
Introduction To Human Resource
Management
Objectives
After studying this chapter you should be able to understand:
What is Human Resource Management (HRM)
Functions involved in HRM
How HR has evolved over the years.
Differentiate between Personnel management, Industrial relations, HRM

and HRD.
Process of HRM in an organisation
Factors affecting HRM in an organisation.
Future of HRM - Strategic HRM & HCM.
! !4
Structure:
1.1 Nature of Human Resource Management (HRM)
1.2 Functions in HRM
1.3 Evolution of HRM
1.4 Difference between Personnel Management, Industrial Relations, HRM

and HRD.
1.5 Process of HR
1.6 Factors affecting HRM
1.7 Future of HRM
1.8 Summary
1.9 Self Assessment Questions
The story continues…….
After a few days, Ajay Verma had to visit the factory at Ghansoli. On the
way to the factory……..
Ajay Verma: What So Rajesh, are you enjoying your work?? What about
your studies??
Rajesh: Yes Sir, I am enjoying my work. As far as studies are concerned, I

have joined a distance learning course but I am finding it difficult to
understand certain subjects like Human Resource Management.
Ajay Verma: Is it??? Well, ask me questions and I will try my best to
answer them.
Rajesh: What is Human Resource Management (HRM)?? What is the need

for HRM?? What are the functions involved in HRM??
! !5
1.1 NATURE OF HUMAN RESOURCE MANAGEMENT (HRM)
Human Resource Management is basically the management of human

resources in an organization. It is a process where people and
organizations are brought together so that the goals of each are met. In a
dynamic and competitive business environment, it is very necessary for an
organization to have the right resources especially their employees, to
survive and succeed.
Organisations have realized that they may be technologically advanced but

it is the people who offer competitive advantage to an organisation. How
do people provide the competitive advantage? People offer skills,
capabilities, systems, practices, speed, language, bonding and behaviours,
which help an organisation to execute its strategies successfully.
Nowadays, organisations ensure that along with the organisational
objectives, even the individual objectives of their employees, are achieved.
1.2 FUNCTIONS IN HRM
HRM typically consists of the following functions:
Planning: Preparing forecasts of future HR on the basis of an

organisation's environment, mission, objectives and strategies.
Staffing: Obtaining people with the appropriate skills, abilities,

knowledge and experience to fill jobs in the organisation. This involves
human resource planning, job analysis, recruitment and selection.
Developing: Analyzing learning requirements to ensure that employees

possess the knowledge and skills to perform their jobs satisfactorily or to
advance in the organisation. Performance appraisal is done to identify an
employees' key skills and 'competencies'.
Monitoring: This includes job evaluation, performance appraisal, pay

and benefits.
Maintaining: This involves workplace safety, health and welfare policies

and compliance with statutory requirements.
! !6
Rajesh: Oh, so this is what HRM is all about. But Sir, how did it start ??
Ajay Verma: Well, it all started with the industrialization……..
1.3 EVOLUTION OF HRM
Human Resource Management developed gradually, over a period of time.

Its key milestones were :
Period: Milestones in the Development of Human Resource Management
1890-1910: Frederick Taylor develops his ideas on scientific

management. Taylor advocates scientific selection of workers based on
qualifications and 1910-1930 :Many companies establish departments
devoted to maintaining the welfare of workers. The discipline of industrial
psychology begins to develop. Industrial psychology, along with the
advent of World War I, leads to advancements in employment testing and
selection.
1930-1945: The interpretation of the Hawthorne Studies' begins to have

an impact on management thought and practice. Greater emphasis is
placed on the social and informal aspects of the workplace affecting
worker productivity. Increasing the job satisfaction of workers is cited as
a means to increase their productivity.
1945-1965: In the U.S., a tremendous surge in union membership

between 1935 and 1950 leads to a greater emphasis on collective
bargaining and labor relations within personnel management.
Compensation and benefits administration also increase in importance as
unions negotiate paid vacations, paid holidays, and insurance coverage.
1965-1985: The Civil Rights movement in the U.S. reaches its apex with
passage of the Civil Rights Act of 1964. The personnel function is
dramatically affected by Title VII of the CRA, which prohibits
discrimination on the basis of race, color, sex, religion, and national
origin. In the years following the passage of the CRA, equal employment
opportunity and affirmative action become key human resource
management responsibilities.
! !7
1985-present: Three trends dramatically impact HRM. The first is the

increasing diversity of the labor force, in terms of age, gender, race, and
ethnicity. HRM concerns evolve from Equal Employment Opportunity and
affirmative action to "managing diversity." A second trend is the
globalization of business and the accompanying technological revolution.
These factors have led to dramatic changes in transportation,
communication, and labor markets. The third trend, which is related to
the first two, is the focus on HRM as a "strategic" function. HRM concerns
and concepts must be integrated into the overall strategic planning of the
firm in order to cope with rapid change, intense competition, and
pressure for increased efficiency.
Activity A
List down the stages in the development of HRM.

____________________________________________________________
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Rajesh: Sir, but I am confused. So many times, people use the terms -
HRM, Personnel Management, Industrial Relations…..do they mean the
same thing ??
Ajay Verma: Yes I know. Many people use these words and they think
they are talking about the same thing. But there is a slight difference in all
these terms.
! !8
1.4 DIFFERENCE BETWEEN PERSONNEL MANAGEMENT,

INDUSTRIAL RELATIONS, HRM AND HRD
Personnel Management is concerned with manpower planning, recruitment,

selection, placement, transfer, promotion, training and development, lay off
and retrenchment, remuneration and incentives. Industrial relations cover
union-management relations, joint consultation, collective bargaining,
grievance and disciplinary procedures. Human Resource Management
includes Personnel management and Industrial relations as well as the
welfare aspect which includes working conditions and amenities. HRM is
also different from Human Resource Development (HRD). HRD is a function
which is more concerned with training and development, career planning
and development, and organisational development. HRD is a part of HRM.
Rajesh: Thank you Sir. You have resolved a major query for me. Now I can
understand what these terms stand for whenever they are used by other
people.
Ajay Verma: I am glad to hear it…
Rajesh: How is the HR process structured in an organisation?
Ajay Verma: Yes, I was just getting to that topic.
1.5 HRM PROCESS
HRM is an ongoing process and it starts from Job Analysis. The HR process
in an organisation is structured as below :
! !9
Job Analysis
It is the process of collecting job related information which will then help in
the designing of a job.
Manpower planning
Process of forecasting an organisation's future demand for, and supply of,
the right type of people in the right number.
Recruitment & Selection

Recruitment involves attracting and obtaining applications from eligible job-
seekers. Selection is the process of choosing the right individuals for a job
in an organisation, out of the pool of job applicants.
Motivation
Motivation undertakes to understand and change an employee's behaviour
for increase in the employee's performance.
! !10
Training and Development

It refers to the imparting of requisite skills, abilities and knowledge to an
employee.
Employee Welfare
Employee welfare ensures that an employee receives other benefits and
services like good working conditions, retirement benefits, leave, leave
encashment, etc.
Performance Appraisal
It is an objective assessment of an individual's performance against the
individual's objectives or benchmark laid down.
Compensation Administration
Compensation or remuneration is what an employee receives in return for
his or her contribution to an organisation. Compensation Administration is
concerned with the administrative aspect of the compensation dispersal.
Separation
Separation is a process concerned with when an employee leaves an
organisation either voluntarily or involuntarily.
Ajay Verma: That, in a nutshell, was how HR works in an organisation. I

will explain these in depth, later.
Rajesh: Ok Sir. By the way, is HR affected by what happens in the world?

Or is it only concerned with the organisation?
Ajay Verma: HR is very much affected by what happens in the world

around us.
HRM is affected by the environment in which it functions and HR

professionals have to understand the various forces which form the
environment for a better functioning of the organisation. HRM functions in
2 environments - internal and external.
External environment consists of the political factor, legal factor, job

market, competitors, customers, economic growth, diversity, globalization,
technological factor and cultural factor.
! !11
Internal environment consists of forces like strategy, unions and

organizational culture.
EXTERNAL ENVIRONMENT
Political-Legal
HRM is impacted by the various political forces or institutions in a country.
This can be seen by the sons-of-soil policy followed by political parties. HR
professionals have to ensure that the recruitment of employees is done by
keeping this in mind.
Any changes in the political party may also result in a subsequent change
in the labour laws laid down. HR professionals have to take due care as to
the selection of employees is done with the various reservation
requirement. They also have to ensure that there is no discrimination done
on basis of religion, race, caste, sex or place of birth. They also have to
ensure that there is no employment of children in the factories and that
there is equality of opportunity in terms of employment. All HR activities
are affected by the various labour laws and care has to be taken that the
activities are carried out with due diligence to these labour laws.
Job Market
Job market provides the supply to the organisation. Job market consists of
employment exchanges, universities, colleges, training institutes,
consulting firms, etc. The quality of the human resources in an
organisation depends on the quality of the job market. HR professionals
have to look for the best quality while recruiting employees for the
organisation.
Competitors
Competition plays a very important role in some of the HR functions.
Today, there are several job offers for a right candidate and the candidate
chooses the organisation with the most attractive terms and conditions.
When there is a scarcity of skilled and talented professionals, the
organisation and its HR department have to groom its own employees
through training and development. The HR department also has to retain
them through attractive pay packages.
! !12
Customers
Today, in a highly competitive and demanding world, customers want high-
quality products and services at reasonable prices. The quality of products
and services offered is mostly affected by the employees who provide
these services. In such a scenario, the qualifications and the skills of the
employees comes into focus.
Economic growth
The quality of labour and human resources is affected by the economic
growth or conditions prevalent in a country. In advanced countries, the
government spends more on education and health facilities, which in turn
assures better quality of labour. This in turn ensures higher productivity. In
developing countries, the governments have understood this importance
and hence are developing policies that will ensure better education and
health facilities.
Diversity
Today, the human resources function is characterized by diversity. The
human resources in any MNC is very diverse in terms of nationalities,
cultures, religions, languages and dialects, educational qualifications, skills,
age, genders and other factors. HR managers must learn to manage this
diversity so that it helps the organisation in terms of creativity, innovation,
increased productivity and improved decision making.
Globalization
'The world has become local' - the world today is moving towards
globalization. This in turn has a lot of influence on HR functions. The hiring,
training, compensation and retaining strategies are adopted and followed
keeping the global perspective in mind. A knowledgeable and skilled
Human resource force keeps a company competitive and attracts foreign
investments, joint ventures and collaborations. The mantra followed by
many companies is - 'Be Local, Think Global’.
Technological factor
Technology has affected HR functions considerably. Today's highly
competitive market means that the changes in technology happen almost
on a daily basis. Employees have to keep abreast of the recent
technological changes especially in the field of Information Technology. Job
seekers are highly professional and knowledgeable. Today, it is very
common for a Software Engineer to enroll himself for a MBA degree in
! !13
Finance. It becomes very difficult for HR managers of an organisation to

manage such a highly talented and technology advanced professionals. HR
has to devise new strategies to motivate, train and retain these employees.
Today with technology advancement, it is very common to find employees
working from home rather than from office. Constant advances in
technology has put intense competitive pressure on firms to implement
efficient means of operations.
Cultural factor
Attitude of human resources towards work is the result of their cultural
background. Even the work ethics, achievement needs and effort-reward
expectations are a result of culture. For example, Japanese workers are
dedicated to achieving the highest quality in their work. This is a result of
their cultural upbringing. Indian workers are committed to work and are
loyal to their organisations. They equate their own individual welfare with
the prosperity of the organisations. Though this is changing in the current
scenario, by and large this holds true for most of the Indian workers.
INTERNAL ENVIRONMENT
Strategy
Strategy of an organisation ensures that the objectives of the organisation
and the resources of the organisation are aligned properly. Success of
many companies depends on the high alignment of their strategy,
structure, human resources and management. HR department of an
organisation has to ensure that the recruitment and training of human
resources is aligned with the organizational strategy, to achieve a
competitive edge in the market.
Unions
Unions were formed so that the workers have a collective voice which was
useful for bargaining better working conditions, pay raises and other
benefits. Nowadays, the trade unions have their own political linkages.
Thus the HR managers have to be very careful while dealing with the
Unions. Also sometimes, there are more than one union in an organisation
which makes the job of the HR manager difficult while holding discussions
regarding collective bargaining.
! !14
Organizational culture
Every organisation has its own culture which is a product of its human
resources, organizational successes and failures. The culture of an
organisation reflects its vision, its past and its future. Also, there may be
conflicts that arise due to mismatch of the organizational goals and the
individual goals of the employees. HR department has to proactively adjust
to the culture of the organisation as well as manage the conflicts that may
arise out of such mismatches.
Activity B
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
What are the various factors that affect HRM in an organisation??
Rajesh: That was fascinating. But Sir, times are changing. Will HRM
remain the same or will it change?
Ajay Verma: Time and Tide wait for no one. How will organisations
survive if HRM does not change ?
1.7 FUTURE OF HRM
Strategic HRM
The advent of HRM has brought forth many issues like the changing
employer-employee relationship. There is a need felt by the organisations
to link HRM with the organisation's strategies so that they can attain a
competitive edge in the global market. Today we see more and more
organisations adopting Strategic Human Resource Management (SHRM).
SHRM is nothing but a combination of strategy and HRM. It refers to linking
of human resources with strategic goals and objectives to achieve goals of
an organization.
In an organization, SHRM means accepting and involving the HR function

as a strategic partner in the formulation and implementation of the
company's strategies through HR activities.
! !15
Various factors like globalization, increased technological change, diversity

in the human resources of an organisation and a highly competitive
environment have led to the development of SHRM.
In SHRM, HR department is involved with the organization's top

management in the strategic process.
SHRM helps in improving the performance of the organisation and its

employees, enhancing the customer satisfaction, increase in innovation and
in providing a competitive advantage.
Human Capital Management (HCM)

HRM might soon be replaced by Human Capital Management (HCM). HRM
treats people as an organizational resource, that can be made drawn on
and used to accomplish a task. But under HCM, employees are treated as if
they are investors of their own capital. In short, organisations do not own
this human capital but they can rent it from the employees.
In HRM, employees are seen as value addition but here they will be seen
as value creation. HCM plans to integrate people and business strategy
thus driving and accelerating the business plan.
This is a fairly new concept and is yet to gain acceptance in management

circles. This works best where the organisation is people-oriented and the
size of the organisation is large.
Ajay Verma: Oh, we have reached. Give me a few hours, Rajesh. You can
park the car and have your lunch. You can come back here at 5 p.m.
Rajesh: Ok Sir. I will have my lunch and wait for you here.
! !16
1.8 SUMMARY
Human Resource Management (HRM) is a management function that helps

an organisation to manage its Human Resources. The process of HR in an
organisation consists of manpower planning, job analysis, recruitment &
selection, motivation techniques, training and development, employee
welfare, performance appraisal, compensation administration and
separation. HRM in an organisation is affected by various factors in the
external (technological changes, globalization, legal, political), and internal
environment (organizational strategy, unions, organizational culture). HRM
in the near future will be replaced by Strategic HRM, and in the distant
future it may also be replaced by HCM.
1.9 SELF ASSESSMENT QUESTIONS
1. What is HRM? What are its functions? How is the process of HRM
structured in an organisation?
2. Trace the evolution of HRM.
3. What are the factors that affect HRM?
! !17
Related Reading : Role of HR in Brand Management 

(Courtesy - Dinesh V. Divekar, The Times of India - Ascent)
The Concept of branding or brand management is exclusively the forte of

marketing. Noted marketing guru Philip Kotler defines brand as any name,
term, sign or design, or a combination of them intended to identify the
goods and services of one seller or group of sellers and differentiate from
those of competitors. Kotler further states that, in essence, a brand
identifies a seller or maker.
The definition applies exclusively to the product or service. So what is the

role of HR in branding then? Marketing may do branding of product or
services, HR can do the branding of the people of a company or the
company itself.
Branding helps companies in creating images of their products or services.

Every brand has a recall value. For example, as soon as we say we have a
Sony Walkman or a Rolls Royce car, etc., do you remember when you hear
Benz Mercedes? A very strong and sturdy product. Just as products or
services have recall value, a company's employees also have their recall
value. This recall value is important when you talk about the employees of
a particular company also. Sooner someone says I am an employee of an
MNC our thought process is different. However, if someone says that I am
an employee of some public sector company, immediately our thought
process changes. If someone says that I am a secretary with some
Government. our thought process is still different. Why does our thought
process change? Our thought process is a result of the image that we have
in our mind.
So, your company is what your employees are. The way they act, react or
respond depends on recruiting the right people and grooming them in the
initial days of their career. This is where the HR department has a great
role to play in Brand Management. They can draw out a systematic plan as
to how to manage the perceptions of the job candidates in the job market.
HR can create the brand value in the job market.
! !18
Brand value depends on:
a. What your current employees talk in the job market?
b. What your ex-employees talk in the job market?
c. What your suppliers talk in the job market.
d. How many employees are involved in minor/major crimes?
e. How many employees write research articles in various forums?
f. How your current, or ex-employees, vent their frustration in general

forums?
Let us discuss how the HR can promote the brand of their company. Few
things that the HR can do to encourage their employees are:
a. Encourage senior managers to write articles in newspapers, trade

magazines etc.
b. Encourage seniors to participate in seminars conducted by CII, FICCI or

chapters of AIMA.
c. Seniors can also share their experiences in the evening guest lectures
conducted by NIPM, NHRD etc.
d. Seniors can give interviews in Times Ascent (published on every

Wednesday by Times of India).
In each of the above cases, they may represent in their personal capacity;
however, each time their company's brand is taken to the respective
organisation or forum automatically.
If you look at activities of Mr. N.R. Narayan Murthy, he has promoted the
brand of Infosys in a big way. Many times he has attended functions to give
a mere 10 minutes speech. But to give speech of 10 minutes he commuted
for about 2 hours, to and fro!
! !19
Till the 20th century, it was adequate to take care of customers. The 21st
century has thrown one more challenge on managing the job market. The
perceived image of the company among the job candidates plays an
important role. It helps attracting candidates in the job market to join your
company.
As the brand image grows so does the challenge of employee retention.

However, brand image helps in managing attrition as well. One is that you
get a constant pool of candidates without bothering too much about the
replacement
! !20
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
Video Lecture - Part 1
Video Lecture - Part 3 
! !21
JOB ANALYSIS
Chapter 2
Job Analysis
Objectives
Nature and Importance of Job Analysis.

Process of Job analysis in an organisation.
Different Methods used in collecting job related data.
Nature of Job Design.
Factors affecting job design
Structure:
2.1 Nature and Importance of Job Analysis
2.2 Process of Job Analysis
2.3 Different Methods of Collection of Job Data
2.4 Problems Faced in Job Analysis
2.5 Nature and Importance of Job Design
2.6 Factors Affecting Job Design
2.7 Summary
The story continues……..
The next day after the visit to the factory, Rajesh came to Ajay Verma's
house to chauffeur him to the office. On the way ….
Rajesh: Good Morning, Sir.
Ajay Verma: Good Morning, Rajesh.
! !22
JOB ANALYSIS
Rajesh: Sir, may I ask you a question ?
Ajay Verma: Of course, you may.
Rajesh: I always wanted to know how the jobs of theemployees are

designed in an organisation. Can you please explain it to me ??
Ajay Verma: Yes, of course. The jobs of the employees are designed after
the job analysis is done. Let me explain….
2.1 NATURE AND IMPORTANCE OF JOB ANALYSIS
Job analysis refers to the process of collecting information about a job. It

involves collection of information that includes knowledge, skill and ability
an employee possesses to perform a job effectively. Job analysis is useful
for managing all the personnel activities. Job related data is useful in
Human resource planning, hiring and training of employees, in deciding the
compensation and in the performance appraisal.
Human Resource Planning

Human resource planning determines as to how many and what kind of
personnel will be needed in the future. The number and the kind of
personnel are determined by the number of jobs which need to be staffed.
Job related information is therefore very necessary for human resource
planning.
Recruitment and Selection

The objective of hiring of employees is to match the right people with the
right jobs. For this objective to be achieved, the job analysis needs to be
done. A Human resource manager needs to have an understanding of the
types of skills required for the different types of jobs so that he can look at
the correct sources while recruiting. This understanding also helps the
manager while selecting the candidates, as he can match the job
requirements with the qualifications of the candidate.

Job analysis is useful for a Human resources manager as it helps him to
know the requirements, in terms of knowledge and skills, to perform a job.
Training and development programmes are designed on the basis of the job
requirements.
! !23
JOB ANALYSIS
Remuneration
Job analysis helps in determining the relative worth of each job for the
purpose of establishing salary and wage structure. This in turn decides the
amount of remuneration depending on the grade of the job that the
employees occupy. Job analysis also determines the fringe benefits, bonus
and other benefits.
Performance appraisal is the assessment of the actual performance of the
employee against certain expectations or objectives laid down for him.
Performance appraisal is the basis for awarding promotions, transfers and
assessment of training needs. Job analysis helps fix standards for
performance against which the individual employee's actual performance is
assessed.
Safety and Health

Job analysis also helps in uncovering and identifying hazardous conditions
and unhealthy environmental factors like heat, noise, fumes and dust, so
that corrective actions can be taken to minimize and avoid the possibility of
human injury.
Activity A
What is Job analysis? Describe the importance of job analysis in an

organisation.
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____________________________________________________________
____________________________________________________________
____________________________________________________________
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Ajay Verma: I hope you have understood the importance of job analysis.
Rajesh : Yes, Sir !!
Ajay Verma: Good !! Let me now explain the job analysis process….
! !24
JOB ANALYSIS
2.2 PROCESS OF JOB ANALYSIS
Strategic Choices
An organization has to make choices regarding the employee involvement,
the level of details of the analysis, timing and frequency of analysis,
orientation of the job analysis and the sources that will be used for
collecting the job data.
Employee Involvement
Employees are asked to supply important information about the contents of
a job, as they are the ones that are most familiar with the job. Hence, the
organization has to decide how much the employees will be involved. Too
much involvement may result in an employee inflating his job duties and
responsibilities, more than it actually is. Too little involvement may result
in developing suspicion among the employees regarding the motives of the
job analysis. It can also lead to inaccurate and incomplete information.
Level of Analysis
The level of analysis affects the nature of the data collected. The nature of
the jobs being analyzed determines the level of details in job analysis. As
the nature of a job of a security guard is different from the job of a Human
Resource manager, even the level of analysis of these two jobs will be
different. The level of analysis also depends on the purpose for which the
job related data is being collected.
Timing and Frequency of Analysis

Another strategic choice that an organization has to make is regarding the
timing and frequency of job analysis. When an organization is new, job
analysis is initiated for the first time. Subsequently after the organization is
established, job analysis is conducted whenever a new job is created, or
whenever there is a significant change in the job due to changes in
technology or methods, or when the organization feels that there is an
inequality between the job demands and the remuneration it pays.
! !25
JOB ANALYSIS
Orientation of the job Analysis

There are two approaches to conducting a job analysis. Job analysis can be
done by looking at what has happened in the past and what is currently
being done. This orientation is referred to as the past-oriented approach.
On the other hand, if an organization is changing rapidly due to fast growth
or technological changes, then the approach to the job analysis should be
future-oriented. In such an approach the organization anticipates the
future changes and conducts the job analysis, keeping this change in mind.
Sources of Job Data

The organization should make a choice regarding the source of job data to
be used. For an established organization, the first source of job related
data is the job-analysis data that already exists. The various sources of job
data are the employees, supervisors, job experts, existing job data,
equipment maintenance records, training manuals and other job training
materials. An organization has to keep two things in mind while deciding
the sources of job data to be used - the sources should be most recent,
and several sources of information should be used.
Gather Information
The organization has to decide as to what type of data is to e collected,
which methods are to be used for data collection, and who should collect
the data. Normally, trained job analysts, supervisors or the employees are
used to collect the data. The type of method to be used for data collection
depends on important factors like the purpose of the job analysis and, the
status of the current job analysis process. For example, a new organization
may appoint a job analyst who will select the most suitable method for
data collection. Well established organizations should review the job
analysis information over a period of time as jobs change due to many
factors like changes in technology, and changes in products.
Process Information
Once the job information has been collected, it is processed so that it can
be useful to various personnel functions. Specifically, job-related data is
used to prepare job description and job specification.
! !26
JOB ANALYSIS
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 and relationship with other jobs. Thus, a job description
contains the following information:
1. Job title, code number, and 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/stress.
5. Social environment prevailing at the workplace.
6. Extent of supervision given and received.
7. Relationship with other jobs-vertical, horizontal, and diagonal.
Advantages of Job Description
a. It helps the supervisors in assigning work to the subordinates so that he

can guide and monitor their performances.
b. It helps in recruitment and selection procedures.
c. It assists in manpower planning.
d. It is also helpful in performance appraisal.
e. It is helpful in job evaluation in order to decide about rate of

remuneration for a specific job.
f. It also helps in chalking out training and development programmes.
Job Specification
Job specification summarizes the human characteristics needed for
satisfactory job completion. It tries to describe the key qualifications
someone needs to perform the job successfully. It spells out the important
attributes of a person in terms of education, experience, skills, knowledge
and abilities to perform a particular job. The job specification is a logical
outgrowth of a job description. For each job description, it is desirable to
have a job specification. This helps the organization to find what kinds of
persons are needed to take up specific jobs. The personal attributes that
! !27
JOB ANALYSIS
are described through a job specification may be classified into three

categories:
a. Essential attributes: skills, knowledge and abilities a person must

possess.
b. Desirable attributes: qualifications a person ought to posses.
c. Contra-indicators: attributes that will become a handicap to successful

job performance.
A job specification can be developed by talking with the current jobholders

about the attributes required to do the job satisfactorily. Opinions of
supervisors could also be used as additional inputs. Checking the job needs
of other organizations with similar jobs will also help in developing job
specifications.
A Specimen Job Specification of Compensation Manager is given below:
Education MBA with specialization in HRM/MA in social work/PG

Diploma in HRM/MA in industrial psychology.
Experience: At least 3 years experience in a similar position in a large
manufacturing company,
Skill, Knowledge, Knowledge of compensation practices in competing

Abilities: industries, of job analysis procedures,of compensation
survey techniques, of performance appraisal systemsn.
Skill in writing job descrip tions, in conduction job analysis
interviews, in making group presentations, in performing
statistical compu-tations.
Ability to conduct meetings, to plan and prioritize work.

Work Orientation The position may require up to 15 per cent travel.
Factors:
Age: Preferably below 30 years
! !28
JOB ANALYSIS
Preparing a job specification is always not easy. Regarding the human

resource requirements of a job, there is scope for disagreement. For a
clerical job, one bank may demand high school education; another bank
may demand the services of graduates or even postgraduates. Differences
may also crop up when stating an attribute as a 'desirable' or 'essential'
qualification. To avoid further confusion, while writing any job specification,
it is important to list only those skills, knowledge and abilities essential for
job performance.
Advantages of Job Specification
1. It is helpful in preliminary screening in the selection procedure.
2. It helps in giving due justification to each job.
3. It also helps in designing training and development programmes.
4. It helps the supervisors for counseling and monitoring performance of

employees.
5. It helps in job evaluation.
6. It helps the management to take decisions regarding promotion,

transfers and giving extra benefits to the employees.
Activity B
Describe the process of job analysis in an organisation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Ajay Verma: Can you figure out your job description and job specification?
Rajesh: I will try, Sir. My job description is to be a driver to the Vice

President of Human Resource department, Globodyne Ltd. And my job
specification must have been for a person who was more than 18 years of
age and who has studied up to the school level.
! !29
JOB ANALYSIS
Ajay Verma: Fantastic!! Let me explain the various methods of collecting

job data.
2.3 DIFFERENT METHODS OF COLLECTION OF JOB DATA
The different methods of collecting job-related data are described below:-
Interview
In this method, the job analyst interviews the employee and his supervisor
to get information about the job. Normally, a structured interview form is
used to record the information provided by the employee and the
supervisor. During the interview, the job analyst uses his own judgement
about the information to be included in the form. Though the interview
method provides a personal touch to the job collection process, it is a time
consuming process. The interview may also be subject to bias - bias on the
part of the interviewer. Also, the employee may provide inaccurate data
regarding the job. The effectiveness of the interview method depends upon
the interviewer and on the ability of the employee to provide meaningful
responses.
Observation
In this method, the job analyst observes the employee at work and records
what he does, how he does, and how much time is required for completion
of a given task. This method is very simple and the collected is very
accurate. On the other hand, it is a time consuming method. This method
can be applied only to jobs which are of a repetitive nature. It can be
applied to unskilled and semi-skilled jobs and not to skilled jobs. Also, the
job analyst has to be trained for this method, and the training involves
additional cost.
Questionnaire
In this method, employees fill in a structured questionnaire provided to
them. These questionnaires are then approved by their supervisors. The
questionnaires provide information on the job title of the employee, the job
title of the employee's supervisor or employee, the job titles and the
number of staff reporting to the employee, and a list of the duties that the
employee performs. This method is useful as it can collect information on a
large number of jobs in a short period of time. This helps in saving time
and also the staff required to conduct this programme is very minimal. Also
all the employees can participate in this method. However, this method
! !30
JOB ANALYSIS
also suffers from certain drawbacks. The information provided may not be
accurate. Also, follow-ups may be required to clarify inadequately filled
questionnaires. In addition to this, the questionnaire may be subject to
misinterpretation by the job analyst.
Jot Performance
In this method, the job analyst actually performs the job. The analyst
receives first hand experience of the contextual factors on the job including
physical hazards, social demands, emotional pressures and mental
requirements. This method is useful for jobs that can be easily learned. It
is not suitable for jobs that are hazardous or that require extensive
training.
Checklist
This method is similar to the questionnaire method. In this method, the
response sheet contains few subject judgements, and the responses are
mainly 'yes' or 'no' variety. Checklists cover many activities and the
employee ticks only those tasks that are included in their jobs. The
checklist is normally prepared by a specialist who collects all relevant
information about the job concerned. This information is obtained by
asking supervisors, industrial experts and those familiar with the work.
After the checklist is prepared it is sent to the employee, who then ticks
the relevant tasks that he performs in the job. Also, the employee is asked
to write any additional task that is not listed in the checklist. The checklist
is useful in large firms that have a large number of employees assigned to
a particular job. However, this method is costly and therefore, not suitable
for small firms.
Technical Conference Method

In this method, the job analyst approaches the supervisors possess
extensive knowledge of the job. These experts provide details about the
job. Normally, a conference is held so that all the supervisors can attend at
the same time and provide the relevant job related data. It is a good
method of collection of job data but it lacks accuracy as the employees are
not involved in the collection of the information.
! !31
JOB ANALYSIS
Diary Method
This method required the employees to record in detail their activities each
day. If the employees record the activities faithfully, the data obtained is
accurate. Also, it eliminates any errors due to memory lapses that an
employee makes while answering a questionnaire or a checklist. However
this method is time consuming as the recording has to be spread over a
number of days. This also reduces the production time and thereby the
productivity of the employee.
Critical Incidents
This method is a qualitative approach to obtain specific behaviourally
focused description of work. In this method, the employees are asked to
describe several incidents based on their past experience. The incidents
collected are analyzed and classified according to the job areas they
describe. The job requirements become clear once the analyst
differentiates between effective and ineffective behaviours of the
employees on the job. The process of collecting is a lengthy and a time
consuming process. It is also very difficult to classify these incidents as
several employees might have dissimilar incidents. Also, the analyst must
possess excellent analytical skills to translate the content of these incident
descriptions into meaningful statements.
2.4 PROBLEMS FACED IN JOB ANALYSIS
Some of the major problems that may crop up while conducting job
analysis are :-
Support from Top Management

Support from the top management is very crucial. For a job analysis to be
successful the top management has to make it clear to all the employees
that their participation is extremely important. Unfortunately in most of the
cases it is not communicated by the top management, thus rendering the
entire process ineffective.
Relying on a Single Source or Method
Many times, the organizations rely only on one method of collecting job
related data.
! !32
JOB ANALYSIS
Or they might rely only on one source, either employees or their

supervisors, for collecting job data. Job analysis is most effective when
multiple sources of data are used, preferably a combination of employees,
supervisors and industrial experts. Also, when organizations use more than
one method of collecting job related data, the job analysis is more
accurate.
No Training Provided to Employees

Employees or the job holders are a great source of information about the
job. But they are not trained to generate quality data which can be useful
for job analysis. In addition to this, employees are not made aware of the
importance of the data. As a result, when the job data is collected the
employees either do not participate fully or they do not participate at all.
Distortion of Activities
Many times, employees perceive job analysis as a threat to their jobs.
Hence, they are prone to distort the data by inflating their activities and
duties. This results in inaccurate job data which may lead to the
organizations over-compensating these employees.
Activity C
Describe the various methods used to collect job related data in an
organisation. List down some of the problems faced while conducting job
analysis.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: That was wonderful, Sir!! Thank you, Sir!!
Ajay Verma: You are welcome!! But, I have not finished. Let me explain
job design and the various factors that affect it...
! !33
JOB ANALYSIS
2.5 NATURE AND IMPORTANCE OF JOB DESIGN
The next logical step, after job analysis is completed, is job design. Job
design involves efforts to organize tasks, duties and responsibilities into a
unit of work so as to achieve certain objectives. Job design involves three
steps:-
a. Specification of individual tasks.
b. Specification of the method/methods to perform these individual tasks.
c. Combination of tasks into specific job to be assigned to individual

employees.
The first and the third step determine the content of the job while the
second step shows how the job must be performed.
While designing a job, the organization requirements and the individual

needs of the employee must be considered.
This is very important as it has a critical impact on organizations and

employee objectives. From an organization's viewpoint, the way tasks,
duties and responsibilities are grouped can affect productivity and costs.
Jobs that are not satisfying or are too demanding are very difficult to fill.
This leads to a higher employee turnover (employee attrition). For an
employee, motivation and job satisfaction are affected by the match
between job factors (job content and rewards) and personal needs.
Therefore a well thought job design can help both the organization and its
employees achieve their objectives.
Poorly designed jobs lead to lower productivity, high employee turnover,

absenteeism, sabotage and other problems.
In future, the survival and the growth of an organization will depend on

how well a job has been designed. As the number of new employees
entering the labour market slows and the international competition
increases, well designed jobs will become even important in attracting and
retaining a motivated workforce, which will be capable of producing high
quality products and services.
! !34
JOB ANALYSIS
2.6 FACTORS AFFECTING JOB DESIGN
Job design is affected by organizational, environmental and behavioural

factors. A well designed job will make a job productive to the organisation
and satisfying to the employee.
Organisational Factors
Organizational factors include the following factors :
Job design requires the assembly of a number of tasks into a job or a

group of jobs. A task consists of three elements :
a. Planning: deciding the course of action, timing and the resources

required
b. Executing: carrying out the plan.
c. Controlling: monitoring the elements for each of the tasks involved.
An individual may carry out one main task. Task functions may be split
between a team working closely together or along an assembly line.
Complexity in a job may be a reflection of the number and variety of tasks
to be carried out, or the range and scope of decisions that have to be made
or the difficulty of predicting the outcome of decisions.
Work Flow
The flow of work in a firm is strongly influenced by the nature of the
product or services. Normally, if the work is to be done efficiently, the
product or service suggests the sequence of jobs to be done. After the
sequence of jobs is determined, the balance between jobs is established.
Balance of jobs refers to the time and the workforce that will be involved in
completing a particular job.
Ergonomics
Ergonomics is concerned with designing and shaping jobs to fit the physical
abilities and the characteristics of individuals so that they can perform their
jobs better. Nature of job remains the same, but the location of tools,
switches, computers and other facilities is changed to make the employee
feel comfortable and handle the job in a much better manner.
! !35
JOB ANALYSIS
Work Practices
Work practices are set ways of performing work. Till recently, work
practices were determined by time and motion study, which studied the
standard time needed to complete a given job. Failure to consider work
practices can have undesirable outcomes such as resistance from the
employees.
Environmental factors
Environmental factors include the following factors :
Employee abilities and availability

Efficiency consideration must be balanced against the abilities and
availability of the people who are to do the work. New employees lack the
experience to handle specific tasks of the organisation. While designing the
jobs, the ability and the availability of the employees must be considered.
Change in expectations of employees

Nowadays, the employees are more educated, knowledgeable and aware
about their individual objectives and goals. This in turn translates to
employees having high expectations from their jobs. Job design has to
meet these changes in the expectations of the employees.
Globalization
Globalization has made it possible for companies to set up units in different
parts of the world. In such a scenario, a multi-national organisation tends
to design jobs keeping in view the benefits of standardization in mind. This
leads to a neglect of the national and cultural differences. Hours of work,
holidays, vacations, religious beliefs, management styles and employee
attitudes are some of the differences that can affect the design of jobs
across international borders. Failure to consider these expectations can
create dissatisfaction, low motivation, hard-to-fill openings and a low
quality of work life.
Behavioural factors
Behavioural factors are concerned with human needs and the requirement
to satisfy them. Individuals find jobs challenging and satisfying only when
the following factors are considered :
! !36
JOB ANALYSIS
Feedback
Employees need to receive meaningful feedback about their performance.
They need to know whether the job that they are doing plays a significant
part in the overall operations of the organisation.
Autonomy
Autonomy refers to being responsible for what one does. Jobs that give
employees authority to make decisions will increase an employee's self-
esteem. Absence of autonomy can cause employee apathy or poor
performance.
Use of Abilities
An employee must perceive that the job is requiring them to use their
abilities they possess. If an employee perceives that a job is not making
use of his abilities, it might lead to low motivation.
Variety
Lack of variety may cause boredom. This in turn leads to fatigue which
causes mistakes. While designing a job, the job designer should ensure
that there is sufficient variety in the jobs. Too little variety causes boredom
and too much of variety may lead to incompletion of the jobs.
Ajay Verma: So Rajesh, can you summarize our chat ??
Rajesh: Yes, Sir!! To summarize our chat, Job analysis is ………..
! !37
JOB ANALYSIS
2.7 SUMMARY
Job Analysis is a process which involves collection of information regarding

the knowledge, skill and ability an employee possesses to perform a job
effectively. It is useful for all personnel activities like human resource
planning, hiring and training of employees, deciding the compensation and
for appraising the performance of employees. Job analysis process consists
of 5 steps. They are - making strategic choices, gathering of information,
processing of information, preparation of job description and job
specification. Some of the methods used in job analysis are questionnaire,
checklist, jot performance, observation and interview. For an effective job
analysis, the support of the top management and the whole-hearted
participation of the employees is a must. Job design involves efforts to
organize tasks, duties and responsibilities into a unit of work so as to
achieve certain objectives. A well designed job is the key to a company's
survival and growth. Job design is affected by organizational,
environmental and behavioural factors.
1. What is Job analysis? Explain the importance of job analysis in an

organization.
2. What are the various steps that are involved while conducting job
analysis ?
3. Explain job description and job specification.
4. List down and explain the various methods used in collecting job data.
What are some of the problems faced while conducting job analysis in
an organization ?
5. Explain job design and its importance. Describe the various factors
affecting job design.
! !38
JOB ANALYSIS
Related Reading: Critical Thinking - The Skill for the 21st Century
Workforce
(Courtesy - Sunitha Murthy, The Times of India - Ascent)
Critical thinking is neither an abstract nor a difficult skill to attain.

At the most basic level, it is the process of identifying and
evaluating evidence relevant to decision- making.
Want to know the success mantra to excel at your work place? Think
Critical. Critical thinking skill is the answer for the 21st century work-force.
According to a survey, HR professionals cited that Critical Thinking would
become the number one skill of increasing importance in the next five
years.
Critical thinking is neither an abstract nor a difficult skill to attain. At the

most basic level, it is the process of identifying and evaluating evidence
relevant to decision-making. Critical thinking goes beyond mere logic. It
represents the ability to become aware of one's own biases in thinking that
governs our decision-making capabilities. This ability results in objective
evaluation of information to reach a conclusion. Critical thinking is about
how you think and not what you think. It is a process and not an outcome.
Thus, Critical thinking involves the thinker passing through steps such as
encountering a triggering situation or problem-event, the knowledge about
this event that leads to exploration of alternative solutions, the evaluation
of these alternatives on the basis of available evidence, finally leading to
taking a decision about the situation or event.
Critical thinking cuts across boundaries of designations and domains. It has

relevance for all. Every professional benefits from thinking better.
Therefore, the need of the hour is to acquire this skill to take one's logical
thinking process to the next level. However, most of us are vulnerable to
'thinking traps' or fallacies in thinking. Some common fallacies or
erroneous beliefs that come in the way of thinking critically are:
a. Fallacies of relevance: Arriving at a conclusion/decision due to appeal

to authority/force.
b. Fallacies of insufficient evidence: Fallacies of insufficiency are cases

where insufficient evidence is provided in support of a claim.
! !39
JOB ANALYSIS
c. Fallacies of inconsistency: Arguing from inconsistent statements, or

to conclusions that are inconsistent with the premises.
d. Fallacies of inappropriateness: Fallacies of inappropriate

presumption are cases where one has explicitly or implicitly made an
assumption that is not reasonable to accept in the relevant context.
To apply Critical thinking is to stay grounded in objectivity, thereby

significantly reducing the impact of thinking traps. In our day-to-day living,
we can improve our Critical thinking skills by following a mental roadmap
of steps to take to arrive at well-balanced conclusions - consider facts,
examine the relevance of the facts to the situation to get clarity on the
situation, weight the alternatives, and finally integrate information to arrive
at a conclusion.
Practicing Critical thinking at the workplace is of utmost importance as it

has a cascading effect on various decision making factors, the most
important being strategic thinking, problem solving, and planning and
organising. Going by the competency matrix set for managers in most
organisations, among the most common attributes figuring in the
competency bucket are abilities of problem solving, decision-making,
planning and organisation.
But the question is do organisations really adopt objective measures to

assess professionals on these competencies? Current HR practices tend to
focus on assessing abilities at the entry level of recruitment. Abilities
assessed at this level are of a very general nature and pertain to
parameters such as ability to learn a new task, language skills and some
basic analytical skills. There may be an implicit assumption pervading the
HR thought-process that needs to be brought out - testing the ability of
mid to high-level management is not required as employees functioning in
these levels of management will have the necessary skills to think better
and drive sound decisions for their organisations.
In today's highly competitive markets, clients, projects, deadlines and

targets drive day-today operations and long-term boardroom decisions in
organizations. A floor manager, team leader or vice president - all need to
think on their feet and offer solutions that optimise the business prospects
of the organisation. Critical thinking leads to better decisions. Both
managers and leaders should be able to pick out critical data from a sea of
! !40
JOB ANALYSIS
information and take sound decisions based on it. Hence, workplace

assessment of Critical Thinking is crucial in creating the right work
environment that offers sustained solutions driving positive growth.
The time is right for a paradigm shift in thinking within the HR community.
Talent assessment needs to be a blend of both the right kind of personality
and the right kind of ability to lead from the front. Critical thinking needs to
be recognised as an essential skill in organisations if we are to become
successful players in a globalised business arena.
! !41
JOB ANALYSIS
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !42
MANPOWER PLANNING
Chapter 3
Manpower Planning
Objectives
After completing this chapter, you should be able to understand:
What is Manpower planning?
Various factors affecting manpower planning.
Process of manpower planning in an organisation.
Importance of manpower planning.
Various barriers faced by an organisation while planning the manpower.
Structure:
3.1 Manpower Planning
3.2 Process of Manpower Planning
3.3 Importance of Manpower Planning
3.4 Barriers to Manpower Planning
3.5 Summary
! !43
MANPOWER PLANNING
After a few hours, Ajay Verma returns to the car.
Ajay Verma: Arre Rajesh, let’s go back to the office.
Rajesh: Yes Sir.
Ajay Verma: This visit was quite interesting. I am wondering whether we

are going on the right path in Manpower planning
Rajesh: Sir, what is manpower planning ???
3.1 MANPOWER PLANNING
Manpower planning or Human Resource planning is the process of

forecasting an organisations’s future demand for, and supply of, the right
type of people in the right number. HR activities like recruitment and
selection, training and development, compensation, appraisal and labour
relations are derived from Manpower planning.
Manpower planning, if used properly, leads to the maximum utilization of

human resources, reduces excessive labour turnover and high
absenteeism; improves productivity and aids in achieving the objectives of
any organization. If it is not used properly, it leads to disruption on the flow
of the work, lower production, less job satisfaction, high cost of production
and a constant problem for the management personnel. For an individual,
it is important because it helps him to improve his skills and utilize his
capabilities and potential to the fullest. For an organisation, it is important
because it improves its efficiency and productivity.
Manpower planning is influenced by several factors. The most important

factors are:
a. Type and strategy of organisation.

b. Growth cycle of an organisation.
c. Environmental uncertainties.
d. Labour Market.
! !44
MANPOWER PLANNING
Type of an Organisation
The type of an organisation is important because it determines the number
of processes required and the number and type of staff required. A
manufacturing organisation will have more processes than a service
oriented organisation. For example, a company like Godrej & Boyce will
have to plan for manpower requirements for its manufacturing processes
as well as for its service processes. On the other hand, Vodafone - a
cellular service provider - will plan only for its service processes. The
manpower demand for Godrej will be a combination of unskilled and skilled
manpower, whereas Vodafone’s manpower demand will for skilled
manpower.
Growth Cycle of an Organisation

In the early cycle of an organisation, manpower planning may not have an
importance as the organisation focuses on its entry into the market and its
main focus is the product or service development.
Manpower planning also depends on an organisation’s growth. Manpower

planning is needed when the organisation enters the growth phase.
Internal development of people gets more importance as there is a need to
keep up with the growth.
A mature organisation is less flexible and growth slows down. The

workforce becomes old as fewer younger people are hired. There is less
flexibility and innovation in manpower planning.
In the decline stage, manpower planning is done for layoffs, retrenchment

and retirement.
Environmental Uncertainties
Political, social and economic changes affect all organisations. Manpower
planners handle these changes by carefully formulating policies for
recruitment, selection and training and development. Also companies
operating in an environment which undergoes many changes have to
formulate plans to accommodate these changes. For example, companies
in the Information Technology field have to plan according to the various
technological changes; else they will not survive in the fiercely competitive
market.
! !45
MANPOWER PLANNING
Labour Market
Countries may have a huge population base; the labour market in these
countries may suffer from a lack of talented and skilled professionals. It is
very difficult for organisations to find the right person for the right job at
the right time and hence it becomes important for these organisations to
conduct manpower planning.
Activity A
What is manpower planning? List down some of the factors affecting
manpower planning
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: Oh, so these are some of the factors that affect manpower
planning. Then Sir, what are the benefits of manpower planning?
Ajay Verma: You are so impatient, Rajesh. Let me throw some light on
(laughs) how manpower planning is done…..
! !46
MANPOWER PLANNING
3.2 PROCESS OF MANPOWER PLANNING 
Organisational Objectives
Objectives of the HR plan are derived from the business objectives, which
have been defined by the top management. From the organizational
objectives, the HR department needs to determine the number and
characteristics of the employees. For this purpose, an organizational chart
is drawn which determines, the number of employees, at what level, which
positions, experience required to fill a particular position, training to be
provided, etc.
! !47
MANPOWER PLANNING
Also, the HR department needs to determine the following:
a. Whether vacancies to be filled internally through promotions and

transfers or to be hired from outside.
b. How will the union constraints be handled, if any?
c. How much of the production and operations can be automated?
d. If automated, what is to be done of the employees who will be

displaced??
e. How to ensure that there is a continuous availability of skilled

workforce?
HR Demand Forecast
Demand forecasting is the process of estimating the number and quality of
people required in the future to meet the needs of the organisation.
Demand forecast considers external as well as internal factors. External
factors include competition, economic climate, technological changes, laws
and regulations, etc. Internal factors include budget constraints, new
products and services, organizational structure, employee separations, etc.
Normally, demand forecasting is done on the basis of the annual budget

and long-term corporate plans. For example, in a manufacturing firm, the
sales budget is very essential. On the basis of the sales budget, the
production plan is worked out which provides details on the number and
type of products to be produced. On the basis of this information, the
number of hours to be worked by each skilled category of labour is worked
out. This determines the quantity and quality of employees required.
Demand forecasting helps to:
a. Identify the number of jobs required.

b. The mix of employees required to perform the various jobs.
c. Avoid unnecessary costs with the correct number of employees.
! !48
MANPOWER PLANNING
HR Supply Forecast
Supply forecasting is the process by which management determines
whether it will be able to procure the required number of employees and
the various sources. It measures the number of people that may be
available to an organisation - internally and externally.
Supply analysis is beneficial as it helps in quantifying the number of people

and positions expected to arise in the future and in preventing any
shortages that may arise in the future.
The Supply Analysis Covers
a. Present employees: Analysis of the skills of the employees (non-

managers and managers) is conducted. This helps in providing the HR
department with a ready database and a comprehensive understanding
of the existing capabilities in the organisation. This analysis is also
helpful in identifying employees eligible for promotions and transfers.
b. Internal sources of supply: The analysis helps to identify the internal

sources of supply and whether these sources will be sufficient to meet
the future needs of the organisation. Internal sources of supply could be
through referrals of the employees, children of retired employees, etc
c. External sources of supply: The analysis also helps in identifying the

external sources of supply, if the internal sources of supply do not meet
the needs of the organisation. The external sources could be
employment exchanges, consultants, college campuses, competitors,
etc.
Gap Analysis - Is Demand Equal to Supply?

Once, the demand and the supply forecasts are prepared, the HR
department checks whether the demand is met by the supply. If the
demand is more than the supply, then there is a shortage of manpower
and necessary steps like recruitment and selection, training and
development and retention plans will have to be undertaken. If the supply
is more than the demand, then there is a surplus of manpower and
necessary steps like layoffs, reduced working hours, Voluntary Retirement
Schemes (VRS), pay-cuts, etc will have to be undertaken by the
organisation.
! !49
MANPOWER PLANNING
Activity B
List down the steps involved in Manpower Planning of any organisation
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: Sir, now can you tell me the benefits of manpower planning?
Ajay Verma: Yes…….. (laughs)
3.3 IMPORTANCE OF MANPOWER PLANNING
Importance of Manpower planning can be understood through the following

points :
Future Manpower Needs

Manpower Planning is required as it helps in determining future manpower
needs. If proper manpower planning is done, then the company will find
that it is able to handle any changes in its environment. Manpower
planning also helps in succession planning for the middle and top
management.
Creating Highly Talented Manpower

Jobs are getting highly specialized and intellectual in nature, as compared
to a few years back. As a result of computerization, nowadays the skills
required for an employee on the production floor have changed. Also,
nowadays the manpower consists of qualified and skilled personnel like
MBAs, engineers, etc. Qualified and skilled personnel are known for job
hopping, thus creating shortages in the organisation. Manpower planning
helps to avoid such shortages.
Foundation for HR Functions

From manpower planning, other HR functions like recruitment and
selection, training and development, job analysis, compensation
administration, performance appraisal and feedback, employee welfare,
etc. are derived.
! !50
MANPOWER PLANNING
3.4 BARRIERS TO MANPOWER PLANNING
There are also certain barriers to manpower planning:
a. Manpower plans suffer from inaccuracy as it is difficult to prepare long-

range forecasts accurately. There could be changes in economic
conditions, technology, market and labour force conditions which may
make the long-range plans unreliable.
b. Most of the times, operating managers or non-HR managers are not

involved in the manpower planning which renders the planning
ineffective. A successful planning has to involve the efforts of the
operating as well as the HR managers.
c. Imbalance may occur between short-term and long-term HR needs.
Many managers, due to pressures, may focus on getting the work done
while neglecting the long term need of grooming the people for greater
responsibilities.
Ajay Verma: Oh, here we are. We have reached the office.
! !51
MANPOWER PLANNING
3.5 SUMMARY
Human Resource Management is a process where people and organizations

are brought together so that the goals of each are met. Manpower planning
or Human Resource planning is the process of forecasting an
organisations’s future demand for, and supply of, the right type of people in
the right number. Manpower planning is influenced by factors such as type
and strategy of organisation, growth cycle of an organisation,
environmental uncertainties and labour market.
It involves the following steps:
a. Organisational objectives.
b. Demand forecast.
c. Supply forecast.
d. Surplus or shortage.
It is important as it determines future manpower needs, is a foundation for

other HR functions and is useful in creating highly talented manpower.
1. What are the steps involved in Manpower Planning?
2. Why is manpower planning required?
3. What are the barriers that are faced while planning the manpower
requirements in an organisation?
! !52
MANPOWER PLANNING
Related Reading
 
Forecasting manpower requirements
(Courtesy - Unnati Narang, The Times of India - Ascent)
With increasing uncertainty in the job markets and thrust on cost cutting, it
is increasingly important for HR managers to plan the demand and supply
of manpower as accurately as possible. Basic to human resource planning,
is the function of forecasting a company’s future demand for employees.
Only then can a company maintain a ready pool of candidates and fill in
vacancies without much loss of time or effort. Forecasting forms the basis
of HR functions today.
Explaining the importance of talent planning and forecasting, Rahul

Kulkarni, Head, HR at Kale Consultants, “talent forecasting is the most
crucial job of the Human resources department. Human Resources
department needs to align their strategy according to the needs and vision
of the organization. HR needs to work proactively with the business and
understand what is in pipeline and revisit the needs on periodical basis. In
the current competitive scenario, the robust talent forecasting will help to
get an edge over the competitor”
Forecasting is critical to business success. It offers several benefits for the

organisation as a whole. As M. S. Venkatesh, President, Group HR,
Educomp Solutions Group points out, “Forecasting ensures that the
organisation structure is right sized and there is no short supply of
manpower and excess manpower. This assures better efficiency and
productivity of Manpower. Seoncly, it ensures that there is no overlap of
roles and there is complete role clarity. It helps plan the recruitment
strategy well in advance to hire the right quality of talent at an optimal
cost and Lead time. Forecasting helps in cost optimisation and accurate
budgeting.”
! !53
MANPOWER PLANNING
Setting Forecasts
Forecasting Manpower requirements is driven by the Annual Business Plan
of revenues, Sales Targets, Geographical distribution of business units and
experience of the Business/ Function Head and the HR Head who are
responsible for the forecast. Venkatesh explains, “Manpower forecasting is
the job of both the Business/Function Head and the HR Head approved by
the CEO. Prior to forecasting, it is critical to establish role clarity and Key
Result Areas (KRAs) for every job role in the organization to ensure the
organization structure is of the right size. The next step is to understand
the cost of the organisation structure that will deliver the targeted ROI
(Return on Investment) as per the Annual Business Plan. Further, the
forecasting team needs to have the knowledge of Men to volume/revenue
target ratios and geographical distribution points.”
What are some of the skills needed for accurate forecasting? Venkatesh
continues, “Managers must understand the business very well. Questions
such as why this person can or cannot do a specific job must be asked and
answered logically. For better results in forecasting, the HR Manager plays
a key role if he/she understands the business equally as a Business/
Function Head.”
Not without Challenges

In spite of the availability of many statistical tools and procedures,
forecasting is not free from errors. Even as a process, it is fraught with
challenges. Kulkarni adds, “The greatest challenge in forecasting is the
resistance by people, business uncertainty, and no clear vision.”Often, the
forecasts made are too high and unachievable. This can render the process
meaningless. Hence, the HR managers must revisit and review forecasts
from time to time. In case the forecasts are released to the public,
especially for big organisations, it is all the more important to give realistic
and even conservative figures. HR managers must have the vision and the
ability to work jointly with business heads.”
Clearly forecasting, both an art and a science, is a continuous and a joint

exercise. Achieve accuracy in forecasting to achieve extraordinary business
results!
! !54
MANPOWER PLANNING
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !55
RECRUITMENT, SELECTION AND INDUCTION
Chapter 4
Recruitment, Selection And Induction
Objectives
What is Recruitment?
Importance of recruitment.
Process of recruitment in an organisation.
Various sources of recruitment
What is Selection?
How a selection process is conducted in an organisation.
What is induction?
Structure:
4.1 Nature and Importance of Recruitment.
4.2 Process of Recruitment.
4.3 Various Sources of Recruitment.
4.4 Selection
4.5 Process of Selection
4.6 Induction
4.7 Summary
After a month, Ajay Verma was due for his monthly visit to the factory at
Ghansoli. Rajesh was waiting for him at the gate of his home at Bandra.
Rajesh: Good Morning, Sir.
! !56
Ajay Verma: Good Morning, Rajesh. I am so glad we recruited and

selected you.
Rajesh: Sir, what is recruitment and selection??
Are they different ?
I thought they meant the same thing.
Ajay Verma: No, Rajesh. They are two different things. Let me explain
them…
4.1 NATURE and IMPORTANCE OF RECRUITMENT
Hiring of employees is an ongoing process and it is not restricted to the

early stages of an organisation. Employees leave the firm for better
opportunities, some employees retire and some employees die. Also an
organisation grows, merges with/takes over other organisations and also
diversifies into various sectors. All these activities require that new
employees are hired. The hiring of employees stops only when the
organisation ceases to exist.
Recruitment is the process of searching for and obtaining applications for

jobs, so that the right people can be selected from this pool. It refers to
the process of attraction of job seekers to a company through various
media like advertisements in newspapers, job portals, consultants, etc. In
reality, the term recruitment is used to the entire process of employee
hiring including the selection process.
In today's world, a company's success or failure depends on many factors.

A key factor of this is the company's manpower. The quality of manpower is
emphasized today and we can see that through the various programmes
adopted by Human Resource department. Today, the Human Resource
departments and organisations have realized that to develop a qualitative
manpower, a suitable manpower has to be recruited and selected.
! !57
Recruitment helps a company in the following ways:
Attract highly qualified and competent people.
Ensure that the selected candidates stay longer with the company.
That there is a match between cost and benefit.
Help the company create more culturally diverse workforce.
4.2 PROCESS OF RECRUITMENT
The process of recruitment consists of:
!
Fig. 1
Recruitment Planning
Manpower planning helps in deciding the number of job vacancies, whereas
Job Analysis provides information as to the nature of these vacancies. On
the basis of this, Human Resource department plans the number of
! !58
applicants and the type of applicants to be contacted. Organisations have

to attract more applicants for the vacancies as some of the applicants may
not be suitable for the vacancy.
Strategy Development
Once the number and the type of recruits to be hired are known, Human
Resource department then decides the following :
a. Whether the firms should hire less skilled employees and invest on their
training and development, or whether they should hire highly skilled and
trained professionals. This is known as 'Make' or 'Buy' where 'make'
refers to the hiring of less skilled and untrained employees and 'buy'
refers to the hiring of skilled and trained professionals.
'Buying' skilled and trained employees is advantageous as no training

cost has to be incurred. But the cost of remuneration to such employees
is high.
b. The Human Resource department has to decide the method that is to be

used in recruitment and selection process. The Human Resource
department has to decide many things like whether facilities like tele-
conferencing is to be used during selection, whether attracting the job
seekers is to happen only through newspaper advertisements, whether
consultants is to be used during recruitment and selection.
c. The Human Resource department also has to decide from where the
applicants are to be recruited. This depends on the location of the
organisation. If the organisation is located in a city like Mumbai, then
the recruitment is done from the huge pool of job seekers in Mumbai.
But if the organisation is located in Pune, then it will have to look at
attracting job seekers from Pune as well as Mumbai. Most of the
companies located in Pune recruit employees from Mumbai, as the
necessary skilled employees may not be available in Pune.
d. Whether the recruitment is to happen from internal sources (recruit

from within the organisation) or external sources (recruit from outside
the organisation) or a combination of both.
e. The Human Resource department has also to decide when the

recruitment and selection is to happen. This decision depends on the
! !59
time taken from when the advertisement is given in the newspaper till
when the candidate reports for work. For example, if the time taken for
the entire recruitment and selection process is 2 months and the
candidate reports for work on 1st July, then the Human Resource
department will advertise for the vacancy on 1st May.
Searching
Once, the recruitment plan and strategy are developed, the search process
begins. The search process begins only after the line managers confirm
that they require an employee. Normally, they fill a form and submit it to
the Human Resource department stating that they require an employee for
a job. Also, the company has to decide what type of media is to be used for
broadcasting the recruitment message.
Screening
Screening refers to the scrutinisation and short-listing of applications
received. The purpose of screening is to filter out those applications that
are not suitably qualified for the job. For this purpose, clear job
specifications are a must as the job specifications can be compared with
the knowledge, skills and abilities of the applicants. Interviews and
applications are used to screen walk-ins. Interviews and resumes are used
by campus recruiters and consultants to screen job seekers.
Evaluation and Control

Recruitment process is evaluated on the basis of the number of
applications received, the number of candidates who went to the selection
process, the cost of the recruitment process, the number of the candidates
retained after the probation period, and the performance of the candidates
selected.
Activity A
What is recruitment ? Describe the process of recruitment in an
organisation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !60
4.3 VARIOUS SOURCES OF RECRUITMENT
Sources of recruitment can be classified into internal sources and external

sources. The various sources of recruitment are explained below:
!
Fig. 2
INTERNAL SOURCES
Internal sources include present employees, referrals from employees,
former employees and former applicants. Internal recruitment is less costly
than external recruitment. Recruiting from internal sources also increases
the morale of employees, their commitment to the organization and job
! !61
satisfaction. Also, the organization has a better knowledge of the skills and
abilities of their employees.
Present Employees
Usually, for the promotions and transfers a company prefers its present
employees for these positions. This has several advantages - it builds
morale of the present employees, it is cheaper than recruiting externally,
those who are chosen internally - are familiar with the organisation, and if
carefully planned, promotion also acts as a training tool for developing
middle-level and top-level managers. This is the reason why companies
prefer to develop internal talent groups.
Transfers are another way to recruit from present employees. Transfers

may be to another department or to another location. Transfers are
handled with care as it may lead to loss of motivation in the employee, and
eventually employee may quit.
Employee Referrals
Another internal source of recruitment is the referrals provided by the
present employees of the company. Present employees are requested to
refer either their family or friends for the jobs which are advertised. This is
most beneficial in large companies or multi- national corporations as the
large number of employees offers a huge pool of referrals. Also, this is a
very cost-effective method as the company does not have to go in for
advertisements in the external media. Most of the companies offer a
reward to the employee who refers family or friend for a job vacancy. The
reward is paid either on the appointment of the referral or after the
probation period of the referral is over.
Past Employees
Retired employees are another source of applicants as some of the retired
people may be willing to return to work on a part-time basis or as a
consultant. Also, they may recommend someone, either from their family
or friends, who would be interested in working for the organization.
Sometimes, people who have left the company are willing to come back
and work and too sometimes for a better pay package than offered earlier.
! !62
EXTERNAL SOURCES
External sources refer to sources outside an organization. External
recruitment brings in new skills and talent into the organization. Sources of
external recruitment are :-
Professional Bodies
Professional bodies like Management/Chartered Accountant/ Company
Secretary/Cost Accountant institutions, offer placement services to their
students. Also, trade associations publish journals for their members.
These journals carry advertisements of employers interested in recruiting
their members. Professional bodies or trade associations are very useful in
recruiting highly educated or skilled human resources.
Advertisements
This source of external recruitment is very popular due to its wide reach
and cost- effectiveness. Companies place want ads in newspapers or in
professional/business journals. Mostly, companies place advertisements in
newspapers like Ascent (The Times of India), Economic Times, Indian
Express, etc. Advertisements must contain information like - job content
(primary tasks and responsibilities), location of the job, growth prospects,
to whom one applies. The advertisement also draws attention to the main
features of the company and creates a desire in the candidate to apply for
the job advertised.
Employment Exchanges
Employment exchanges were set up due to the provisions in the
Employment Exchange (Compulsory Notification of Vacancies) Act 1959.
The act requires that all industrial companies having more than 25 or more
workers to notify about vacancies before they are filled. Employment
exchanges increase the pool of possible applicants. It is also useful in the
preliminary screening of a job seeker. Employment exchanges are useful in
recruiting blue-collar, white-collar and technical workers.
Campus Recruitment
Campus recruitment is mostly done from colleges and universities,
especially management (IIM and other institutes), and engineering
institutes (IIT). A placement officer in each institute handles the
recruitment functions and ensures that the student's as well as the
company's expectations are fulfilled. Campus recruitment is a major source
for recruiting fresh, highly educated personnel.
! !63
Walk-ins
Walk-ins are second to newspaper advertisements, and are the most
common and least expensive source of recruitment. Here, job seekers
directly walk into the office of any organisation or company and submit
their resumes to the Human Resource department. Sometimes,
advertisements are placed in newspapers by companies informing job
seekers about the future walk-ins. Walk-ins are mostly used for entry level
and unskilled vacancies.
Consultants
Consultants are retained by organisations for recruiting and selecting
managerial and executive personnel. Consultants have nation-wide,
sometimes international-wide, contacts and reach. They keep the
prospective employee and employer anonymous. They also lend
professionalism to the process of recruitment and selection. They are
expensive as they charge huge amounts of fees, and hence they are used
while recruiting managerial level of personnel.
Contractors
Contractors are used to recruit casual workers. The names of the workers
are not entered in the company records. Nowadays, Consultants have
turned into contractors. Consultants hire people for skilled vacancies on a
contract basis. Sometimes, the contract employee, due to his good
performance, is hired as a full time permanent employee by a company.
Radio and Television

Radio & Television are very rarely used today. Earlier, it used to enjoy the
same status as newspaper advertisements. It was used by government
departments only.
Acquisitions and Mergers

As a result of acquisitions and mergers, a large pool of employees is
created. Also, a large pool of new jobs is created. Organisation can use this
large and readily available pool of human resources to implement the new
organisation's strategy. This saves a lot of time as the organisation need
not go in for the other standard recruiting methods.
! !64
Competitors
Recruiting from a rival or competitor is called poaching or raiding. This
method involves identifying the right people in rival companies and offering
them better terms of employment, and luring them. Sometimes an
employee joining a rival company has to obtain 'no objection certificate'
from his previous company. He may also have to pay a few months' salary
to the previous company. Nowadays, companies ask their employees to
sign a confidentiality agreement. This is to ensure that the data or
information that an employee comes across in his duration of employment
in the company is not misused or used by the employee in a rival company
or any other company.
Job Portals
This is the new emerging method of recruitment since the advent of
Internet. Web sites like Naukri.com, Monster.com, Timesjobs.com,
jobstreet.com, etc are some of the job portals. Job seekers upload/post
their resumes on these portals. They then browse through the various
suitable vacancies posted on the job portal and apply for the same, online.
Companies also browse through the various resumes of jobseekers, posted
on the job portal, and directly contact the job seeker through email or
telephone.
Previous Applicants
Applicants who have applied earlier and were rejected are another source
of recruitment. It is very cost-effective as the organization keeps the
records of those applicants who had earlier applied for jobs in the
company. Also, there is no involvement of consultants nor does the
company have to take out advertisements in newspapers about the
vacancies. Previous applicants can be contacted very easily - either by mail
or telephone.
Activity B
Describe the various sources of recruitment.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !65
4.4 WHAT IS SELECTION?
Selection is the process of choosing candidates with the necessary

qualifications and competence, out of the pool of job applicants, to fill jobs
in an organisation. Recruitment and selection are two sides of the same
coin. There is a slight difference between the two. While recruitment refers
to the process of attracting job seekers to apply for the vacancies, selection
refers to the process of choosing the right candidates from a pool of
applications received from the job seekers. Recruitment is positive in its
approach as it seeks to attract as many job seekers as possible. Selection
is negative in its approach as it eliminates the unqualified applicants in
order to choose the right candidate.
4.5 PROCESS OF SELECTION
If you observe the selection process in any organisation, it will look like the
following diagram:
! !66
! !67
Preliminary Interview
The main purpose of a preliminary interview is to scrutinize and eliminate
unqualified job seekers, based on the information supplied in the
application forms or in their resumes. It is mostly conducted by the Human
Resource department and is sometimes seen as a public relations exercise.
Selection Tests
The next step in the selection process is the administration of selection
tests. Job seekers who pass the preliminary interview are asked to take a
test and the applicant's ability, aptitude and personality are measured.
Ability tests help in determining how well an individual can perform tasks
related to the job. For example, secretaries may undergo a test which tests
their typing and data entry skills. Aptitude tests help determine a person's
potential to learn in a given area. For example, the numerical tests in the
Banking exam for probationary officers. Personality tests are used to
measure an employee's motivation to function in a particular working
environment.
Employment Interview
An employment interview is conducted by the manager of the department
which has the posted vacancy. This interview is very important as it allows
the interviewers and the applicants to learn about each other. Employment
interviews are flexible in nature, as it is left up to the interviewer to ask the
questions - there is no format that is to be followed and the interview
proceeds as per the questions asked by the interviewer and the answers
supplied by the interviewee.
Interviews can be one-to-one (only 2 participants - interviewer and the

interviewee), sequential (series of one-to-one interviews) or a panel
interview (more than one interviewer at a single interview). Interview
helps the company to obtain information about the applicant regarding his
suitability to the job. It also helps the applicant to obtain information about
the company, its policies, job description, etc. Interviews are also a way of
building a company's image among the applicants.
Reference and Background check

Companies request the names, addresses and telephone numbers or
references for the purpose of verifying information provided by the
applicant in his resume or application form. Previous employers, known
public figures, university/college professors, neighbours, friends, etc can
! !68
act as references. Usually previous employers are preferred because they

are aware of the applicant's performance. Reference checks are used to
check previous employment records, criminal records, educational records,
credit records, character reference, etc. Nowadays due to increase in
frauds, background checks have become more strict and a major
requirement in all the companies.
Selection Decision
After obtaining all the relevant information in the previous steps, selection
decision must be made. The previous stages in the selection process are
used to narrow the number of candidates for a job vacancy. The final
decision has to be made from the pool of individuals who pass the tests,
interviews and reference checks. The final decision is decided by the
Human Resource manager, in consultation with the line manager as it is
the line manager who will be responsible for the performance of the new
employee.
Physical Examination
After the selection decision and before the job is offered, the candidate is
required to undergo a physical fitness test. The job offer depends upon the
candidate being declared fit after the physical examination. The physical
examination is either conducted by the company's in-house physician or by
an external physician, selected by the company. The report is submitted to
the company for their records. The physical examination is done so as to
ensure that the candidate is fit to perform the work. Also it protects the
employer from any invalid claims made by the employees as the employees
might have had the illnesses or injuries prior to the current job/company.
Job Offer
After the candidate passes the physical examination, a job offer is made to
him by the company. The job offer is made through a letter of offer. The
letter of offer contains the date by which the candidate must report for
duty. The offer letter takes into consideration the notice period that the
candidate specifies during the earlier interviews. The offer letter may also
contain the compensation/salary details along with the various perquisites.
! !69
Employment Contract
On the day that the candidate reports to work at the new organisation, he
is given the letter of appointment contains the job title, the number of
hours that he is to work, holiday details, sick leave details, length of notice
due to and from employee, etc. The new joinee has to sign the letter of
appointment and a copy of the signed appointment letter is given to the
joinee. The original signed copy of the appointment letter is kept with the
Human Resource, for record purposes.
Evaluation
The selection system is evaluated on a periodic basis. Feedback is asked
from the line managers by the Human Resource department whether the
selection process adopted by the company is correct. Depending on the
response received, the Human Resource department improves new
practices to better its recruitment and selection process.
Certain parameters on which the selection process is evaluated are - the

performance of the new employee, the employee turnover/attrition/
separation during and after the probationary period, etc.
Activity C
Explain how the selection process is conducted in an organisation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Ajay Verma: So Rajesh, have you gone for your induction programme??
Rajesh: No Sir. What is induction??
Ajay Verma: What ???
You haven't gone for your induction !!! Induction is very important. It is……
! !70
4.6 INDUCTION
Induction, also called Orientation, is designed to provide new employees

with the necessary information that they will need to function comfortably
and effectively in an organisation. Induction conveys the following
information:
General information about the work routine - number of hours to be

worked, office timings, duration for breaks for lunch or snacks, whether
home drop or transport fare is provided in case of late sitting at the
office, the number of holidays, etc.
Information about the organisation - review of the organisation's history,

vision and mission, objectives, products and services as well as how the
employee's job contributes to the organisation's objectives.
Information about the organisation's policies, work rules and employee

benefits.
Induction is conducted so that the anxiety of new employees can be

reduced. New employees are anxious about many things - whether they
will be able to fulfill the expectations of the supervisor/organisation,
whether their expectations will be fulfilled by the organisation, whether
their colleagues will be helpful and well will they get along with their
colleagues. If these anxieties are not addressed, then the employee might
leave the organisation. Induction is also used to create a favourable
impression of the organisation and the work environment. Evaluation of an
induction programme is conducted by requesting the new employees to
complete questionnaire and to provide their feedback as comments.
Rajesh: Sir, I will definitely go for my induction.
Ajay Verma: Talk to Lata and ask her to send your name for the induction
programme. Induction in our company is scheduled for the first working
day of every month.
Rajesh: Ok, Sir.
! !71
4.7 SUMMARY
Recruitment is the process of searching for and obtaining applications for

jobs, so that the right people can be selected from this pool of job seekers.
The process of recruitment involves planning, strategy development,
searching, screening and evaluation and control. Sources of recruitment
could be either internal (within an organisation) or external (outside an
organisation). The most popular methods of recruitment are
advertisements in the newspapers, consultants, walk-ins and campus
recruitment. Selection refers to the process of picking the right candidates
from the pool of applications. The final selection is generally done by the
Human Resource departments in consultation with the line managers.
Selection process consists of 8 steps, starting from preliminary interview
and ending with the evaluation of the selection process. Induction is done
to provide new employees with the necessary information that he will need
to function effectively in an organisation.
1. What is recruitment? Explain the process of recruitment.
2. Describe the various sources of recruitment.
3. What is selection? Explain the process of selection.
4. Write a short note on induction.
! !72
Related Reading
 
The 'no-show' act!
 
(Courtesy - Yasmin Taj, The Times of India - Ascent)
India Inc. is plagued not only by the problem of rising attrition but
also by 'no show' employees. It is seen that a large number of job
seekers who are given offer letters do not show up on the date of
joining. Experts say it could have dire consequences on a working
professional's career graph
Quite often employers are faced with the problem of a candidate who has
been given the offer letter and is expected to join soon, but does not show
up on the joining date - a candidate who simply disappears without any
form of notification to the employer. Any employer who has had this
problem is sure to have been faced with problems as all plans have been
made to get them on board and hand over certain assignments to them.
Also, for a working professional, doing the 'no-show' act is not just an
unethical practice but can have some dire consequences for his
professional career in the long run. So, have you met a 'no show' candidate
recently?
Naveen Coomar, vice president - human resources, Impetus Technologies,

Inc. expresses, "This is an unethical practice, but there is not much an
organisation can do at this stage. This is a reflection of social reality to
some extent and also of organisational practice of engaging prospective
employees. Smart hiring should be able to engage the candidates strongly
to avoid this. We are working out a practice of identifying such candidates
and mark their profiles for disuse in future. We are also working out
strategies to engage a candidate better during the hiring process to avoid
this.”
According to Dr Sandeep K Krishnan, vice president - HR and corporate

development, Acropetal Technologies Ltd., Bangalore, 'no show' becomes
an issue because in an open market there are no much ways to curb this.
"However, at entry levels like from MBA schools or engineering colleges,
institutes themselves impose restriction on candidates to make sure they
accept and join an offer taken up by stopping them to appear for more
companies. At senior levels, it generally takes couple of months for a
! !73
person after accepting the job to join. In case the person fails to join, it
generally pulls back the business by at least another couple of months. In
India, it is not considered unethical to accept an offer and not join," he
asserts.
Is there any mechanism by which the employer can figure out that a
certain candidate is not going to show up on the scheduled joining date? "It
can be judged through gauging the interest level of candidates and also
during extensive HR rounds. Constant touch and regular/ weekly basis
interactions with the candidate can help in identifying and anticipating
whether the candidate would show up on joining day," avers Coomar.
"The best way to curb this problem is to clearly understand the candidate's
expectations and take enough time to understand the fit of the candidate
vis-à-vis job and organisation. Many a times, it is only wrong selection that
finally ends up as no-show. Constant engagement with the candidate who
is joining is another best way to make sure that the person will join.
Building your employer brand and making a strong compulsive reason for a
person to join after accepting the offer are two positive factors that can
reduce 'No Shows'. Offering joining bonuses and buying off notice periods
are some other mechanisms to ensure waiting time is reduced for an
individual joining and hence increasing the chances of joining," suggests
Krishnan.
For candidates, it is imperative that they understand the consequences of

doing such an act. If they ever want to come back to an organisation they
had earlier done the 'no show' act with, it is going to prove quite
hazardous. Your reputation can also be maligned amongst companies,
which fall under the same sector or those which are connected to others in
one way or the other. So, will such a candidate be considered by the
organisation or will it be a case of 'once bitten, twice shy'? "Normally, I
shall not like to encourage this. However, in a genuine case, we may
reconsider the candidate and re-hire him/her, given a chance to explain
his/her absence on the date of joining," says Coomar. According to
Krishnan, "Generally if there is a genuine case or a person has asked for
prior postponement, we may consider joining late. It is very rare that a
person who has not showed up or communicated to you will try to come on
board after a long period. In such cases, it will be considered as a fresh
application if the case is worth considering and will depend on suitability of
the candidate and the position that is getting filled."
! !74
So, think twice before you ever try out the 'no show' act with an employer!
Though they might not take any direct action against you, the
consequences of this act will surely stay with you as a blotch for long!
! !75
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
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MOTIVATION
Chapter 5
Motivation
Objectives
What is Motivation
Some of the early theories of motivation.
Some of the contemporary theories of motivation.
Application of motivation in an organisation.
Structure:
5.1 Nature and Importance of Motivation
5.2 Early Theories of Motivation
5.3 Contemporary (Modern) Theories of Motivation
5.4 Applied Motivation Practices
5.5 Summary
Our story continues…….
Ajay Verma: Hey Rajesh, why do you look so sad ??
Rajesh: Sir, what to tell you ?? I enjoy my work but then sometimes I
wonder if I will ever achieve my goal of completing my MBA studies.
Ajay Verma: Oh, don't worry. As soon as you achieve your basic goal of
physiological and safety needs, you will be on the path to achieve your
goals which will increase your self-esteem.
Rajesh: Sir, what are you talking? I did not understand one word of it.
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MOTIVATION
Ajay Verma: Sorry, I apologise. I was talking about a theory of

motivation.
(laughs first) I will explain to you what is motivation.
5.1 NATURE AND IMPORTANCE OF MOTIVATION
Motivation is what drives a person to perform to the best of his ability.

Ability refers to the skill and competence of the person to complete a given
task. Motivation is a process which begins with a physiological need (need
for air or food or water) or a psychological need (need for recognition),
which triggers behaviour that is aimed at a goal. Motivation is the
characteristic that helps an individual achieve his goal. Performance is
considered to be a function of ability and motivation, thus:
Job performance =f(ability)(motivation)
Motivation is a very important for an organization because of the following

benefits it provides:-
Puts human resources into action

Every concern requires physical, financial and human resources to
accomplish the goals. It is through motivation that the human resources
can be utilized by making full use of it. This can be done by building
willingness in employees to work. This will help the enterprise in securing
best possible utilization of resources.
Improves level of efficiency of employees

The level of a subordinate or an employee does not only depend upon his
qualifications and abilities. For getting the best of his work performance,
the gap between ability and willingness has to be filled which helps in
improving the level of performance. This will result into -
1. Reducing cost of operations, and
2. Improving overall efficiency.
3. Increase in productivity.
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MOTIVATION
Leads to achievement of organizational goals
The goals of an enterprise can be achieved only when the following factors
take place:-
1. There is best possible utilization of resources,
2. There is a co-operative work environment ,
3. The employees are goal-directed and they act in a purposive manner,
4. Goals can be achieved if co-ordination and co-operation takes place

simultaneously which can be effectively done through motivation.
Builds friendly relationship
Motivation is an important factor which brings employees satisfaction. This

can be done by keeping into mind and framing an incentive plan for the
benefit of the employees. This could initiate the following things:
a. Monetary and non-monetary incentives,
b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.
In order to build a cordial, friendly atmosphere in a concern, the above

steps should be taken by a manager. This would help in :
1. Effective co-operation which brings stability,
2. Industrial dispute and unrest in employees will reduce,
3. The employees will be adaptable to the changes and there will be no

resistance to the change,
4. This will help in providing a smooth and sound concern in which

individual interests will coincide with the organizational interests,
5. This will result in profit maximization through increased productivity.
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MOTIVATION
Leads to stability of work force

Stability of workforce is very important from the point of view of reputation
and goodwill of an organisation. The employees can remain loyal to the
organisation only when they have a feeling of participation in the
management. The skills and efficiency of employees will always be of
advantage to employees as well as employers. This will lead to a good
public image in the market which will attract competent and qualified
people into an organisation.
From the above discussion, it is clear to say that motivation is an internal

feeling which can be understood only by manager since he is in close
contact with the employees. Needs, wants and desires are inter-related
and they are the driving force to act. These needs can be understood by
the manager and he can frame motivation plans accordingly. Motivation
therefore is a continuous process since motivation process is based on
needs which are unlimited. The process has to be continued throughout.
Thus, motivation is important both to an individual and a business.

Motivation is important to an individual as:
1. Motivation will help him achieve his personal goals.

2. If an individual is motivated, he will have job satisfaction.
3. Motivation will help in self-development of individual.
4. An individual would always gain by working with a dynamic team.
Similarly, motivation is important to an organisation as:
1. The more motivated the employees are, the more empowered the team
is.
2. The more is the team work and individual employee contribution, more
profitable and successful is the business.
3. During period of amendments, there will be more adaptability and

creativity.
4. Motivation will lead to an optimistic and challenging attitude at work

place.
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MOTIVATION
Activity A
What is motivation ? Explain its importance.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Ajay Verma: I hope, Rajesh, you have now understood what is motivation
and its importance.
Rajesh: Yes, Sir. But you were talking something about my safety
needs….I still do not understand what that means.
Ajay Verma: Well, I was talking about Maslow's need hierarchy theory. Let
me explain to you that and other theories of motivation.
Rajesh: OK, Sir.
There are many theories which explain motivation. They are classified
into :
1. Early theories of Motivation.
2. Contemporary theories of Motivation.
5.2 EARLY THEORIES OF MOTIVATION
Maslow's Need Hierarchy Theory
The need hierarchy theory of motivation was put forth by Abraham Maslow.
The theory states that :
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MOTIVATION
!
1. Human beings have wants and desires. These wants and desires
influence their behaviour. Only unsatisfied needs can influence
behaviour.
2. Human beings have many needs and they can be arranged in the order
of their importance.
3. Only when one level of need is satisfied, then the person moves on to
the next level
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MOTIVATION
He classified the human needs on the basis of their importance into the
below 5 levels :
Physiological needs: This is the most basic need of all human beings.
It is the need for physical survival and includes the needs for food, drink,
air, sleep, sex, shelter and other bodily needs. In an organisation,
physiological needs could be the basic working conditions like an office
structure, canteen facilities, drinking water facilities, etc.
Safety needs: This includes security and protection from physical and
emotional harm. Security needs in an organisation could be job security,
rise in salary, safe working conditions, etc.
Belonging & Love needs: It is the need for affectionate relationships

with others. In an organization, these could be in the form of compatible
work group, professional (sometimes even personal) friendship and peer
acceptance.
Self-esteem needs: These needs include self-respect and esteem from

others. Self esteem needs include confidence, achievement,
independence and freedom. Esteem from others includes prestige,
recognition and appreciation. Self-esteem needs, from an organizational
viewpoint, include job title, merit pay, challenging work and co-worker/
supervisor appreciation and recognition.
Self-actualisation needs: It includes the desire to become everything

that a person is capable of becoming. It is to reach the peak of one's
potential. From an organization point, self-actualisation could be in the
form of excelling in one's job or successfully managing a team.
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MOTIVATION
Merits of the theory
a. The theory is helpful to managers who are keen about motivating their
employees.
They can use this theory to identify the individual needs of the
employees and offer satisfaction for the particular needs.
b. The theory is also helpful as it explains the many variations in human

behavior. It provides insights as to why an employee is motivated by
money while another employee is motivated by recognition.
c. The theory also puts forth the idea that motivation is never constant - it
is always changing.
The theory has also been criticized for the following points :
a. At any given point of time, the hierarchy of needs exists at all levels. A
person who is motivated by self-esteem needs will not forget to satisfy
his physiological needs.
b. Hierarchy of needs need not be the same for everyone. Some people
may place social and security needs higher than self-actualisation.
Others may place self-esteem needs higher than physiological needs.
c. Managers may not have the time to diagnose all the needs of every
employee. Also, managers may not be able to provide a perfect solution
to the needs of every employee.
In spite of these constraints, the theory is important as it has made the

management aware of the diverse needs of the employees.
Theory X and Theory Y

Douglas McGregor proposed two distinct views of human beings : one
basically negative - labeled Theory X and the other basically positive -
labeled Theory Y. After viewing the way managers dealt with employees,
McGregor concluded that a manager's view of the human beings is based
on certain assumptions and that he or she tends to mould his or her
behaviour towards the subordinates according to these assumptions.
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MOTIVATION
Under Theory X, four assumptions are held by the manager :
1.Employees inherently dislike work and, whenever possible, will attempt

to avoid it.
2.Since employees dislike work, they must be coerced, controlled, or

threatened with punishment to achieve desired goals.
3.Employees will shirk responsibilities and seek formal direction

whenever possible.
4.Most workers place security above all other factors associated with
work, and will display little ambition.
Theory Y has the following assumptions :
1. Employees can view work as being as natural as rest or play.
2. A person will exercise self-direction and self-control if he is

committed to the objectives.
3. The average person can learn to accept, even seek responsibility.
4. Creativity or the ability to make good decisions is widely dispersed

throughout the population, and not necessarily the sole province of
only those who are in management functions.
Theory X assumes that lower order needs dominate individuals whereas

theory Y assumes that higher order needs dominate individuals. McGregor
believed that the Theory Y assumptions were more valid than Theory X
assumptions. Therefore, he proposed ideas like participation in decision
making, responsible and challenging jobs, and good group relations as
approaches that would maximize an employee's job motivation.
But there is no evidence to confirm that either set of assumptions is valid.

Nor is there any evidence that acceptance of Theory Y assumptions and
changing one's actions accordingly will lead to more motivated workers.
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MOTIVATION
Two - Factor Theory

The two-factor theory has been proposed by Frederick Herzberg and is also
known as the motivation-hygiene theory. Herzberg along with his
associates carried out a survey using the critical incident method for
obtaining data for the purpose of analysis. The employees were basically
asked two questions -
a. When did they feel particularly good about their job ?

b. When did they feel exceptionally bad about their job ?
Based on the responses obtained, it was observed that certain

characteristics related to job satisfaction and others to job dissatisfaction.
These characteristics could be classified into intrinsic/motivation factors
and extrinsic/hygiene factors.
!
Fig.2
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MOTIVATION
Intrinsic factors like achievement, recognition, the work itself,

responsibility, advancement, and growth seem to be related to job
satisfaction. These factors are also known as motivators, satisfiers or job-
content factors. When questioned as to when they felt good about their
work, the respondents attributed these characteristics to themselves. On
the other hand, when they were dissatisfied, they tended to attribute it to
extrinsic factors like company policy and administration, supervision,
working conditions, salary, status, security and interpersonal relations.
These factors are also known as dissatisfiers, hygiene factors, maintenance
factors, or job-context factors.
According to Herzberg, satisfaction is affected by motivators and

dissatisfaction by hygiene factors. Also, satisfaction and dissatisfaction
were two separate characteristics of a job and the opposite of 'satisfaction'
was not 'dissatisfaction' but it was 'no satisfaction'. Also, the opposite of
'dissatisfaction' was 'no dissatisfaction’.
Hygiene factors, when made available to employees, will not result in

motivation. At the most, the employees will not be dissatisfied. But, at the
same time the employees will not be satisfied. The employees will be
satisfied and motivated only when they are provided the motivation
factors. The motivating factors like promotion and recognition are found to
be intrinsically rewarding.
Evaluation of the Theory
Upon evaluation, the following points have emerged :
The procedure that Herzberg used is limited by its methodology. When

things are going well, employees tend to credit themselves, and on the
other hand they blame failure on the extrinsic environment.
The reliability of Herzberg's methodology is questioned. Since raters have

to make interpretations, it is possible they may contaminate the findings
by interpreting one response in one manner while treating a similar
response differently.
No overall measure of satisfaction was utilized. A person my dislike part

of his or her jobs; yet think the job as acceptable.
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MOTIVATION
The theory is inconsistent with previous research. The motivation-

hygiene theory ignores situational variables.
Herzberg assumes a relationship between satisfaction and productivity,

but the research methodology he used looked only at satisfaction and not
at productivity. To make such research relevant, one must assume a
strong relationship between satisfaction and productivity.
Activity B
Describe the early theories of motivation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
5.3 CONTEMPORARY THEORIES OF MOTIVATION
Achievement Motivation Theory

Achievement Motivation Theory or the Three Needs Theory has been put
forward by David C. McClelland. In this theory, he states that a person's
behaviour is mostly motivated by any of the 3 needs - power, affiliation and
achievement. It does not mean that a person does not have other needs,
but it means that a person is primarily motivated by any of these 3 needs.
• Need for Achievement (nAch)

Employees with a high need for achievement get satisfaction when they
achieve the goals that they have set. Succeeding at a task is very
important to the high achiever. They are mostly rewarded in terms of
money, though money is not the motivating factor for employees with high
need for achievement. Employees with high need for achievement require
feedback about their achievements.
• Need for Power (nPow)

Employees displaying the needs for power derive satisfaction from the
ability to control others. Actual achievement of goals is less important than
the means by which the goals are achieved. Satisfaction is derived from
being in positions of influence and control, and individuals who have a high
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MOTIVATION
need for power derive satisfaction from being in positions of influence and
control.
Need for Affiliation (nAff)

Individuals with the need for affiliation derive satisfaction from social and
interpersonal activities. There is a need to form strong interpersonal ties
and to 'get close' to people. Such individuals will prefer to work with their
friends rather than technically competent people.
Merits of the theory:
a. The theory highlights the importance of matching the individual and the
job. Employees with low achievement needs prefer situations of
stability, security and predictability. They respond better to considerate
supervision than to impersonal high-pressure supervision and look to
the workplace and co-workers for social satisfaction.
b. Employees with high achievement needs thrive on work that is

challenging, satisfying, stimulating and complex. They welcome
autonomy, variety and frequent feedback from supervisors.
c. The research also suggests that managers can, to some extent, raise
the achievement needs level of subordinates by creating the proper
work environment by permitting their subordinates independence,
increasing responsibility and autonomy, gradually making tasks more
challenging, and praising and rewarding high performance
The theory has also been criticized for the following points :
a. The theory has been criticized on the question whether motives can be
taught to adults.
Psychologists suggest that the acquisition of motives normally occurs in

childhood and is very difficult to change, once it has been established.
b. The theory has been criticized for the methodology used by McClelland.
c. The theory has been criticized for the point that the needs are
permanently acquired.
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MOTIVATION
McClelland argued that the needs can be changed socially through

education or training. But the critics affirm that this change is only
temporary and that the needs cannot be changed and that they are
permanently acquired.
Equity Theory
The equity theory is also known as the 'social comparison' theory or the
'inequity' theory. The equity theory is based on the assumption that
individuals are motivated by their desire to be equitably treated in their
work relationships. When employees work for an organisation they
basically exchange their services for pay and other benefits.
Employees do not work in a vacuum. They constantly make comparisons.

The theory proposes that an employee compares his job inputs and
outcomes with another employee having similar work and education
background. If his input-outcome ratio is equal with the other employee's
input-outcome ratio, then the employee feels they are equal. If the ratios
are unequal, then the employee will view himself as underpaid or overpaid.
He will then be motivated to correct this inequity.
When attempting to reduce inequity, the employee will try any of the
following alternatives :
a. The employee will alter his inputs.
b. The employee will alter his outcomes.
c. The employee might distort his inputs and outcomes.
d. The employee may leave the organisation.
e. The employee may seek another employee to compare himself to.
f. The employee might distort the inputs and outcomes of the other
compared employee, thus forcing the other employee to leave the
organisation.
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MOTIVATION
Merits of the Theory
a. The theory recognizes the influence of social comparison processes on

motivation.
Individuals are concerned not only with the absolute amount of reward
they receive for their efforts, but also with the relationship of this
amount to what others receive. Any inequity motivates them to restore
equity.
b. The theory adopts a realistic approach to motivation. The theory states

that a major share of motivated behaviour is based on the perceived
situation rather than on the actual set of circumstances.
Criticism of the Theory
a. The theory is not clear as to how a person chooses or changes the other
person with whom he compares himself to.
b. The relationship between inputs and outcomes has not been looked into.
c. The feeling of inequity may force one employee to quit the job while
another employee may change the person to whom they are comparing
themselves. Hence, the theory has been criticized for the method of
resolution used to resolve inequity.
Expectancy Theory
The most comprehensive explanation of motivation is expectancy theory.

The theory argues that the strength of tendency to act in a certain way
depends on the strength of an expectation that the act will be followed by
a given outcome and on the attractiveness of that outcome to the
individual. Therefore, it includes the following three variables :
1. Attractiveness
The importance the individual places on the outcome or reward that can be
achieved on the job. This considers the unsatisfied needs of the individuals.
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MOTIVATION
2. Performance-reward linkage
The degree to which the individual believes performing at a particular level
will lead to the attainment of a desired outcome.
3. Effort-performance linkage
The probability perceived by the individual that exerting a given amount of
effort would lead to performance.
If any one of these variables is low, motivation is likely to be low. No

matter how tightly desired outcomes are linked to performance, if an
employee thinks that it is impossible for him to perform, then motivation to
perform will be low. Similarly, if the employee does not think that the
outcome is linked to performance, or if the employee does not desire the
outcome, then motivation will be low.
Managers of successful firms strive to ensure that all the three variables
are high so that the employee is highly motivated.
Merits of the Theory
a. The theory views individuals as thinking, reasoning beings who have

beliefs and anticipations concerning future events in their lives. This
model values human dignity.
b. The theory implies that managers must make it possible for an

employee to see that effort can result in appropriate need satisfying
rewards.
Criticisms of the Theory
a. The theory does not state in which situations it can be applied.
b. The theory is complex and it has not been fully tested.
c. The theory has limited use because it tens to be valid only in situations
where the effort-performance and the performance-reward linkages are
clearly perceived by the employees.
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MOTIVATION
Activity C
Describe the contemporary theories of motivation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: Wow, I did not know that there were theories for motivation.
Thank you Sir for explaining them to me.
Ajay Verma : Yes, the theories explain a lot about motivation. But it is not
enough to know the theories. You should also know how and when to apply
them.
5.4 APPLIED MOTIVATION PRACTICES
A manager in an organisation, in addition to having knowledge about the

various theories of motivation, should also know how to apply these
theories to motivate his subordinates. Some of the ways of motivating
employees are through rewards, job design, empowerment, participative
management, profit sharing, merit pay, etc.
Financial Rewards
Organisational rewards can be mostly classified into - Membership and
Seniority-based rewards, Job status-based rewards, Competency-based
rewards, and Performance-based rewards.
Membership and Seniority-based rewards

Membership-based rewards are rewards received if a person is member of
an accredited association or institution. A Chartered Accountant or a
Company Secretary or a Cost Accountant is paid more than a Graduate.
Seniority-based rewards are those rewards which are paid on the basis of a
person's seniority in the firm. Advancement pay raises, retirement benefits
and perquisites depend on the seniority of an employee in the firm.
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MOTIVATION
There are advantages and limitations associated with membership and

seniority based rewards. Membership rewards are used to attract job
applicants of a certain qualification but these rewards may not directly
motivate job performance. Seniority based rewards reduces the employee
turnover since the cost of quitting increases with the employee's length of
service. But seniority based rewards may fail to motivate junior achievers
to perform better. Another disadvantage with both membership and
seniority based rewards is that they may discourage poor performers from
leaving the organisation voluntarily as alternative jobs may not be
available to these poor performers. Most of the times, it is the junior
achievers who leave for better-paying jobs.
Job status-based rewards

Every organisation rewards employees for the status of the jobs they are
holding. Job evaluation systems are used by firms to evaluate the worth of
each job in terms of the necessary skills, effort and responsibility, and
working conditions. If a firm does not use job evaluation system, then it
relies on the pay surveys conducted by research organisations on its
competitors.
Jobs that require more skill and effort, have more responsibility and have
difficult working conditions have more value and therefore the pay would
be high for such jobs. A supervisor will receive higher rewards than a junior
mechanic in the firm. This is because, the supervisor's job has more value
to the organisation (calculated by the job evaluation system or the pay
survey).
High status job-holders rewarded with more perquisites, larger offices,

company-paid vehicles, etc.
Job status-based rewards maintain feelings of equity. Job evaluation

systems ensure internal equity that is the employees feel their pay is fair
when compared to how much other jobs in the organisation are paid. Pay
surveys help in maintaining external equity, that is the employees feel their
pay is fair when compared to how much other people in other organisations
are paid. Job status-based rewards motivate employees to compete for
positions higher up in the organizational hierarchy.
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MOTIVATION
But sometimes, these rewards fail to motivate achievers to perform better

as they feel that non-performers still get rewarded better as they are
holding a higher status job. Also, employees might exaggerate their job
description to get a higher job-status which will then help them in getting
higher rewards.
Competency-based rewards
Competency-based rewards are rewards given to employees on the basis of
their competencies. Competencies are reflected in the skills, knowledge
and behaviours displayed by employees. Rewards on the basis of
competencies leads to skill-based pay, where the employees are paid on
the number of skills they display while handling different jobs or on the
depth of the knowledge while handling one job.
Competency-based rewards motivate employees to acquire additional skills

so that they become more useful to the organisation. It also results in
process, product and work improvements as the various skills help an
employee in identifying ways to better the job. On the other hand, the pay
disparities could de-motivate other employees.
Performance-based rewards
Nowadays, the emerging trend is to link pay to performance rather than to
seniority or membership. Most of the performance-based rewards can be
classified as following :-
Individual rewards: Piece rate, Commission, Merit pay, Bonuses.
Team rewards: Gain sharing, special bonuses, Paid vacations.
Organisational rewards: Profit sharing, Stock options.
Individual rewards are very common in organisations. Piece rate is the

reward given to the number of units produced or the number of
transactions processed by an employee. Piece rate is common in the
production sector. It is also an emerging reward in the current BPO sector.
Commissions are a fixed percentage or fixed amount paid on the actual
sales achieved by sales people. This is used mostly in the real estate and
manufacturing sectors. Merit pay is based on an individual's performance.
Bonuses are paid on the achievement of certain objectives by an individual.
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MOTIVATION
Team rewards are paid so that these rewards support the team-based
structures. This is also done to encourage team spirit in the organisation.
Some teams are rewarded with special bonuses or paid vacations or gifts if
the team has collectively achieved specific goals. Top sales people of an
organisation might be sent on all-expense-paid vacation trips to exotic
places, when they achieve certain sales objectives of the firm. Gain sharing
is a type of reward that motivates team members to reduce costs and
increase labour efficiency in their process. Mostly, the company shares the
benefits of the cost savings with the employees who helped achieve the
cost saving.
Profit sharing is an organizational performance-based reward. Corporate

profits are awarded to designated employees. Employees stock option
schemes (ESOPs) are given to employees so that they also can be owners
of the firm. ESOPs are used as a retention strategy so that an employee
can complete certain years of service in the organisation. This is done to
ensure that high achievers do not leave the organisation for better paying
jobs at the competitors’.
Activity D
List the various financial rewards in your own organisation.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Non-financial Rewards
These are mostly in the form of awards, letters of appreciation, club
membership, gift vouchers, etc. These are mostly given in recognition of
achievements of the employees. For example :- Punctuality on all working
days of the year, completion of certain years of service in the organisation,
achieving savings through cost reduction in processes, etc.
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MOTIVATION
Behavioural Methods of Motivation

In addition to the above methods of motivation - financial and non-financial
rewards - there are other methods of motivating the employees which aim
at changing the behaviour of the employees. Some of these are explained
below :
• Job Design
Job design has a critical impact on the motivation of the employees. It is
the process of determining the content of the job and how the job should
be performed. It was Herzberg who conceived job design as an important
instrument to motivate employees. Jobs are designed by focusing on the
individual and the interaction between him and specific attributes of the
job. Such an approach helps make the job interesting and keeps the
employee motivated.
Some of the approaches of job design are job rotation, job enlargement,
job enrichment. Job enrichment has more impact and is more complex
than job enlargement and job rotation.
!
Fig 3
! !97
MOTIVATION
Job Rotation
Job rotation refers to moving employees from one job to another job so as
to add variety and reduce boredom by allowing them to perform a variety
of tasks. When an activity is no longer challenging, the employee would be
moved to another job at the same level that has similar skill requirements.
By diversifying the employee's activities or jobs, the disinterest or boredom
of the employee is reduced.
For example, an electrician, in the first week will be assigned the task of
drilling holes in the walls. In the second week, he will be assigned the task
of laying down the electrical cables and in the third week, he will be
assigned the task of testing the electrical system laid down.
Employees with a wider range of skills are more flexible to adapt to

change. Such employees can also be selected to fill vacancies. On the other
hand, training costs increase. There is disruption of work as the rotated
employees take time to adjust to the new job. It can de-motivate
ambitious employees who seek specific responsibilities in their chosen
speciality.
Job Enlargement
Job enlargement refers to the expansion of the number of different tasks
performed by an employee in a single job. Job enlargement attempts to
add similar tasks to the existing job so that it has more variety and be
more appreciated.
For example, earlier in banks, one person would handle prepare letter of
credit for issuance, a second person would amend it, a third person
negotiated the payment and a fourth person would pass the debit or credit
entry in the customer's account. This was how a typical letter of credit
transaction used to take place. Nowadays, all these four activities are
performed by a single person as s single transaction.
Enlarged jobs with optimal levels of complexity create tasks that are
challenging but attainable. Enlarged jobs allow for more meaningful
feedback and can be particularly motivating if they are linked to
organizational rewards. However, employees may require additional
training for the new and enlarged tasks. Also, productivity may fall down as
the employee adjusts to the enlarged scope of his work.
! !98
MOTIVATION
Job Enrichment
A job is enriched when the nature of the job is exciting, challenging and
creative, or it gives the employee more decision-making, planning and
controlling powers.
For example, the job of an electrician is enriched when he is assigned the

tasks of ordering the raw material of electrical cables and of designing the
electrical system. These jobs, in addition, to the tasks of drilling holes in
the walls, laying down the electrical cables and testing the electrical
system laid down, gives the electrician decision-making, controlling and
planning powers.
Job enrichment improves both task efficiency and human satisfaction by

building greater scope for employee's personal achievement and
recognition. It makes a job more challenging and responsible thus giving
more opportunity for individual advancement and growth.
Job enrichment benefits employees and organizations in terms of personal

motivation, performance, satisfaction, job involvement and reduced
absenteeism. On the other hand, the employees may not want more
responsibility. They may, in fact, be content with the lack of responsibility
present in the job. Job enrichment is not a substitute for good supervisory
practices, company policies and compensation package.
Empowerment
In the earlier days, employers would motivate employees by providing
them with financial rewards. But nowadays, young job aspirants are
looking for more than just monetary rewards. More than monetary
rewards, it is the feeling that the employee 'owns' the job that motivates
him/her to perform the job.
Empowerment can be understood as the process of enhancing feelings of

self-efficiency and a sense of 'owning' a job. Empowered employees are
energetic and passionate. Because they are empowered they aspire to do a
better job and are the ones who will suggest improvements or cost
initiatives. It may not lead to monetary rewards always but they feel a
sense of satisfaction on a personal level.
! !99
MOTIVATION
Empowerment is facilitated by a combination of factors including values,

leadership, job structure, and reward systems. It occurs when power of
decision-making and authority to share resources goes to employees who
then experience a sense of ownership and control over jobs. Empowered
employees know that their jobs belong to them. Given a say on how things
are done, employees feel more responsible. When they feel responsible,
they show more initiative in their work, get more done and enjoy the work
more.
Information sharing and team formation are crucial building blocks of

empowerment. Empowered employees know what they are working
towards and understand how their work affects other employees and the
organization as a whole.
! !100
MOTIVATION
5.5 SUMMARY
Motivation is the characteristic that helps an individual achieve his goal.

Performance is considered to be a function of ability and motivation.
Motivation is important as it puts human resources into action, improves
level of efficiency of employees and leads to achievement of organizational
goals. Maslow's need hierarchy, McGregor's Theory X and Y, and Herzberg's
two factor theory are some of the early theories of motivation. Need
achievement theory, expectancy theory and equity theory are some of the
contemporary theories of motivation. Financial rewards are awarded on the
basis of merit, seniority, job status, competency and performance. Non-
financial rewards are mostly in the form of awards, letters of appreciation,
club membership, gift vouchers, etc. Behavioural methods of motivation
involve job rotation, job enlargement, job enrichment and empowerment -
to name a few.
1. Explain motivation as a concept and describe its importance.
2. Evaluate the early and contemporary theories of motivation.
3. Describe the various financial rewards.
4. Explain the non-financial aspects of motivation in an organisation.
! !101
MOTIVATION
Related Reading : Maintaining and motivating the best workforce

(Courtesy - Sheetal Srivastava, The Times of India - Ascent)
Maintaining a motivated, quality workforce can be quite

challenging in the future as many organisations look for creative
ways to get Baby Boomers, Gen-Xers and Gen Y employees to work
together as an effective, cooperative and respectful team
With markets and industries growing at a fast pace, matching this growth
with productivity has never been more pronounced. In the backdrop of
increasing level of globalization and improved access of resources to all, it
would not be wrong to conclude that it is the quality of people and
workforce that define an organization. Today, motivating employees to
achieve and realize their best has become imperative for any organization's
growth. "Needless to say, our growth is contingent on developing, growing
and honing talent of our workforce and encouraging them to perform
better. The easiest way to do so is through motivation. As the workplace
and employer-employee relationship continue to evolve and reach newer
heights, retaining talent and ensuring efficiency is not only significant but
also achievable. HR today has a host of tools ranging from peer recognition
to remunerative benefits to a challenging work place environment
conducive to growth among many others," says Anshoo Gaur, General
Manager and Head, Amdocs India.
"Getting quality workforce is an activity but maintaining them is the

process. So, the end result is getting higher productivity from the people.
It has been observed that many organisations keep hiring resources but
productivity level per employee is less than 50 per cent, which actually
increases size of an organisation but not the business or revenue. A quality
and motivated workforce always gives results beyond expectations," notes
Sunil Goel, Director, GlobalHunt, an executive search firm.
So are organizations looking for creative ways to get the multi-generational

workforce to work together as an effective, cooperative team? While
making employees with different capabilities, ages and profiles work
together as a team is what HR departments of several organisations have
been successful in achieving, the mode deployed to do so must be in
accordance with the employee profile. Amdocs uses a mix of financial
incentives, subordinate- peer-senior appreciation along with a larger level
of responsibility. "Updating employees on latest happenings makes them
! !102
MOTIVATION
feel a part of the organisation and motivates them to give in their best.
Employees spend substantial hours a day at the work place and hence
there is a huge scope to effectively deploy communication tools for
motivation that are in accordance with an employee's profile, aspirations,
likes and preferences. For instance Gen-Y employees would appreciate
social media, tweets, blogs, sms updates, much more than a coffee table
book on a work related subject that could occupy space on a desk in a
senior official's cabin," adds Gaur.
IBM is leveraging a wide range of technology tools to connect and engage

with its vast and geographically dispersed workforce. These tools help
employees feel connected to the larger organization and also help them
establish a distinct identity for themselves. "We have been taking the
concept of social networking and applying it within the IBM firewalls to
enable collaboration and innovation. Some of the key collaborative tools
used to engage our employees are:
a. IBM BlogCentral: a site that hosts more than 1400 active blogs, many
of which spark lively dialogue on emerging technologies and other topics
germane to IBM's business.
b. Media Library: an online centralized repository that allows IBMers to

share photos, videos etc with other IBMers across the globe
c. PodSmart: an innovative way to create personalised content for digital

audio player.
IBM extensively uses Podcasts to share executive interviews with the

employees through intranet.
d. ThinkPlace: an online, collaborative tool called ThinkPlace provides an

open and collaborative forum for idea generation and refinement.
Employees surface opportunities to grow the business, identify solutions
for critical client and business needs, and offer improvements for
existing problems or internal inhibitors."
! !103
MOTIVATION
Convergys realises that it's vital to tap each generation's skills and
potential for the rewards they can bring to the business. "I believe that
companies are always on the lookout for how to make such diverse teams
more effective. Knocking down parochial boundaries is a very effective way
to break the ice between various generations. We promote the use of first
names at work, for example. This immediately lends a personal touch to
team conversations. The open-door policies adopted by senior
management and other executives also helps to foster communication
between various generations at work," says Ashish Garg, Director, HR,
Convergys India.
Face-2-Face is an employee portal that Convergys uses to enable effective

communication between senior management and employees across all
levels in the company. The use of such portals and platforms enables an
easy exchange of ideas in a one-on-one forum.
A motivated, multi-generational workforce is a phenomenal asset to a

company, especially when each member of a team recognizes that they
have unique and valuable perspectives that together can help solve
business issues. For example, younger team members can bring a fresh
approach to solving a business issue, while more experienced team
members can provide their knowledge on how to transform a good idea
into an actionable business plan that will meet the team's objective.
Whatever the route, a classic mix of fresh perspective and refined thought
is a heady concoction which if properly channeled helps make great
workplaces. 
! !104
MOTIVATION
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !105
TRAINING AND DEVELOPMENT
Chapter 6
Training And Development
Objectives
Nature of Training and Development
How training process is conducted in an organisation.
The different methods of training
How a training programme is evaluated
The different barriers to an effective training programme
Structure:
6.1 Nature and Importance of Training and Development
6.2 Benefits of Training and Development
6.3 Process of Training and Development
6.4 Various Methods of Training and Development
6.5 Evaluation of a Training Programme
6.6 Barriers to an Effective Training Programme
6.7 Summary
! !106
The story continues……
Ajay Verma was on his way back to the factory. Rajesh noticed that he was
slightly disturbed.
He asked Ajay Verma ……
Rajesh: Sir, if I may ask - what is troubling you ?
Ajay Verma: Rajesh, this visit has been an eye opener for me. I was
thinking that the training we provide to our workers is excellent.
Rajesh: The training is not excellent now??
Ajay Verma: No, I can see that there are some gaps and we have to
rectify them.
Rajesh: Sir, why do we require training? We are qualified enough to do our

jobs.
Ajay Verma: Yes, I know. Let me explain why I think that training is
required in addition to your qualification.
6.1 NATURE OF TRAINING AND DEVELOPMENT
Training and development refers to the imparting of specific skills, abilities

and knowledge to an employee. New employees in an organization need
training to perform their duties effectively. Current employees of an
organization must be trained so that they can perform better on their jobs
on a daily basis. Training also teaches employees different and creative
ways of working so as to increase their productivity. Training when
provided to employees at a managerial level helps them to attain a certain
level of maturity, so that they are in a better position to lead a team.
Companies derive competitive advantage from training and development.

Training and development helps remove performance deficiencies in
employees, especially when the deficiency is caused by a lack of ability.
Training and development is effective when the individual has the aptitude
and motivation to learn to do the job better, and when the superiors are
supportive of this desired behaviour.
! !107
Training serves as an effective internal source of recruitment for the

organization. Training helps in grooming the current human resources for
future growth opportunities. At the same time, the employee's personal
and career goals are furthered, as training adds to his abilities and value to
the organization.
6.2 BENEFITS OF TRAINING AND DEVELOPMENT
Training benefits the organization and the employees in the following ways:
Leads to improved profitability.
Improves the job knowledge and skills at all levels of the organization.
Improves the morale of the workforce.
Helps create a better image for the organization.
Improves relationship between employer and employee.
Helps in the overall organizational development.
Organization gets more effective decision-making and problem-solving

skills.
Helps the organization in development of human resources for promotion

from within.
Aids in increasing productivity and quality of work.
Helps in reducing costs in many functions like production, personnel,

administration, etc.
Helps employees adapt to change.
Conflicts are handled better thus leading to less stress and tension in the
workplace.
Helps the individual employees in developing self-confidence.
! !108
Provides information to employees and managers for improving

leadership, knowledge, communication skills and attitudes.
Provides information on organizational policies, rules and regulations.
Improves the interpersonal skills, thus helping to improve the boss-

subordinate relationship, subordinate-subordinate relationship and
relationship between the various departments and functions in an
organization.
Builds togetherness and cohesiveness in groups.
Improves the morale in the organization.
Rajesh: That was an eye opener for me, Sir!!!
Ajay Verma: Wait Rajesh!!! There is more…..Let me explain the process

that we follow for training and development.
6.3 PROCESS OF TRAINING
!
Fig.1
Assessment of Training Needs

Before an organization can commit huge amounts of money for the
purpose of training and development of its employees, it needs to assess
the training needs of its employees. Assessment of training needs is
essential as it gives a direction to the training and development
programme and ensures that the training provided is in alignment with the
goals of the organization. It helps in ensuring the career paths of the
! !109
employees which in turn results in better quality of the employees. This

helps the organization a competitive edge over its competitors.
Assessment of training needs occurs on two levels - group and individual.

Individuals may require new skills in case of possible job transfers and new
jobs. On a group level, training may be required if there is a change in the
organization's strategy or when the organization decides to introduce a
new line of products or services.
Assessment of training needs is possible only with the support of the

organization.
While conducting the assessment, the Human Resources department

examines the organizational goals and the trends that are likely to affect
these goals. After obtaining the organizational support and the
organizational analysis, it is necessary to identify what tasks are needed
for each job and which knowledge, skills and abilities are necessary to
perform these tasks. After this an analysis of the individual employees is
undertaken to determine the knowledge and the skills which an employee
may already possess.
Deriving Training Objectives

Assessment of training needs helps in preparing a blueprint that describes
the objectives to be achieved by the trainee upon completion of the
training programme. Training objectives provides the input for designing
the training programme as well as for measuring the effectiveness of the
training programme.
Designing Training Programme

Every training and development programme must address important issues
like who will participate in the training programme, who will be the
trainers, what methods are to be used for training, what should be the
level of training, what learning principles are needed and where the
programme should be conducted. Trainees should be selected on the basis
of self nomination, recommendations of the supervisors or by the Human
Resource department. Trainers may be immediate supervisors, co-workers,
the members of the Human Resource department, specialists from within
the organization, consultants from outside the organization, industry
associations, and faculty members at colleges and universities. Trainers are
selected on the basis of the skills that are to be taught. Training and
! !110
development programmes are more likely to be effective when they

incorporate the principles of learning such as employee motivation and
feedback.
Implementation of the Training Programme

Once the training programme has been designed, it needs to be
implemented. Implementation is difficult as most employees are too busy
in their day-to-day job activities to attend the training programme. Also,
good trainers with excellent communication skills are not easily available.
The Human Resources department has a tough time in scheduling the
training around the work duties of the employees.
Evaluation of the Training Programme

Evaluation helps in determining the effectiveness and the results of the
training programme. It helps in determining whether the training
objectives are achieved or not. Questionnaire is a simple method used to
evaluate the training programmes. Training programmes are evaluated for
their cost effectiveness. Training costs include the needs assessment costs,
salaries of the training and development staff, trainers' costs and
programme development costs.
Activity A
What is training and development? What are the benefits of training?
Explain the process of training and development.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: So Sir, is this process once in the lifetime of the organization ?
Ajay Verma: No, Rajesh. We follow this process every year. Else, how will
it be effective given the various changes in our technology and business
environment ?
Rajesh: Oh ! Ok !
Ajay Verma: Let me tell you about the various methods of training and
development.
! !111
Rajesh: Please go ahead, Sir.
6.4 VARIOUS METHODS OF TRAINING AND DEVELOPMENT
Training methods can be broadly classified into two sections :
1. On-the-job training.
2. Off-the-job training.
1. On-the-job Training
As the name suggests, on-the-job training means training given while
working at the workplace. On-the-job training is an inexpensive way of
training and it does not require preparations like selection of the training
venue, organizing facilities, etc. It provides a quick feedback to the trainee
and there is no disruption in the work. The motivation of the trainee to
learn is high as he is aware that his success on the job depends on the
training received. On-the-job training may not be systematically organized.
Job instruction, internship, apprenticeship, coaching and job rotation are

some of the examples of on-the-job training.
Job Instruction
Job Instruction Training is a step-by-step, relatively simple technique used
to train employees on the job. It is especially suitable for teaching manual
skills or procedures. The trainer is usually the employee's supervisor or a
co-worker. In this method, the trainer demonstrates to the trainee how a
job is done. The trainer then asks the trainee to perform the job. Any gaps
in the trainee's learning process are resolved immediately. After the
training is provided, a follow up is done by the trainer to check whether the
trainee is able to perform the job without any supervision. The steps taken
to perform a job are often summarized and printed on a small card that
can be put in an employee's wallet or pocket. The employee can refer to
the card when instructing another employee.
Internship
In an internship, an individual gets the opportunity to experience his/her
industry of interest before entering into it full time and opting for it as his/
her future career field. This type of training is best suited for students who
are newly graduated and who do not have any work experience as
internships are ideal for understanding the way a particular industry
! !112
functions and what it would be like to work in that industry. Such an

experience puts them in a better situation to decide whether they are
suited for a particular role / industry or not. Many companies go on to hire
their successful intern's full time. Most internship is unpaid but some offer
a low wage or a stipend. Many of the internships are organized through
colleges and professional bodies.
Apprenticeship
It is a combination of classroom instruction and on-the-job training. It is a
training programme where an individual can earn wages while he learns a
skilled profession in a specific field, such as construction, health care, or
culinary arts. The training is done on the job while working for an employer
who helps the apprentices learn their trade, in exchange for their
continuing to work for him for an agreed period, even after they become
skilled.
Coaching
Coaching is the practice of giving sufficient direction, instruction and
training to a person or a group of people, so as to achieve goals or develop
specific skills. Usually in an organization, the coach is a superior or the
manager. Though coaching is a system of providing training, the method of
coaching differs from person to person, aim or goals to be attained, and
the areas needed. In order to decide the coaching methods the coach
should know about the trainee's aim or the goal, skills and drawbacks,
training environment, training aids needed etc. Coaching methods includes
both theoretical and practical sections.
Job Rotation
It involves moving management trainees from department to department
to learn the different functions of the organization. It is useful to the
management trainees as they are able to understand the basics of the
business.
2. Off-the-job training
Off-the-job training happens away from a work place. This is necessary to
get people from the stress and frustration of the workplace. Off-the-job
training enables trainees to absorb new and innovative ideas in a relaxed
environment. The only problem is that the training provided may not be
relevant to the actual events happening at the workplace. Some of the off-
the-job training techniques are:-
! !113
Lectures
Lectures are a verbal presentation of information by a knowledgeable
instructor to an audience. It is used for large groups and hence the cost
per trainee is low. But there is no learning by practice. Also, since it is a
one-way communication and no feedback is asked from audience, lectures
are not so popular. However, nowadays, lecturers interact more with their
audience and frequently invite questions regarding the subject from the
audience. Lectures can be interesting when it is also used with other
methods of training.
Audio-Visuals
Audio-visuals include slides, videos and films. It is used to provide realistic
examples of job conditions. The quality of audio-visuals is consistent and
hence can be controlled. But, like lectures, it is one way of communication
and hence found to be boring. Also, the presentation is standard for any
type of audience.
Computer-Assisted Instruction
No trainer is involved and the information is provided to trainee in parts on
a computer. After completion of one part, the trainee has to answer
questions about the part. Correct answers to the questions are provided
after each response. If the answers of the trainee are correct, the trainee
moves to the next part. If the answers are wrong, the trainee has to repeat
the part. This method is useful as the trainee can learn at his own speed.
But the cost is high as the material has to be developed.
Simulation
It is a technique that duplicates as nearly as possible the actual conditions
encountered on the job. Simulation is an attempt to create a realistic
decision making environment for the trainee. Simulations present likely
problem situations and decision alternatives to the trainee. The results of
those decisions are reported back to the trainee with an explanation of
what would have happened had they actually been made in the workplace.
The trainee learns from this feedback and improves his/her subsequent
simulation and thereby, his/her workplace decisions in the future. The most
common types of simulation are - case studying, role playing and vestibule
training.
! !114
Case Studying
It is a written description of an actual situation in business. The reader
upon reading the case study has to examine what is going on, assess the
real situation is or what the problems are, and has to provide a solution as
to what can and should be done to rectify the situation or problem. Case
studies are taken from the actual experiences of organizations and they
describe accurately the real problems that managers face in their
functioning. Case study is conducted in a group environment as the best
solution is arrived at only after discussions among the participants. It is an
ideal method to increase decision-making abilities.
Role Playing
It focuses on human relations issues. In role playing, a realistic situation is
created and the trainees assume the parts of specific personalities in the
situation. For example, the boss may assume the role of the employee and
the employee may assume the role of the boss. Then, both are given a
typical work situation and are asked to respond as per the roles. Role
playing results in better understanding among individuals. This in turn
leads to better interpersonal relations. Changes in attitude are another
result of role playing.
Vestibule Training
Vestibule training takes place away from the work environment and it
utilizes equipment which closely resembles the actual ones used on the
job. The trainee is permitted to learn under simulated conditions, without
disrupting ongoing operations. Vestibule training is advantageous as it
helps the trainee to concentrate on learning rather than being distracted by
work.
Sensitivity Training
Sensitivity training basically focuses on gaining insight into one's own and
others' behaviour. Trainings are normally conducted for a small group of
employees, usually 12 to 15, with a passive trainer for observation.
Discussions focus on 'why participants behave as they do, how they are
perceived by others, how they perceive others and the emotions generated
in the interaction processes. The objectives of the sensitivity training are to
provide the participants with increased self awareness of their behaviour,
increase in their sensitivity to the behaviour of others and increased
understanding of group dynamics. The results of sensitivity training are
! !115
increase in one's empathy to others, listening skills and increase in conflict-

resolution skills.
Management Games
Business games are becoming highly popular in developing managers and
supervisors. Games actually duplicate selected factors in a particular
business situation. Employees and the managers learn best by being
involved in the game. The trainees are usually divided into groups. The
groups have to elect their leaders and have to organize themselves. This
develops their leadership skills and fosters teamwork and co-operation.
After the game is finished, feedback is provided to the trainees as to the
abilities and interpersonal skills displayed by them, the impact of their
decisions and the corrective actions to be taken in future and in the job
scenario. However, the trainees might be more interested in playing and
winning the game instead of concentrating on making a good decision.
Behaviour Modeling
Behaviour modeling seeks to improve interpersonal skills among the
trainees. Behaviour modeling is basically learning through observation. In
organizations employees learn all kinds of behaviours (work related or
otherwise) by observing supervisors, managers and co-workers who serve
as role models. Role models have a tremendous influence on individuals
and on their behaviour.
Seminars and Conferences

Seminars and conferences facilitate meeting together of groups of people
to seek mutual development. Such programmes can be used to
communicate ideas, policies or procedures. Issues are discussed and
debated. Seminars and conferences are also used to communicate new
developments or new trends in various fields such as finance,
management, technology, etc.
Activity B
Explain the different methods of training and development.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !116
6.5 EVALUATION OF A TRAINING PROGRAMME
Modern organizations place great emphasis on training. Keeping employees

acquainted of the latest in technology and training them in other "people
skills" such as negotiation, communication is considered extremely vital. In
the face of rapidly changing technology that becomes obsolete very quickly
and demanding conditions in the market, companies invest enormous time,
effort and resources to provide training to their employees. In this context,
it is but natural that the management would want to ensure that the
training imparted is of high quality and that the training process is
efficiently managed. Therefore, the process of training evaluation assumes
a place that is almost equal to the training itself.
In almost all organizations, feedback forms are distributed among the

participants after the training. The way the questions are framed has a lot
to do with the proper evaluation of the training. The questions need to be
unambiguous, precise and incisive.
The main questions in training evaluation should be centered on the

following aspects.
Extent to which the training needs were achieved.

Extent to which the individual's expectations were attained.
Specific information obtained through the training process.
Probable area where the information acquired would be implemented.
Organizations, sometimes, fail to do this exercise seriously due to reasons

such as lack of time or resources in the human resources department. This
results in courses that are way off the expectations and requirements of
the organization. This results in wasteful expenditure and the courses
conducted start to lose their seriousness. Evaluation of training should,
therefore, be treated as a distinct function separate from the impartation of
training.
The evaluation mechanism should have its own set of people who evaluate
the training programs and a clear line of authority responsible for this.
Though the primary responsibility lies with the people in charge of doing
the evaluation, people at all rungs of the management ladder should be
involved in the evaluation process - from the senior management to the
trainee who receives the training.
! !117
Central to the evaluation of the training program is the role of the trainer
himself. As the conductor of the program, the trainer plays a major role.
The trainer has to understand the expectation of the management,
appropriately design the course content, and decide the medium of
delivery (intranet presentation, DVD/CD or distance learning).
Unlike other investments, investment in training is intangible and

traditional methods of calculation of returns such as Returns-on-
Investment cannot be done. This is because the benefits of training,
though they can be perceived, cannot be quantified. The return of training
can be felt in improved customer care, better output, reduced stress level
and boosted morale.
Training evaluation is a critical exercise necessary to ensure that the

conduction of training does not degenerate into a routine ritual and that
the entire process is accorded the seriousness it deserves. If rightly
implemented, it can focus the training effort to areas that deserve fresh
inputs and make valuable contributions to the organization's growth.
Rajesh: That was very informative, Sir.
Ajay Verma: Thank you, Rajesh. But training has certain barriers to it.
They are…..
6.6 BARRIERS TO AN EFFECTIVE TRAINING PROGRAMME
There are several barriers to an effective training programme. Following

are the major barriers
Lack of Commitment from Management

Most companies are reluctant to spend money on training for their
employees. They tend to disregard the importance of training or else they
concentrate training programmes to the managers only. But in today's
highly competitive world, it is crucial that everyone is up-to-date about the
changes in technology and production process. A highly trained worker has
the ability to solve problems and implement initiatives which could lead to
many cost benefits for the company.
! !118
Inadequate Spending on Training

Due to lack of commitment from management, many companies do not
allocate adequate amount of their budget or spending on training. Also,
during financial crisis the first item that is reduced or cut is the budget
allocated to training.
Poaching of Trained Workers

A trained employee is more in demand than an untrained employee. Many
companies poach on their competitors' well trained employees. This is done
as these companies do not have to incur costs on re-training these
employees. Such situations are very common in the Information
Technology field. Hence, organizations before sending their employees for
training insist that the employees sign a bond of tenure. This is especially
true in cases where the training is of a high quality or if the training is to
be provided in foreign countries.
! !119
6.7 SUMMARY
Training and development refers to the imparting of specific skills, abilities

and knowledge to an employee. An organization follows a process for
training and development which involves assessment of training needs,
deriving objectives of the training, designing the training programme,
implementing the training programme and finally, the evaluation of the
training programme. There are many methods by which training can be
conducted. These can be categorized into on-the-job and off-the-job
training methods. Job instruction, internship, apprenticeship, coaching and
job rotation are some of the examples of on-the-job training. Lectures,
audio-visuals, sensitivity training, management games and computer
assisted instruction are some of the examples of off-the-job training.
Improved profitability and the job knowledge and skills at all levels of the
organization are some of the benefits of training. Evaluation of a training
programme is as important as the training itself. It ensures that the
training provided contributes to the growth of an organization. But there
are certain factors like lack of commitment from the management and
poaching of trained workers, which act as barriers to an effective training
programme.
1. What is training and development? What are the benefits of training?
2. Explain the process of training and development.
3. Describe in detail the different methods used in training and

development.
4. What are the barriers to an effective training programme?
! !120
Related Reading 
Let's Learn 
(Courtesy - Priya C. Nair, The Times of India - Ascent)
Though learning never stops, it is imperative to innovate the

process of learning, from time to time. Today, firms are devising
innovative teaching (read: training) methods to hone employee
skills. This article showcases a few such fun initiatives that have
given the terms 'teaching' and 'learning' a new meaning.
The very mention of the word 'teaching' (read: training) brings to mind the
memories of classroom, lectures, textbooks, power point presentation, etc.
But this traditional concept is giving way to e-learning, virtual classrooms,
experiential learning, etc. Corporates are devising innovative training tools,
modified training modules and strategies at par with changes in the
business and market situation to make training programmes as exciting as
possible for their employees and to impart newer learnings.
According to Tapan Mitra, chief, human resources, Apollo Tyres Ltd, any
form of training, which is non-classroom-based are tailored to cater to
specific kinds of employees and are primarily enhances one's soft skills.
They save time, foster higher interactivity and team work, enhance team
spirit, increase employee motivation and propagate instant learning. "In
experiential training programmes, the participants are taken to an outdoor
location where they stay in tents for a few days and participate in
adventure activities such as rappelling, rock-climbing, raft-making and
river-crossing. This ensures that the participants work together in tandem
towards a common goal. This enables them to appreciate the importance of
communication, leadership, teamwork, planning and delegation. Faced with
challenging situations, they learn important lessons on conflict resolution,
effective communication, leadership skills, planning and teamwork,"
explains Sriram Rajagopal, VP, HR, Cognizant.
Safe hands are a series of awareness programmes for people at all levels
at the ING Vysya Bank. The set of five comic strips communicate a series
of messages and finally the employees are asked to choose the right
picture against a set of questions. The intent of these questions is to
ensure better engagement and ensure interest in reading through the
same. "The programme is language neutral, as every one understands the
pictorial language. This proves that learning need not always take place
! !121
within the four walls of a training hall; self-study too is possible," says J M
Prasad, chief of HR, ING Vysya Bank.
At Apollo Tyres Ltd, Cafe Lite programme is a three-hour workshop which

extensively uses audio-visual tools for specific behavioural competency
enhancement of employees across all levels. "There is no hierarchial
structure involved in these trainings, as people from higher (director/head)
level to the lowest (executive) undertake the training together. There are
video-assisted workshops, which ensure deeper involvement of the
trainees, apart from making the learning process more impactful. The
videos are generally a mix of real-life scenarios and dramatised role-plays.
Skills like positive attitude, team building, personal effectiveness, time
management, negotiation skills, leadership skills, planning and analysis,
etc are imparted through this programme," informs Mitra.
"Every month, a group of employees create a presentation on a topic they

feel is valuable for the entire organisation (for example: negotiation skills,
effective selling, time management, etc). This method gives more
inclusiveness to the training process by getting employees to create the
training materials, analyse cost effectiveness since the dissemination is
through intranet and also, this method fosters 'anytime learning' as the
audience is scattered," says Dr Sandeep Krishnan, VR-HR and corporate
affairs, Acropetal Technologies. Sobha Developers has a platform called;
'Idea Space' through which any employee can make suggestions related to
his/her work or other functional areas on the intranet. These suggestions
are evaluated by the committee and those with a lucrative value are
segregated. Employees, whose ideas are accepted, are rewarded on the
'Innovation Day' of the company. "Apart from skill enhancement, initiatives
like these facilitate better team-building, 360 degree analysis and
encourage cross-functional group activities that lead to higher productivity.
When we learn as we have fun, our ability to retain the learning is far
higher," concludes Mitra.
! !122
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !123
PERFORMANCE APPRAISAL
Chapter 7
Objectives
What is Performance Appraisal?

Importance of performance appraisal
How performance appraisal is conducted in an organisation
Different methods of performance appraisal
Problems faced in performance appraisal
Structure:
7.1 Nature of Performance Appraisal
7.2 Importance of Performance Appraisal
7.3 Process of Performance Appraisal
7.4 Annual Performance Appraisal Cycle
7.5 Current Methods of Performance Appraisal
7.6 Future Methods of Performance Appraisal
7.7 Problems Faced in Performance Appraisal
7.8 Summary
! !124
It was the month of November and the October heat was on its way out. As
Ajay Verma made his way to the factory at Ghansoli, he felt a sense of
peace descend on him. He turned his gaze to Rajesh, his driver and asked
him -
Ajay Verma: How long has it been since you started your job with us?
Rajesh: Sir, it's been 7 months since I started working.
Ajay Verma: I will have to appraise your performance next month.

December is the month when we appraise performances of employees.
Rajesh: What is performance appraisal ?? Why is it done ?
Ajay Verma: Let me explain what a performance appraisal is.
7.1 NATURE OF PERFORMANCE APPRAISAL
Performance appraisal is an objective assessment of an individual's

performance against well defined benchmarks. An employee is assessed on
several factors like job knowledge, quality and quantity of output,
initiatives taken by him, leadership qualities displayed by him, etc.
Performance management refers to the entire process of appraising
performances, giving feedback to the employees, and offering rewards to
them. Earlier, organisations used to focus on an employee's past
performance only. But nowadays, organisations focus on the future
potential performance of the employee.
! !125
7.2 IMPORTANCE OF PERFORMANCE APPRAISAL
Performance appraisals are very useful to both - the employee and the
organisation.
Organisation's point of view
Promotions are effected on the basis of an employee's performance and

competence.
Training and development needs of employees are assessed.
To confirm the services of employees who complete their probationary

period satisfactorily.
To decide upon the pay raise of an employee.
To determine whether the recruitment, selection and training provided,

have been effective or not.
To let the employees know where their performance stands compared to

their peers', department's and organisation's performance.
To improve communication as the line manager can provide a clear

picture to the employee in terms of past performance and future goals.
Employee's Point of View
It provides an employee an insight as to where his performance stands

while compared to his peers' and department's performance.
Feedback given to him by the line manager helps him in improving his
behaviour, output and overall performance.
Ajay Verma: I hope you have understood the importance of performance

appraisal.
Rajesh: Yes Sir. But what is involved in performance appraisal ?
! !126
Ajay Verma: Let me explain the process as laid down by an organization

and how it is conducted on an annual basis…
7.3 PERFORMANCE APPRAISAL PROCESS
Broadly, Human Resource department in most organizations lay down the

following performance appraisal process to be followed. The effectiveness
of the performance appraisal system lies in following all the steps laid
down. The process is as follows :-
1. Objective of Appraisal
The Human Resource department should decide before hand the objectives
of the appraisal system. The Human Resource department should decide
whether the appraisals will be used to improve the performance of poor
performers or whether it will be used to lay off poor performers. It also has
to decide whether the appraisal system will be used for effecting
promotions and transfers, for assessing training needs or for pay increases.
2. Establish Job Expectations

The Human Resource manager or the immediate supervisor should inform
the employee what is expected of him/her on the job. An employee should
not start a job until he fully understands what the expectations of the
superiors are. Normally, the job expectations are laid down in the job
description. The Human Resource manager should ensure that there is
alignment in the understanding of the job description in the minds of the
employee as well as his immediate supervisor.
3. Design Appraisal Programme

After laying down the objectives of the appraisal system and ensuring that
the job expectations are correctly understood by the employee and his
immediate supervisor, the Human Resource department has to decide
whose performance is to be assessed, whether the immediate supervisors/
managers or clients or subordinates will rate the performance, what should
be the parameters of performance against which the employee will be
appraised, when the performance should be evaluated and what will be the
methods that will be used for performance appraisal. The Human Resource
department has also to decide whether the performance will be assessed in
terms of quantity/quality/timeliness of output, job knowledge, leadership
abilities displayed, versatility, and team spirit, congruence of the individual
! !127
goals with the organizational goals or an employee's future potential to

perform the job.
4. Appraise the performance

The Human Resource department has to ensure that the performance
appraisal is done for all the deserving employees in a timely manner. Most
of the times, performance appraisals of employees are conducted by the
immediate supervisors and it is difficult to conduct appraisals when
deadlines are to be met in the day-to-day functioning of a department. It
becomes the responsibility of the Human Resource department to see to it
that the performance appraisal is conducted and finished in the specified
time period.
5. Archiving/storing performance appraisal data

Organizations need to archive or store the performance appraisal data so
that at any point in the future, the information can be retrieved and used.
After the performance appraisal is conducted, the appraisal data is
archived/stored for future use. Issues like pay hikes, promotions, training
assessment, confirmation of probationary services, etc are decided on the
basis of the appraisal data. Appraisal data such as the rating given to the
employee, the comments of the superiors, the training needs identified and
such like are stored for future use.
Activity A
What is performance appraisal? Why is performance appraisal conducted ?
Describe the performance appraisal process.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !128
7.4 ANNUAL PERFORMANCE APPRAISAL CYCLE
The annual performance appraisal cycle involves the following steps:
Self appraisal.
Preparation for the Performance Review.
Performance Review - The Meeting.
Completion of a Performance Appraisal Form.
Self Appraisal
Self appraisal is an important part of the Performance Appraisal process
where the employee himself gives the feedback or his views and points
regarding his own performance. Usually this is done with the help of a self
appraisal form where the employee rates himself on various parameters.
The employee has to be honest and objective while performing self
appraisal. Self appraisal ideally includes the accomplishments, the goals
achieved, the failures, and the personal growth (i.e. new skills acquired,
preparation for the future etc.), the obstacles faced during the period, the
efforts for removing them, the suggestions, and the areas of training and
development felt by the employee.
Preparation for the Performance Review

The performance review meeting should not be strictly formal nor should it
be completely informal in nature. Ideally, the review meeting should be
structured, semi - formal meeting which needs prior preparation by the
appraiser as well as the employee for it to be effective.
The appraiser has to prepare on the following points before the meeting:
Inform the concerned employees the date, time and place for the review
meeting well in advance.
Review and be prepared with each and every employee's - job

description, performance standards, planned performance goals,
performance measures collected throughout the time period, the critical
incidents details and past appraisals of the employees.
Provide the employee a copy of the appraisal form.
! !129
The appraiser needs to completely understand the standards for the

employees at same level, to maintain the consistency in the process.
The feedback should be prepared in quantifiable measures where ever

possible.
The appraiser should be familiar with the performance review form and
the details.
The appraiser should collect as many evidences to support his/her point

as possible like the monthly, quarterly progress reports.
On the part of the employee, he should be prepared with his/her

accomplishments, initiatives taken, any cost benefits achieved by him,
situations where he has displayed leadership qualities, extra curricular
activities undertaken by him, etc. The employee should ensure that this
data is quantifiable terms.
The employee and the appraiser both should be prepared to discuss and
figure out the future goals and training needs. They should be mentally
prepared for constructive feedback.
Performance Review - The Meeting

Today, performance review meetings are regarded as conversation with a
purpose. They are considered extremely important for the development
and health of the organization. The purpose of the performance review
meetings is to reach mutually agreed conclusions about the development
of the individual and his performance and if applicable, any areas for
improvement, including how such improvements are to be achieved. It can
be used to motivate employees to perform better in future or reinforce the
current desirable behaviour. It also should enable the employees to engage
in a dialogue and get the support of the manager about the individual's
performance and development.
! !130
Review discussion meetings ideally include the following:
Review of progress on tasks and activities in relation to the employee's

performance plan,
The developmental initiatives taken by the employee himself and those

planned by the management for the employee.
Identification of variances in terms of delays, requisite quality and

shortfall in help planned for the employee, if any
Analyzing the causes of the delay, the problems faced and the solutions
adopted.
Preparation of action steps for solving identified problems and

contingency plans for anticipated problems.
Completion of a Performance Appraisal Form

Performance appraisal form provides the basis for the performance review,
providing the feedback to the employees and the final rating of the
employee. It also facilitates various other HR decisions and career
development plans and decisions of the employees. Therefore,
performance appraisal from should be filled with utmost care and
objectivity. Clear and unambiguous description of the employee
performance should be given in terms of average, above average, good
and excellent performance. The final rating should be mentioned. The
performance appraisal form should be approved or signed off by the
employee as well as his immediate supervisor. This is done so that in future
there is no ambiguity by any concerned party.
Activity B
Explain the annual performance appraisal cycle.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !131
Ajay Verma: Now that I have explained the process, let me describe the
methods.
Rajesh: That's wonderful Sir.
7.5 CURRENT METHODS OF PERFORMANCE APPRAISAL
Rating Scales
This is the most popular technique used for appraising the performance of
employees. Mostly, any type of job can be evaluated by using the rating
scale. The only necessity is that the job-performance criteria should be
changed. A rating scale looks like the following:
Job-
Average Excellent
Performance Poor 1 Fair 2 Good 4
3 5
criteria
1 Initiative
2 Quality of
work
3 Quantity of
output
4 Attendance
5 Co-operation
6 Attitude
Total
Total score
Performance of the employees is rated on a scale ranging from poor to

excellent against the various job-performance criteria specified. Rating
scales are very easy to use and are cost- effective. A large number of
employees, especially in a factory, can be evaluated in a short time and the
rater does not need any training. On the other hand, the rater could be
biased and thus present a wrong picture of the employee's performance.
! !132
Checklist
Under this method a checklist of statements on the traits of the employee
and his or her job is prepared in two columns - 'Yes' column and a 'No'
column. The rater has to tick whichever column is applicable to the
employee. After this is done, the checklist is forwarded to the Human
Resource department who do the actual assessment of the employee.
Points are allocated to every single 'Yes' and the total score is arrived at.
Following is an example of a checklist :
Yes No
1 Does the employee have adequate knowledge about the
job?
2 Does the employee comply with the safety regulations?

3 Is the employee’s attendance satisfactory?
4 Does the employee co-operate with co-workers?

5 Does the employee’s work meet the quality standards?
As a checklist is standardized, it is easy to administer. Very little training is

required to be provided to the rater. On the other hand, the checklist items
can be misinterpreted. It also does not allow the rater to provide any
relative feedback on the performance of the employee.
Forced Distribution/Bell Curve Method

This method assumes that the general employee performance level
conforms to a normal statistical distribution. A normal statistical
distribution resembles a bell-shaped curve. It is assumed that 10 per cent
are excellent or outstanding, 20 per cent are good, 40 per cent are average
or satisfactory, 20 per cent are below average or marginal and 10 per cent
are unsatisfactory. The unsatisfactory 10% are asked to improve their
performances or leave the organization whereas promotions and pay hikes
are given to the excellent 10% and the good 20%.
! !133
!
Fig.1
The benefit of this method is that the rater cannot be lenient in providing
his rating to the employee. The disadvantage of this method is the
assumption that the employee performance levels conform to a normal
distribution. Also it could be damaging to the morale of the employees in
the organization.
Critical Incidents Method

This method focuses on certain critical behaviours of an employee that
make all the difference between effective and non-effective performance of
a job. Examples of critical incidents are - in case of a call center employee
it could be reducing the call duration from 5 minutes to 3 minutes, in case
of a supervisor in a factory it could be increasing the machine utilization in
plant by 30% from last year. Critical incidents method is useful as it is
based on the actual job behavior. Feedback can be easily provided to the
employee. On the other hand, the negative incidents are more noticeable
than positive ones. For the supervisor, the recording of incidents might be
difficult.
Behaviorally Anchored Rating Scales

Behaviorally Anchored Rating Scales (BARS) is a technique which combines
the rating scale and critical incidents method. It consists of predetermined
critical areas of job performance or sets of behavioral statements
describing important job performance qualities as good or bad (for e.g. the
qualities like inter personal relationships, adaptability and reliability, job
knowledge etc). These statements are developed from critical incidents. In
! !134
this method, an employee's actual job behaviour is judged against the

desired behaviour by recording and comparing the behaviour with BARS.
Developing and practicing BARS requires expert knowledge.
Essay Method
In this method, the rater describes the employee on certain parameters
like the rater's overall impression of the employee's performance, whether
the employee can be promoted, the jobs that the employee is able to
perform, and the training and development required by the employee. This
method is used with the other structured methods like rating scale and
checklist, as it gives a description of the employee on an individual basis.
But it is a time consuming method and it depends on the writing skills of
the raters. Also, the appraisal might be influenced with the content rather
than the actual performance of the employee.
Ranking Method
In this method, the superior ranks his subordinates in the order of their
merit, starting from the best to the worst. This method just focuses on that
one employee is better than the other. It does no question as to 'how' or
'why' this ranking has been arrived at. This helps in deciding the merit-pay
increases, promotions and other organizational rewards. However, it suffers
from many biases such as the halo effect.
Activity C
List down and explain some of the current methods used for performance
appraisal.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !135
Assessment Centres
An assessment centre typically involves the use of methods like social/
informal events, tests and exercises, assignments being given to a group of
employees to assess their competencies to take higher responsibilities in
the future. Generally, employees are given an assignment similar to the job
they would be expected to perform if promoted. The trained evaluators
observe and evaluate employees as they perform the assigned jobs and
are evaluated on job related characteristics. The major competencies that
are judged in assessment centres are interpersonal skills, intellectual
capability, planning and organizing capabilities, motivation, career
orientation etc. assessment centres are also an effective way to determine
the training and development needs of the targeted employees.
Human Resource Accounting Method

Human resources are valuable assets for every organization. Human
resource accounting method tries to find the relative worth of these assets
in the terms of money. In this method the Performance appraisal of the
employees is judged in terms of cost and contribution of the employees.
The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs
etc whereas their contribution includes the total value added (in monetary
terms). The difference between the cost and the contribution will be the
performance of the employees. Ideally, the contribution of the employees
should be greater than the cost incurred on them
360 Degree Feedback

360 degree feedback, also known as 'multi-rater feedback', is the most
comprehensive appraisal where the feedback about the employees'
performance comes from all the sources that come in contact with the
employee on his job. 360 degree respondents for an employee can be his/
her peers, managers (i.e. superior), subordinates, team members,
customers, suppliers/ vendors - anyone who comes into contact with the
employee and can provide valuable insights and information or feedback
regarding the "on-the-job" performance of the employee.
360 degree appraisal has four integral components:

1. Self appraisal
2. Superior's appraisal
3. Subordinate's appraisal
4. Peer appraisal.
! !136
Self appraisal gives a chance to the employee to look at his/her strengths

and weaknesses, his achievements, and judge his own performance.
Superior's appraisal forms the traditional part of the 360 degree
performance appraisal where the employees' responsibilities and actual
performance is rated by the superior. Subordinates appraisal gives a
chance to judge the employee on the parameters like communication and
motivating abilities, superior's ability to delegate the work, leadership
qualities etc. Also known as internal customers, the correct feedback given
by peers can help to find employees' abilities to work in a team, co-
operation and sensitivity towards others
Self assessment is an indispensable part of 360 degree appraisals and

therefore 360 degree performance appraisal has high employee
involvement and also has the strongest impact on behavior and
performance. It provides a "360-degree review" of the employees'
performance and is considered to be one of the most credible performance
appraisal methods.
360 degree performance appraisal is also a powerful developmental tool

because when conducted at regular intervals (say yearly) it helps to keep a
track of the changes others' perceptions about the employees. A 360
degree appraisal is generally found more suitable for the managers as it
helps to assess their leadership and managing styles. This technique is
being effectively used across the globe for performance appraisals. Some
of the organizations following it are Wipro, Infosys, and Reliance Industries
etc.
Management By Objectives (MBO)

The concept of 'Management by Objectives' (MBO) was first given by Peter
Drucker in 1954. It can be defined as a process whereby the employees
and the superiors come together to identify common goals, the employees
set their goals to be achieved, the standards to be taken as the criteria for
measurement of their performance and contribution and deciding the
course of action to be followed. The essence of MBO is participative goal
setting, choosing course of actions and decision making. An important part
of the MBO is the measurement and the comparison of the employee's
actual performance with the standards set. Ideally, when employees
themselves have been involved with the goal setting and the choosing the
course of action to be followed by them, they are more likely to fulfill their
responsibilities.
! !137
The MBO Process

The principle behind Management by Objectives (MBO) is to create
empowered employees who have clarity of the roles and responsibilities
expected from them, understand their objectives to be achieved and thus
help in the achievement of organizational as well as personal goals.
Some of the important features and advantages of MBO are:
Clarity of goals - With MBO, came the concept of SMART goals i.e. goals
that are:
Specific
Measurable
Achievable
Realistic, and
Time bound.
! !138
The goals thus set are clear, motivating and there is a linkage between
organizational goals and performance targets of the employees.
The focus is on future rather than on past. Goals and standards are set
for the performance for the future with periodic reviews and feedback.
Motivation - Involving employees in the whole process of goal setting and

increasing employee empowerment increases employee job satisfaction
and commitment.
Better communication and Coordination - Frequent reviews and

interactions between superiors and subordinates helps to maintain
harmonious relationships within the enterprise and also solve many
problems faced during the period
Team Performance Appraisal

Today, teams are becoming very common in companies. Most of the
performance appraisal techniques are formulated with individuals in mind
i.e. to measure and rate the performance of the individual employee.
Therefore, with the number of teams increasing in the organisations, it
becomes difficult to measure and appraise the performance of the team.
The question is how to separate the performance of the team from the
performance of the employees. A solution to this problem that is being
adopted by the companies is to measure both the individual and the team
performance. Sometimes, team based objectives are also included in the
individual performance plans
Rank And Yank Strategy

Also known as the "Up or out policy", the rank and yank strategy refers to
the performance appraisal model in which best-to-worst ranking methods
are used to identify and separate the poor performers from the good
performers. Then the action plans and the improvement opportunities of
the poor performers are discussed and they are given to improve their
performance in a given time period, after which the appropriate HR
decisions are taken.
! !139
Activity D
What are the methods that will be used in future for appraising the
performance of its employees ?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Ajay Verma: We do face some problems in performance appraisal.
Rajesh: What are the problems ?
Ajay Verma: The problems that we face are several but every problem
has its solution.
7.7 PROBLEMS FACED IN PERFORMANCE APPRAISAL
Performance appraisals are subject to many rating errors. These could be

due to errors in the rater's observations and judgement. These can
seriously affect the assessment results. The most common errors are listed
below :-
1. Halo effect
This takes place when only one aspect of the individual's performance
influences the evaluation of the entire performance of the individual. For
example, the rater could be influenced by the employee who works late
constantly and rates the employee as highly productive employee. It may
not be the true picture. Similarly, an attractive or popular employee might
be given a high overall rating.
2. Rater effect
This includes favouritism, stereotyping and hostility. The rater gives
excessively high or low scores to certain individuals or groups on the basis
of the rater's attitude towards the employee and not on the actual
performance.
! !140
3. Initial efforts and Recent efforts effects

The rater is influenced by the behaviour/performance shown by the
employee during the early stages of the review period (initial efforts), or by
the behaviour/performance shown by the employee near the end of the
review period (recent efforts). The rater has to take the composite
performance of the employee over the entire review period.
4. Past spillover effect

The rater is influenced by the earlier performance ratings, good or bad, and
rates the employee according to the past ratings rather than taking into
account the current performance. This is unjustified as the current
performance does not deserve the rating of the earlier good or bad ratings.
5. Status effect
The rater holds the view that the employee's job is of a high level and
hence over-rates the performance of the employee and where he considers
the job is of a low level, he under- rates the performance of the employee.
6. Leniency or severity
Raters are lenient to the employees as they feel that the rating given by
them might be a poor reflection on them. They might also feel that the
relation between them and their subordinates will be affected. They might
also feel that if they are lenient in their subordinates' rating, the
subordinates might get promoted, which will increase their own standing.
The rater might also be severe in the rating provided as they may be
unduly critical of the employee's performance.
7. Tendency to play it safe

The raters are unsure as to how the employee should be rated and hence
they tend to play it safe and will rate the employee as 'average' or
'satisfactory'. This makes it difficult to distinguish excellent performers and
poor performers, which is not advantageous to the organization.
Such problems can be solved by the Human Resource department by

providing training, before the performance review cycle is conducted, to
the managers and supervisors who conduct performance appraisals. They
are provided training on the following aspects: 
! !141
Methods, techniques and guidelines for setting goals and objectives.
How to evaluate the performance and rate the employees.
Standards for performance documentation.
How to complete a performance appraisal form.
How to maintain objectivity in the appraisal.
Questioning techniques for appraisals.
Responding to employee reactions.
Improves rapport and communication.
Building morale and motivating employees.
Observing and measuring performance.
Tracking results.
Structuring the interview with the focus on improving performance.
Feedback techniques (providing constructive feedback).
How to deal with non-performers and people who refuse to co-operate.
Post review actions.
The training is given by conducting special workshops by either the in-

house trainers or by professional HR consultants, from outside the
organisation.
! !142
7.8 SUMMARY
Performance appraisal is an objective assessment of an individual's

performance against well defined benchmarks. Performance appraisal is
useful in determining pay hikes, promotions and in the assessment of
training and development needs of the employees. The Human Resource
department is instrumental in laying down the performance appraisal
process for the entire organization. It is also involved in ensuring that the
annual performance appraisal cycle is carried out on a timely basis. There
are many methods used for appraising the performance of the employees
such as rating scale method, bell curve method, etc. In future,
performance appraisals could include the 360 degree feedback method.
Although performance appraisal suffers from certain drawbacks like the
halo effect, status effect and leniency or severity, these drawbacks can be
reduced or eliminated by providing training to the raters.
1. What is performance appraisal? Why is performance appraisal conducted

? List down the performance appraisal process.
2. Describe the current methods used for performance appraisal.
3. Explain the annual performance appraisal cycle.
4. What are the methods that will be used in future for appraising the
performance of its employees ?
5. What are the problems faced while appraising the performance of

employees ? How are they overcome ?
! !143
Related Reading
Negative criticism? Take it in your stride

 
(Courtesy - Vinnie Bhadra, The Times of India - Ascent)
Much like negative criticism, a bad performance review can easily

make one feel angry, shocked and disappointed. However, the key
lies in taking the criticism in stride and moving ahead to provide
better results
The appraisal day is usually a time which is full of anxiety and nervous
energy for the people in the office. In the case where the review is not
positive, it can affect the performance of the individual in a negative way,
in case it is not dealt with in the proper manner. "It can become very
difficult to maintain morale and even more challenging to not harbour
feelings of hostility and resentment towards our job and our superiors in
case of a negative review. But these are just initial, visceral responses so
it's important to realise that negative reviews are only part of your growth
process," says Kamlesh Gupta, President-HR, Venus Consultants Ltd.
Shedding some light on the above topic, Gayathri Padmanabhan, a

psychologist based in Mumbai says, "When an employee receives a 360
degree negative review it can be very demoralising for him/her. Most of
them will perceive it in a way, which speaks of their incapability to handle
their job responsibilities. This will lead to a loss of focus from their actual
goal because of which it is important to send across the review in a subtle
and easy manner.”
On the part of the employee, the most important thing that they can do is
to have self- confidence that the negative review is not a means of bringing
them down, but a stepping- stone to be a better employee. "What you do
with the feedback that you receive is up to you. The important thing is that
you've really listened to what has been said and given yourself some time
to reflect on it. If the feedback is coming from your supervisor, you may
have to make changes if you want to do better at your job. But in the end,
it's you who determines how you want to approach those changes," says
Ganesh Nagadeva, VP-HR, Tricomm India.
! !144
In case of a negative feedback, the important thing is that you've really

listened to what has been said. The second step is to give yourself some
time to reflect on what is said. "Giving yourself time to reflect will help to
separate the negative feelings inside of you, so that you can think clearly,"
says Gupta.
As experts say that communication is the key to solving all major

problems, in this case too it is helpful to communicate clearly with your
supervisors as well as colleagues and understand their point of view better.
"Don't be shy or embarrassed to ask candid questions. Clarity regarding
your role is very important and you don't want to miss any obvious details
that will help you in clearing the negative review," says Nagadeva.
"Once you are crystal clear about what's expected of you, set goals for the
future and create specific action plans that will help you achieve them.
These are known as S.M.A.R.T goals, i.e., Specific, Measurable, Achievable,
Realistic and Time-Bound. Keep your boss in the loop as to how you'll go
about improving your performance by setting a follow-up meeting,"
concludes Padmanabhan.
! !145
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !146
EMPLOYEE WELFARE
Chapter 8
Employee Welfare
Objectives
What is employee welfare ?
Importance of employee welfare
Various benefits provided in an organisation.
Structure:
8.1 Nature of Employee Welfare
8.2 Importance of Employee Welfare
8.3 Types of Welfare Facilities
8.4 Safety Aspect
8.5 Summary
Ajay Verma: So Rajesh, will you be attending our employee welfare

workshop ?
Rajesh : No Sir, I do not understand why I should attend it.
Ajay Verma: Well, let me tell you what is employee welfare……
! !147
EMPLOYEE WELFARE
8.1 NATURE OF EMPLOYEE WELFARE
Welfare means the physical, mental, moral and emotional well-being of an

individual. Employee or labour welfare, as defined by ILO (International
Labour Organisation) is understood to include such services, facilities and
amenities as may be established in or in the vicinity of undertakings to
enable the persons employed in them to perform their work in healthy,
congenial surroundings and to provide them with amenities conducive to
good health and high morale.
Employee welfare is concerned with the welfare facilities provided by an

organization to its employees as well as the physical, health and safety
conditions of the working environment.
8.2 IMPORTANCE OF EMPLOYEE WELFARE
The facilities provided help motivate and retain employees. Most welfare
facilities are hygiene factors which create dissatisfaction if not provided.
Welfare facilities, besides removing dissatisfaction, help to develop loyalty
in the employees towards the organisation.
Welfare may help minimize social evils such as alcoholism, gambling, drug
addiction and the like. A worker is likely to fall victim to any of these if he
is dissatisfied or frustrated. Welfare facilities tend to make the worker
happy, cheerful and confident looking.
Employee welfare improves the image of the organisation as a good

employer. This helps the organisation when it wants to recruit. Welfare
helps in cutting down labour turnover as a satisfied employee is less likely
to leave the organisation.
! !148
EMPLOYEE WELFARE
8.3 TYPES OF WELFARE FACILITIES
Welfare facilities can be broadly classified into two groups
1. Welfare measures inside the work place.

2. Welfare measure outside the work place.
Welfare Measures Inside Work Place
Conditions of the work environment :
Neighbourhood safety and cleanliness. Attention should be paid to the

roads leading to the factory or the organization.
Upkeep of premises which includes the compound wall, lawns, gardens,

passages and doors, ceilings, walls and floor maintenance.
Workshop should be sanitized and clean. The temperature, humidity,

ventilation and lighting should be maintained. Dust, smoke, fumes and
gases should be eliminated.
Control of effluents.
Convenience and comfort during work, that is, the seating arrangements
should be conducive to the posture of the employees.
Distribution of work hours and provision for rest hours, meal times and
breaks.
Maintenance of machines and tools, fencing of machines, providing

guards, helmets, aprons, goggles and first-aid equipment.
Supply of necessary beverages and pills and tablets.
Notice boards, posters, pictures and slogans which convey necessary

organizational and safety information should be prominently displayed.
! !149
EMPLOYEE WELFARE
Conveniences:
Restrooms, wash basins, bathrooms, provision for spittoons should be

arranged.
There should be a waste disposal system.
Provision of drinking water or water coolers should be made.
Canteen services should be provided. Meals should be either provided

free or at a subsidized rate.
Workers' Health Services
Some of the health services provided to workers are :
Factory health centre.

Dispensary.
Ambulance.
Emergency aid.
Medical examination for workers.
Health education.
Health research
Family planning services.
Doctor on duty.
Pre-hiring medical check up for all employees.
Periodical physical and check up of all employees.
First aid treatment following an accident. Training in first aid to all
employees.
Treatment of minor complaints such as cough, cold, fever and
headaches.
Control of occupational health hazards.
Elimination of insects and rodents.
Psychiatric counseling.
! !150
EMPLOYEE WELFARE
Women and Child welfare
Some of the facilities that are provided to women:
Maternity aid, crèche and child care.

Women's general education.
Separate lunch rooms, toilets and rest rooms for women.
Family planning services.
Workers' recreation
Indoor games
Library
Internet café
Economic services
Co-operatives.
Loans and financial grants.
Saving schemes.
Budget knowledge.
Health insurance.
Employment bureau.
Transport services.
Provident fund, gratuity and pension.
Rewards and incentives.
Workmen's compensation for injury.
Family assistance in times of need.
Labour-Management Participation
Formation and working of various committees like works committee,

safety committee, canteen committee, etc.
Consultation in welfare area, in production area, in the area of

administration, in the area of public relations.
Workmen's arbitration council.
Research bureau.
! !151
EMPLOYEE WELFARE
Workers' Education
Circulating library.
Visual education.
Literary classes.
Adult education.
Social education.
Daily news review.
Factory news bulletin.
Co-operation with workers in education services.
Welfare Measures Outside Work Place

Housing = quarters for bachelors and family residences.
Water, sanitation, waste disposal.
Roads, lighting, parks, playgrounds.
Schools - nursery, primary, secondary and high school.
Markets, co-operatives, consumer and credit societies.
Bank.
Transport.
Communication - post, telegraph and telephone.
care, family visiting.
Cultural programmes, festival celebrations, study circles.
Security
Community leadership development, council of elders, administration of
community services and problems.
Activity A
What is employee welfare? State its importance and list down a few of the
welfare facilities provided to employees or workers.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !152
EMPLOYEE WELFARE
8.4 SAFETY ASPECT
A worker's safety is of main concern to an organization. An organization

should take necessary steps in the prevention of accidents. The various
steps taken by an organization in the matter of safety are :
Training in Safety
Systematic training of industrial employees is necessary if they are to do
their jobs efficiently and safely. This is an absolute requirement and it
should be provided to all employees irrespective of their aptitude and
experience they may possess for the jobs to which they are assigned.
Training practices in the industry are found to vary with respect to method,
content, quality, quantity and source of instruction.
It is not enough if the workers are trained on the methods of avoiding

accidents. They must also be trained on the different ways of minimizing
damage, should an accident occur. Additionally the employees must be
given instructions in first-aid procedures, including techniques for
resuscitation.
Training for workers working with chemical compounds should include what
to do and what not to do in performing the job properly. It should also
include thorough instructions on the use of special devices and procedures
in case an emergency occurs.
Physical and Mechanical Conditions

Safety measures should be kept in mind while planning a layout and
constructing a building. Workers must be provided with safe tools and
equipment to work with. All machinery must be fenced and mechanically
and physically unsafe conditions should be eliminated. No new machine
should be installed without being sufficiently guarded and fenced.
Protective equipment of good quality and proper size, goggles, gloves, ear
muffs, safety belts and shoes and helmets should be supplied to workers,
who must be educated to wear them while on duty. Aisles and passages
should be free to permit easy movement of workers and materials. Proper
facilities should be provided for materials and work- in-progress so as to
prevent collision and stumbling and, also to facilitate escape in
emergencies.
! !153
EMPLOYEE WELFARE
Periodic inspection should be conducted to ensure safety of workers and

machines. Defective tools and equipment must be discarded. Electrical
wiring should be checked periodically.
Role of Management, Unions and Employees

The management should believe in, and have a commitment to safety and
safety rules. Strong trade unions can force unwilling managers to
undertake safety measures. Involvement of the employees in
implementation of safety programme is necessary. Involvement binds them
to participate in the safety programme. Also they understand the reasons
for accidents better and can offer effective suggestions to avoid them.
Safety Posters and Film Shows

Safety posters with illustrations should be put up on the walls in the
workplace. Films on how accidents occur, on the consequences of injuries,
and the need for safety should be screened for the benefit of the workers.
Film shows are more effective than posters because of their tremendous
audio-visual impact.
Safety week and Awards

A safety week should be observed. Safety awards are presented by the
national Safety Council every year to industrial establishments which show
accident-free operations. Stringent action against non-compliant
organisations, also help in improving safety.
Safety Database
Data relating to accidents should be properly maintained and periodically
updated.
! !154
EMPLOYEE WELFARE
8.5 SUMMARY
Welfare means the physical, mental, moral and emotional well-being of an

individual. An organization provides many welfare facilities to its
employees. Welfare facilities can be classified into welfare facilities inside
the workplace and welfare facilities outside the workplace. Employee
welfare improves the image of the organisation as a good employer. Safety
of the employees is of paramount concern to employees.
1. What do you mean by welfare ? What is its importance ?
2. What are the welfare facilities provided by an organization ?
3. Explain the various safety measures.
! !155
EMPLOYEE WELFARE
Related Reading : Workplace bullying
(Courtesy - Sheetal Srivastava, The Times of India - Ascent)
Much has been talked and written about workplace bullying but
what actually gives rise to it? While some call bullying the younger
sibling to violence, others look at it as a violence predictor.
Recently, there has been much discussion about workplace bullying: the
overly aggressive behaviour that makes coming to work a dreaded
necessity for many employees and one which can lead to violence.
"Workplace bullying means any sort of behaviour that is persistently
directed towards an employee or group of employees in a manner that
undermines their position within the work environment, and in the process
affects them psychologically. It can be in the form of aggressive behaviour,
verbal abuse, physical abuse, humiliation, job insecurity threats and
spreading false rumours," says Vaibhav Mahajan, Manager Human
Resource, Neev Group of Companies.
Workplace bullying has always existed but has taken a more aggressive
and intense form since last few years. Says Mahajan, "Bullying at the
workplace occurs in almost every industry. It is a major concern right from
private organisations to government bodies to even educational and
medical institutions. Competitive industries like media and creative
agencies besides the mushrooming call centres and BPOs face a lot more of
work bullying cases as compared to other industries.”
According to Dr Anjali Chhabria, psychologist, "There are a variety of

reasons why a person may bully another at the workplace. Some of the
reasons are:
Power
A person may use his/her position of power or physical dominance over
those who may be perceived to be weaker or submissive.
Self-esteem
Bullies may help put down others to boost their own self-esteem and
confidence to help deal with personal feelings of inadequacy.
Difference
! !156
EMPLOYEE WELFARE
An individual or group may become a target of bullying as s/he may be

perceived by others as being new or different.
Perceived Threat
Some people bully others because the other person may be seen as a
threat to them personally, or a threat to their position within the
workplace.
Organisational Culture
The culture of a workplace is the main reason for the occurrence of
bullying. When the culture is positive it encourages individuals to adopt
appropriate behaviours that encourages respect of others. Conversely,
employees may find themselves in a negative culture where inappropriate
behaviours and attitudes are promoted or condoned by management and
bullying is seen as normal behaviour for the majority of people in the
workplace.
Bullying gets easier when there are no proper HR policies and to add to it if
there is no constant check by the top management on the same.
Workplace bullying could take place due to power disparity, organisational
culture and discouragement of employees to openly voice their
dissatisfaction or opinions. HR managers should play a crucial role in
curbing workplace bullying by encouraging employees to immediately
report any sort of repetitive bullying to ensure timely intervention by top
management team.
"Organisations need clearly defined policies regarding behavioural code of

conduct at the workplace. This coupled with sound organisation values that
are well communicated to employees set the framework for expected
behaviour and resultant work culture. In case of non-compliance,
counseling and coaching should be provided immediately. It is the
responsibility of the HR department to ensure that the behavioural code of
conduct is implemented stringently across the organisation. They must
drive this through the line managers and have a candid and continued
dialogue to address bullying related issues, if any. It is also essential that
the HR department enables two-way communication and encourages
employees' grievances to bring the same to their notice," says Anuraag
Maini, Senior VP-HR, DLF Pramerica Life Insurance.
! !157
EMPLOYEE WELFARE
So should the HR have an explicit policy on workplace bullying? What

strategies can HR adopt to prevent such behaviours? "Typically, the HR
department ensures that the Workplace Standards policy at DLF Pramerica
Life Insurance which refers to general harassment including bullying is
communicated in detail to every new employee, at the time of his/her
joining. This communication is refreshed at regular intervals. Resolution of
conflicts, counseling, giving feedback etc. are other ways by which we
contribute towards a safe working environment," adds Maini.
"HR professionals need to have a clear and explicit policy about what is
acceptable behaviour and what is not. Potential aggressors are often
cranky or aggressive on the job long before they explode and commit acts
of violence. HR professionals should identify these potential aggressors
during the hiring process and avoid them. We try and get information of
the new employees from their previous employer. We also have community
programs that offer people training in anger management," adds Mahajan.
Given the sensitivities involved in dealing with workplace bullying, the need
of the hour is, to have mature and competent leaders/managers who will
be able to spot early signs and nip the issue in the bud.
! !158
EMPLOYEE WELFARE
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !159
COMPENSATION ADMINISTRATION
Chapter 9
Compensation Administration
Objectives
Nature and Importance of compensation
The various factors affecting compensation
The different components of compensation
Structure:
9.1 Nature and Importance of Compensation
9.2 Factors Influencing Compensation
9.3 Various Components of Compensation
9.4 Summary
Ajay Verma: So Rajesh, your appraisal is over. Has the HR department

given you a letter giving details of your new compensation?
Rajesh: No, Sir. I have not received any letter from HR. And, what is this
new term - compensation ?? I only receive my monthly salary.
Ajay Verma: Well Rajesh, your monthly salary is a part of your

compensation. Let me explain to you what compensation means.
! !160
9.1 NATURE AND IMPORTANCE OF COMPENSATION
Compensation is the total reward received by an employee in exchange for

services performed for an organization. It can include both direct pay
(salary and wages) and indirect pay (benefits programs). In order to
provide additional incentive to attract quality employees, as well as keep
competent workers who are already associated with the company, many
businesses offer a compensation package that is much more detailed than
simple salary or wages. The compensation package may include a number
of other benefits, including insurance, employee discounts, extended
leaves, and retirement programs. Compensation packages vary greatly
from one industry type to the next. Yet, all of them address the matter of
consistent compensation through the process of a wage or salary. Wage
and salary requirements are usually agreed upon before the employee
begins work, and becomes the foundation for the compensation package.
The details of the wage or salary may also include guarantee of increases
from time to time, based on either the cost of living or the job performance
of the individual.
Along with basic compensation, there is usually some sort of process that
guarantees pay during leave. Another basic aspect of the compensation
package is often some form of health insurance. This may be a benefit that
is extended to the employee and is paid for by the company, or the
company may choose to pass part of the cost along to the employee in the
form of a payroll deduction.
Other types of benefits may also be included in a compensation package.

For instance, if the employer manufactures a good or service, such as
home textiles, the employee may receive a discount for purchasing finished
goods from company operated stores. A compensation package may
include guarantee for reimbursement of any out of pocket costs the
employee incurs while performing his or her job responsibilities.
Retirement plans may vary from simple accruals of matched deductions

from the weekly or monthly paycheck to mutual funds. The range of
benefits that may be included in a compensation package can include the
use of a company car, cell phone service, and office equipment for working
at home, or any other type of benefit that the company wishes to extend.
! !161
A fair compensation system is a must for every business organization. The

fair compensation system will help in the following:
An ideal compensation system will have positive impact on the efficiency

and results produced by employees. It will encourage the employees to
perform better and achieve the standards fixed.
It will enhance the process of job evaluation. It will also help in setting
up an ideal job evaluation and the set standards would be more realistic
and achievable.
It should not result in exploitation of workers.
It will raise the morale, efficiency and cooperation among the workers. It,
being just and fair would provide satisfaction to the workers.
Such system would help management in complying with the various labor
acts.
Such system should also solve disputes between the employee union and
management.
It should motivate and encouragement those who perform better and

should provide opportunities for those who wish to excel.
Sound Compensation/Reward System brings peace in the relationship of

employer and employees.
It aims at creating a healthy competition among them and encourages

employees to work hard and efficiently.
The system provides growth and advancement opportunities to the

deserving employees.
The perfect compensation system provides platform for happy and

satisfied workforce.
This minimizes the labour turnover. The organization enjoys the stability.
! !162
The organization is able to retain the best talent by providing them

adequate compensation thereby stopping them from switching over to
another job.
The business organization can think of expansion and growth if it has the
support of skillful, talented and happy workforce.
The sound compensation system is hallmark of organization's success

and prosperity.
The success and stability of organization is measured with pay-package it

provides to its employees.
Activity A
What is compensation? Describe its importance.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Ajay Verma: I hope you have now understood what compensation means
and what its importance is.
Rajesh : Yes, Sir.
Ajay Verma: Let me now explain to you the various factors that affect
compensation. 
! !163
9.2 FACTORS AFFECTING COMPENSATION
A number of factors influence the compensation payable to employees.

They can be categorized into external and internal factors.
External Factors
Labour Market
Demand for and supply of labour influence wage and salary fixation. A low
wage or salary may be fixed when the supply of labour exceeds the
demand for labour. A higher salary or wage will have to be paid when the
demand exceeds supply. Nowadays, the trend is that there is more supply
of unskilled labour than skilled labour. Hence, organizations pay high
compensation to skilled labour to attract and retain them. At the same
time, unskilled labour has to be paid a justifiable wage or salary.
Labour Unions
The presence or absence of labour unions often determines the amount of
wages paid to employees. Employers in non-unionised factories enjoy the
freedom to fix wages and salaries. Labour unions pressurize organizations
to pay employees the legal minimum wage and, collectively they bargain
for increase in the wages of the workers. Thus, labour unions determine
and revise the pay scales of the workers in the organization.
Cost of living
This is a very important factor especially during times of rising prices. Cost
of living reduces the real wages of the workers. Care should be taken to
ensure that while fixing the wages, the cost of living is considered. A rise in
the cost of living is sought to be compensated by payment of dearness
allowance.
Labour Laws
Labour laws have been passed to ensure that the workers or employees
are not exploited by the organizations, and that they are paid their just
dues. Labour laws like the Payment of Wages Act 1936, the Minimum
Wages Act 1948, the Payment of Bonus Act 1965, Equal Remuneration Act
1976 and the Payment of Gratuity Act 1972, all ensure that the payment of
wages and other dues is paid by the organization to the workers. These
acts safeguard the rights of the workers or the employees.
! !164
Society
Compensation or remuneration paid to employees is reflected in the prices
fixed by an organization for its goods and services. As the general public
consumes the products and services of the organization, they are
interested in the compensation decisions of the organization.
Economic conditions
The state of the economy also plays a role in the determination and
fixation of wage and salary. When the economy is in a recession,
organizations cut down on the compensations of its employees. Whereas,
when the economy is in a boom period or prosperity period, the
organization will pay handsome compensations to its workers.
Internal Factors
Business Strategy
The overall strategy which a company follows determines the compensation
that it pays to its employees. If the strategy of the company is to achieve
growth rapidly, the compensation will be higher than what its competitors
may be paying. If the strategy is to maintain the current savings or to
reduce costs, then the company will pay average or below average levels of
compensation.
Performance appraisal helps award pay increases to employees who show
improved performance. If the organization wants to retain its key and high
performing employees, then it will pay a handsome compensation package
to them. If the organization wants to cut down its staff and reduce the
number of poor or unsatisfactory employees, it will not increase their
compensation package thus forcing these employees to quit.
Employee
Employee-related factors like performance, seniority, experience and
potential determine an employee's compensation. An employee's
performance is always rewarded with an increase in the pay. Sometimes,
organizations pay on the basis of the seniority of the employee. This is
especially true in case of the compensation paid to the organization's top
management.
! !165
Activity B
Describe the various factors that affect compensation.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Rajesh: Thank you, Sir. But I still do not understand the relation between
salary and compensation…
Ajay Verma: Well Rajesh, salary is one component of compensation. Let

me explain to you the various components of compensation package.
9.3 VARIOUS COMPONENTS OF COMPENSATION
The various components of compensation are :
Wages
Wages refer to the hourly rates of pay paid to workers. Wages are subject
to annual increments and they differ from employee to employee. They
also depend on the nature of job, type of industry, seniority and merit.
Based on the needs of the workers, capacity of the organization to pay and
the general economic conditions prevailing, wages can be classified into
three categories - minimum wage, fair wage, and living wage.
Minimum wage is usually fixed by labour laws and it is the one which
provides for the basic living conditions. It also ensures that the wage is
sufficient enough for the worker to some education, medical requirements
and amenities.
Fair wage is equal to the wage rate prevailing in either the same trade or
similar kind of work. It is fixed only by comparison with an accepted
standard rate and such standard rates are fixed where the workers are able
to bargain with the employers or organizations.
! !166
Living wage is described as the wage which enables the worker to provide
for himself and his family with the basic requirements like food, clothing
and shelter. It also ensures that the wage is sufficient enough for the
worker to provide education for his children, medical facilities and
insurance for his family. A living wage is fixed by taking into consideration
the general economic conditions of a country. Hence, the living wage is
different from country to country. In developed countries like U.S.A. and
U.K., the living wage is the minimum wage.
Salary
Salary represents the monthly rate of pay paid to employees. Salaries are
revised on an annual basis and are subject to annual increments. Salaries
they differ from employee to employee. It depends on number of factors
like the nature of job and the type of industry. Salary is normally paid to
executives based on what they can do and their performance. It is not paid
on the basis of the demands of the job. It is also subject to deductions at
source. In order to overcome the shortfall, the executives are paid hefty
incentives and attractive perks.
Bonus
Bonus is usually short-term incentive (annual) and is based on
performance. For this purpose, the definition of performance is very
crucial. In some organizations, the annual bonus is tied to the share price
of the return on investment. In other organizations, bonus is decided by
the Board of Directors and the Chief Executive Officer. In some
organizations, bonus is given after certain established targets have been
achieved. Organizations give out a bigger amount of bonus to its
executives as the executives have much more opportunity to influence
organizational success than non-managerial staff.
Commission
Commission is normally paid to the sales people or the marketing
department. It is paid upon the achievement of certain established sales
targets. The commission is normally calculated as a certain percentage of
sales.
For example, the sales force of an organization may have a target to

achieve sales of Rs.1 lakh in a month. If they achieve this target, then
they are promised a commission of 15% of the sales.
! !167
Commissions are paid so as to ensure that the morale of the sales people
is high and that they are motivated to generate more revenue for the
organization. Increase in sales mostly leads to increase in profits and
profits are crucial to the survival and growth of an organization.
Stock Options
Stock options are long-term benefits offered to executives. Companies
allow executives to purchase their shares at fixed prices. Stock options are
valuable as long as the price of share keeps increasing. Stock options are a
form of profit sharing that links the executive's financial success to that of
the shareholders. Stock options are awarded to the top and middle level
management, as a reward for their high performance. Stock options can
also be used as a retention strategy. For example, if an employee
completes certain years of work experience with an organization and is a
key performer, he is awarded the option to buy the stocks of the company.
Perquisites
Perquisites or perks constitute a major source of income for executives.

Typically, perks to executives include the following :
1. Membership in clubs.
2. Well furnished houses.
3. Medical expense reimbursement.
4. Reimbursement of servant's salary, telephone bills, electricity and gas

bills, and petrol and fuel expenses.
5. A company provided car.
6. Entertainment allowance.
7. Special dining privileges.
8. Reimbursement of credit card bills and mobile phone bills.
9. Reimbursement for children's education (school or college) expenses.
! !168
10.Professional meetings and conferences.
11.Holiday homes.
12.Spouse travel.
13.House rent allowance.
14.Conveyance allowance.
Life Insurance
Most organizations provide life insurance plans to its employees. The
organizations take these policies on a group basis as the insurance
companies accept all the employees regardless of the health or physical
condition. The health and physical conditions of the employees are tested
by the organization when they are selected to join the organization.
Mostly, the organization pays the base premium, which usually provides life
insurance and the employee pays for any additional coverage. Sometimes,
the cost of the base premium is split between the organization and the
employee on an equal basis or any other basis laid down by the
organization.
Medical Insurance
Health and hospitalization is a big concern for many people and it plays a
major role in their choice of employer, as medical insurance is very
expensive. Most organizations, therefore offer their employees some type
of medical and hospitalization insurance. Most medical insurance plans
provide at least basic hospitalization, surgical and medical insurance for all
eligible employees at group rates. Most plans pay for hospital room and
board, surgery charges, and medical expenses including doctor's visits to
the hospital. Some organizations also pay for major medical expenses
resulting from long- term or serious illnesses.
Mostly, organizations also pay for the medical insurance premiums of the
employee's dependents - parents, spouse and children.
! !169
Sometimes, organizations also sponsor insurance plans that help cover

health related expenses like eye care and dental services. Many
organizations offer membership in a health maintenance organization as a
hospital/medical option. The health maintenance organization is a medical
organization consisting of specialists like surgeons, psychiatrists, etc and
operating out of a health care centre.
Pension
It is a fixed sum received by the employees when they reach a pre-
determined retirement age or when they can no longer work due to
disability. Pension plans can be either contributory or non-contributory.
Contributory pension plans are those plans where the employee and the
employer both contribute a certain amount on a monthly basis. Non-
contributory pension plans are those plans where only the employer makes
the contribution to the pension plan. Organisations enjoy tax benefits when
they contribute to the pension plans.
Gratuity
It is a lump sum amount paid by the organization to the employee when
the employee retires from the service. It is calculated as the basic salary
for each completed year of service.
For example, if an employee at the time of retirement has a basic salary of

Rs.15,000/- and he has completed 10 years of service in the organization,
then the gratuity that will be payable by the organization will be Rs.
1,50,000/-
Gratuity will be paid only when both the organization and the employee are
in agreement over the expiry of the contract of the employee. It will not be
paid if the employee has left the organization over a serious fault
committed by him.
Supplemental Pay Leave

Supplemental pay leave refers to the pay for time not worked. It includes
holidays, vacations, sick leave, maternity leave and paternity leave.
! !170
Vacations and Holidays

The number of paid employee vacation days is different in various
organizations. Normally organizations provide 28 to 30 days of vacation on
an annual basis. But due to work pressures, sometimes this annual
vacation is not availed by the employees for years. At the end of a year,
employees encash (in money) the pending days of vacation. Nowadays,
banks and outsourcing companies follow strict norms and instruct their
employees to avail a compulsory vacation of 10 days, on an annual basis.
This is a statutory requirement for SOXA audit.
Sick Leave
Sick leave provides pay to employees when they out of work due to illness.
Most sick leave policies grant full pay for a specified number of sick days -
usually up to about 12 days per year. The sick days, usually accumulate at
the rate of one day per month of service. Sick leave pay causes difficulty
for many employers. The problem is that while many employees use their
sick days only when they are genuinely sick, others use sick leave as
extensions to vacations, whether they are sick or not. To reduce this
problem, many employers, at the end of the year, pay their employees a
daily equivalent sum for each sick leave day not used.
Maternity Leave
About half of the employees are women and most of them will become
pregnant during their work lives. Most organizations provide either 90 days
or 180 days of maternity leave to the women employees. In such cases,
the women employees are paid their full respective salaries and all the
other benefits due to them. Also, organizations pay for the hospital
expenses incurred by the women employees at the time of delivery.
Paternity Leave
This is a recent trend noticed in many organizations. This leave is granted
to the father when his baby is born. The organization usually provides 3
days of leave to the father. The organization pays the salary and all the
benefits of the father during this time.
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9.4 SUMMARY
Compensation is the total reward received by an employee in exchange for

services performed for an organization. A sound compensation system is a
mark of an organization's success and prosperity. Compensation is affected
by many internal factors such as business strategy and employee, and by
external factors such as economic conditions, society, labour unions and
labour laws. Wages, salary, bonus, pensions are a few components of the
compensation package which an organization provides to its employees.
1. Explain the term compensation. What is the importance of a fair

compensation system in an organization ?
2. Describe the various internal and external factors that affect

compensation.
3. Explain the various components of compensation.
! !172
Related Reading  
Negotiate your way 
(Courtesy - Priya C. Nair, The Times of India - Ascent)
In today's corporate scenario, it has become imperative for

working professionals to hone their negotiation skills, in order to
derive maximum career benefits.
We all negotiate in our daily lives, don't we? We demand discounts during
our shopping expeditions, argue with the vegetable vendor hoping he
would reduce costs, try politely persuading the client before closing a deal,
convince our bosses to give a decent hike in the next appraisal season and
even negotiate with little troublesome children these days by 'bribing' them
with chocolates. Clearly, negotiating today has become an art. Whatever be
the reason, experts say that negotiations at work must be considered as a
process to find a solution to a problem in a tactful manner.
Let's take the case of salary negotiations. Before going in for a negotiation,
it is important for the person to be well-prepared. "He/she must first
evaluate his/her worth. If the employee has not added value to the
company, then he/she should refrain from the discussion of pay hikes,"
says Pramath Nath, HR, business partner for Asia, Pacific & Japan, Hewlett-
Packard GBS. "The person negotiating for a pay-rise must measure his/her
contribution before he/ she arrives at suitable figure for pay rise
negotiations," adds Pushpendra Mehta, career strategist & CEO,
VCherish.com. Adding to it Murli A. Mehta, Director, Inter Gold India P. Ltd
says one must do the homework well as to why he/she should get the hike.
"Ask yourself the questions your boss could ask you. Envisage the counter
arguments and identify and plug those loopholes in your arguments,"
suggests Murli Mehta.
Apart from preparation, choosing an appropriate time for the discussion is

also significant towards making it a fruitful one. Experts say that it is good
to fix an appointment with the manager when he/she is free and have the
time to hear you. Before getting into the discussion it is a must to have a
list of accomplishments he/she had in the previous year to justify the
demand. "The best argument in negotiations is triple P - your Powerful Past
Performance. Have a brief, well structured report of your achievements
with a separate file of cumulative record before you get into the
discussion," says Murli Mehta.
! !173
The way you present your request before the manager is also important.
Experts say that discussions must be in a diplomatic manner and personal
reasons should not be a part of official negotiations. "The person must
focus on a win-win relationship with his/her employer. He/she must
communicate the contributions and commitment tactfully and effectively,"
suggests Mehta.
Sometimes, it's easy to negotiate and get what you want, but at times, it
becomes a difficult task to convince the person on the other side. So, even
if the negotiation tactic fails, it is advisable not to get argumentative or
aggressive, because it will reflect negatively on you.
! !174
Related Reading 
Asking for a raise 
(Courtesy - Sakshi Singh, The Times of India - Ascent)
The budget has been announced, the financial year is coming to an end but
what you are most interested in is the finances in your near future. Is it
going to be a hike? Are perks in order? While waiting and wondering is
alright to do, a little pro-active approach hurt no one. Looking for a raise
and hoping to climb up a notch? Here's what HR has to say about asking
for a raise
Approaching the subject

It's certainly not an easy subject to touch upon whether it's with your HOD
(Head of Department) or your HR manager. What's the best way to tackle
the situation? How do you plan the interaction in the best possible way?
Rajeshwar Tripathi, Executive Vice President - HR, Farm Equipment,
Mahindra & Mahindra says, "It's not often that people would apply for a
raise, however if they do, it should be considered more as a feedback from
them and then process it while formulation of their compensation plan.”
There are several ways of applying for a raise and organisations may
handle the requests differently. "Individual raise requests are rare and they
only happen while hiring or in case the person has quit and we plan to re
hire them. It's best to ask and appreciate feedback of the employees and
how they perceive their compensation; this is the healthiest form of taking
up the subject. HR can then do benchmarking at various levels of
performance, the industry paying standards and them arrive on a
compensation plan, says Tripathi”
Lastly, it's always better to gather some support for your cause instead of
you hooting for yourself all alone. "Share with HOD: Rather than walking
straight to the CEO/ HR's cabin, it will be a good idea to first take your
HOD in confidence of your intention and once he supports you, there are
better chances of you getting the hike when he escalates it to the senior
officials. In short, make your plea for raise a very objective, professional
and fact based request rather than an overly emotional, impulsive or
immature demand, adds Dixit.”
! !175
Raise Request! The "No-No's"

So you feel you deserve a pay hike but yet you don't know how to go about
it. Does it have to be over email or a formal meeting is required? Do you
need to follow a procedure? What's the deal? Although it's fair for you to
let the HR be aware of your feelings and feedback, you don't want to end
up rubbing them the wrong way. "Asking the HOD or HR for a raise on the
grounds that you will resign or not multitask without a raise is a bad idea
as it most often snubs the HOD in a wrong way. One might get some hike
or commitment at that moment but in the long run such employees are
replaced easily. Similarly, asking for a raise less than 9-12 month from last
increment is not just greedy but against most company rules," says
Meghna Dixit, VP & Group Head-HR & OD, Maya Entertainment Limited.”
Ask and you shall receive!

Plan your meeting and play safe while you want to make that big request.
So when is it really OK to ask for a raise? And how do you go about it?
"One can ask for a raise in the week after the last big success,
breakthrough, and innovation that one brought about and was recognised
for by the HOD/HR. The request should sound like a request with all
humility and should not be all money based. Rather than asking for a 25%
hike, one can say 'I am looking for a 20-30% hike and growth prospects in
the company as I feel I am delivering my tasks as expected,'" conclude.
! !176
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !177
SEPARATION
Chapter 10
Separation
Objectives
Nature of Separation
The different types of separation.
How to manage separations effectively.
Structure:
10.1 What is Separation ?
10.2 Different Types of Separation
10.3 How to Manage Separation Effectively
10.4 Summary
On the next trip to the factory, Ajay Verma notices that Rajesh, who was
normally cheerful, was looking sad and forlorn..
Ajay Verma: What is the matter, Rajesh?? Why the sad face??
Rajesh: What to tell you, Sir?? I just joined the organization and now I
hear that one of my friends, Vasu, is leaving the organization.
Ajay Verma: But then, Rajesh, this is a part of life and it is a part of the
HR cycle. Let me explain to you. Perhaps, it will help you to handle
Separation.
! !178
SEPARATION
10.1 WHAT IS SEPARATION?
Separation occurs when an employee leaves the organization. Separations

can be either voluntary or involuntary. In voluntary separations, the
initiation for separation is taken by the employee himself. In involuntary
separations, the initiation for separation in taken by the employer. In
involuntary separations, the employee harbours feelings of injustice and
may seek legal protection to undo it.
Organizations become leaner, there is saving in the compensation

amounts, and new entrants hired to fill the vacant jobs bring in new ideas
and experience along with them. Turnover can also help infuse greater
diversity in the workforce. On the other hand, turnover disrupts employee
morale. Also, instead of reducing costs, it may add to the cost. Costs of
turnover include retirement costs, and hiring and training costs of new
employees.
10.2 DIFFERENT TYPES OF SEPARATION
Voluntary Separations
Voluntary separations occur when the employee decides to terminate his
relationship with the organisation. Voluntary separations can be further
classified into resignations and retirements.
Resignations/Quits
An employee resigns or decides to quit when his level of dissatisfaction
with the present job is high or when he has secured a better job in another
organization or for some personal reasons or when the employee suffers
from ill health. The reasons for dissatisfaction could be the job itself or
supervision, compensation, advancement opportunities, spouse relocation
or some other reason. During times of prosperity or economic boom, jobs
are easily available to competent people.
Retirements
Retirements occur when employees reach the end of their careers.
Retirement differs from resignations. When the employee retires and
leaves the organization he avails of several benefits like gratuity, pension,
etc. Such a privilege is denied to the employee who quits. Also, retirements
occurs at then of an employee's career but the resignation can take place
at any time. The retirement is amicable and there are no hurt feelings with
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SEPARATION
the employer or the employee. In resignation, there might be hurt feelings

either with the employer or the employee.
Involuntary Separations
Employers resort to terminate employment contract with employees for the

following reasons:
Organization is passing through tough times financially and is unable to

maintain the existing labour
Employee shows deviant behaviour, which affects the environment in an

organization or which is against the organization culture/policies.
Faulty hiring resulting in mismatch between job and employee fit.
Discharges, layoffs, retrenchment, voluntary retirement scheme (VRS) and

rightsizing are the common methods of involuntary separation.
Discharge or Dismissal
Discharge takes place when the organization discovers that it is no more
desirable to keep an employee any longer. It should be avoided as far as
possible because any discharge or termination is a reflection of the
company's human resource system. Also, in such a case, the organization
has to find a replacement, hire and train the new employee. This involves
costs. Also, a terminated or dismissed individual is likely to speak badly
about the organization.
The following reasons lead to the dismissal of an employee :
a. Excessive absenteeism.
b. Serious misconduct.
c. Theft of company's property.
d. Espionage.
e. Submitting false qualification statements or the experience certificates
at the time of employment.
This method is to be used as a last resort and only after all efforts have
been made by the organization to salvage the employee have failed.
! !180
SEPARATION
Layoffs
A layoff is a temporary separation of the employee at the request of the
employer. Layoff is the failure, refusal or inability of an employer to provide
employment to an employee whose name is present on the rolls of the
company but who has not been retrenched. A lay-off may be for a definite
period. After this definite period ends, the employee will be recalled by the
employer for duty. Mostly, this period can extend to any length of time and
the employer is unable to estimate when the employees will be recalled.
Layoffs could be due to shortage of raw materials, economic recession,
accumulation of stocks, or for any other reason.
Industrial disputes Act, 1947 makes it mandatory on the part of the

employer to pay compensation for all the days that an employee has been
laid off. Compensation must be half of the normal wages the employee
would have earned, if he was working.
Basis of the lay-off may be either on merit basis or seniority basis. If it is

on the merit basis, then the employees with poor or unsatisfactory
performance are laid off first. For this purpose, performance appraisal is
used to establish who is inefficient or below expectations. If seniority is the
basis, then employees with the shortest period of service are first laid off
and the older employees are retained as long as possible.
At the time of recall (after the lay off period is over), the organization
recalls their key employees. Employees with the longest period of service
(seniors) are recalled first and then the employees with the shortest period
are recalled. Also, the management may seek to recall those employees
whose skills are essential for the resumption of production or services.
Retrenchment
It refers to the termination of the services of employees because of the
replacement of labour by machines or the closure of a department due to
lack of demand for the products manufactured. Retrenchment, like layoff,
entitles the employees to compensation. But retrenchment differs from
layoff. In layoff the employee continues to be in the employment of the
organization and will be recalled after the end of the layoff period. But in
retrenchment, the employee stops being in the employment of the
organization.
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SEPARATION
Retrenchment is different from dismissal. Retrenchment is forced on both

the employer and the employees whereas in dismissal an employee is
dismissed because of the fault of the employee. Also, in retrenchment
service of several employees is terminated, and in dismissal the services of
only few employees is terminated.
Voluntary Retirement Scheme (VRS)

This is another type of separation where surplus labour is reduced by
paying them handsome compensations. Managements prefer to pay hefty
sums and reduce staff strength than retaining surplus labour and
continuing them to pay compensation. Also, VRS is perceived as a painless
and time saving method of trimming staff strength, as the organisation
offers the compensation only to those employees who opt for VRS. On the
other hand, organizations have lost competent employees while
incompetent employees have not opted for the VRS.
Downsizing
Downsizing means reducing the size of workforce. It involves several

employees and is mostly adopted by organizations when they face any of
the below situations :
a. When the organisation is constantly incurring losses over a period of

years.
b. When the organization goes in for restructuring.
Downsizing should be handled carefully because of its negative impact. It

affects the employee morale as the surviving employees experience loss of
identity, colleagues and security. Also, the economic benefits that an
organisation expects often fail to materialize.
Activity A
What is Separation? Describe the various methods of separation.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !182
SEPARATION
10.3 HOW TO MANAGE SEPARATION EFFECTIVELY
The entire separation process should be handled smoothly without the

separating employee feeling harassed. Smooth transitions and return of
company property should be ensured. Valuable insights about the
organisation from departing employee are received through exit interviews
that help the organisation reduce future attrition. Employee exits are
natural part of the employee life cycle. Whether caused by voluntary
resignation, retirement or company induced termination, employee
separations need to be efficiently managed by HR.
Employee separation needs to be handled with sensitivity, discretion and

speed so that exits can happen smoothly and on good terms. After all,
former employees are the most effective brand ambassadors for the
company's employer brand equity.
Exiting employees, present an opportunity to glean a wealth of valuable

feedback and insights on the organisation strengths and weaknesses as an
employer, and employee engagement levels in the organisation.
Exit interview
Exit interviews are conducted just before an employee leaves an
organisation and are conducted to know the reason for quitting and the
circumstances which made the employee quit. The exit interview should
have structured set of questions which can include the following:
What is your reason for leaving the present job?

What did you like most about your job?
What did you like least about your job?
What did you like most about the organisation?
What did you like least about the organisation?
Would you like to join back the organisation in the future?
What would make this organisation a better place to work?
Exit interviews are very useful as they provide feedback about the
employee's experiences on the job. The feedback provided by the
separating employee could help the organisation in strengthening its
retention strategies. Also, the interview can help retain a competent
individual who has quit his job.
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SEPARATION
On the other hand, the separating employee need not be candid and
objective while giving feedback during the exit interview.
10.4 HOW TO MINIMISE TURNOVER / REDUCE ATTRITION
Attrition can be reduced by retaining high performers through innovative

reward schemes while engaging in human resource planning to ensure that
only a few employees occupy difficult-to-replace positions. Some of the
retention strategies followed by organizations are:
Succession Planning
Succession planning includes training programmes and series of job
assignments leading to top positions. Succession planning used to refer to
the process of replacing a CEO when the position became vacant due to
foreseen or unforeseen circumstances.
These days, leading organizations understand the importance of

implementing a succession plan for more and more roles across the
company - in some cases extending to the larger population (managerial,
professional, and administration). Nowadays, more organizations are
planning for succession and development because they have found that it
takes years of systematic grooming to produce effective managers
Succession planning is also an important way to identify, develop, retain

and allocate key members of your workforce long before any talent gap
occurs. Also, top-performing employees are often looking for jobs that are
engaging while their managers are continually looking for ways to motivate
and retain them.
Most succession planning programmes include the involvement and

commitment of the top management, high-level review of the succession
plans, formal assessment of the performance and potential of the
candidates, and written and specific development plans for the individual
candidates.
Succession planning efforts are designed within the context of an

organization's overall business plan. Since the strategic plan and corporate
objectives direct the skills and abilities needed by the company's
leadership, these plans also affect the training and development
implemented by the company. All organizations incorporate a robust
! !184
SEPARATION
development program which is a part of the succession planning process to

ensure the right people, with the right skills, are available at the right time
to meet current and future business needs.
Career Development
Career is a progress of a person in some profession or in an organisation.
Career development refers to a formal approach used by an organisation to
ensure that employees with proper qualifications and experiences are
available when needed. Organizations devise and implement several
initiatives in order to develop their employees' careers. Most significant of
them are career planning, workshops, career counseling, mentoring,
personal development plans and career workbooks.
Career development benefits both employees as well as organizations, as

properly developed employees add value to themselves and to the
organisation. Active career development initiatives by a company are a key
retention tool to keep the best talent within its fold. It is one of the
greatest motivators to keep an employee happy and engaged. From the
employees' point of view, career development initiatives gives them a clear
focus about their career track, the obstacles that they have to overcome
and the final goal to be reached. This focussed approach works to their
advantage from their everyday work to long-term aspiration.
Implementation of these plans helps companies earn credibility amongst

employees and commitment towards building 'intellectual capital' which is
the strength of any organisation. The impact of career development/
succession planning programmes can be seen through the productivity
indicator, engagement surveys and reduction in attrition rate.
Activity B
Describe the retention strategies followed by organizations.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
! !185
SEPARATION
10.5 SUMMARY
Separation occurs when an employee leaves the organization. Separation

can be either voluntary or involuntary. Resignations and retirements falls in
the category of voluntary separation whereas discharges, layoffs,
retrenchment, voluntary retirement scheme (VRS) and rightsizing are the
common methods of involuntary separation. An organization manages
turnover by separation through retention strategies. An exit interview is a
process to elicit the views of the exiting employee. Career development
and succession planning are some of the strategies adopted by
organisation to retain high performing employees.
1. What is separation? Describe the various methods of separation.
2. How does an organization manage separation effectively ?
3. Explain exit interview.
4. What are the retention strategies adopted by organizations ?
! !186
SEPARATION
Related Reading 
Handling employee resignation 
(Courtesy - Vinnie Bhadra, The Times of India - Ascent)
Even the best employer has to face the dilemma of an employee

resigning for various reasons. The employee could be your star
performer or an above average performer; it is always a task to
deal with when an employee chooses to leave.
When an employee resigns, whether or not he/she is amongst the one who
shoulders the responsibilities, it can cause a disruption in the work-flow of
the team. There are so many loose ends to tie and in order not to let the
productivity get affected, the HR has to come up with solutions that will
create as little bumps in the work process as possible.
"When an employee quits the HR personnel's sole motive should be to

handle the team that shall be losing the member. Everyone has a set of
responsibilities and that is how the team is able to give the end result. So,
it is vital to handle an employee's resignation in a sensitive manner,
considering the consequences," says Ratan Jain, CEO, Glitters Import.
The HR manager can first address the issue of responsibility division

amongst the existing team members. "When an employee quits, the first
task at hand is to divide his/her responsibilities in case, there is no
replacement found till then. As the team cannot stop functioning and the
other members should also not feel burdened with excessive duties. So,
this has to be handled with utmost care," says Paresh Rawat, recruiting
head, Shah Transport and Engineering Co.
Apart from the duties that have to be split, there also remains the task of
hiring someone who will be able to match up to the team's expectation of
the previous employee. In an organisation, the teams that work together
usually have their own set dynamics which help them perform better. The
dynamics of the team may be a little difficult for the newcomer to handle.
"In such a situation, the HR can smoothen the way in for the new
employee and make sure that the team as well as the new employee are
comfortable with each other. This can be done by conducting an induction
session for the specific team only so that they know each other under
informal circumstances," adds Jain.
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SEPARATION
However, the main role is played by the employee who is resigning. In their
notice period, the HR managers can make sure that they are able to tie the
loose ends and make sure that they bring about a positive transition in the
team while leaving and not de motivate the other members.
The HR personnel can also organise a meeting with the leaving member
and the other team members, so that in case of any grievances, they can
address it and try to work on the issues so as to keep the productivity
levels high. "The team from the member resigns will be the most affected.
The entire working process undergoes a sudden change and people who
are staying back in the company are the ones to deal with the change.
Some team members will be receptive to the change and some won't. That
is why it is said that dealing with an employees resignation is not an easy
task and requires a lot of tact and understanding," concludes Rawat.
! !188
SEPARATION
Related Reading 
Life after Layoff 
(Courtesy - Mousumi Halder Ghosh, The Times of India - Ascent)
As an individual nothing shakes up your life as much as a sudden

loss of job. So what can be done in such times of crisis?
'Layoff', 'Downsize', 'Workforce Optimisation' are no longer terms that

sound strange to the average Indian employee. Although this corporate
phenomenon hitherto has only been associated with the West, Indians are
slowly coming to terms with its harsh reality albeit in a different way!
For an individual nothing shakes up your life as much as a sudden loss of

job. "One can equate the trauma of being laid off to that of losing a parent
or a limb," believes Shanth, a bank employee who fears losing his job each
waking hour. Some say that the unfortunate event of being laid off can turn
out to be a golden opportunity in disguise. "It is a chance to stop, catch
your breath and figure out what you want to do with your life," informs a
popular US-based human resources website. However in India, only a
handful of the working population is blessed with the financial power to tide
through this unexpected vacation and devote time and energy in self
exploration. For a majority, it is the thought of how to get the next pay
cheque and the nightmare of how to pay the next home loan installment
which looms large.
For a laid-off employee, along with the stress of job hunting during tough
times there is also the added emotional baggage of coming to terms with
the fact that 'YOU' have been asked to leave. "Take comfort in the fact that
there are many like you who have been laid off during these typically tough
times and there was nothing personal that made you lose your job," shares
Madhukar, a back office worker at a publication house who has been given
the pink slip last month and has just started working as a collection agent
for a credit card company.
So what are the steps that one needs to take to tide through the crisis?
How does one deal with so much in so less time?
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SEPARATION
First things first: Tend to your finances

"While you are still working, work towards having three to six months'
worth of living expenses in reserve. Draw up a plan to manage your
household expenses and reduce your spending on extraneous luxuries like
eating out or visiting multiplexes. Also avoid using credit cards since
interest rates on these are really high," advices Anil Shah, an investment
consultant.
Looking for a new beginning: Tap your contacts

The ideal way to start your job search is to formulate an effective strategy.
Fall back on your network and let the world know that you are free and
looking for job openings. "Never feel shy to send a communication to all
your friends, peers, former colleague and relatives telling them about your
situation and you may be surprised with the help you get," adds Madhukar.
Contact a head-hunter that specialises in your industry and get on the web
to expand your search.
Collect your dues: Ensure that you have been paid what you were entitled
to You need to ensure that you have collected all your dues from your ex-
employer. "Sign and submit all documents in time to ensure that your final
settlement papers clear all that you deserved from the company. If your
company is offering to pay a severance pay, read through the fine print and
negotiate if you have the right to do so," adds Vipul, an HR executive in an
IT company.
And finally: Stay calm

Losing a job does not mean you have lost all hope in life! Being patient and
having the right attitude will ensure that you pass these tumultuous times
with ease. Don't become a loner. Stay surrounded by friends and loved
ones. Be physically fit and do not indulge in booze or smoke. In these
times it is very ease to fall prey to addictions- steer clear from them. Even
if it takes a few months, you will surely bounce back if you have courage
and have the confidence to do so. Remember- after a spell of dark rainy
days, sun does shine!
! !190
SEPARATION
If the worst is yet to come…..
When layoff rumours start circulating, it's time to make yourself

indispensable. Here are some tips:
Meet your supervisors: Let them know what you're working on and get
feedback on how you're doing. The idea is to convey your value to the
organization.
Step up your networking: This should happen both inside and outside
your company.
Update your résumé: Prepare more than one version. That way you
can tailor it to suit the job you're applying for.
! !191
SEPARATION
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !192
HUMAN RESOURCE INFORMATION SYSTEM
Chapter 11
Human Resource Information System
Objectives
What is Human Resource Information System (HR IS)?
The various HR areas benefited by the system.
The process of implementing HR IS in an organization.
Importance of Human Resource Information System.
Structure:
11.1 Human Resource Information System (HRIS)
11.2 Areas of Human Resources benefited by HRIS
11.3 Process of Implementing HRIS in an Organization
11.4 Importance of HRIS
11.5 SummarY
Rajesh: Sir, I would like to thank you for all the information given
regarding Human Resource Management.
Ajay Verma: You are welcome... But I have left out 1 small topic.
Rajesh: What’s that, Sir
! !193
Ajay Verma: It is quite an interesting topic and the future of HR in

organizations, from an information point of view. I will tell you about the
Human Resource Information System
Rajesh: Ok, Sir.
11.1 HUMAN RESOURCE INFORMATION SYSTEM (HRIS)
In today's corporate world human resources has come to play a very

critical role in a business. Whether it concerns the hiring and firing of
employees or whether it concerns employee motivation, the Human
Resources department of any organization now enjoys a very central role in
not only formulating company policies, but also in streamlining the
business process.
To make a human resource department more effective and efficient new

technologies are now being introduced on a regular basis to make things
much simpler and more modernized. One of the latest human resource
technologies is the introduction of a Human Resources Information System
(HRIS). This integrated system is designed to help provide information
used in HR decision making such as administration, payroll, recruiting,
training, and performance analysis.
Human Resource Information System (HRIS) merges human resource

management with information technology to not only simplify the decision
making process, but also aid in complex negotiations that fall under the
human resource umbrella. The basic advantage of a Human Resource
Information System (HRIS) is to not only computerize employee records
and databases but to maintain an up to date account of the decisions that
have been made or that need to be made as part of a human resource
management plan.
! !194
11.2 AREAS OF HR BENEFITED BY HRIS
The three principal areas of HR that are benefited by the Human Resource
Information
System (HRIS) include:

Payroll
Time and labor management
Employee benefits
These three basic HR functionalities are not only made less problematic,
but they are ensured a smooth running. A Human Resources Information
System (HRIS) thus permits a line manager to see online a chronological
history of an employee from his/her position data, to personal details,
payroll records, and benefits information.
Payroll and HRIS

The advantage of a Human Resource Information System (HRIS) in payroll
is that it automates the entire payroll process by gathering and updating
employee payroll data on a regular basis. It also gathers information such
as employee attendance, calculating various deductions and taxes on
salaries, generating automatic periodic paychecks and handling employee
tax reports. With updated information this system makes the job of the
human resource department very easy and simple as everything is
available on a 24x7
Time and labour management and HRIS

In time and labor management a Human Resource Information System
(HRIS) is advantageous because it lets Human Resource personnel apply
new technologies to effectively gather and appraise employee time and
work information. It lets an employee's information be easily tracked so
that it can be assessed on a more scientific level whether an employee is
performing to their full potential or not, and if there are any improvements
that can be made to make an employee feel more secure.
Employee benefits and HRIS

Employee benefits are very crucial because they help to motivate an
employee to work harder. By using a Human Resource Information System
(HRIS) in employee benefits, the Human Resource department is able to
! !195
keep better track of which benefits are being availed by which employee
and how each employee is profiting from the benefits provided.
Other areas of HR that are affected by Human Resource

Information System (HRIS) are:-
Training and HRIS

HRIS is very advantageous in tracking the trainings attended by employees
vis-à-vis the training needs of the employees. It tracks the types of
trainings attended, the number of days of the training programme, the
number of people attending a training, etc. This helps the HR in making
better decisions regarding the trainings provided.
Performance Appraisal and HRIS

In some companies, HRIS is used to track the performance of an
employee. The key performance objectives/indicators are entered into the
system at the beginning of the year with the employee and the line
manager signing off the key objectives. At the end of the year, the
performance feedback is conducted face-to-face and the key discussion
points are entered into the system and the employee and the line manager
has to sign off the performance appraisal in the system. This helps the HR
department to keep track of an employee's performance over the years.
Compliance and HRIS

Certain organizations especially the ones which are more prone to security
risks have to abide by certain compliance rules. These rules require that all
employees have to undergo certain tests as well as agree to certain
guidelines. For this purpose, HRIS is used. HRIS system is also used to
train employees on compliance issues.
Employee self-service
HRIS allows employees to query HR related data like payroll and salary
package, leave encashment, etc. It also allows employees to perform some
HR transactions over the system like change in their personal records,
education changes, etc. Employees may query their attendance record
from the system without asking the information from HR personnel. The
system also lets supervisors approve Overtime requests from their
subordinates through the system without overloading the task on HR
department.
! !196
Activity A
What is Human Resource Information System ? How is it advantageous to
Human Resource department in an organization?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
11.3 PROCESS OF IMPLEMENTING OF HRIS
Implementing HRIS is usually perceived as an IT project. They may be

accustomed to pushing responsibility for such projects onto IT managers,
but implementing an integrated HRIS requires HR manager participation
and active involvement in scoping, implementation, cutover, resourcing and
management.
Evaluating and preparing for a new HRIS

Many companies go through a process of comparing and evaluating several
HRIS packages using a team of analysts or managers from the various
units affected - HR Administration, Payroll, Benefits, Employee Relations,
Training and so on. As this team prepares its evaluation criteria and
reviews HRIS features, much is learned about the goals and values of the
various units. The HR administration unit is looking for improved reporting
of employee data, Payroll is concerned with the system's paycheck
calculations and regulatory reporting, while Benefits may be looking for a
more streamlined enrollment process. As this team drives deeper into the
selection criteria, the members learn more about each other and may start
to see the emergence of some chaotic business processes.
As the team evaluates an HRIS software package, it begins to get a better

grasp on what the entire company's business processes are, and therefore
what the company might require in an HRIS. The team will most likely find
that none of the packages are an exact fit and that substantial effort is
required to modify or integrate the chosen HRIS. If due diligence and
research has not done, the team may be facing this effort and not be
aware of it. This gap in planning will show itself in the subsequent
implementation phase when the project team realizes there are not enough
resources - time, people and money - to implement the HRIS.
! !197
Perhaps the most critical results of the HRIS evaluation process are that
the evaluation team set correct expectations for the project and gain
executive management commitment. With correct, or at least realistic
expectations and an executive management team that seriously supports
the team's efforts, an HRIS implementation project has a much greater
chance to succeed.
Configuring the New HRIS

An HRIS comes with built-in processes for most HR activities, but firms will
need to customize the system to process according to their specific needs.
For example, every HRIS supports the process of benefits open enrollment,
but the system does not come delivered with a firm's specific benefit
providers and eligibility rules. Customizing the HRIS for this typically does
not involve programming; the common activity is to enter specific data into
control tables that then direct how the HRIS operates. The customizing, or
configuration tasks then become a process of understanding the firm's
business processes well enough to encode that logic into the HRIS. This
mapping of business processes and policies into system control tables
requires people who understand both the business process and the HRIS -
typically the existing IT support and HR business analysts. Due to the large
amount of work, the HRIS project team usually needs these analysts fully
dedicated to the project, requiring the "home" departments to fill the gaps
in their absence. Having partially dedicated team members may cause
tension since the team members have to maintain responsibilities at the
home department while also fulfilling responsibilities on the project team.
Either way, back- filling resources becomes a big issue if not planned for
during the evaluation stage.
Firms may find that the internal resource people assigned to the project do
not have the skills or capabilities needed for the job. Sometimes training
can resolve this, but other times the people lack basic analytical skills
required for the implementation. One of the key requirements for a person
to be successful on an HRIS implementation project is that he/she have
excellent analysis skills. The most analytical people in HR and IT should be
assigned to the project, or else the company should rely on external
resources (i.e. contractors or consultants). The project can get done this
way - but the more an implementation team relies on external resources
the more difficult it will be for the company to become self-sufficient in
ongoing HRIS support, maintenance, and operations. 
! !198
Many HRIS implementations include, to one degree or another, business

process reengineering. As a firm documents, investigates, and discovers its
true business processes, it's natural that the firm also take time to improve
them, or at least integrate the processes across departments. The
integrated nature of most HRIS packages drives this activity. When a
process is reengineered or integrated, once-independent departments
become much more dependent on each other. That dependency can
increase tensions on the project team as representatives from those
departments learn to trust others to do their part of the process. Or, once
the project team members become comfortable with the new processes
they have designed, they may have a hard time convincing the other
departments regarding these changes.
Finally, as the project team analysts dig into the current business
processes, they may find that the HR users, and sometimes managers,
don't really understand or know the processes well. Users may know what
is done, but not why it is done. Knowing the why part is critical to getting
the most out of an HRIS implementation. In most every HRIS there are
two or three technical methods of implementing any given requirement -
knowing why something is done in a business process helps ensure the
project team analysts select the best method of implementing it in the
HRIS.
Linking the New HRIS with Other Systems

Most HRIS project teams have a number of people assigned to converting
historical data from the existing HR databases into the new HRIS, as well
as for interfacing the new HRIS with other systems that rely on HR data.
As this group starts mapping historical data to the new system for
conversion, most often group members will find (particularly when
combining data from several existing systems to go into one HRIS) that the
existing HR data contains a significant amount of invalid, incomplete, or
contradictory data. As the new HRIS was configured for new, reengineered
or streamlined business processes, the existing employee data may not fit
well into the new system. The new HRIS will demand more complete and
accurate employee data. Making sense of these data conversion problems
is a skill that falls to HR analysts, not the programmers writing data-
conversion routines. Conversion and interfacing are not solely technical
activities - user consultation and input are required. Many HRIS project
teams discover these requirements too late, thus increasing the demand
for time from HR analysts on the project team.
! !199
If the firm has a data warehouse, the new HRIS data will need to be
mapped to it. If the data model in the warehouse is based on the legacy
HR database, the two data models may not be compatible. A lot of effort
can be spent mapping the new HRIS to an existing data warehouse. Or if
the HRIS vendor has its own data warehouse application, the project team
might be tempted to use it, but they will still have to contend with
converting existing historical HR data into the new warehouse. Either way,
HRIS project teams spend more effort than planned on this issue - the
details can get very tedious and time consuming.
Replacing HR systems involves any area of the company that reads or

relies on employee data. New system implementation may highlight
employee data privacy issues, or increase the scope of interfacing once the
project team realizes just how many systems read employee data from the
current HR-related databases.
Preparing the Organization

The HRIS project team must track progress not only on the technical
aspects of implementing the HRIS, but also on the softer side of managing
the organization as a whole to accept the new business processes that
come with the HRIS. Companies typically underestimate this change-
management effort. From the very beginning there must be a focus on
preparing the organization and the employees for the new HRIS.
A new HRIS, with more integrated work processes, tends to pull related
departments together. Some firms recognize this as they go through the
implementation process, and also implement a new organizational
structure with the HRIS roll-out. For example, HR and Payroll may have
reported to separate areas of the company, and parts of HR business
processes were scattered throughout various departments. But as a new
HRIS is implemented, the previous organizations are transformed to report
to a single authority, and a shared-services group is established to perform
the integrated work processes that were once scattered. This is a common,
but often unexpected, result of HRIS implementations.
During the implementation phase, firms should also be determining what

their support model will look like - what kind of organization will be
required to support this new HRIS? Those who study this task in detail will
realize they need cross-functional support teams - containing
programmers, configuration experts, and business analysts - to
! !200
successfully support the new HRIS. But this integrated support team does
not fit well into the vertical departments in most companies today. Finding
a way to implement this cross-functional team is a critical success factor
for the new HRIS' ongoing operation.
Activity B
Describe the process of implementing an HRIS in an organization.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
11.4 IMPORTANCE OF HRIS
HRIS Benefits
HRIS has showed many benefits to the HR operations. A few of them can
be detailed as;
a. Faster information process,

b. Greater information accuracy,
c. Improved planning and program development, and
Enhanced employee communications.
Putting HR services online doesn't just cut costs by letting employees

research their own inquiries or by letting HR call center counselors do their
jobs more easily (although it certainly does both). It also enables HR to
redeploy its assets and focus on more strategic issues.
HRIS is useful in measuring the diversity of the organisation. The HR

manager depends on the HRIS to assess the efficiency and effectiveness of
a company's diversity. HRIS provides accurate information thus reducing
the costs of collecting and compiling the relevant information. It helps the
HR manager to know the turnover in the organisation, the percentage of
minority/women promotions, workforce profile and the cost of replacement
per hire.
! !201
HRIS also improves the administrative efficiency by speeding up the

provision of data, by reducing the resources required to carry out routine
administration, thereby freeing the resources for higher-value activities
which are fundamental to the success of the management.
It helps in supporting the decisions of the management as it gives a factual

basis for decisions concerning the planning, acquisition, development,
utilization and remuneration of human resources.
Critical Analysis
Although almost all HR managers understand the importance of HRIS, the
general perception is that the organization can do without its implantation.
Hence only large companies have started using HRIS to complement its HR
activities.
But HRIS would be very critical for organizations in the near future. This is
because of a number of reasons.
a. Large amount of data and information to be processed.

b. Project based work environment.
c. Employee empowerment.
d. Increase of knowledge workers & associated information.
e. Learning organization
The primary reason for delay in HRIS implementation in organizations is

because of the fear psychosis created by "technology" and "IT" in the
minds of senior management.
They may not be very tech savvy and fear being left out.
But trends are changing for the better as more and more organizations
realize the importance of IT and technology. Major HRIS providers are
concentrating on the small and middle range organizations as well as large
organizations for their products. They are also coming up with very specific
software modules, which would cater to any of their HR needs. SAP and
PeopleSoft provide HR modules within their business intelligence software.
Hence, HRIS would soon be an integral part of HR activities in all
organization.
! !202
11.5 SUMMARY
Human Resource Information System refers to the systems and processes

at the intersection between human resource management (HRM) and
information technology. It has impacted many key Human Resource
Department's activities like payroll, time and labour management, and
employee benefits. Many organizations have adopted it to streamline the
HR processes and also to lessen the burden on the HR department.
1. What is Human Resource Information System? Describe its impact on

HR activities.
2. Explain the process involved in implementing Human Resource

Information System.
3. What is the importance of HRIS in an organization ?
! !203
Related Reading 
Human Resource Information Systems in Companies
(Courtesy - Article Source: http://EzineArticles.com ?
expert=Steven_Phillip_Brown)
SHAW'S SUPERMARKETS The Situation

Shaw's Supermarkets is the second largest supermarket chain in New
England. With a workforce of 30,000 located at 180 stores throughout six
states, Shaw's HR staff is responsible for managing employees' personal
data. Their employee mix includes approximately 70 percent part-time
employees, consisting of students, senior citizens, second-job part-timers,
and career part-timers. One third of the workforce is made up of union
associates, and Shaw's staff oversees the company's involvement with
three unions and six separate contracts. In order to help manage the
workforce, the HR staff became interested in centralizing its HR operations.
The Response
In order to centralize HR operations Shaw's decided to implement an ESS
(employee self- service) solution. The use of self-service applications
creates a positive situation for HR. ESS gives HR more time to focus on
strategic issues, such as workforce management, succession planning, and
compensation management, while at the same time improving service to
employees and managers, and ensuring that their data is accurate. With
this solution, employees have online access to forms, training material,
benefits information and other payroll related information.
The Outcome
Shaw's has had positive feedback since implementing the ESS solution.
"The reaction from our employees has been extremely positive," Penney,
VP of Compensation and Benefits, says. "We even had a significant
increase in our medical coverage costs, and it was almost a non-issue
because the online enrollment featured the plan choices, the employee
cost, and the company subsidy. An employee self-service application makes
it very easy for them to understand their contributions and coverage
options. I received several e-mails from employees saying this was a great
change and how easy ESS was, which the case is not often when
employees are selecting their benefit options." By giving the employees
more access to their information they are able to see the benefit choices
available to them. Employees are also able to update their information
online, which helps reduce the paperwork of the past. Shaw's has also seen
! !204
improvement in productivity because employees are updating information

at home, not during work hours.
IBM
The Situation
IBM's paperless online enrollment system, introduced in 1999, has proved
to be a winner for both the company's 135,000 active U.S. employees and
the company, according to Cathleen Donnelly, senior communications
specialist at company headquarters in Armonk, N.Y. The company saves
$1.2 million per year on printing and mailing costs alone, Donnelly says,
and the employees' can take advantage of a variety of technologies to
learn about issues, research program information and access decision
support tools from their desktop computers.
The Response
One of those tools, a personal medical cost estimator, enables employees
to calculate potential out-of-pocket health care expenses under each of the
plan options available to them, Donnelly says. Employees log in personally
and are greeted by name and with important information regarding their
benefits enrollment, such as the deadlines and when changes take effect.
They automatically get access to health plans that are available to them,
and the calculator lets them compare estimated benefit amounts for each
plan.
"Employees can select the health care services they expect to use in a
particular year, estimate expected frequency of use, and calculate potential
costs under each plan option," Donnelly says. "The feedback that we've
received from employees tells us that this tool has really helped them to
make a comparison between plans based on how they consume medical
services." The calculator shows both IBM's costs and the employee’s.
The Outcome
"Since we began offering online enrollment, we've learned that employees
want web access," Donnelly says, so they can log on at home rather than
through the company intranet. So the company has been working to put in
place a web-based enrollment system that employees and retirees can
access from anywhere.
! !205
Employees can get summary information on the plans, drill down into very
specific details and follow links to the health care providers for research.
Donnelly says the system has received high marks for convenience
because employees can "get in and out quickly.”
TOSHIBA AMERICA MEDICAL SYSTEMS INC.
The Situation
Lynda Morvik, director of benefits and human resources information
systems at Tustin, California-based Toshiba America Medical Systems Inc.
(TAMS), thought it would make sense to add a benefits communication
component to it. By having all the benefit information online, the TAMS
employee handbook would also be a living document, enabling Morvik to
make changes when necessary. Such was the case halfway through the
project, when TAMS changed health care plans from Aetna Inc. to United
Health Group Inc
The Response
TAMS, an independent group company of Toshiba Corporation and a global
leading provider of diagnostic medical imaging systems and comprehensive
medical solutions, such as CT, X-ray, ultrasound, nuclear medicine, MRI,
and information systems, had been using a payroll service bureau and an
in-house solution for HR that didn't include easy-to-use consolidated
reporting or an employee portal. After evaluating UltiPro alongside several
enterprise resource vendors, TAMS selected Ultimate Software's offering
and went live in September 2002 after an on-time and on-budget
implementation. Almost immediately upon rolling out the UltiPro portal to
employees, TAMS began seeing improvements, with an estimated 70%
increase in open enrollment efficiency. 
! !206
The Outcome
In an effort to expand the usage of the Web beyond the benefits
enrollment process, TAMS has posted a library of documents and forms on
its HR portal, including the benefits handbook, which garnered a 2004
Apex Award for publication excellence. That same year, Business Insurance
magazine also gave TAMS the Electronic Benefit Communication (EBC)
award for outstanding achievement in communicating employee benefits
programs over the Web. To continue elevating its use of Ultimate
Software's HRMS/payroll solution, TAMS modified the UltiPro portal to meet
the imaging company's unique needs. It was completely integrated with
several proprietary applications created to address compensation and
performance management issues so that TAMS employees have a central
location for comprehensive workforce and payroll information from a Web
browser that they can access with a single sign-on.
! !207
Additional Reading : Human Resource Management @ Tata
Employee empowerment is the latest buzzword in business and a

variety of Tata companies are working overtime to place their
people in the driver's seat.
The crowd holds its collective breath as Pakistan speedster Shoaib Akhtar
prepares to strike. But the batsman, B. Muthuraman, is unperturbed. The
delivery is sent flying into the stands. The cheers get louder as the Tata
Steel managing director raises his bat in triumph.
Not real life, but an inspirational film. "It's a part of our Vision 2007
campaign," explains Niroop Mahanty, Vice president (HRM), Tata Steel.
Adds B. N. Sarangi, chief, HR/IR, Tata Steel, "The idea was to motivate
employees to accomplish the impossible, like hit a six off Shoaib Akhtar."
Or achieve EVA (Economic Value Add) positive status by 2007.
The buzz in Jamshedpur is palpable. Tata Steel is not looking at

incremental improvement, but a quantum jump in performance. Unlike its
previous attempts, Vision 2007 is not a top-down initiative. More than
8,000 inputs from shop-floor workers and managers, contributed in
articulating the future course for the lowest- cost producer of steel in the
world. Tata Steel's human resources (HR) department further cascaded the
knowledge to all of the company's 40,000 employees.
Assimilation of the vision was of paramount importance. Tata Steel

organised one- day workshops called 'Lakshya 2007 - Ek Chunauti' where
employees were encouraged to write down their main responsibilities.
These were then aligned with the departmental, divisional and company's
key performance indices and, finally, with the vision. This innovative
approach has garnered tremendous support from employees. Says Suman
Biswas, Improvement Group, Tata Steel: "The employees felt important as
they were made an integral element of the vision. Our commitment is
total.”
Tata Steel has been inundated with scores of ideas and suggestions
generated at its employee workshops. It is setting up a centre to
implement and even patent the viable ones, while publicising the names
behind them.
! !208
Winds of change
With globalisation and competition challenging the corporate world, HR
managers can no longer play just the traditional administrative and welfare
role. They are expected to be effective change leaders, working at the
centre of each business rather than at the fringes of the action. Today HR
helps define the business case for change, it communicates a vision of the
future, shapes a sound implementation plan, and follows through to
achieve sustained results. Changing times call for different and innovative
strategies - and a catalyst called technology.
With footprints in various geographies, IT leader Tata Consultancy Services

(TCS) created systems for managing the future. The need was to deploy
employees in a seamless and integrated manner. The innovative solution it
engineered to meet these challenges is called Ultimatix. Designed in-
house, it digitized the whole organisation in real time through the web.
Every single employee was connected through this platform across the
globe. Ultimatix has also been successful in cutting through layers of
decision-making within TCS.
"Ultimatix has become our single employee-service window," says S.

Padmanabhan, executive vice president and head - Global HRD, TCS. "It
has ensured that employees get their services without much difficulty. They
can log in with their claims, loans or even leave applications for processing.
All approvals are done online. To that extent, we are a paperless
organisation.”
To a population that is highly mobile, virtual HR is a godsend. With

deployment being a challenge to companies with the size and spread of
TCS, it is a major time saver. Besides its HR policies, the organisation has
taken its appraisals and employee satisfaction surveys online. It does not
end here. The survey findings, along with implemented suggestions, are
also posted online. Rising employee satisfaction scores endorse the
popularity of these initiatives.
Incubating innovation
Every employee possesses the power to innovate. The challenge is to
create an encouraging environment that allows and recognises this,
believes Bernand Martyris, senior VP (HR), Indian Hotels. This is one of the
key elements of the company's Stars, or Special Thanks and Recognition
Systems, programme. Since its launch three years ago, the globally
! !209
acclaimed model has triggered soaring employee satisfaction scores,

besides numerous employee suggestions and innovations, many of which
are best practices today.
"Whether it's an indigenously manufactured bathroom mat or a new

chemical for the laundry, every idea is big and shared across the hotel
chain," says Mr. Martyris.
"It has shattered the myth that only people at the top are creatively
inclined." There is a huge reservoir of innovation waiting to be tapped
among all levels of employees.
The success of the earlier programme led Indian Hotels to introduce 'Stars
Plus', a spin-off for its service providers, and 'Joy at the Workplace', which
is aimed at team building and bringing cheer to the office. From celebrating
birthdays to organising cricket matches between the various Taj properties,
the objective is to keep employees motivated. Instead of major initiatives,
HR is engaging in small but innovative activities which might appear
mundane but make the employee feel at home while at work.
The Human Factor

HR has also discovered the lost art of listening. Employee satisfaction
surveys and primary mood reflectors within the organisation have become
sacred. This helps in targeting employee irritants and executing policy
changes. Also, HR is more transparent than ever before. Companies are
providing direct personal interaction through around-the-clock telephone or
intranet / Internet access. For example, TCS has a HR help desk where
employees can call in with any HR-related questions. Currently operational
in about three to four locations, TCS plans to expand this unique facility to
all its centres.
Jobs are out, careers are in. And HR is assuming the responsibility for
plotting the career paths and growth of the employees. Most software
engineers have a three- point agenda: globetrotting, annual promotions
and acquiring millionaire status. "This is the base aspiration and we have to
address elements of it," says Mr. Padmanabhan.
! !210
TCS, India's first billion-dollar IT enterprise, offers a host of other tangible

and intangible benefits to transform its employees into world-class
professionals. It supports a rotation policy where employees' discipline is
changed every two years, to expose them to different geographies,
projects and technologies. Training and continuing education programmes
are compulsory. Likewise, the Taj draws up an extensive training calendar
at the beginning of the year for its employees.
Knowledge sharing has acquired great significance in the corporate world.

Today most companies allow some level of knowledge sharing through
various media. While most of these programmes are usually aimed at the
managerial level, Tata Steel's Aspire Knowledge Manthan is a rare
programme that enables knowledge sharing among supervisors and
workmen. The purpose of this effort is to instil confidence in people and
help them perform better.
Change agents
Recent economic trends have compelled companies to tighten the belt and
adhere to fiscal responsibility. Companies are returning to improve
efficiencies, streamline processes, make intelligent choices, ensure
profitability and strengthen the corporate fibre in order to be more
competitive. Change is crucial. But the Jamshedpur-based Tata Motors'
commercial vehicles division (CVD) has discovered that managing people to
manage change is even more important.
Its department for productivity services has been the change agent to
achieve the dual task of employee involvement and waste elimination. Says
A. K. Dua, deputy general manager, Productivity Services, Tata Motors, "We
have tried to be innovative in each of our initiatives.”
For instance, the first thing that the team addressed was the need to
create champions and opinion leaders from various divisions within CVD.
Under the Total Productivity Model, the division started using a system
under which an individual would be the owner of a machine. It would be
this person's responsibility to improve its performance and to keep it clean.
"When you deal with people, you deal with emotions. We found that there
was a lot of resistance and even hostility towards this model. Someone
pulled out a peg from a machine to spite the attempt. So four senior
managers took up the ownership of one machine each to set a precedent.
! !211
They would clean up the machine themselves. Soon, we have others asking
if they can do this too," says Mr Dua.
Even in the area of managing in a lean and mean way the division has tried
attacking the issue from all angles. For instance, in the area of travel not
only is each department keeping track of it's own expenses but a central
coordinator has also been appointed. "He develops economy routes. He has
worked out that the expense can be cut down substantially if people don't
stay overnight in Mumbai on their way to Pune. These may sound like
trivial things but they make a big difference," he says.
In order to keep track of each department's performance on productivity

the division has created a single sheet method in which traffic light signals
indicate red, green or yellow. "All 18 divisions are monitored regularly on
this basis. If one is on yellow, it means that it is going slow and may need
a push," says Mr. Dua.
Catching them young
Tata Motors' FastTrack initiative was launched to nurture leaders from a

young age. Aimed at recognising talented employees, it facilitates early
advancement to challenging and visible assignments through a systematic
procedure.
The selection involves a three-stage process: a written test, a 'power'

interview and assessment. Short-listed candidates are required to go
through an interview with the executive directors. Selected candidates gain
a huge lead in terms of promotion and learning. They are relieved from
their current jobs and put on various project- based training programmes
under the guidance of senior managers in the company. If the candidates
do not possess management education, they undergo a four-month course
at the Indian Institute of Management, Ahmedabad.
"Any employee with two years of work experience in the company can
apply for this programme," says V. K. Verma, head, corporate human
resources, Tata Motors. "Till date it has generated more than 60 potential
leaders in the company, and they are at least 10-15 years younger than
the natural climbers.”
! !212
After the successful completion of the programme, the candidates are

rotated across departments to acquire general management skills. "In fact,
the programme has performed so well that we are helping duplicate it in
other Group companies, with Tata Chemicals being one of them.”
Looking beyond
Yesterday's innovative practices are routine today. This is true about
employee welfare schemes standard with most corporates. Companies are
looking at the workplace and beyond. The emphasis is on enriching and
improving the quality of life. Tata Steel, a pioneer in employee welfare, is
making huge investments in environment and education in Jamshedpur.
Pollution, occupational hazards, safety regulations and health are the other
constants on its plate.
Tata Motors' innovative concept of a 'leave bank' has been much

appreciated by its employees. In this scheme, every employee voluntarily
donates one day's leave to a notional bank every year. In return, the
employee is entitled to one year of paid or two years of half-pay leave.
"This helps in the case of any accidents or need for long leave," says Mr.
Verma. "On resuming, the employee pays back only 10 per cent of the
leave withdrawn." To prevent the misuse of this facility, two members of
the management and union head the leave-approving committee.
Long working hours, extensive travel and desk-bound jobs skewed the
delicate work-life balance of many a TCSer. Propel came to the rescue.
Under this innovative initiative, the company encouraged the formation of
groups with similar interests to come together to conduct various activities
like book reading. Maitree, an initiative for the spouses of employees,
helped in bringing together the families of the employees. This has not only
increased sharing and communication within the company, but has also
remarkably improved the social skills of employees, says Mr.
Padmanabhan.
! !213
Additional Reading : Human Resource Management @ Google

 
(Courtesy - Anurag Gupta & Great Place to Work® Institute Inc.,
Report on 100 Best Employers of 2008 ©)
Introduction
Managing human resources effectively has become vital to organizations
within the modern and fast?paced business environment, more so as the
economy the world over converge into a synapse of globally connected and
interdependent sectors aimed at preserving and creating knowledge rather
than products and services alone. The novelty in the market today
demands innovation and trust more than mere comparative analysis of
sales and market share, and the hierarchy of the centre and periphery
model is evolving into a different paradigm.
Human Resources specialists are more important in business strategies

today for this very change in market dynamics - more so in the present
economic situation of a global recession and downturn across industries
and sectors. The focus has turned on HR Department at every organization
- the survival lines are running drier with every passing week at the trading
markets the world over, and the aim is not only to see through the
recession, but more importantly, to ensure employees are still committed
to the organization. HR development acts as the mentor5 to its employees
- guiding, training and educating them in the way of the industry and the
organization. Well trained and competent employees, who are able to
showcase themselves and their organization to the customers in a more
effective manner, help in increasing customer satisfaction and overall
clientele, by adding credibility and reputation to the business. Effective HR
planning and development practices bring quality and loyal workers who
are committed and passionate about the success of their organization.
Google Inc., the 9 year old technology service provider based in Mountain
View, California, was voted the number one Best Company to Work for in
America for the second year in a row by its employees. It is the biggest
brand name in the world today - a brand that is built upon a culture that is
high on trust, low on politics, great at sharing resources and sharing the
wealth, and full of meaning and significance. However, besides the usual
and much publicized remuneration package and plush offices, deeper and
more thoughtful set of factors have been identified and acknowledged by
! !214
consulting firms and employees alike on why it is such an attractive

organization to work for.
Industry - Media and internet Services

Headquarters - Mountain View, California
CEO - Dr. Eric Schmidt
Founded - 1998
Ticker Symbol - GooG
Website - www.google.com
Job Applicants - 761,799
Training - 120 hours/week
Voluntary Turnover (FT) - 4.3%
Organizational Goal and Vision

The work culture and employee empowerment philosophy at Google was
apparent from the day the company was launched in 1998. The founders,
Larry Page and Sergey Brin, wanted to establish Google as a company that
was to be seen as a company run by the geeks. The HR Department, in its
alignment with the business strategy of trying to attract the best minds
across the globe to work for Google, has since always aimed to become the
strategic partner to the business operations.
Business Strategic Model

As an organization, Google and its employees take pride in being regarded
as geeks. In fact, one of the banners that greets you as you enter Google's
Toronto Office reads "proud to be geeks". How this very philosophy dictates
their business strategy can be understood from the fact that Larry Page
once remarked that Google was comprised of people with 'frighteningly'
single?minded focus. Google offices are seen not as locations where people
go to work, but rather as dream?houses for these geeks to retire to when
they want to create something innovative and state of the art.
"Four years ago, the average search took about 3 seconds. Today, it is
down to about 0.2 seconds. And since 0.2 is greater than zero, it's not fast
enough". A small statement from Peter Norvig, an engineer at Google, tells
the tale of the work culture and employee commitment at Google - the
employees don't need the next deadline or next project proposal to work
on creating something, but rather an intrinsic challenge - a challenge that
could be driven by self benchmarks, or by peer influence, or simply, the
quest for solving something. As a company, Google completely understands
! !215
that such is the nature of devoted and committed geeks - and provides
everything that is possible to keep these geeks motivated to work on novel
and creative pursuits.
Understanding Google's business strategy needs a subtle understanding of

how the so?prejudiced geeks work and present themselves. For a media
and technology service provider like Google, the competitors have always
tried to downplay the role of Google's HR department in the overall success
of the organization. This is clear from the scathing criticism from Steve
Ballmer, CEO of Microsoft Inc., where he has repeatedly questioned and
challenged the business strategy and model of Google. "They're really just
one business, a search and advertising business". However, this does not
explain how Google was able to reach the $10 billion revenue mark much
quicker than Microsoft.
! !216
The explanation, as Larry Page puts it in his official blog, comes from the
intrinsic Google's vision - Google wants its employees to be as committed
to technology solutions and services as the founders themselves were
when they were busy conceptualizing this very vision in the dormitories at
Stanford University during their college days. From providing everything
that the employees need for them to focus on creativity and innovation, to
helping these employees have the right information and the right resources
for their work, Google has always focussed on the human capital creation
and retention since becoming operational in September 1998. The business
strategy for Google is tightly coupled and strongly reflected in their
company's vision statement, now known as 'The Ten Things' because of the
way Google was able to envisage, and more importantly, deliver, this
vision.
This philosophy at Google has served as the operating guidelines for the
Human Resource Department there in a very broad and yet amicable
manner. It is clear from this philosophy that Google, when formed, was
aimed at creating innovative and unique solutions which would uphold the
brand equity and reputation of the company not by who its employees
were, and how did they dress and behave, but rather from whether the
product they launched in the market could deliver what it promised or not.
As a company, Google was founded and has succeeded on the shoulders of

its innovative products and clutter?free presentation. The strategy has
been to provide the user a completely precise and to?the?point customer
experience - and to accept12 short term losses over long term goals. The
fact that Google's home page always consists of exactly 37 words proves
the point.
The informal structure of work setting, the focus on creativity across

diverse areas of internet technology, and the performance delivery promise
that Google incorporates in its vision is testified by the success of its first
IPO last year. However, the innovative and novel management techniques,
the unique demographics of workforce, and the marvel of web services that
Google launches every now and then are not as distinguishable and clear
to external observers, more so from a non?technology background. The
rigorous accountability, the relentless attention to detail, and the cutting
edge ideas are not the secretive components of its success14 anymore.
However, the way the HR functions and policies have aligned themselves
! !217
with the business model and vision makes Google the most exciting young
technology company to work for and to do business with.
HR as a Strategic Partner for Business

HR department at any organization has a unique challenge - it has to
ensure that the employees are motivated and committed to the
organization with complete integrity and honesty. However, at the same
time, the HR department has to ensure that the market dynamics are not
adversely affected by the sheer volumes of investment involved in the
process. In some ways, HR department should act as a service provider for
the employees, and treat employees as its customer base - treat the
employees the same way you would like them to treat their customers, and
the whole paradigm of customer satisfaction and delivery becomes easy to
adopt and adapt.
The business model and strategy of not merely trying, but actually
delivering the best solution has been a benchmark of the work culture at
Google. The workplaces and office locations all over the world are built
over sprawling spaces which provide the employees not only with every
possible space for creativity and innovation, but also ensures that the
employees' ideas are duly and uncompromisingly studied, worked on, and
acknowledged.
Recruitment and Selection

Recruitment at Google is the first and foremost step in the overall HR
processes. With the reputation and promise that Google holds for
thousands of technology professionals who want to make Google their
second home, more than 1300 Resumes are received each day by Google.
Hiring the right people is a key HR philosophy at Google - the median age
of employees at Google is 27 years, making it the youngest workforce
across the industry.
However, the retention rate, and the turnover data at Google proves that
the organization has been successfully able to attract, retain, and motivate
the most difficult crop of employees - the Y generation cyber?generation
professionals who are prone to changing their affiliations quicker than they
change their clothes.
! !218
Google hosts many external events throughout the year which reflect a
combination of their excellent recruiting practices and their awareness of
the internal culture they want to maintain. They are explicitly seeking to
attract the kinds of people to the company who will be successful in their
open, collaborative culture.

Google employees are offered tremendous opportunities to learn and grow.
Professional development opportunities offered to all employees include
classes on individual and team presentation skills, content development,
business writing, executive speaking, delivering feedback, and
management/leadership. Free foreign language lessons, including French,
Spanish, Japanese, and Mandarin are also sponsored by Google. Given the
prominence of engineers at Google, particular attention is paid to providing
unique development opportunities for this group.
An Engineering training group, engEDU, provides orientation and training

classes, mentoring, career development, and tutorial services - all
programs built by and for engineers. Google has also expanded its global
learning and development team during the last year and is creating new
leadership development programs to help develop and support Google's
future leaders. In a survey, 92% of employees indicated that they are
provided T&D to further them professionally, and 97% indicate that they
are given the resources and equipment to do their job.
It is mandatory for all employees to undergo T&D sessions for a minimum

of 120 hours/ year, which is about three times the industry average in
North America of 43 hours/year. This shows the amount of effort, time and
money that Google invests in its employees to keep them abreast of the
professional and technological advancements.
Innovation and Creativity

There is a strong culture of innovation and experimentation at Google with
engineers encouraged to take 20% of their time to develop new product or
service offerings, or to provide enhancements to current offerings.
Innovation from inside the firm is the norm for most engineering based
software development companies. What is unique at Google is the support
provided by the company, the collaboration among engineers working on
each others' projects, and the final set of results that Google is able to
achieve with the creativity and expertise of its engineers.
! !219
Social Good
Google has the informal corporate motto "Don't be Evil", which reminds its
employees that commitment to be ethical is part and parcel of being a
leader at Google. 99% of the employees indicate that, "Management is
honest and ethical in its business practices". The standards of conduct that
Google employees adhere to concern internal business practices
(respecting each other, protecting confidentiality, protecting Google's
assets, etc), external relations with customers and partners, and the
impact on of Google's work on the larger society.
Compensation Structure
Google stands out as being one of the most sought after and yet one of the
most underpaying employers in the industry. However, the HR strategy fits
perfectly with the business model and vision at Google - wherein
employees are attracted not to the short term monetary returns from
work, but rather to the support system that could help them create
anything. So the work hives at Google have day care and elder care
centres, have spa and hair salons, car wash and oil check facilities, and
virtually everything that a technology?obsessed geek would like to worry
least about, in form of an all inclusive liberal benefits package, but the
actual take?out cash component is negligible. The innovative Stock Option
system at Google ensures that all employees get compensated
competitively thanks to the remarkable equity growth of the company.
So strong is the work culture and employee committed bent upon

technology solutions rather than tangible compensation that Google
became the first company where the Board of Directors requested for a
reduction in their salaries and compensation because they felt they were
getting paid more money than they needed. All the employees agreed on
the sentiment, and in 2005?06, the employees formally demanded a wage
cut themselves. During the same period, the turnover was 1.43%.
! !220
Google Perks and Benefits
Unlimited Sick Leave
27 days of paid time off after one year of employment
On-site Medical and dental facilities, oil change and car wash, courier,
fitness center, banking sector, free breakfast, lunch and dinner on a daily
basis.
18 weeks of additional paid time off post maternity leave; new fathers
can take 7 weeks off.
Annual on-site Health Fair offering free testing services, including eye
exams and cholesterol testing; also offers free flu shots.
Fuel Efficiency Vehicle Incentive Program provides a $5,000 rebate to

employees purchasing hybrid cars.
Best Practice Examples
Creating a great workplace requires more than a specific set of programs

and practices ? there is no one set of perks and benefits that work for all.
Best Companies develop their own unique cultures in their own ways, with
the common feature being that employees are able to say "I trust the
people I work for, have pride in what I do, and enjoy the people I work
with.”
Google institutes quarterly company?wide strategy sessions with senior

executives and separate sessions to assess the company's performance
during the previous quarter. These gatherings are intended both to
celebrate the organization's achievements over the course of the quarter
and to introduce objectives for the new quarter. Opportunities are
provided at these sessions for employees to ask questions of senior
leadership about the company's strategic direction and performance.
Functional teams supplement this all?hands session with their own
department?specific meetings led by senior members.
! !221
Google realizes that not everyone feels comfortable speaking up in a

public forum. That's why they conduct a series of regular surveys to
solicit input directly from employees on a range of topics. The annual Job
Satisfaction Survey, the Engineering Team survey, the Sales Team Survey
and numerous others gather data from employees anonymously. They
then draw on those findings to improve and shape their various
programs. They publish the high level results for all employees to read
on their internal website, and managers are expected to discuss results
with their teams.
Google has an in?house blogging tool that allows employees to start their
own blogs. Employees can use these blogs to communicate personal
stories, to provide work updates, or to share notes. These blogs can only
be accessed internally, and these online forums are yet another way that
Google encourages cross?functional interaction across all levels of the
organization.
TGIFs (Thank God, it's Friday) are an informal company?wide weekly get
together which include a preview of the week to come, a recap of the
week's big events, and a question and answer session. While every week
is a little different, the highlight of TGIF is always the Question and
Answer section; no question is off?limits. Their team webcasts TGIFs to
Google offices around the globe and archives them for those whose time
zones or schedules prevent them from attending the meeting in person.
Some of Google field offices have taken to hosting their own TGIFs, with
senior leaders joining when possible either in person or via video?
conference. They encourage all Google employees, regardless of location,
to submit questions for TGIF through email if they can't (or opt not to)
ask the question in person. Other employees vote on these questions so
that the most relevant work their way to the top of the queue.
In addition to more formal venues, Google's philosophy is reflected in

their "whiteboard" culture. Employees start or add to whiteboard
discussions on topics ranging from future Google products to life at
Google. You'll find these oversize whiteboards all over Google.
Employees drive Google's product development process. They first

release new products and features internally across the company,
allowing employees to explore the product and provide feedback to the
engineers and managers who developed it.
! !222
Google recognizes that the first few months of a child's life are precious.
They provide mothers who've been with Google for over 1 year with 18
weeks of paid bonding leave to spend with their newborn. Fathers are
encouraged to spend 7 weeks of paid bonding leave with their newborn
during his/her first year. To support employees while they bond with their
newborns, Google provides all employees with 100% of their normal take
home pay during maternity/paternity leave.
Google wants employees to maintain the best possible work/life balance,

so they offer flexible work hours, part-time work options, and
telecommuting if the specific job allows. A generous vacation policy is
provided and a vacation donation program is also used to provide an
opportunity for employees to help out their fellow coworkers during a
time of need. The program allows employees to voluntarily donate a
portion of their accrued vacation hours to another eligible employee in
case of an emergency.
While they maintain more specialized learning programs in virtually every

department, the Engineering group has taken the idea of continuous
learning to new heights. The Engineering training group, or engEDU,
aims to provide Google Engineers with compelling educational
opportunities throughout their lives at Google, including everything from
orientation classes to mentoring to career development.
In 2007, Google kicked off their "Candidates@Google" speaker series,

inviting 2008 Presidential candidates to stop by headquarters to speak
with their employees. In addition to these political luminaries, Google
hosts regular Tech Talks where speakers both internal and external
present their insights on timely topics. Google's engineering tech talk
program is a vital part of their engineering knowledge transfer efforts,
and typifies Google's culture, which encourages engineers to air their
ideas in an arena composed of highly technical colleagues, who challenge
each other to push the boundaries of their thinking.
In Q2 2007, Google announced a new equity program for employees

called Transferable Stock Options (TSOs) - a first?of?its?kind program
designed to help employees derive value24 from their options by selling
instead of exercising them. "The goal is quite simple," says David
Rolefson, Google's Director of Compensation Programs. "It is to increase
the perceived value of the option to the employee."
! !223
Google maintains a strong Code of Conduct that it expects all employees

to adhere to. To ensure that employees feel safe in reporting any
potential violation of the policy, and/or asking questions about an action
that might be construed to be a violation, Google enforces a strict "no
retaliation" policy. Retaliation for reporting a possible violation of the
Code of Conduct, otherwise making a complaint regarding a possible
violation of the Code or participating in any investigation of a possible
violation of the Code is strictly prohibited. If a complaint of retaliation is
substantiated, appropriate disciplinary action will be taken, up to and
including termination. The Code of Conduct, and the No Retaliation Policy
both serve to uphold strong ethical behaviour at Google.
Google places a high value on the opinions of employees. Any employee

can approach any manager to discuss any issue. The official policy25
states: Google desires to maintain a friendly, cooperative atmosphere
between employees and all levels of management. Consequently, the
Company provides opportunities for you to express yourself without
recrimination. If you have a problem with your Manager that, despite
your mutual efforts, cannot be resolved, you may discuss this with the
next higher level of management or with Human Resources. You may
request that the Human Resources person or a co?worker accompany
you in an advisory capacity in any meeting. While Google prides itself on
being an open organization where you can approach any member of
management directly, we recommend you first attempt to resolve the
issue through your Manager or Human Resources. If not satisfied, you
may then continue the process with the successive levels up to the CEO.
Concerns ,conflicts and complaints will be carefully considered and
facilitated promptly.
Google encourages employees to volunteer by alerting new Google

employees to volunteer opportunities on their first day at orientation.
One program that's frequently highlighted is Google Grants, which
donates free advertising services to select non?profit organizations.
Google has initiated a number of programs to do their part to reduce

greenhouse gas emissions, to improve energy efficiency, and to support
clean energy sources. In 2007, they switched on the solar panel
installation at its headquarters. Moreover, the company's benefits
package includes a significant incentive for employees to purchase plug?
in hybrid cars.
! !224
Events such as seminars, get?togethers, and conferences at Google are

themed with colour and creativity - and include the inspiration and
imagination of every engaged employee. This allows all the employees to
attach a sense of belonging to the workplace as well as to the event.
Over the years, Google has nurtured a work culture where employees are
to be quirky27 and a little irreverent. Worldwide themed "special days"
help foster their sense of community and fun.
To round out their first week as Google employees, new employees are
recognized at TGIF, Google's all?hands meeting held every Friday
afternoon. Sitting in a reserved section at the front of the room, they
wear Noogler hats (brightly coloured propeller beanies bearing the word
"Noogler") and plaques around their neck displaying fun personal trivia of
their choosing. At the beginning of the TGIF program, Google founders
Larry Page and Sergey Brin lead a round of applause to welcome the new
folks as their names are projected on a large screen. For Nooglers, this
TGIF represents one of their first chances to experience the team spirit of
Google.
HR Strategy influencing Business Strategy: An alternate view

The fact that Google provides a 20% off time to employees for their
creative pursuits is an HR practice that has reaped them rich rewards.
However, the business implications of such rewards are very limited as
compared to their flagship search engine and online advertising services.
Notwithstanding, the HR department and the executives still continue to
encourage employees for investing effort and time into such projects - the
basic idea is that the employees remain motivated and committed to
innovation and novelty. The employees get a day every week where they
can work on their own, and on the rest of the work week, get back to their
official job description of writing complex algorithm and semantic programs
for their search engine and Adwords services. The recruitment, on its part,
becomes much more diverse with more and more talented minds looking to
work for a company which would encourage and pay them for trying to
build up a tool which may or may not come out right. This is a very
peculiar case of a business strategy being an output of a deliberate28 HR
strategy.
! !225
The Challenge of Recession

Recession poses the unique challenge to the HR department. Google as an
organization is better equipped to handle the recession than most of its
competitors simply because the employee satisfaction and commitment at
Google is seen much beyond the compensation structure and promotion
race - voluntary turnover at Google is much less than the industry average,
and layoffs that have occurred during the current and last quarter have
only affected the contractual part time workers. Moreover, Google is
expected to release a host of products over the next 2 quarters, and has
already invested millions of dollars into acquiring the necessary hardware
and satellite systems - indicating the confidence Google has in the relative
immunity of its business model to recession.
a. Human Resource Management K. Aswathappa
b. Human Resource Management Gary Dessler
! !226
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !227
PARTICIPATIVE MANAGEMENT
Chapter 12
Objectives
Concept and benefits of Participative Management
Essential requirements for successful participative management
Problems of Participative Management
Different types of participative programmes
Different Methods and Techniques of Participative Management
Structure:
12.1 Definition
12.2 Introduction
12.3 Benefits of Participative Management
12.4 Requirements of Participative Management
12.5 Concerns
12.6 Methods and Techniques of Participation
12.7 Different Methods and Techniques of Participative Management
12.8 Summary
! !228
12.1 DEFINITION
Type of management in which employees at all levels are encouraged to

contribute ideas towards identifying and setting organizational goals,
problem solving, and other decisions that may directly affect them. Also
called consultative management.
Or 
An open form of management where employees have a strong decision

making role. Participative management is developed by managers who
actively seek a strong cooperative relationship with their employees. The
advantages of participative management include increased productivity,
improved quality, and reduced costs.
12.2 INTRODUCTION
Participative (or participatory) management, otherwise known as employee

involvement or participative decision making, encourages the involvement
of stakeholders at all levels of an organization in the analysis of problems,
development of strategies, and implementation of solutions. Employees are
invited to share in the decision making process of the firm by participating
in activities such as setting goals, determining work schedules, and making
suggestions. Other forms of participative management include increasing
the responsibility of employees (job enrichment); forming self-managed
teams, quality circles, or quality-of-work-life committees; and soliciting
survey feedback. Participative management, however, involves more than
allowing employees to take part in making decisions. It also involves
management treating the ideas and suggestions of employees with
consideration and respect. The most extensive form of participative
management is direct employee ownership of a company.
Four processes influence participation. These processes create employee

involvement as they are pushed down to the lowest levels in an
organization. The farther down these processes move, the higher the level
of involvement by employees. The four processes include: 
! !229
1. Information-sharing, which is concerned with keeping employees

informed about the economic status of the company.
2. Training, which involves raising the skill levels of employees and offering
development opportunities that allow them to apply new skills to make
effective decisions regarding the organization as a whole.
3. Employee decision making, which can take many forms, from

determining work schedules to deciding on budgets or processes.
4. Rewards, which should be tied to suggestions and ideas as well as

performance.
12.3 BENEFITS OF PARTICIPATIVE MANAGEMENT
A participative management style offers various benefits at all levels of the

organization. By creating a sense of ownership in the company,
participative management instils a sense of pride and motivates employees
to increase productivity in order to achieve their goals. Employees who
participate in the decisions of the company feel like they are a part of a
team with a common goal, and find their sense of self-esteem and creative
fulfilment heightened.
Managers who use a participative style find that employees are more
receptive to change than in situations in which they have no voice.
Changes are implemented more effectively when employees have input
and make contributions to decisions. Participation keeps employees
informed of upcoming events so they will be aware of potential changes.
The organization can then place itself in a proactive mode instead of a
reactive one, as managers are able to quickly identify areas of concern and
turn to employees for solutions.
Participation helps employees gain a wider view of the organization.

Through training, development opportunities and information-sharing,
employees can acquire the conceptual skills needed to become effective
managers or top executives. It also increases the commitment of
employees to the organization and the decisions they make.
! !230
Creativity and innovation are two important benefits of participative

management. By allowing a diverse group of employees to have input into
decisions, the organization benefits from the synergy that comes from a
wider choice of options. When all employees, instead of just managers or
executives, are given the opportunity to participate, the chances are
increased that a valid and unique idea will be suggested.
12.4 REQUIREMENTS OF PARTICIPATIVE MANAGEMENT
A common misconception by managers is that participative management

involves simply asking employees to participate or make suggestions.
Effective programs involve more than just a suggestion box. In order for
participative management to work, several issues must be resolved and
several requirements must be met. First, managers must be willing to
relinquish some control to their workers; managers must feel secure in
their position in order for participation to be successful. Often managers do
not realize that employees’ respect for them will increase instead of
decrease when they implement a participative management style.
The success of participative management depends on careful planning and

a slow- phased approach. Changing employees’ ideas about management
takes time, as does any successful attempt at a total cultural change from
a democratic or autocratic style of management to a participative style.
Long-term employees may resist changes, not believing they will last. In
order for participation to be effective, managers must be genuine and
honest in implementing the program. Many employees will need to
consistently see proof that their ideas will be accepted or at least seriously
considered. The employees must be able to trust their managers and feel
they are respected.
Successful participation requires managers to approach employee

involvement with an open mind. They must be open to new ideas and
alternatives in order for participative management to work. It is important
to remember that although the manager may not agree with every idea or
suggestion an employee makes, how those ideas are received is critical to
the success of participative management.
! !231
Employees must also be willing to participate and share their ideas.

Participative management does not work with employees who are passive
or simply do not care. Many times, employees do not have the skills or
information necessary to make good suggestions or decisions. In this case,
it is important to provide them with information or training so they can
make informed choices. Encouragement should be offered in order to
accustom employees to the participative approach. One way to help
employees engage in the decision making process is by knowing their
individual strengths and capitalizing on them. By guiding employees toward
areas in which they are knowledgeable, a manager can help to ensure their
success.
Before expecting employees to make valuable contributions, managers

should provide them with the criteria that their input must meet. This will
aid in discarding ideas or suggestions that cannot be implemented, are not
feasible, or are too expensive. Managers should also give employees time
to think about ideas or alternative decisions. Employees often do not do
their most creative thinking on the spot.
Another important element for implementing a successful participative

management style is the visible integration of employees’ suggestions into
the final decision or implementation. Employees need to know that they
have made a contribution. Offering employees a choice in the final decision
is important because it increases their commitment, motivation, and job
satisfaction. Sometimes even just presenting several alternatives and
allowing employees to choose from them is as effective as if they thought
of the alternatives themselves. If the employees’ first choice is not feasible,
management might ask for an alternative rather than rejecting the
employee input. When an idea or decision is not acceptable, managers
should provide an explanation. If management repeatedly strikes down
employee ideas without implementing them, employees will begin to
distrust management, thus halting participation. The key is to build
employee confidence so their ideas and decisions become more creative
and sound.
! !232
12.5 CONCERNS
Participative management is not a magic cure for all that ails an

organization. Managers should carefully weigh the pros and the cons before
implementing this style of management. Managers must realize that
changes will not take effect overnight and will require consistency and
patience before employees will begin to see that management is serious
about employee involvement. Participative management is probably the
most difficult style of management to practice. It is challenging not only for
managers but for employees as well.
While it is important that management allows employees to participate in

decision making and encourages involvement in the organization’s
direction, managers must be cognizant of the potential for employees to
spend more time formulating suggestions and less time completing their
work. Upper-level management will not support a participative
management program if they believe employees are not meeting their daily
or weekly goals. Some suggestions for overcoming this potential problem
are to set aside a particular time each week for workers to meet with
management in order to share their ideas, or to allow them to work on
their ideas during less busy times of the day or week. Another idea that
works for some managers is to allow employees to set up individual
appointments to discuss ideas or suggestions.
Managers should remember that participative management is not always

the appropriate way to handle a given situation. Employees often respect a
manager that uses his or her authority and makes decisions when it is
necessary. There are times when, as a manager, it is important to be in
charge, make a decision, and then accept the responsibility for the choices
made. For example, participative management is probably not appropriate
when disciplinary action is needed.
When managers look upon their own jobs as a privilege instead of as a

responsibility, they will fail at making participative management work. They
will be less willing to turn over some of the decision making responsibility
to subordinates. Another reason that participative management fails is that
managers do not realize it is not the same as delegating or simply shifting
responsibility. Participation alone has no value; it is only an effective tool if
it is used to solve problems and meet goals. Some managers believe that
inviting employees to join in meetings and form committees will create a
! !233
successful participative management program. However, these measures

are only successful when employees’ ideas are accepted by management
and implemented.
The larger the organization, the more difficult it becomes to institute a

participative management style. Large organizations have more layers and
levels, which complicate effective communication and make it difficult to
register the opinions and suggestions of a diverse group of employees and
managers. Critics argue that unions are often more effective than
participative management in responding to employee needs because union
efforts can cut through bureaucratic organizations more quickly.
Participative management programs can be threatened by office politics.

Due to hidden agendas and peer pressure, employees may keep their
opinions to themselves and refuse to tell a manager if they feel an idea will
not work. Managers also play a part in politics when they implement
participative management programs to impress their own bosses but have
no intention of seeing them through.
Many companies have experienced the positive effects of participative

management. Employees are more committed and experience more job
satisfaction when they are allowed to participate in decision making.
Organizations have reported that productivity improved significantly when
managers used a participative style. Participative management is not an
easy management style to implement. It presents various challenges and
does not succeed overnight. Managers will be more successful if they
remember that it will take time and careful planning before they will see
results. Starting with small projects that encourage and reward
participation is one way to get employees to believe that management is
sincere and trustworthy.
! !234
12.6 METHODS AND TECHNIQUES OF PARTICIPATION
Organizations use a variety of programs aided at increasing employee

participation. All the different programs have one major objective and that
is to increase employee participation.
Participative management is basically a process where subordinates share

a significant degree of decision making with their immediate superiors. The
different types of participative programs are:
1. Works Committees: The Industrial Disputes Act of 1947 provides for

establishing works committees in every establishment employing
hundred or more workers. This legislation thus makes it compulsory for
the organization to ensure employee participation. The works
committees consist of equal number of members of workers and
employers. The main function of the work committees is to promote
measures for securing and preserving amity and good relations between
the employers and the workers. Their task is to smooth away any
friction that may occur between the management and the workers.
Unions consider these committees as a threat to their existence as
employers prefer to talk to these committees rather than the union.
There is lack of interest among workers in works committees as they
concentrate only on minor issues and not major issues.
2. Co-partnership: In this method, employees are paid the share of profit

in the form of shares and not cash. Thus, workers become shareholders
in the company in which they are employed. Being shareholders of the
company in which they are entitled to participate in management,they
also receive dividend on their shares. The problem with this method is
that employees are not interested in co-partnership and want their
share of profit in cash and refuse to accept shares of the company.
3. Employee Directors: Under this method, one or two representatives of

the worker are nominated on the board of directors of the company.
They enjoy the same privileges and have the same authority as other
directors have. The problem of this method of participation is that many
worker directors are ignorant about their role on the board and get in to
conflict with other board members.
! !235
4. Joint Management Councils: Under this system, joint management

councils are constituted. These councils consist of equal number of
representatives of employer and workers. The councils discuss various
matters concerning the working of the company. The decision of these
councils is advisory in nature. The council generally discusses matters
relating to working conditions, prevention of accidents, indiscipline, and
training.
5. Suggestion Schemes: As the name itself indicates, suggestion

programs are formal plans to invite individual employees to make
suggestion for work improvements. The suggestions are then sorted out
as per their applicability and cost-benefit ratio. Employees whose
suggestions result in cost saving for the organization are given
monetary rewards that are proportionate to the company’s savings. The
limitation of this method is that there is a possibility that employees
may feel dejected if there is a delay in the processing of suggestions or
if certain ideas that appear good are rejected.
12.7 DIFFERENT METHODS AND TECHNIQUES OF

Company Leadership Support

One of the foundational requirements of a successful corporate wellness
program is that executive management be on board and supportive. The
leadership and culture of the company will steer the initial engagement and
in turn continued participation in the program. The tone is established by
the leadership of the company and must encourage and support each
employee’s efforts to utilize the corporate wellness programming. It is
extremely important for management to create an environment that is
conducive to engagement and participation. In other words, management
needs to create a program that actually makes it easy to participate in.
Human nature will find excuses not to participate, so it is important that
the company stands behind the wellness investment and facilitates
participation.
! !236
Employee Engagement
Once you have strong management support for the corporate wellness
program, you will have to plan how to engage employees in the program.
As you plan your wellness program, it is important to keep in mind that
you need a variety of options to offer the workforce. Below are a few
suggestions to encourage employee engagement. You may also come up
with an original idea that will speak specifically to your workforce:
Education: By educating your employees, especially the sedentary or

non-wellness population, you can draw them into the program. This is a
vital part of any successful health and wellness program. The sedentary
population of your workforce needs to know and understand the many
benefits of living a healthy lifestyle and how to make those changes. This
will be the most challenging group to reach, but once you do it will be the
most rewarding.
Incentives: Depending upon the culture of your company, this can be a

fundamental method to engage your employees in a wellness program,
especially when the incentive is monetary. But keep in mind that this can
also provide a temporary motivation when the goal is to create long-term
positive behavioral changes.
On-site Fitness Professional: Whether you have a fitness center within

your company or not, you can hire someone to perform fitness
assessments, personal training or to teach classes. This shows each
employee that you are serious about the wellness programming. Having
a fitness professional on-site also gives your employees a resource for
health and fitness information, support and motivation.
Once an employee engages in wellness and fitness programming, he or

she will feel better about life and work. The employee will exhibit a more
positive outlook regarding work product and the work environment. There
is a two-way benefit for the employee and the company. A win-win, if you
will.
! !237
Keeping Consistent Participation

Once your employees decide to engage in your Corporate Wellness
program, the next step is consistent participation. Our research has shown
that this can be accomplished through the 3Ps to participation leading to
program success:
1. Presence: Having highly trained, goal-oriented fitness personnel on-

site to facilitate the program. A fitness professional can provide
education, support, and motivation to your workforce.
2. Programming: Cutting edge programming and execution of services

provides incentives and interest to your corporate wellness
programming. Offering a variety of the top programs in the fitness world
will draw in different audiences of your workforce.
3. Promotion: Promoting your wellness programming with targeted

internal marketing that offers an educational value will help create
interest in corporate wellness. There are many avenues to market to
your workforce including newsletters, informational and educational
emails, social media, etc.
Combining presence, programming and promotion will drive participation,

thus resulting in increased retention and reduced attrition. Consistent
participation is critical because the more the employees participate, the
more likely they will experience results. The results in turn fuel the
continued participation of the employee. The ultimate goal of the company
is behavioral change and engaging all employees, especially the sedentary
population, into a healthy and fit lifestyle. For the company, this has a
multitude of benefits that they are offering to their workforce, as well as
creating an ROI for the company.
! !238
12.8 SUMMARY
Participative management refers to an open form of management where

employees have a strong decision making role. Information-sharing,
training, employee decision making and rewards are the four processes
which influence participation. The advantages of participative management
include increased productivity, improved quality, and reduced costs.
Creativity and innovation are two important benefits of participative
management. The different types of participative programs are works
committees, co-partnership, employee directors, joint management
councils and suggestion schemes.
1. What is Participative Management? What are its advantages?
2. Which processes influence the participation?
3. What are the important elements required for successful participation?
4. Explain the different methods and techniques of Participative

Management.
! !239
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !240
WORK LIFE: QUALITY AND RELATED ISSUES
Chapter 13
Work Life: Quality and Related Issues
Objectives
Concept of Quality of Work Life (QWL)
Issues in QWL
Causes of Workplace Violence and measures to minimise it
Sexual Harassment and its effects in the workplace
Alcoholism and Drug Abuse and techniques to deal them
Structure:
13.1 Issues in QWL
13.2 What are the Causes of Workplace Violence?
13.3 Sexual Harassment
13.4 Alcoholism and Drug Abuse
13.5 Summary
! !241
The present era is an era of knowledge workers and the society in which
we are living has come, to be known as knowledge society. The intellectual
pursuits have taken precedence over the physical efforts.
Some knowledge workers work for more than 60 hours a week. As a result
of this, their personal hobbies and interests clash with their work. Life is a
bundle that contains all the strands together and hence the need to
balance work life with other related issues.
One must have both love and work in one’s life to make it healthy. Gone
are the days when the priority of employees used to be for physical and
material needs. With the increasing shift of the economy towards
knowledge economy, the meaning and quality of work life has undergone a
drastic change.
Meaning
Qual i ty of Work Li fe (QWL) refers to the favourabl eness or

unfavourableness of a job environment for the people working in an
organisation. The period of scientific management which focused solely on
specialisation and efficiency, has undergone a revolutionary change.
The traditional management (like scientific management) gave inadequate

attention to human values. In the present scenario, needs and aspirations
of the employees are changing. Employers are now redesigning jobs for
better QWL.
Definition
The QWL as strategy of Human Resource Management has assumed
increasing interest and importance. Many other terms have come to be
used interchangeably with QWL such as ‘humanisations of work’ ‘quality of
working life, ‘industrial democracy’ and ‘participative work’.
! !242
There are Divergent Views as to the Exact Meaning of QWL
A few definitions given by eminent authors on QWL are

given below:
1. “QWL is a process of work organisations which enable its members at all

levels to actively; participate in shaping the organizations environment,
methods and outcomes. This value based process is aimed towards
meeting the twin goals of enhanced effectiveness of organisations and
improved quality of life at work for employees. ”
—The American Society of Training and Development
2. “QWL is a way of thinking about people, work and organisations, its

distinctive elements are: (i) a concern about the impact of work on
people as well as on organisational effectiveness, and (ii) the idea of
participation in organisational problem-solving and decision making.”
— Nadler and Lawler
3. “The overriding purpose of QWL is to change the climate at work so that

the human-technological-organisational interface leads to a better
quality of work life.” – Luthans
4. “QWL is based on a general approach and an organisation approach.

The general approach includes all those factors affecting the physical,
social, economic, psychological and cultural well-being of workers, while
the organisational approach refers to the redesign and operation of
organisations in accordance with the value of democratic society. ”
From the definitions given above, it can be concluded that QWL is

concerned with taking care of the higher-order needs of employees in
addition to their basic needs. The overall climate of work place is
adjusted in such a way that it produces more humanized jobs.
QWL is viewed as that umbrella under which employees feel fully

satisfied with the working environment and extend their wholehearted
cooperation and support to the management to improve productivity and
work environment.
! !243
13.1 ISSUES IN QWL
Trade unions claim that they are responsible for the improvement in
various facilities to workers whereas management takes credit for
improved salaries, benefits and facilities. However, P/HR manager has
(identified) specific issues in QWL besides normal wages, Salaries; fringe
benefits etc. and take lead in providing them so as to maintain higher
order QWL. Major QWL issues are:
1. Pay and Stability of Employment: Good pay still dominates most of

the other factors in employee satisfaction. Various alternative means for
providing wages should be developed in view of increase in cost of living
index, increase in levels and rates of income tax and profession tax.
Stability to a greater extent can be provided by enhancing the facilities
for human resource development.
2. Occupational Stress: Stress is a condition of strain on one as

emotions, thought process and physical condition, Stress is determined
by the nature of work, working conditions, working hours, pause in the
work schedule, worker abilities and nature and match with the job
requirements. Stress is caused due to irritability, hyper-excitation or
depression, unstable behavior, fatigue, stuttering, trembling,
psychosomatic pains, heavy smoking and drug abuse. Stress adversely
affects employees productivity. The P/HR manager, in order to minimize
the stress, has to identify, prevent and tackle the problem. He may
arrange the treatment of the problem with the health unit of the
company.
3. Alternative Work Schedules: Alternative work schedules including

work at home, flexible working hours, staggered hours, reduced work
week, part-time employment which may be introduced for the
convenience and comfort of the workers as the work schedule which
offers the individual the leisure time, flexible hours of work is preferred.
4. Recognition: Recognizing the employee as a human being rather than

as a laborer increases the QWL. Participative management, awarding
the rewarding system, congratulating the employees for their
achievement, job enrichment, offering prestigious designations to the
jobs, providing furnished and decent work places, offering memberships
! !244
to clubs or association, providing vehicles, offering vacation trips are

some of the means to recognize the employees.
5. Congenial Worker Supervisor Relation: Harmonious supervisor-

worker elations give the worker a sense of social association,
belongingness, achievement of work results etc. This in turn leads to
better QWL.
6. Adequacy of Resources: Resources should match with stated

objectives otherwise, employees will not be able to attain the objectives.
This results in employee dissatisfaction and lower QWL.
7. Seniority and Merit in Promotions: Seniority is generally taken as

the basis for promotion in case of operating employees. Merit is
considered as the basis for advancement for managerial people whereas
seniority cum-merit is preferred for promotion of ministerial employees.
The promotional policies and activities should be fair and just in order to
ensure higher QWL.
What is workplace violence? Workplace violence is violence or the threat

of violence against workers. It can occur at or outside the workplace and
can range from threats and verbal abuse to physical assaults and
homicide, one of the leading causes of job-related deaths. However it
manifests itself, workplace violence is a growing concern for employers
and employees nationwide.
13.2 What Are the Causes of Workplace Violence?
Workplace violence takes many forms and has many causes. Angered
former employees, customers who feel wronged, stressed out employees
or a conflict between co-workers can elevate to the point of a violent
altercation in the office. Personal life does spill over into the workplace, and
sometimes those personal issues present themselves at the office with
dangerous consequences. Companies that recognize the potential for
workplace violence are in the best position to prevent it.
! !245
Lack of Pre-employment Screening

Companies that do not conduct thorough background screenings on
potential employees run the risk of hiring someone who could be prone to
violence, or has a violent past. Although many companies are using
psychological tests during the hiring process in an attempt to weed out the
potentially violent candidates, the test is not full-proof and should not be
substituted for a thorough background check.
Stress
As much as companies attempt to dictate this, employees do not leave
their personal issues at the door. Stress, of a workplace and personal
nature, can cause an employee to snap and lash out at at whomever the
perceived enemy is. Overworking employees can create a hostile work
environment, and if the employee is also battling personal issues, the
combination can have disastrous, if not deadly, results.
Lack of Employee Assistance Program

An Employee Assistance Program (EAP) can diffuse a situation with a
potentially violent employee before the employee has a chance to act. Most
employees become violent as a last resort--they feel no one is addressing
or acknowledging their needs. With an EAP program in place, employees
have an impartial party with whom they can discuss the stressors in their
life and possibly receive the assistance or treatment they need before
things escalate into violence.
Denial
Companies who take the approach that nothing bad, such as a disgruntled
employee returning to do harm to his former boss, actually fuel the
workplace violence fire. Ignorance of the potential for violence in an
organization will cause an organization not to put proper safety and conflict
resolution measures into place, leaving the organization vulnerable to such
an attack from employees and customers, and lacking the tools to diffuse
the situation.
Disgruntled Customers and Former Employees

A person who feels a company has wronged him in some way can lash out
at the company. It could be a customer who feels he was cheated, or it
could be an employee who was fired, laid off or wronged by.
! !246
Consequences of Workplace Violences
Violence at the workplace leads to the following consequences:
Major: Physical attacks, assaults, psychological trauma, anger related

accidents, rape, arson and murder.
Minor: Violent arguments, verbal batting, violations in the ethics and

rules, sabotage, property damage, vandalism etc.
Measures to Minimise the Workplace Violence
Management should take the following steps to reduce the

violence:
Counselling the more powerful employees;
Divert the powerful employees towards organisational goals or, to the

issues where their power can be used constructively;
Create a more friendly environment at the workplace;
Formulate the teams with all kinds of employees;
Eliminate candidates with violence behaviour at the time of selection;

and
Impose severe punishments on violators.
13.3 Sexual Harassment
Sexual Harassment and Human Resources

One of the most difficult areas for Human Resource departments (HR) is
developing and managing policies and handling allegations on sexual
harassment. Sexual harassment occurs when one employee makes
continued, unwelcome sexual advances, requests for sexual favors, and
other verbal or physical conduct of a sexual nature, to another employee,
against his or her wishes.
! !247
Many employers are not aware of sexual harassment activities occurring in

their workplace and often times they are surprised when they learn what
even constitutes sexual harassment. Sexual harassment can occur in many
situations such as the examples listed below. The list is not to be
considered all inclusive and is shown only to provide examples:
Posting emails or pictures of a sexually related nature.
Repeated requests for dates that are turned down.
Unwanted flirting.
Any body contact such as grabbing an employee around the waste,

patting a coworker’s back, or interfering with an employee’s ability to get
around the workplace.
Playing sexually suggestive music.
Unwanted jokes, gestures, offensive words on clothing.
The Effects of Sexual Harassment in the Workplace

The serious effects of sexual harassment are often understated. These
behaviors can cause significant health problems, financial difficulties, and
even global repercussions.
Emotional Well-being
Sexual harassment can jeopardize the victim's emotional and mental
health. It can lead to the loss of self-esteem and it may even compromise
personal relationships. Sexual harassment in the workplace can cause
significant stress and anxiety. An employment harassment lawyer is also
likely to work with clients who have suffered from long-term clinical
depression as a result of sexual harassment.
Physical Health
Physical health and emotional health are closely linked. When victims of
sexual harassment experience mental and emotional problems, it often
leads to physical health issues, such as loss of appetite, headaches, weight
fluctuations, and sleep disturbances. Sleep disturbances can in turn lead to
other serious health problems, such as hormonal imbalance, an increased
risk of high blood pressure, and a weakened immune system.
! !248
Financial Challenges
In addition to causing health problems, sexual harassment frequently leads
to financial challenges. It's important to tell your sexual harassment
attorney in San Jose about any financial consequences of sexual
harassment, such as lost wages and unpaid leave. Some victims of sexual
harassment may even face broader career repercussions, such as the loss
of job references. They may decide to leave their current position or
employer to avoid a hostile work environment.
Global Consequences
Sexual harassment has a direct effect on employers and the global
economy. Each year, millions are lost due to absenteeism, low productivity,
employee turnover, low morale, and legal costs stemming from sexual
harassment. The economy also suffers due to premature retirement and
higher insurance costs.
Measures of Reduce Sexual Harassment
Below are some measures that employers can take in order to create a
harassment-free workplace:
Make it clear that this is a workplace where harassment will not be

tolerated.
Provide education and information about harassment to all staff on a

regular basis.
The circulation of information, open communication and guidance is of

particular importance in removing the taboo of silence which often
surrounds cases of sexual harassment. Information sessions, personnel
meetings, office meetings, group discussion and problem-solving groups
can prove very effective in this respect. Staff should also be informed of
the best way of coping with aggression by means of guidelines and staff
development programs on sexual harassment at work.
Develop an anti-harassment policy together with employees, managers,

and union representatives.
Communicate the policy to all employees
! !249
Make sure that all managers and supervisors understand their

responsibility to provide a harassment-free work environment
Ensure that all employees understand the policy and procedures for
dealing with harassment - new and long-term employees alike - this
involves training, information and education.
Show you mean it - make sure the policy applies to everyone, including
managers and supervisors.
Promptly investigate and deal with all complaints of harassment.
Appropriately discipline employees who harass other employees.
Provide protection and support for the employees who feel they are being
harassed.
Take action to eliminate discriminatory jokes, posters, graffiti, e-mails

and photos at the work site.
Monitor and revise the policy and education/information programs on a

regular basis to ensure that it is still effective for your workplace.
Employers should provide a mechanism for addressing sexual

harassment in a confidential and sensitive manner after a grievance has
been filed.
A well constructed and well-implemented plan within an organization

may stop inappropriate conduct before it creates a problem for individual
employees or the company.
! !250
13.4 Alcoholism and Drug Abuse
Alcohol and drug use among employees can be an expensive problem for
business and industry, with issues ranging from lost productivity,
absenteeism, injuries, fatalities, theft and low employee morale, to an
increase in health care, legal liabilities and workers' compensation costs.
The impact of alcoholism and drug dependence in the workplace often

focuses on four major issues:
1. Premature death/fatal accidents

2. Injuries/accident rates
3. Absenteeism/extra sick leave
4. Loss of production
Additional Problem Areas can include
Tardiness/sleeping on the job
After-effects of substance use (hangover, withdrawal) affecting job

performance
Poor decision making
Loss of efficiency
Theft
Lower morale of co-workers
Increased likelihood of having trouble with co-workers/ supervisors or

tasks
Preoccupation with obtaining and using substances while at work,

interfering with attention and concentration
Illegal activities at work including selling illicit drugs to other employees
Higher turnover
! !251
Training of new employees
Disciplinary procedures
Techniques to Deal with Alcoholism and Drug Abuse
Techniques to deal with this problem include:
Administering the tests to detect alcoholism and drug abuse along with
employment tests and weed- out candidates indulging in such cases;
Counselling: Organisations should conduct counselling programmes;
Providing training;
Taking disciplinary action; and
Controlling the employees financially by paying the salary to employee’s

family members.
! !252
13.5 SUMMARY
Qual i ty of Work Li fe (QWL) refers to the favourabl eness or

unfavourableness of a job environment for the people working in an
organisation. The major issues concerning QWL are pay and stability of
employment, occupational stress, alternative work schedules, recognition,
congenial worker supervisor relation, adequacy of resources and seniority
and merit in promotions. Workplace violence takes many forms and has
many causes such as lack of pre-employment screening, stress, lack of
employee assistance programme, denial, disgruntled customers and former
employees. Sexual harassment can cause significant health problems,
financial difficulties, and even global repercussions. Employers must take
some measures create a harassment-free workplace. Alcohol and drug use
among employees can be an expensive problem for business and industry.
Its major issues are premature death/fatal accidents, injuries/accident
rates, absenteeism/extra sick leave and loss of production. Employers can
deal with this problem by using appropriate techniques.
1. What do you mean by Quality of Work Life (QWL)? What are the major
issues of QWL ?
2. What is workplace violence? What are the causes of workplace violence?
3. What are the effects of the Workplace Violence? What measures can be
taken to minimise the workplace violence?
4. Describe the effects of sexual harassment in the workplace and also the
measures to reduce it.
5. What are the major issues faced in the workplace due to alcoholism and
drug dependence? What are the techniques used to deal them?
! !253
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !254
TOTAL QUALITY AND HUMAN RESOURCE MANAGEMENT
Chapter 14
TOTAL QUALITY AND HUMAN RESOURCE
MANAGEMENT
Objectives
Concept and principles of TQM
Significance of human resource management in TQM
Formulation and execution of total quality and human resource

strategies?
Structure:
14.1 Meaning and Definition
14.2 Human Resource Development and TQM
14.3 The Total Quality Human Resources Strategy
14.4 Summary
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14.1 Meaning and Definition
Total Quality is defined as, .... a people-focused management system that

aims at continual increase in customer satisfaction at continually lower
cost. Total Quality (TQ) is a total system approach (not a separate area or
programme), and an integral part of high level strategy. It works
horizontally across functions and departments, involving all employees, top
to bottom, and extends backward and forward to include the supply chain
and customer chain.”
Total Quality Management (TQM) is a continuous process of improvement

for individuals, groups of people and the total organisation. Unlike other
methods, TQM is the concentrated focus on continuous improvement. TQM
is about changing the way things are done within the organisation’s
lifetime. People must know what to do, how to do it, have the right
methods to do it and be able to measure the improvement of the process
and the current level of achievement in order to improve the process.
Principles Of TQM
1. Be Customer focused: Whatever you do for quality improvement,

remember that ONLY customers determine the level of quality. Whatever
you do to foster quality improvement, training employees, integrating
quality into processes management, ONLY customers determine whether
your efforts were worthwhile.
2. Insure Total Employee Involvement: You must remove fear from

work place, then empower employee... you provide the proper
environment.
3. Process Centred: Fundamental part of TQM is to focus on process

thinking.
4. Integrated system: All employee must know the business mission

and vision. An integrated business system may be modeled
by MBNQA or ISO 9000.
5. Strategic and systematic approach: Strategic plan must integrate

quality as core component.
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6. Continual Improvement: Using analytical, quality tools, and creative

thinking to become more efficient and effective.
7. Fact Based Decision Making: Decision making must be ONLY on data,

not personal or situational thinking.
8. Communication: Communication strategy, method and timeliness

must be well defined.
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14.2 HUMAN RESOURCE DEVELOPMENT AND TQM
Human resources play a vital role in total quality management. The

following forces shape the human resources management towards TQM:
i. Economic liberalisations announced by the Government of India in 1991.
ii. Opening the Indian economy to the rest of the globe through the
globalisation policy.
iii. Entrusting more priority for the private sector to play a constructive role
in the restructuring and development process of Indian economy.
iv. Mounting competition among the industries across the globe.
v. Successful companies accord high priority to productively and

systematically understanding and responding to current and future
external customer needs.
vi. Successful organisations proactively and systematically understand and

respond to current and future external customer needs.
vii.Human resources diversity and mobility are creating new employee

needs and expectations about the future work culture.
viii.The information technology revolution is reshaping the core

competencies needed in a knowledge economy.
ix. Organisational and human resources leaders are being challenged to

become effective strategic partners in the creation of world-class work
cultures.
The TQM approach brought changes in the attitudes and expectations of

the managers about the roles of human resources managers. Further, the
expectations of stakeholders about the HRM profession have also been
changing. Traditionally, objectives of the business organisations were
restricted to productivity and profits. Consequently, stakeholders
particularly the customers and employees were given low priority. Workers’
participation in management programmes is limited to offering suggestions
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by employees. Training and development programmes were limited to job-

related activities rather than extending to employee capacities.
But the business objectives and total quality HRM approach are to
maximise customer satisfaction and market share through improved
quality.
14.3 THE TOTAL QUALITY HUMAN RESOURCES STRATEGY
Traditionally, human resources plans were not integrated with the strategic
plans. But in the total quality organisations, human resources plans should
be integrated with the strategic plans. In fact, HR strategies are given top
priority in total quality organisations. However, HR managers feel that HR
strategies are not yet given due importance even in total quality
organisations.
The human resources role can be of four types, viz., (i) strategic — high
profile i.e., change agent, (ii) strategic — low profile, hidden persuader, (iii)
operation — high profile, i.e., internal contractor and (iv) operation — low
profile, i.e., facilitator. There are several strategies of human resources
related to profile total quality human resources grand strategies. Exhibit
31.1 presents total quality human resources grand and selected tactical
strategies.
Total quality human resources strategic management is also reciprocally

interdependent with business strategic management. This is the most
important contribution to the total quality orientation of human resources.
Total quality human resources approach requires organisation around
process (instead of tasks), flatten hierarchies, use teams to manage
everything, let customer satisfaction drive output, reward team results,
maximise supplier and customer contact and inform and train all
employees.
Total quality HR strategy managers must shape, introduce, maintain and

review the total quality initiatives.
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The TQ human resources managers actively involve themselves in the

following activities in order to shape the TQM:
1. Preparing and synthesising reports from other organisations that have

experience in TQM, in conjunction with the management team.
2. Assisting with choices about which TQM approach to adopt.
3. Identifying any internal sources of expertise.
4. Utilising the expertise of practitioners from other organisations.
5. Ensuring that an appropriate infrastructure for TQM is put into place and
takes sufficient account of both customer feedback and human
resources management issues.
6. Reviewing current practices, behaviour and attitudes in the organisation

and assessing their degree of fit with TQM.
7. Shaping the type of organisational structure, culture and ethical climate

appropriate for introducing and sustaining TQM.
8. Designing and delivering senior management development courses that

set the proper tone for TQM.
9. Developing a TQM directory of internal resources and expertise.
Total quality HR strategy managers facilitate the introduction and adoption

of TQM by being actively involved in the following activities:
1. Encouraging and facilitating a total quality partnership between the

company and union leadership in order to establish collaboration to
benefit all stockholders.
2. Training all formal leaders (including union officers) in the principles of

TQM, advising them of the best means of developing a process of
continuous improvement within their areas of influence, encouraging
them to persuade everyone to take personal responsibility for their own
quality assurance and being prepared to seek improvements.
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3. Identifying the conditions necessary for the successful use of quality

management tools and techniques.
4. Providing guidance on what is necessary for the successful employment

of teams that focus on quality improvement and how they fit into the
organisational structure.
5. Training and coaching facilitators, mentors, and team members in

interpersonal skills and how to manage the improvement process.
6. Designing communication events and vehicles to publicise the launch of

TQM and early successes.
7. Consulting with employees about the introduction and development of

TQM.
8. Institutionalising organisational ethics development programmes.
9. Proactively contributing to vision and mission statements and preparing

quality objectives for dissemination to staff, customers and suppliers.
Next, total quality HR strategy managers maintain and reinforce TQM

within the organisation by being actively involved in the following activities:
1. Adopting selection processes that target and screen for conceptual,

technical, ethical, and social skills that support a TQM environment.
2. Introducing or upgrading the quality awareness and TQM component

within orientation courses.
3. Identifying the most appropriate mechanisms for recognising and

rewarding achievements, in particular looking at non-traditional reward
systems.
4. Ensuring that training in quality management tools, techniques and

processes continues to be provided within the organisation and that the
knowledge imparted in such training is being used in the workplace.
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5. Redesigning appraisal procedures so that they contain criteria relating to

specific TQM objectives, appropriate social relations, skills and support
personal responsibility, self-assessment, and 360- degree performance
feedback.
6. Preparing and overseeing special newsletters or team briefs on TQM and

improvement initiatives and the outcome of quality improvement team
projects.
7. Assisting continuous improvement and project teams to work effectively

and innovate.
Finally, the total quality HR strategy managers review TQM implementation

progress by being actively involved in the following activities:
1. Contributing to or leading the preparation of an annual TQM report.
2. Assessing the effectiveness of the TQM infrastructure, including steering

committees, quality councils, quality improvement teams, improvement
facilitators, project teams, and individual performance.
3. Preparing and administering employee attitude and ethical climate

surveys and disseminating their results.
4. Co-ordinating customer comments on the organisation’s progress.
5. Benchmarking the effectiveness of the organisation’s TQM with that of

competitors and global best practices.
6. Facilitating the operation of internal reviews using criteria such as ISO

9000, the Malcolm Baldrige National Quality Award or the Deming Prize.
ISO certification enables to enter global markets.
7. Identifying the barriers to continuous quality improvement.
8. Conducting HR, quality and ethics audits.
Total quality HR strategic management would not be complete if HR

practitioners do not review their own activities as they do all other areas.
Some of the more typical self-review total quality activities include:
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1. Undertaking a department mission analysis of the functional

contribution of human resources to the organisation. This could include
the following:
a. Identifying internal customers and suppliers.
b. Agreeing to performance measures as part of service-level

agreements.
c. Tracking such measurements.
d. Identifying non-value-added activities.
e. Taking part in cross-functional project teams to resolve interface

problems with customers and suppliers.
2. Selecting new HR employees only with peer and customer involvement.
3. Appraising and rewarding HR staff for teamwork, ethical integrity and

customer satisfaction.
4. Training and developing HR employees on a regular basis.
5. Surveying and distributing the results of HR staff satisfaction and ethical

climate surveys.
6. Providing advice on ethical problem analysis and conflict resolution

within a specified and agreed-upon time period.
7. Benchmarking HR policies and processes with world-class models.
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14.4 Summary
Total Quality Management (TQM) is a continuous process of improvement

for individuals, groups of people and the total organisation. Human
resources play a vital role in total quality management. In the total quality
organisations, human resources plans should be integrated with the
strategic plans. Total quality human resources strategic management is
also reciprocally interdependent with business strategic management. This
is the most important contribution to the total quality orientation of human
resources.Total quality HR strategy managers must shape, introduce,
maintain and review the total quality initiatives.
1. Discuss the terms ‘Total Quality’ and ‘Total Quality Management.’
2. Explain the principles and core concepts of TQM.
3. Explain the significance of human resource management in TQM.
4. How do you formulate and execute total quality and human resource
strategies?
! !264
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !265
HUMAN RESOURCE RECORDS, ACCOUNTING, AUDIT AND RESEARCH
Chapter 15
Human Resource Records, Accounting,
Audit and Research
Objectives
After completing this chapter, you should be able to understand :
Concept and advantages of computerisation of HR records
Objectives of and need for Human Resource Information System (HRIS)
Concept, objectives and advantages of HRA
Concept, purpose, benefits, activities, problems and process of HRA
Approaches to and need for HR Audit
Audit of corporate strategy, HR objectives, HR function and managerial

compliance
Objectives and methods of HR research
Structure:
15.1 Computerisation of Human Resource Records
15.2 Human Resource Accounting
15.3 Objectives of HR Accounting
15.4 Advantages of HR Accounting
15.5 Human Resource Audit
15.6 Purpose of Human Resource Auditing
15.7 Approaches to Human Resources Audit
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15.8 Audit of Corporate Strategy
15.9 Audit of Human Resource Objectives
15.10 Need for HR Audit
15.11 Benefits of a HR Audit
15.12 HR Audit Activities
15.13 Problems In HR Audit
15.14 Audit of Human Resource Function
15.15 Audit of Managerial Compliance
15.16 The Human Resource Audit Process
15.17 Customer Satisfaction Audits
15.18 Employee Satisfaction Audit
15.19 Human Resource Research
15.20 Important Objectives of HR Research
15.21 Methods of HR Research
15.22 Summary
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15.1 Computerisation of Human Resource Records
Personnel Records
Records refer to the informational documents utilised by the organisation
to carry out its functions. Personal records and reports provide valuable
information relating to different aspects of human resources of an
organisation. The information includes personal details of the employee,
such as date of birth, qualifications, family, experience, employment
history, grade changes, salary levels, appraisal comments, training
programmes attended, absenteeism and organisational/departmental level
information such as employee turnover, employee welfare, HR surveys,
training programmes, payroll data, grievance records, suggestions, etc.
These records may be kept in the form of cards, files or computer floppy,
diskettes or video films.
Personnel/HR Reports
Based on Personnel/HR records, the Personnel/HR department prepares
important reports to meet the requirements of top management and
departmental heads. Examples: Timely report to the production manager
on labour absenteeism so that he can take remedial action, information on
department wise headcount of employees on a monthly basis that shows
appointments, resignations, retirements, etc. will be very useful in
assessing manpower requirements, if any.
There are two types of reports prepared by HR department, i.e.,
1. Regular or Routine reports provide information on rate of labour

turnover, extent of absenteeism, etc.
2. Periodic reports contains information on internal/external training

programmes, appointments, transfers, separation, employee grievances
and employee problems.
The reports should be selective and relevant to draw the attention of the
top management and departmental heads, otherwise it may loose its
importance.
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15.2 Human Resource Accounting
Human Resource Accounting as “the process of identifying and measuring

data about human resources and communicating this information to
interested parties”. HRA, thus, not only involves measurement of all the
costs/ investments associated with the recruitment, placement, training
and development of employees, but also the quantification of the economic
value of the people in an organisation.
Concept of HRA
Human Resource Accounting (HRA) is a new branch of accounting. It is

based on the traditional concept that all expenditure of human capital
formation is treated as a charge against the revenue of the period as it
does not create any physical asset. But now a day this concept has
changed and the cost incurred on any asset (as human resources) should
be capitalised as it yields benefits measurable in monetary terms.
Human Resource Accounting means accounting for people as the

organisational resources. It is the measurement of the cost and value of
people to organisations. It involves measuring costs incurred by private
firms and public sectors to recruit, select, hire, train and develop
employees and judge their economic value to the organisation.
Meaning
Human resource accounting is an attempt to identify and report

investments made in the human resources of an organisation that are not
presently accounted for under conventional accounting practice. Basically,
it is an information system that tells the management what changes
overtime are occurring to the human resources of the business, and of the
cost and value of the human factor to the organisation. The system may
serve both the internal and external users, providing management (internal
users) with relevant data on which to base recruiting, training and other
development decisions and supplying investors, lenders and other external
users of financial statement with information concerning the investment in
and utilisation of human resources in the organisation.
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Accounting is a man-made art and its principles and procedures have been
evolved over a long period to aid business in reporting for the management
and public. Of the four factors of production, viz., man, money, material
and land, the last three of them are amenable to conventional accounting,
but the first one, i.e., the human resource has not been subject to such
accounting. Over the last two decades the idea of accounting for human
resources is gaining active consideration.
Much of the work on accounting for human resources focused primarily on

development or validation of HRA concepts. The traditional practice of
treating all expenditure on human capital formation as an immediate
charge against income is not consistent with the treatment accorded to
comparable outlays in physical capital. The American Accounting
Association strongly critised the practice of assigning a Zero value to an
asset and stated that ‘Costs should be capitalised when they are incurred
in order to yield future benefits and when such benefits can be measured.’
Management of any concern continuously strives hard for obtaining

maximum efficiency. In order to measure the effectiveness of any firm the
normal method is to examine financial statements. These statements
include balance sheets in which physical assets such as cash accounts
receivables, inventory and plant are recorded. These statements normally
do not mention the productive capacity of the workers or goodwill of the
company.
HRA is the art of valuing, recording and presenting systematically the work
of human resources in the books of accounts of an organisation. Thus, it is
primarily an information system, which informs the management about the
changes that are taking place in the human resource of an organisation.
Definition
Stephen Knauf defined HRA as “the measurement and quantification of

human organisational inputs, such as recruiting, training, experience and
commitment.”
Eric Flamholtz defined as “Human resource accounting is the

measurement of the cost and value of the people for the organisation.”
! !270
15.3 Objectives of HR Accounting
The objective of HRA is not merely the recognition of the value of all
resources used by the organisation, but it also includes the management of
human resource which will ultimately enhance the quantity and quality of
goods and services. The main objectives of HR Accounting system are as
follows:
1. To furnish cost value information for making proper and effective

management decisions about acquiring, allocating, developing and
maintaining human resources in order to achieve cost effective
organisational objectives.
2. To aid in the development of management principles. and proper

decision making for the future by classifying financial consequences of
various practices.
3. To have an analysis of the human assets i.e. whether such assets are
conserved, depleted or appreciated.
4. To monitor effectively the use of human resources by the management.
5. In all, it facilitates valuation of human resources recording the valuation

in the books of account and disclosure of the information in the financial
statement.
15.4 Advantages of HR Accounting
The major benefits of HR accounting are:
It checks the corporate plan of the organisation. The corporate plan

aiming for expansion, diversification, changes in technological growth
etc. has to be worked out with the availability of human resources for
such placements or key positions. If such manpower is not likely to be
available, HR accounting suggests modification of the entire corporate
plan.
It offsets uncertainty and change, as it enables the organisation to have

the right person for the right job at the right time and place.
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It helps individual employee to aspire for promotion and better benefits.
It aims to see that the human involvement in the organisation is not

wasted and brings high returns to the organisation.
It helps to take steps to improve employee contribution in the form of

increased productivity.
It provides different methods of testing to be used, interview techniques

to be adopted in the selection process based on the level of skill,
qualifications and experience of future human resources.
It can foresee the change in value, aptitude and attitude of human

resources and accordingly change the techniques of interpersonal
management
It provides scope for advancement and development of employees by

effective training and development.
15.5 Human Resource Audit
Introduction
Human Resource Audit is a basic tool for the management of a company.
Its objective is not only the control and quantifying of results, but also the
adoption of a wider perspective that will aid in depending future lines of
action in the HRM held. Thus, HR auditing must perform two basic
functions. First, it must be a management information system whose
feedback provides information about the situation in order to facilitate the
development of managing processes or the development of HR. On the
other hand, it must be a way of controlling and evaluating the policies that
are being applied, as well as the established processes.
It can be understood that in order to secure the operative efficiency and

user or client satisfaction, an appraisal of the results of the HR function is
necessary. According to this approach, the results obtained can be valued
from certain HR policies an external type of measurement or from the
results of the policies or the policies themselves. The results can be valued
through their cost.
! !272
HR practitioners are more likely to face ethical dilemmas in the areas of

employee hiring. One challenge commonly encountered is pressure to hire
a relative or a friend of a highly placed executive. Another area related to
employment is that of faked credentials submitted by a job applicant. While
discovery of this kind of fabrication usually leads to termination of the
employment, the choice becomes difficult when the applicant has a blend
of skills set and a proven track record with his or her previous employers.
Privacy issues to protecting a person’s private life from intrusive and
unwarranted actions. The employee believes that his or her religious,
political, and social believes as well as personal life style are private
matters and should be safe guarded from being snooped or analyzed.
Exceptions are permitted grudgingly only when job involvement is clearly
involved. For example, it may not be inappropriate to intrude into an
employee’s private matter if it is suspected that he or she discusses with
competitor, through email messages, the specification of newly developed
product not yet launched into the market. Safety and health much of the
industrial work is hazardous. This is because of the extensive use of high
speed and noisy machinery, production processes requiring high
temperature, an increasing reliance on chemical compounds. Accidents,
injuries and illnesses are likely to occur under these circumstances. Over
past decade, new categories of accident and illness have emerged,
including the fast growing job safety problem of office injuries.
Restructuring and Layoffs Restructuring and consequent layoffs have
become relevant because of poor management, but incompetence does not
become unethical. There are ethical implications in the process by which
termination decisions are made and actions taken. For example if
restructuring requires closing a plant, the process by which that plant is
chosen, how the news will be communicated and the time frame for
completing the layoffs are ethically important. If conducted in an
atmosphere of fairness and equity and with dignity of the affected
individuals in mind, the action is ethical.
The Concept Human Resource Audit

The word “audit” comes from the Latin verb audire, which means, to listen.
Listening implies an attempt to know the state of the affairs as they exist
and as they are expected/promised to exist. Auditing as a formal process is
rooted in this feature of listening. Consequently, it is a diagnostic tool to
gauge not only the current status of things but also the gaps between the
current status and the desired status in the area that is being audited.
! !273
Auditing has been a routine exercise in the area of finance, especially

because it is a statutory obligation. However, in case of Human Resource,
there is no legal binding to adopt auditing. Some of the companies
nevertheless prefer to have Human Resource audits.
Like any audit, the Human Resource Audit is also a systematic formal
process, which is designed to examine the strategies, policies, procedures,
documentation, structure, systems and practices with respect to the
organization’s human resource management. It systematically and
scientifically assesses the strengths, limitations, and developmental needs
of the existing human resources from the larger point of view of enhancing
organizational performance.
The human resource audit is based on the premise that human resource
processes are dynamic and must continually be redirected and revitalized
to remain responsive to the ever changing needs. Human Resource Audits
are not routine practices aimed at problem solving. Instead of directly
solving problems, HR audits, like financial audits, help in providing insights
into possible causes for current and future problems.
The findings of these audits aid decision making in the organization and are
usually internal documents that need not necessarily be shared with the
public. Moreover, unlike Financial Audits that are routine, regulated and
standardized, Human Resource Audits are non-routine and may be
designed to cater to the unique needs of the organization at a particular
point in time. These are in fact, studies of an unusual nature. The manner
in which the Audit is conducted could vary from self-directed surveys to
interventions by outside consultants.
Human resources are the people in an organization, so a human resources

audit is a look at those people and the processes that put them in place to
make sure the system is working efficiently. An HR audit also goes beyond
looking at the hiring process into areas like employee retention, budgeting,
training, employee compensation, management/employee relations and
virtually any process or practice within the company that affects its people.
A periodic Human Resource audit can qualify its effectiveness within an

organization. Human Resource audits may accomplish a variety of
objectives, such as ensuring legal compliance; helping maintain or improve
a competitive advantage; establishing efficient documentation and
! !274
technology practices; and identifying strengths and weaknesses in training,

communications and other employment practices.
Human Resource auditing is something that many companies do annually,

just as they audit their financial information. This gives them an accounting
of their workforce and the efficiency with which the organization as an
entity deals with its people, from recruiting to firing. Human Resource
auditing can be likened to a person going to the doctor for a general check-
up to stay well. The process allows a company to get a general idea of
where it stands so it can better correct any potential problems and plan for
the future.
When it comes to physical health, prevention of problems is far better than

waiting until a problem arises and trying to cure it. The same holds true for
human resources auditing. Preventing problems is much easier than trying
to fix them after the fact. Good Human Resource planning and auditing can
help prevent those problems, and save companies money and difficulties.
Human Resource Accounting benefits the company ascertain how much
Investment it has made on its Employees and how much return it can
expect from this Investment.
Meaning of Human Resource Audit

Human Resource Audit means the systematic verification of job analysis
and design, recruitment and selection, orientation and placement, training
and development, performance appraisal and job evaluation, employee and
executive remuneration, motivation and morale, participative management,
communication, welfare and social security, safety and health, industrial
relations, trade unionism, and disputes and their resolution.
! !275
15.6 Purpose of Human Resource Auditing
The commonly understood audits are the established and regular

accounting audits carried out in accordance with specific statutory
regulations. However, in the case of human resource audits, there is no
legal obligation, but enlightened managements have voluntarily accepted
its usefulness depending upon the circumstances. The following
circumstances may be cited as examples:
i. Felt concern by top management,
ii. Compulsions of the external forces necessitating a situational audit,
iii. Business changing significantly influenced by international business

decisions affecting human resource management, and an urge on the
part of human resource management professionals towards
advancement of the practices and systems.
Human Resource audit is highly useful for the purpose:
a. Does the organization regularly forecast the supply of and demand for
employees in various categories?
b. Do job analyses exist for all positions in the organization?
c. Are all potential sources of recruitment identified and evaluated?
d. Are measurable selection criteria developed and used while filling up

jobs?
e. Do effective training and development programmes exist?
f. Is there a performance evaluation system that helps assess past and

potential performance?
g. Is the remuneration programme designed to motivate employees?
h. Is the plant unionized?
i. Does a grievance procedure exist?
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j. Does the organization have high quality of work life?
k. Does the HRM practice contribute to organizational effectiveness?
l. Does the management underestimate the capacity of HRM to contribute

to organizational effectiveness?
15.7 Approaches to Human Resources Audit
The following approaches are adopted for purpose of evaluation:
1. Comparative approach
2. Outside authority approach
3. Statistical approach
4. Compliance approach
5. Management by objectives (MBO) approach
1. Comparative approach: In this, the auditors identify Competitor

Company as the model. The results of their organization are compared
with that Company/industry.
2. Outside authority approach: In this, the auditors use standards set

by an outside consultant as benchmark for comparison of own results.
3. Statistical approach: In this, Statistical measures are performance

developed considering the company’s existing information.
4. Compliance approach: In this, auditors review past actions to

calculate whether those activities comply with legal requirements and
industry policies and procedures.
5. Management by objectives (MBO) approach: This approach creates

specific goals, against which performance can be measured, to arrive at
final decision about organization’s actual performance with the set
objectives.'
! !277
15.8 Audit of Corporate Strategy
The process of conducting a strategic audit can be summarized into the

following stages:
1. Resource Audit
The resource audit identifies the resources available to a business. Some of
these can be owned (e.g. plant and machinery, trademarks, retail outlets)
whereas other resources can be obtained through partnerships, joint
ventures or simply supplier arrangements with other businesses. You can
read more about resources here.
2. Value Chain Analysis

Value Chain Analysis describes the activities that take place in a business
and relates them to an analysis of the competitive strength of the
business. Influential work by Michael Porter suggested that the activities of
a business could be grouped under two headings:
a. Primary Activities: Those that are directly concerned with creating

and delivering a product (e.g. component assembly);
b. Support Activities: They are not directly involved in production,

may increase effectiveness or efficiency (e.g. human resource
management). It is rare for a business to undertake all primary and
support activities.
Value Chain Analysis is one way of identifying which activities are best
undertaken by a business and which are best provided by others
("outsourced"). You can read more about Value Chain Analysis here.
3. Core Competence Analysis

Core competencies are those capabilities that are critical to a business
achieving competitive advantage. The starting point for analyzing core
competencies is recognizing that competition between businesses is as
much a race for competence mastery as it is for market position and
market power.
Senior management cannot focus on all activities of a business and the

competencies required undertaking them. So the goal is for management
to focus attention on competencies that really affect competitive
! !278
advantage. You can read more about the concept of Core Competencies
here.
4. Performance Analysis
The resource audit, value chain analysis and core competence analysis help
to define the strategic capabilities of a business. After completing such
analysis, questions that can be asked that evaluate the overall performance
of the business. These questions include:
- How have the resources deployed in the business changed over time;
this is "historical analysis”
- How do the resources and capabilities of the business compare with

others in the industry - "industry norm analysis?"
- How do the resources and capabilities of the business compare with

"best-in-class" - wherever that is to be found- "benchmarking"
- How has the financial performance of the business changed over time
and how does it compare with key competitors and the industry as a
whole? - "ratio analysis"
5. Portfolio Analysis
Portfolio Analysis analyses the overall balance of the strategic business
units of a business. Most large businesses have operations in more than
one market segment, and often in different geographical markets. Larger,
diversified groups often have several divisions (each containing many
business units) operating in quite distinct industries.
An important objective of a strategic audit is to ensure that the business

portfolio is strong and that business units requiring investment and
management attention are highlighted. This is important - a business
should always consider which markets are most attractive and which
business units have the potential to achieve advantage in the most
attractive markets.
Traditionally, two analytical models have been widely used to undertake

portfolio analysis:
- The Boston Consulting Group Portfolio Matrix (the "Boston Box");
- The McKinsey/General Electric Growth Share Matrix
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6. SWOT Analysis
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and
Threats. SWOT analysis is an important tool for auditing the overall
strategic position of a business and its environment.
15.9 AUDIT OF HUMAN RESOURCE OBJECTIVES
a. To review the organizational system, human resources subsystem in

order to find out the efficiency of the organization in attracting and
retaining human resources.
b. To find out the effectiveness of various personnel policies and

practices.
c. To know how various units are functioning and how they have been
able to implement the personnel policies, and
d. To review the personnel system in comparison with organizations and

modify them to meet the challenges of personnel management.
15.10 Need for HR Audit
Though there is no legal obligation to audit personnel policies and

practices, some of the modern organizations have accepted it due to
certain compelling reasons:
a. Increasing size of the organization and personnel in several

organizations.
b. Changing philosophy of management towards human resources.
c. Increasing strength and influence of trade unions.
d. Changing human resources management philosophy and thereby

personnel policies and practices throughout the world.
e. Increasing dependence of the organisation on the human resources

system and its effective functioning.
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15.11 Benefits of a HR Audit
The benefits of a human resource management audit may be summarized

thus:
a. Identifies the contributions of the HR department.
b. Improves the professional image of HR department.
c. Encourages greater responsibility and professionalization among

members of HR Department.
d. Classifies the HR departments’ duties and responsibilities.
e. Stimulates uniformity of personnel policies and practices.
f. Finds critical personnel problems.
g. Ensures timely compliance with legal requirements.
h. Reduces human resource costs.
15.12 HR Audit Activities
The personnel audit should probe many deeper, evaluating personnel

policies, programmes, philosophy, practices and concepts comparing with
standards and with those of the personnel records of the said organization
and other organizations. The level and the depth of the investigation
should be decided in advance. The process of personnel audit usually
carried out through an attitudinal survey or by interpreting data, includes:
a. Identifying indices, indicators, statistical ratios and gross numbers in

some cases.
b. Examining the variations in time-frame in comparison with a similar

previous corresponding period.
c. Comparing the variations of different departments during different

periods.
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d. Examining the variations of different periods and comparing them with

similar units and industries in the same region.
e. Drawing trend lines, frequency distributions and calculating statistical

correlations.
f. Preparing and submitting a detailed report to the top management and

to the managers at appropriate levels for information and necessary
action.
15.13 Problems In HR Audit
The rules, systems and regulations for financial audit are well developed.
But it is very difficult to audit personnel policies and practices. Personnel
audit involves comparison with past ratios, rates of turnover, expenditure
etc., with those of other departments and organizations. The organization
by itself cannot be taken as standard for comparison and a decision arrived
at. Hence, it is difficult to conduct the personnel audit.
There may be a tendency to turn the survey into a fault-finding process.

Every employee may then try to pass the buck. The audit may create more
troubles than solutions. The audit has to be done carefully. It must
evaluate things in an objective way, find out what has gone wrong and
suggest improvements. The emphasis must be on rectifying things rather
than fault finding.
15.14 Audit of Human Resource Function
1. A healthy HR function in an organization is as important as the physical

and mental well being of a human body.
2. Typically the basic reason why organizations prefer to conduct an HR

audit is to get a clear judgment about the overall status of the
organization and also to find out whether certain systems put in place
are yielding any results.
3. HR audit also helps companies to figure out any gaps or lapses and the
reason for the same. Since every company plans certain systems and
targets, an HR audit compares the plans to actual implementation.
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4. The concept of HR audit has emerged from the practice of yearly finance
and accounting audit, which is mandatory for every company, to be
done by external statutory auditors.
5. This audit serves as an examination on a sample basis of practices and

systems for identifying problems and ensuring that sound accounting
principles are followed. Similarly, an HR audit serves as a means
through which an organization can measure the health of its human
resource function.
15.15 Audit of Managerial Compliance
Compliance management is a critical component of the internal control

process for any business and a prerequisite for assessing compliance with
corporate performance standards. Whether it is compliance with internal
corporate procedures, external regulatory requirements such as Sarbanes
Oxley or compliance with industry codes of conduct such as ISO 14001,
effective internal auditing is the cornerstone of compliance management
and continuous improvement.
Effective compliance management will protect and enhance your brand and
reputation by helping you avoid the adverse affects of non-compliance such
as: litigation, fines, prosecution, bad PR, and the risks, costs, liability, and
damage to brand reputation associated with non-compliance.
The Audit and Compliance Management Workflow can help to ensure and
demonstrate compliance with internal and external standards, legislations,
procedures and codes of conduct while providing instant and real-time
visibility of the compliance profile of your entire organization. Users can
identify legal and other requirements and audit, report and improve
compliance across your business.
The Audit and Compliance Management Workflow enables the scheduling,

planning, and conducting of audits/assessments, the subsequent
identification of non-conformances and triggering and tracking of
recommendations for improvement. This workflow allows users to easily
track non-conformance rectification and corrective and preventive actions
(CAPA). With its extensive dashboard and drill-through reporting capability,
you can easily and instantly report audit and compliance information at a
site, a business unit or across your entire business.
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Key Benefits of Audit of Managerial Compliance
a. Improve compliance management processes.
b. Provide executive dashboard visibility on enterprise-wide compliance.
c. Provide consistent and comparable compliance information across the

business.
d. Configure audit/assessment checklists and protocols.
e. Administrate checklist question, scoring, and weighting functionality.
f. Schedule audits/assessments for your entire business, a single

business unit or a single site.
g. Track, monitor and rectify all identified non-compliances.
h. Notify via email and dashboard all responsibilities in the audit and
non-conformance rectification workflow.
15.16 The Human Resource Audit Process
The HR audit process is conducted in different phases. Each phase is

designed to build upon the preceding phase so that the organization will
have a very strong overview of the health of the HR function, at the
conclusion of the audit. These phases include:
Step-1: Pre-Audit Information

This phase involves the acquiring and review of relevant HR manuals,
handbooks, forms, reports and other information. A pre-audit information
request is forwarded to the client who compiles the necessary information
for review by auditors.
Step-2: Pre-Audit Self-Assessment

In order to maximize the time spent during subsequent portions of the
audit, a pre-audit self-assessment form, if sent to the client can be of use.
The self-administered yes/no questionnaire asks a number of questions
about current HR policies and practices.
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The completion of this self-administered questionnaire allows auditors to

identify key areas for focus during the HR audit.
Step-3: On-Site Review

This phase involves an on-site visit at the client's facility interviewing staff
regarding HR policies and practices. A very in-depth HR audit checklist is
completed.
Step-4: Records Review

During the on-site visit, a separate review is conducted of HR records and
postings. Employee personnel files are randomly examined as well as
compensation, employee claims, disciplinary actions; grievances and other
relevant HR related information are checked.
Step-5: Audit Report

The information gathered is used to develop an HR audit report. The audit
report categorizes action needs into three separate areas. The areas that
are urgent and important (UI), not urgent needs but important (NUI), not
urgent but not important needs (NNI)), and important opportunities needs
(IO). As a result of this scheme of classification, managements can
prioritize their steps.
15.17 Customer Satisfaction Audits
What are the true attitudes, opinions and motivations of customers and
how can you meet these to gain a greater share of the market, to enhance
the loyalty and commitment of current customers, to have current
customers sell your product and services to others.
Identifying the sufficiency of the product and / or service to meet, satisfy

and over-deliver on the wants, needs and expectations of clients and
customers in the marketplace.
Identifying the extent to which internal service wants, needs and

expectations of staff are being met and how this can be improved that it
impacts on external customer service and satisfaction.
It is much easier to turn a dissatisfied client into a loyal and committed

client by handling a negative situation positively and accepting
responsibility for poor service!
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15.18 Employee Satisfaction Audit
Assessing what management and leadership needs to do to obtain the

commitment, loyalty and motivation of staff towards the business as well
as specific strategies and initiatives.
Employees want to know that their contribution to the business is

recognized and appreciated. Without them, there is no business! But, they
also need to understand that it's not their right to expect recognition and
appreciation when their contribution and commitment is average or below
average.
15.19 Human Resource Research
HR research is a systematic study into any HR problem to find out its

logical solution. Examples: High employee turnover, excessive grievance
reporting and dissatisfaction among employees in a department.
According to M.J. Jucius, “Personnel research is the task of searching for

and analysing facts to the end that personnel problems may be solved or
principles and laws governing their solution derived”.
15.20 Important Objectives of HR Research
1. To evaluate the effects and results of current HR policies.
2. To evaluate the need for revision of current HR policies.
3. To evaluate present employment terms and conditions.
4. To predict the possible problems and suggest measures for their

prevention.
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15.21 Methods of HR Research
1. Case Study: The problems faced by the HR manager can be solved

through the use of case study methods.
2. Survey: The questionnaire may contain objective multi choice type or

scaled answer to suggest agreement or disagreement to a particular
question. Example: To check the attitude of the employees regarding
job satisfaction, salary, etc.
3. Experiment: Here, the control group remains constant and operates as

it did under old environment whereas selected variables are
manipulated within the experimental group.
15.22 Summary
HRIS is used to collect, record, store, analyse and retrieve data concerning
human resources in an organisation. HRA means accounting for people as
the organisational resources. The HR audit process is conducted in different
phases. HR research is a systematic study into any HR problem to find out
its logical solution, e.g., high employee turnover, excessive grievance
reporting and dissatisfaction among employees in a department. Case
Study, survey and experiment are used for hr research.
1. What is Human Resource Information System? Describe its objectives

and need.
2. Explain the process involved in implementing Human Resource Audit.
3. What are computerised HR systems? Describe its advantages.
4. What is HR Auditing? What are its objectives and advantages?
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
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RECENT TECHNIQUES IN HUMAN RESOURCE MANAGEMENT
Chapter 16
RECENT Techniques IN Human Resource
Management
Objectives
Recent developments in the working of organisations
Trends in Human Resource Management
Structure:
16.1 Learning Organisation

16.2 Virtual Organisation and HR
16.3 Human Resource Management Matrix
16.4 Employer Brand
16.5 Competency Mapping
16.6 Flexitime
16.7 Employee Referrals
16.8 Business Process Outsourcing
16.9 Green HR
16.10 Rehiring Former Employees
16.11 Talent Management
16.12 Strategic HR Management
16.13 e-Learning
16.14 e-Human Resource Management
16.15 Summary
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16.1 Learning Organisation
Of all the “M”s in management, i.e., money, materials, machine, market

and methods, the most important “M” stands for men, the manpower
working in the organisation. Organisations also learn and acquire
knowledge as the individual employees. Organisational learning is the
outcome of the cumulative learning of all employees in the organisation. A
learning organisation refers to an organisation which facilitates the learning
of all its participants and constantly changes itself. Such an organisation is
also skilled at creating, acquiring and transferring knowledge and adapting
to the changing situation.
Important features of a Learning Organisation are: (a) Receptive to new

ideas, (b) Developing systematic thinking, (c) Encouraging creativity and
innovation, (d) Learning from past experiences, (e) Empathy and (f)
Sharing knowledge with others. Learning organisations provide
opportunities for employees to acquire knowledge, share with others and
apply the same to improve productivity and achieve organisational goals.
16.2 VIRTUAL ORGANISATION AND HR
Virtual organisation is a network in which all the horizontal and vertical

boundaries are removed. It consists of individuals working out of physically
disperse workspaces or not tied to any particular workspace. It involves co-
ordination activities through information technology. Example: Production
and marketing of jeans by a reputed company in Mumbai. Small
establishments in Bellary produce jeans for the company. The company
gives specifications to these establishments through internet. Quality check
is carried out by company officials in the production centres itself. The
small establishments despatch the stocks of jeans through designated
carriers to wholesalers as per instructions received through internet.
Advertising activities are carried out by agencies. Various agencies
undertake different functions for the company through telephone, fax and
internet. The company has a few executives and most of the activities are
outsourced. This organisation is known as virtual organisation.
Some of the characteristics of virtual organisations are flexibility with

regard to work, time and workplace, dependency on IT, multiskills, part-
time work, less of organisational boundaries and high concern for customer
and customer service. HR manager in such a organisation has to focus on
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hiring knowledgeable people for short period, accept working from home as
a reality, encourage teamwork and empowerment of employees.
16.3 HUMAN RESOURCE MANAGEMENT MATRIX
An organisation consists of several functions/departments like sales,

marketing, finance and distribution and these departments cannot work in
isolation. Example: Production department depends upon purchase
department for supply of raw materials and similarly sales department
depends upon distribution department for supply of finished goods. Each
department has to interact and integrate their activities with other
departments.
Matrix management provides for an integrated approach to management

instead of following superior-subordinate relationship in the traditional
organisation structure. The principle of scalar chain of command is not
followed in the matrix organisation. A Project Officer reports to more than
one supervisor.
HR department cannot function in isolation. Their functions have to be

aligned horizontally with other functions such as marketing, sales, finance,
production, IT and R&D. Vertically, their activities have to be aligned with
top management with regard formulation of policies and procedures.
Further, all organisational activities are aligned around customer and
customer satisfaction. HR matrix first considers the organisational
philosophy of customer service and customer satisfaction. Then HR
integrates its activities with the activities of other departments for
achieving company’s strategies in the marketplace. The organisation
structure is designed to meet customer needs.
16.4 EMPLOYER BRAND
One of the problems faced by organisations is acquiring and motivating

good performers to work productively. This is generally due to high
demand and short supply of qualified and experienced people. Example:
Attracting and retaining talented people in IT and financial sector. In view
of the shortage of talented people, organisations have been devising
strategies to attract and retain talent. One of the strategies is creating and
establishing ‘Employer Brand’ in the minds of present and prospective
employees and placement agencies.
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In simple terms, employer brand is the value of the company in the

external marketplace. It is the image of the organisation as a great place
to work in the minds of employees and job-seekers. Employer brand is
required to derive a competitive advantage in the job market and to attract
and retain high performers. HR manager and the management should be
involved in employer branding exercises. The objective is to develop
“Employer of Choice” image among employees, placement agencies,
potential candidates and other stakeholders.
Through product positioning, the company tries to create and build a

distinct image of the brand in the mind of the customers compared to that
of the competitive brand in the marketplace. In the same way, employer
brand helps the company in attracting and retaining good performers
despite better offers received from rival companies.
Creating Employer Brand

HR plays an important role towards ensuring that the employer is viewed
as an attractive work destination. This can be achieved through the usage
of job sites, company websites, placement partner and college campuses.
HR can be helpful in terms of hiring the right kind of talent for the job,
provide best HR practices to the employees. Employer brand includes all
aspects of HR policies and practices and these should meet the needs of
employees. A few points to be considered by the employer to develop
employer brand image are given below:
1. Recognition of the good work done by employees
2. Personal problems to be considered based on merit and sympathy it

deserves and quick response to such problems
3. Adequate compensation based on nature of job and responsibilities
4. Career prospects
5. Superiors with equal concern for performance and people
6. Maintaining transparency with regard to HR policies and procedures
7. Empowerment of employees
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8. To create a positive image about the company in the job market, the
employees should maintain high level of ethics and integrity in personal
and professional life.
Several companies have taken the initiative of creating a positive image in

the mind of employees and public and surveys carried out show that some
of the good employers are Infosys, Johnson and Johnson, HSBC, Dr.
Reddy’s Labs, HUL and Tata Group.
16.5 COMPETENCY MAPPING
Competencies can be defined as skills, knowledge, attitudes and abilities

that distinguish high performers in an organisation. There are five types of
competency characteristics, i.e.:
Knowledge: Information a person has in specific areas of the job.
Skill: Ability to perform a task, communication and leadership.
Motives: Indicate drive or select behaviour towards certain actions or

goals.
Traits: Characteristics and response to situations or information such as

confidence, team player, handling ambiguity, demonstrates initiative,
quick learners, etc.
Self-concept: Attitude, values and self-image.
Knowledge and skills competencies are relatively easy to develop compared

to motives and traits. A competency model describes the combination of
knowledge, skills and characteristics needed to effectively perform a role in
an organisation. Identifying and mapping these competencies are carried
out through a series of tests such as written, analytical, interactive and
group exercises. Competency mapping is used as an HR tool for selection,
training, development, potential appraisal and succession planning.
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16.6 FLEXITIME
Flexitime allows flexible starting and leaving times for the employees.
However, all the employees have to be present in the office during core
time and should work for the stipulated total number of hours per day in
the office.
Example: Flexible starting time: 8 AM to 10 AM
Core time: When all the employees must be present: 10 AM to PM
Flexible lunch time: 1 PM to 2 PM (lunch break is for 30 minutes)
Core time: 2 PM to 4 PM
Flexible time for leaving the office: 4 PM to 6 PM
Those who start the work at 8 AM, can leave office at 4 PM
(Total number of hours in office 8 hours with 30 minutes lunch break, i.e.,
7½ hours of working)
16.7 EMPLOYEE REFERRALS
Nowadays, in many organisations, existing employees are asked to suggest

suitable candidates for filling up vacancies in the organisation. The
management considers the recommended candidates as the existing
employees are aware of the nature of the job and organisational culture.
Example: Existing employees recommend suitable candidates in IT/BPO
operations.
Many companies believe that employees are the best brand ambassadors
and they can attract the right people to the organisation. Many firms are
making use of employee referral as a major tool for recruitment. The
vacancies are put up on an internal portal and employees are requested to
refer their friends and former colleagues to fill up the vacancies. Firms also
reward employee through financial and non-financial incentives. Internal
reference can bring good quality candidates. It also shows that the present
employee is enjoying the job and he is loyal to the organisation. Apart from
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saving expenses on recruitment process, the company is also able to

acquire candidates as per the job requirement.
16.8 BUSINESS PROCESS OUTSOURCING
The company assigns some of the business processes to a third party

under agreed terms and conditions. It is a process of using an expert
partner to manage operations and leverage knowledge and technology to
support the organisation from outside. The external provider is an
independent business organisation and it works in collaboration with the
parent company. The external provider carries out the processes as per
instructions given by the company. Our country has become a BPO centre
for various industries such as pharma, medical services, bio-technology,
legal, insurance and banking services.
Outsourcing of HR Functions
Examples: Recruitment, Training, Payroll Administration, Leave

Administration, Medical claims settlement, Reimbursement of Travel/
medical expenses, etc.
Advantages of Business Process Outsourcing
a. The company can focus on core areas of business where it has expertise
and experience. Non-core areas can be handled by the third party.
b. It cost less cost to the company to engage the services of third party.
c. Control on headcount and personnel cost.
Disadvantages
a. HR problems of third party provider will affect the parent organisation

with regard to quality of output, delivery schedule and customer service.
b. High turnover of employees affects the service quality and

schedules.
c. The parent organisation may face Industrial relations problems as

existing employees may feel that they may lose jobs.
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d. The company has to provide training to the client organisation’s

employees and has to closely monitor the working of the people to
ensure that the quality of output is as per expected standards.
e. The client company may exploit the employees by paying less wages
due to excess supply of labour over demand.
f. Due to high attrition, the client organisation has to put up with

inexperienced employees which will in turn affect the quality of work
and delivery schedule.
g. Employees experience stress due to strict deadlines, delivery schedules

and late night working.
h. Employees coming from rural and semi-urban areas are willing to work
for low wages and they face lot of problems in an urban atmosphere.
i. In the case of voice BPOs, names and places get changed to suit the
local situation and the employee loses his identity.
j. Many small BPOs do not provide a congenial working atmosphere and

facilities for employees as they are more concerned about business and
profits.
16.9 GREEN HR
Green HR involves environmentally friendly HR initiatives that lead to

greater efficiencies, lower cost and better employee involvement.
Examples: Less hard copies of correspondence, memos and documents,
substituting air travel by vide-conferencing, teleconference, e-mail, car
pooling, working from home, recycling of waste, etc. The HR should come
out with environmentally friendly policy highlighting the need for saving
energy and resources for the benefit of the company and the society.
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16.10 REHIRING FORMER EMPLOYEES
Rehiring former employees (also known as Alumni employees) offer several

advantages to the organisation. These employees are familiar with the
company polices, procedures and culture and can become productive
within a short period. Examples: IBM provides part-time employment to
alumni employees in areas such as technical design specification,
component software code, test plans, etc. Infosys Global Alumni Network is
open to former employees and share information with these employees
about latest happenings in the company. Further, the alumni employee can
reconnect with Infosys as clients, consultants and even take up a job.
When rehiring alumni, his grade and salary package are decided based on
his level while leaving the job and his current role, responsibilities and
salary in the present job.
16.11 TALENT MANAGEMENT
Talent Management involves attracting, selecting, training, developing and

promoting employees in the organisation. The employees want to have a
successful career in the organisation and the employer wants to make use
of the talent of the employees for growth and development of the
organisation. Talent management is similar to career management from
the employers’ point of view. There are softwares that offer talent
management applications.
16.12 STRATEGIC HR MANAGEMENT
Top management of the company prepares strategic plans. The strategic

plan explains us how it will match internal strengths/ weaknesses with the
external opportunities and threats to achieve a competitive advantage in
the marketplace. The strategic plan tells us where we are, where we want
to go and how should we get there. The HR department then formulates
specific HR strategies to achieve the objectives of the organisation.
Therefore, strategic HR management means formulating and executing HR
policies and procedures that will produce among employees the knowledge,
skills and attitude that the company needs to achieve strategic objectives.
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16.13 E-LEARNING
e-Learning helps to reach and cover all employees located in different parts
of the country/world. It is cost efficient as we can do away with expenses
on travel, hotel and loss of productivity when the employee is away from
workplace attending training. e-Learning does not impose fixed hours of
study and employee can complete the same at his convenience, of course
within the time limit. Apart from providing reading materials and
powerpoint presentations, problem solving exercises should be included to
make the programme interesting and informative.
16.14 E-HUMAN RESOURCE MANAGEMENT
Computers are extensively used in human resource management.

Information technology and internet find applications in the different areas
of HR, i.e., e-Human resource planning, e-recruitment, e-selection, e-
performance management, e-training and development, e-compensation
management and e-human resource information system. Example: In
many organisations, personnel records, processing of payroll, salary
remittance, pay slip, expense statements, leave applications, attendance
recording, field force reports, etc. are computerised. Through the use of IT
and Internet, companies are moving towards paperless offices.
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16.15 Summary
A learning organisation refers to an organisation which facilitates the

learning of all its participants and constantly changes itself. Flexitime
allows flexible starting and leaving times for the employees. Green HR
involves environmentally friendly HR initiatives that lead to greater
efficiencies, lower cost and better employee involvement. Talent
Management involves attracting, selecting, training, developing and
promoting employees in the organisation. e-Learning helps to reach and
cover all employees located in different parts of the country/world.
1. What is a learning organisation? Describe its features.
2. Write a note on human resource management matrix.
3. What do you mean by employer brand? What are the factors to be

considered by the employer to develop employer brand image?
4. What is Business Process Outsourcing? And also describe its

advantages and disadvantages.
5. Explain the recent developments in the working of organisations.
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture 
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ETHICS IN HUMAN RESOURCE MANAGEMENT
Chapter 17
Ethics in Human Resource Management
Objectives
After completing this chapter, you should be able to understand:
Ethical issues in HRM

Managing Ethics
Benefits of and guidelines for managing ethics in the workplace
Key roles and responsibilities in Ethics Management
Tools of Ethics
Structure:
17.1 Ethical Issues in HRM
17.2 Managing Ethics
17.3 Benefits of Managing Ethics in the Workplace
17.4 Guidelines for Managing Ethics in the Workplace
17.5 Key Roles and Responsibilities in Ethics Management
17.6 Ethics Tools: Codes of Ethics
17.7 Ethics Tools: Codes of Conduct
17.8 Ethics Tools: Policies and Procedures
17.9 Ethics Tools: Training
17.10 Summary
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17.1 Ethical Issues in HRM
HR Ethical issues arise in employment, remuneration and benefits,

industrial relations and health and safety.
Cash and Compensation Plans

There are ethical issues pertaining to the salaries, executive perquisites
and the annual incentive plans etc. The HR manager is often under
pressure to raise the band of base salaries. There is increased pressure
upon the HR function to pay out more incentives to the top management
and the justification for the same is put as the need to retain the latter.
Further ethical issues crop in HR when long term compensation and
incentive plans are designed in consultation with the CEO or an external
consultant. While deciding upon the payout there is pressure on favouring
the interests of the top management in comparison to that of other
employees and stakeholders.
Diagrammatic Representation of HR Ethical Issues
Race, gender and Disability

In many organizations till recently the employees were differentiated on
the basis of their race, gender, origin and their disability. Not anymore ever
since the evolution of laws and a regulatory framework that has
standardized employee behaviors towards each other. In good
organizations the only differentiating factor is performance. In addition the
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power of filing litigation has put organizations on the back foot. Managers
are trained for aligning behaviour and avoiding discriminatory practices.
Employment Issues
Human resource practitioners face bigger dilemmas in employee hiring.
One dilemma stems from the pressure of hiring someone who has been
recommended by a friend, someone from your family or a top executive.
Yet another dilemma arises when you have already hired someone and he/
she is later found to have presented fake documents. Two cases may arise
and both are critical. In the first case the person has been trained and the
position is critical. In the second case the person has been highly
appreciated for his work during his short stint or he/she has a unique blend
of skills with the right kind of attitude. Both the situations are sufficiently
dilemmatic to leave even a seasoned HR campaigner in a fix.
Privacy Issues
Any person working with any organization is an individual and has a
personal side to his existence which he demands should be respected and
not intruded. The employee wants the organization to protect his/her
personal life. This personal life may encompass things like his religious,
political and social beliefs etc. However certain situations may arise that
mandate snooping behaviors on the part of the employer. For example,
mail scanning is one of the activities used to track the activities of an
employee who is believed to be engaged in activities that are not in the
larger benefit of the organization.
Similarly there are ethical issues in HR that pertain to health and safety,
restructuring and layoffs and employee responsibilities. There is still a
debate going on whether such activities are ethically permitted or not.
Layoffs, for example, are no more considered as unethical as they were
thought of in the past.
Employee Responsibility
An effective Accident Prevention Program should include the defined
responsibilities for management, supervisors, and employees.
Management, by law, has responsibility for the safety and health of all
employees as well as providing a safe workplace. Supervisors have
responsibility for providing a safe work place as well as managing the
production issues.
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Performance Appraisal is the systematic evaluation of the performance of
employees and to understand the abilities of a person for further growth
and development. Performance appraisal is generally done in systematic
ways which are as follows:
i. The supervisors measure the pay of employees and compare it with

targets and plans.
ii. The supervisor analyses the factors behind work performances of

employees.
iii. The employers are in position to guide the employees for a better
performance.
Restructuring and Layoff

Restructuring is the corporate management term for the act of reorganizing
the legal, ownership, operational, or other structures of a company for the
purpose of making it more profitable, or better organized for its present
needs. Other reasons for restructuring include a change of ownership or
ownership structure, demerger, or a response to a crisis or major change in
the business such as bankruptcy, repositioning, or buyout. Restructuring
may also be described as corporate restructuring, debt restructuring and
financial restructuring.
Layoff is a Suspension or termination of employment (with or without

notice) by the employer or management. Layoffs are not caused by any
fault of the employees but by reasons such as lack of work, cash, or
material. Permanent layoff is called redundancy.
Safety and Health

Occupational Safety and Health (OSH) is a cross-disciplinary area
concerned with protecting the safety, health and welfare of people engaged
in work or employment. The goals of occupational safety and health
programs include fostering a safe and healthy work environment. OSH may
also protect co-workers, family members, employers, customers, and many
others who might be affected by the workplace environment.
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17.2 Managing Ethics
Management ethics are the ethical treatment of employees, stockholders,

owners, and the public by a company. A company, while needing to make a
profit, should have good ethics. Employees should be treated well, whether
they are employed here or overseas. By being respectful of the
environment in the community a company shows good ethics, and good,
honest records also show respect to stockholders and owners.
Ethics and ethical behavior are the essential parts of healthy management.
From a management perspective, behaving ethically is an integral part of
long - term career success. Wide access to information and more business
opportunities than in the past makes ethics a need in modern business
world.
17.3 Benefits of Managing Ethics in the Workplace
Many people are used to reading or hearing of the moral benefits of

attention to business ethics. However, there are other types of benefits, as
well. The following list describes various types of benefits from managing
ethics in the workplace:
1. Attention to business ethics has substantially improved society:

A matter of decades ago, children in our country worked 16-hour days.
Workers’ limbs were torn off and disabled workers were condemned to
poverty and often to starvation. Trusts controlled some markets to the
extent that prices were fixed and small businesses choked out. Price
fixing crippled normal market forces. Employees were terminated based
on personalities. Influence was applied through intimidation and
harassment. Then society reacted and demanded that businesses place
high value on fairness and equal rights. Anti-trust laws were instituted.
Government agencies were established. Unions were organized. Laws
and regulations were established.
2. Ethics programs help maintain a moral course in turbulent times:

As noted earlier in this document, Wallace and Pekel explain that
attention to business ethics is critical during times of fundamental
change much like those faced now by businesses, both nonprofit and
for-profit. During times of change, there is often no clear moral compass
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to guide leaders through complex conflicts about what is right or wrong.

Continuing attention to ethics in the workplace sensitizes leaders and
staff to how they want to act consistently.
3. Ethics programs cultivate strong teamwork and productivity:

Ethics programs align employee behaviors with those top priority ethical
values preferred by leaders of the organization. Usually, an organization
finds surprising disparity between its preferred values and the values
actually reflected by behaviors in the workplace. Ongoing attention and
dialogue regarding values in the workplace builds openness, integrity
and community critical ingredients of strong teams in the workplace.
Employees feel strong alignment between their values and those of the
organization. They react with strong motivation and performance.
4. Ethics programs support employee growth and meaning:

Attention to ethics in the workplace helps employees face reality, both
good and bad in the organization and themselves. Employees feel full
confidence they can admit and deal with whatever comes their way.
Bennett, in his article "Unethical Behavior, Stress Appear Linked",
explained that a consulting company tested a range of executives and
managers. Their most striking finding: the more emotionally healthy
executives, as measured on a battery of tests, the more likely they were
to score high on ethics tests.
5. Ethics programs are an insurance policy they help ensure that

policies are legal: There are an increasing number of lawsuits in
regard to personnel matters and to effects an organization’s services or
products on stakeholders. As mentioned earlier in this document, ethical
principles are often state-of-the-art legal matters. These principles are
often applied to current, major ethical issues to become legislation.
Attention to ethics ensures highly ethical policies and procedures in the
workplace. It’s far better to incur the cost of mechanisms to ensure
ethical practices now than to incur costs of litigation later. A major
intent of well-designed personnel policies is to ensure ethical treatment
of employees, e.g., in matters of hiring, evaluating, disciplining, firing,
etc. Drake and Drake note that “an employer can be subject to suit for
breach of contract for failure to comply with any promise it made, so the
gap between stated corporate culture and actual practice has significant
legal, as well as ethical implications.”
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6. Ethics programs help avoid criminal acts “of omission” and can
lower fines: Ethics programs tend to detect ethical issues and
violations early so they can be reported or addressed. In some cases,
when an organization is aware of an actual or potential violation and
does not report it to the appropriate authorities, this can be considered
a criminal act, e.g., in business dealings with certain government
agencies, such as the Defense Department. The recent Federal
Sentencing Guidelines specify major penalties for various types of major
ethics violations. However, the guidelines potentially lower fines if an
organization has clearly made an effort to operate ethically.
7. Ethics programs help manage values associated with quality

management, strategic planning and diversity management
benefit needs far more attention: Ethics programs identify preferred
values and ensuring organizational behaviors are aligned with those
values. This effort includes recording the values, developing policies and
procedures to align behaviors with preferred values, and then training
all personnel about the policies and procedures. This overall effort is
very useful for several other programs in the workplace that require
behaviors to be aligned with values, including quality management,
strategic planning and diversity management. Total Quality Management
includes high priority on certain operating values, e.g., trust among
stakeholders, performance, reliability, measurement, and feedback.
Eastman and Polaroid use ethics tools in their quality programs to
ensure integrity in their relationships with stakeholders. Ethics
management techniques are highly useful for managing strategic
values, e.g., expand market share, reduce costs, etc. McDonnell
Douglas integrates their ethics programs into their strategic planning
process. Ethics management programs are also useful in managing
diversity. Diversity is much more than the color of people’s skin it’s
acknowledging different values and perspectives. Diversity programs
require recognizing and applying diverse values and perspectives these
activities are the basis of a sound ethics management program.
8. Ethics programs promote a strong public image: Attention to ethics

is also strong public relations admittedly; managing ethics should not be
done primarily for reasons of public relations. But, frankly, the fact that
an organization regularly gives attention to its ethics can portray a
strong positive to the public. People see those organizations as valuing
people more than profit, as striving to operate with the utmost of
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integrity and honor. Aligning behavior with values is critical to effective

marketing and public relations programs. Consider how Johnson and
Johnson handled the Tylenol crisis versus how Exxon handled the oil spill
in Alaska. Bob Dunn, President and CEO of San Francisco-based
Business for Social Responsibility, puts it best: “Ethical values,
consistently applied, are the cornerstones in building a commercially
successful and socially responsible business.”
9. Overall benefits of ethics programs: Donaldson and Davis in

“Business Ethics? That managing ethical values in the workplace
legitimizes managerial actions, strengthens the coherence and balance
of the organization’s culture, improves trust in relationships between
individuals and groups, supports greater consistency in standards and
qualities of products, and cultivates greater sensitivity to the impact of
the enterprise’s values and messages.
10.Last and most formal attention to ethics in the workplace is the

right thing to do.
17.4 Guidelines for Managing Ethics in the Workplace
The following guidelines ensure the ethics management program is

operated in a meaningful fashion:
1. Recognize that managing ethics is a process: Ethics is a matter of

values and associated behaviors. Values are discerned through the
process of ongoing reflection. Therefore, ethics programs may seem
more process-oriented than most management practices. Managers
tend to be skeptical of process-oriented activities, and instead prefer
processes focused on deliverables with measurements. However,
experienced managers realize that the deliverables of standard
management practices (planning, organizing, motivating, controlling)
are only tangible representations of very process-oriented practices. For
example, the process of strategic planning is much more important than
the plan produced by the process. The same is true for ethics
management. Ethics programs do produce deliverables, e.g., codes,
policies and procedures, budget items, meeting minutes, authorization
forms, newsletters, etc. However, the most important aspect from an
ethics management program is the process of reflection and dialogue
that produces these deliverables.
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2. The bottom line of an ethics program is accomplishing preferred

behaviors in the workplace: As with any management practice, the
most important outcome is behaviors preferred by the organization. The
best of ethical values and intentions are relatively meaningless unless
they generate fair and just behaviors in the workplace. That's why
practices that generate lists of ethical values, or codes of ethics, must
also generate policies, procedures and training that translate those
values to appropriate behaviors.
3. The best way to handle ethical dilemmas is to avoid their

occurrence in the first place: That's why practices such as developing
codes of ethics and codes of conduct are so important. Their
development sensitizes employees to ethical considerations and
minimizes the chances of unethical behavior occurring in the first place.
4. Make ethics decisions in groups, and make decisions public as

appropriate: This usually produces better quality decisions by including
diverse interests and perspectives, and increases the credibility of the
decision process and outcome by reducing suspicion of unfair bias.
5. Integrate ethics management with other management practices:

When developing the values statement during strategic planning,
include ethical values preferred in the workplace. When developing
personnel policies, reflect on what ethical values you'd like to be most
prominent in the organization's culture and then design policies to
produce these behaviors.
6. Use cross-functional teams when developing and implementing

the ethics management program: It’s vital that the organization’s
employees feel a sense of participation and ownership in the program if
they are to adhere to its ethical values. Therefore, include employees in
developing and operating the program.
7. Value forgiveness: This may sound rather religious or preachy to

some, but it’s probably the most important component of any
management practice. An ethics management program may at first
actually increase the number of ethical issues to be dealt with because
people are more sensitive to their occurrence. Consequently, there may
be more occasions to address people’s unethical behavior. The most
important ingredient for remaining ethical is trying to be ethical.
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Therefore, help people recognize and address their mistakes and then
support them to continue to try operate ethically.
8. Note that trying to operate ethically and making a few mistakes

is better than not trying at all: Some organizations have become
widely known as operating in a highly ethical manner, e.g., Ben and
Jerrys, Johnson and Johnson, Aveda, Hewlett Packard, etc.
Unfortunately, it seems that when an organization achieves this strong
public image, it's placed on a pedestal by some business ethics writers.
All organizations are comprised of people and people are not perfect.
However, when a mistake is made by any of these organizations, the
organization has a long way to fall. In our increasingly critical society,
these organizations are accused of being hypocritical and they are soon
pilloried by social critics. Consequently, some leaders may fear sticking
their necks out publicly to announce an ethics management program.
This is extremely unfortunate. It's the trying that counts and brings
peace of mind not achieving a heroic status in society.
17.5 Key Roles and Responsibilities in Ethics Management
Depending on the size of the organization, certain roles may prove useful
in managing ethics in the workplace. These can be full-time roles or part-
time functions assumed by someone already in the organization. Small
organizations certainly will not have the resources to implement each the
following roles using different people in the organization. However, the
following functions points out responsibilities that should be included
somewhere in the organization:
1. The organization's chief executive must fully support the

program: If the chief executive isn't fully behind the program,
employees will certainly notice and this apparent hypocrisy may cause
such cynicism that the organization may be worse off than having no
formal ethics program at all. Therefore, the chief executive should
announce the program, and champion its development and
implementation. Most important, the chief executive should consistently
aspire to lead in an ethical manner. If a mistake is made, admit it.
2. Consider establishing an ethics committee at the board level: The

committee would be charged to oversee development and operation of
the ethics management program.
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3. Consider establishing an ethics management committee: It would

be charged with implementing and administrating an ethics
management program, including administrating and training about
policies and procedures, and resolving ethical dilemmas. The committee
should be comprised of senior officers.
4. Consider assigning/developing an ethics officer: This role is

becoming more common, particularly in larger and more progressive
organizations. The ethics officer is usually trained about matters of
ethics in the workplace, particularly about resolving ethical dilemmas.
5. Consider establishing an ombudsperson: The ombudsperson is

responsible to help coordinate development of the policies and
procedures to institutionalize moral values in the workplace. This
position usually is directly responsible for resolving ethical dilemmas by
interpreting policies and procedures.
6. Note that one person must ultimately be responsible for

managing the ethics management program.
17.6 Ethics Tools: Codes of Ethics
According to Wallace, "A credo generally describes the highest values to

which the company aspires to operate. It contains the `thou shalts.' A code
of ethics specifies the ethical rules of operation. It's the `thou shalt nots."
In the latter 1980s, The Conference Board, a leading business membership
organization, found that 76% of corporations surveyed had codes of ethics.
Some business ethicists disagree that codes have any value. Usually they
explain that too much focus is put on the codes themselves, and that codes
themselves are not influential in managing ethics in the workplace. Many
ethicists note that it's the developing and continuing dialogue around the
code's values that is most important.
Occasionally, employees react to codes with suspicion, believing the values

are "motherhood and apple pie" and codes are for window dressing. But,
when managing a complex issue, especially in a crisis, having a code is
critical. More important, it's having developed a code. In the mid-70s,
Johnson and Johnson updated their credo in a series of challenge meetings.
Bob Kniffin, Vice President of External Affairs, explains, "We pored over
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each phrase and word. We asked ourselves, `Do we still believe this?' Our
meetings resulted in some fine tuning, but basically we didn't change the
values. The meetings infused the values in the minds of all of us
managers." Many believe this process guided them in their well-known
decision to pull Tylenol bottles off the shelves and repackage them at a
$100 million expense. Kniffin offers some sound, practical advice. "In a
crisis, there's no time for moral conclusions. Get those done beforehand.
But also realize there's no substitute for sound crisis management. For
example, have a list of people with fundamental knowledge, such as who
transports your products where and when.”
Developing Codes of Ethics

Note that if your organization is quite large, e.g., includes several large
programs or departments, you may want to develop an overall corporate
code of ethics and then a separate code to guide each of your programs or
departments.
Also note that codes should not be developed out of the Human Resource
or Legal departments alone, as is too often done. Codes are insufficient if
intended only to ensure that policies are legal. All staff must see the ethics
program being driven by top management.
Note that codes of ethics and codes of conduct may be the same in some
organizations, depending on the organization's culture and operations and
on the ultimate level of specificity in the code(s).
1. Organizational Culture: Review to get a basic understanding of

"personalities" of organizations
2. Strategic Planning: Specific to developing a Values Statement
3. Valuing Diversity: To consider that there are other values and

perspectives
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Consider the following guidelines when developing codes of ethics:
1. Review any values need to adhere to relevant laws and regulations; this
ensures your organization is not (or is not near) breaking any of them.
(If you are breaking any of them, you may be far better off to report
this violation than to try hiding the problem. Often, a reported violation
generates more leniency than outside detection of an unreported
violation, particularly per the new Federal Sentencing Guidelines.)
Increase priority on values that will help your organization operate to
avoid breaking these laws and to follow necessary regulations.
2. Review which values produce the top three or four traits of a highly
ethical and successful product or service in your area, e.g., for
accountants: objectivity, confidentiality, accuracy, etc. Identify which
values produce behaviors that exhibit these traits.
3. Identify values needed to address current issues in your workplace;

Appoint one or two key people to interview key staff to collect
descriptions of major issues in the workplace. Collect descriptions of
behaviors that produce the issues. Consider which of these issues is
ethical in nature, e.g., issues in regard to respect, fairness and honesty.
Identify the behaviors needed to resolve these issues. Identify which

values would generate those preferred behaviors. There may be values
included here that some people would not deem as moral or ethical
values, e.g., team-building and promptness, but for managers, these
practical values may add more relevance and utility to a code of ethics.
4. Identify any values needed based on findings during strategic planning;

Review information from your SWOT analysis (identifying the
organization's strengths, weaknesses, opportunities and threats). What
behaviors are needed to build on strengths, shore up weaknesses, take
advantage of opportunities and guard against threats?
5. Consider any top ethical values that might be prized by stakeholders;

For example, consider expectations of employees, clients/customers,
suppliers, funders, members of the local community, etc.
6. Collect from the above steps, the top five to ten ethical values which are
high priorities in your organization.
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7. Examples of ethical values might include:
a. Trustworthiness: honesty, integrity, promise-keeping, loyalty
b. Respect: autonomy, privacy, dignity, courtesy, tolerance, acceptance
c. Responsibility: accountability, pursuit of excellence
d. Caring: compassion, consideration, giving, sharing, kindness, loving
e. Justice and fairness: procedural fairness, impartiality, consistency,

equity, equality, due process
f. Civic virtue and citizenship: law abiding, community service,

protection of environment.
8. Compose your code of ethics; attempt to associate with each value, two
example behaviors which reflect each value. Critics of codes of ethics
assert that they seem vacuous because many only list ethical values
and don't clarify these values by associating examples of behaviors.
9. Include wording that indicates all employees are expected to conform to

the values stated in the code of ethics.
10.Obtain review from key members of the organization. Get input from as
many members as possible.
11.Announce and distribute the new code of ethics (unless you are waiting
to announce it along with any new codes of conduct and associated
policies and procedures).
12.Update the code at least once a year.
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17.7 Ethics Tools: Codes of Conduct
“Codes of conduct specify actions in the workplace and codes of ethics are
general guides to decisions about those actions,” explains Craig Nordlund,
Associate General Counsel and Secretary at Hewlett Packard. He suggests
that codes of conduct contain examples of appropriate behavior to be
meaningful.
The Conference Board found that codes of conduct are increasingly

sophisticated and focused at lower levels in companies. Departments
frequently have their own codes. Be careful, though an organization could
be sued for breach of contract if its practices are not in accord with its
policies. That’s why legal departments should review codes of conduct and
other ethics policies. Also, that’s why it’s critical for organizations to review
their policies at least once a year to ensure they are in accordance with
laws and regulations.
1. Employee Law: Review major issues and topics to discern what

behaviors to avoid in the workplace
2. Policies (Personnel): Review more specifics about what behaviors to

avoid
Developing a Code of Conduct

If the organization is quite large, e.g., includes several large programs or
departments, may want to develop an overall corporate code of conduct,
and then a separate code to guide each of the programs or departments.
Consider the following guidelines when developing codes of conduct:
1. Identify key behaviors needed to adhere to the ethical values

proclaimed in your code of ethics, including ethical values derived from
review of key laws and regulations, ethical behaviors needed in your
product or service area, behaviors to address current issues in your
workplace, and behaviors needed to reach strategic goals.
2. Include wording that indicates all employees are expected to conform to

the behaviors specified in the code of conduct. Add wording that
indicates where employees can go if they have any questions.
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3. Obtain review from key members of the organization. Be sure your legal
department reviews the drafted code of conduct.
4. Announce and distribute the new code of conduct
17.8 Ethics Tools: Policies and Procedures
1. Update policies and procedures to produce behaviors preferred from the

code of conduct, including, e.g., personnel, job descriptions,
performance appraisal forms, management-by- objectives expectations,
standard forms, checklists, budget report formats, and other relevant
control instruments to ensure conformance to the code of conduct. Try
to avoid creating ethical dilemmas such as conflicts-of-interest or
infringing on employee's individual rights.
2. There are numerous examples of how organizations manage values

through use of policies and procedures.
3. Include policies and procedures to address ethical dilemmas.
4. Include policies and procedures to ensure training of employees about

the ethics management program.
5. Include policies and procedures to reward ethical behavior and impose

consequences for unethical behavior.
6. Include a grievance policy for employees to use to resolve

disagreements with supervisors and staff.
7. Consider establishing an ethics "hotline."
8. Once a year, review all personnel policies and procedures.
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17.9 Ethics Tools: Training
The ethics program is essentially useless unless all staff members are
trained about what it is, how it works and their roles in it. The nature of
the system may invite suspicion if not handled openly and honestly. In
addition, no matter how fair and up-to-date is a set of policies; the legal
system will often interpret employee behavior (rather than written policies)
as de facto policy. Therefore, all staff must be aware of and act in full
accordance with policies and procedures (this is true, whether policies and
procedures are for ethics programs or personnel management). This full
accordance requires training about policies and procedures.
Training Basics for Supervisors and Learners:
1. Orient new employees to the organization's ethics program during new-

employee orientation.
2. Review the ethics management program in management training

experiences.
3. Involving staff in review of codes is strong ethics training.
4. Involving staff in review of policies (ethics and personnel policies) is

strong ethics training.
5. One of the strongest forms of ethics training is practice in resolving

complex ethical dilemmas. Have staff use any of the three ethical-
dilemma-resolution methods in this guidebook and apply them to any of
the real-to-life ethical dilemmas also listed in this guidebook.
6. Include ethical performance as a dimension in performance appraisals.
7. Give all staff a copy of this free "Complete Guide to Ethics

Management."
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17.10 Summary
Management ethics are the ethical treatment of employees, stockholders,

owners, and the public by a company. HR ethical issues arise in
employment, remuneration and benefits, industrial relations and health
and safety. There are various types of benefits for managing ethics in the
workplace. There are also guidelines to ensure the ethics management
program is operated in a meaningful fashion. It is important for
organizations to review their policies at least once a year to ensure they
are in accordance with laws and regulations.
1. Describe the ethical issues in HRM.
2. What is Managing Ethics? What are the benefits of managing ethics in

the workplace?
3. Discuss the guidelines for managing ethics in the workplace.
4. Explain the key roles and responsibilities in Ethics Management.
5. Describe the tools of Ethics.
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture 
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E-HUMAN RESOURCE MANAGEMENT
Chapter 18
e-Human Resource Management
Objectives
Concept and definition of w-HRM
Types of e-HRM
Activities of e-HRM
Structure:
18.1 Definition
18.2 Types of e-HRM
18.3 e-HRM Activities
18.4 Summary
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18.1 Definition
E-HRM is the integration of all HR systems and activities using the web
based technologies. Simply, when HR uses the Internet or related
technologies to support their activities, procedures, processes, then it
becomes an e-HRM.
Through e-HRM, the HR manager can get all the data compiled at one
place and can make the analysis and decisions on the personnel effectively.
E-HRM is seen as offering the potential to improve services to HR

department (both employees and management), improve efficiency and
cost effectiveness within the HR department, and allow HR to become a
strategic partner in achieving organisational goals.
18.2 Types of e-HRM
There are three kinds of e-HRM:
1. Operational e-HRM: It is concerned with the operational functions of

HR such as payroll, employee personal data, etc.
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2. Relational e-HRM: It is concerned with the supporting business

processes viz. Training, recruitment, selection, etc.
3. Transformational e-HRM: It is concerned with the HR strategies and

its activities such as knowledge management, strategic orientation.
Through e-HRM, the main activities that could be performed online are
Recruitment, Selection, Training, Performance Management,
Compensation.
18.3 E-HRM Activities
!
E-Recruitment
Also known as online Recruiting, is being widely used by companies these
days. Through e-Recruitment, companies usually hire the candidates using
the internet as a medium.
The common practice of facilitating the online recruitment is by uploading

the recruitment information on the company’s official website or hiring the
online recruitment websites to serve the purpose. Monster.com,
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Naukri.com, Timesjob.com are some of the well renowned online

recruitment websites.
Advantages of E-Recruitment
Low cost per candidate, as compared to the physical recruitment process.
Wide geographical coverage, i.e. the candidates can be hired from any
part of the world.
Beneficial for both the employer and the job seeker, the corporations can
find the prospective candidates through their CVs attached to world wide
web, and similarly, the candidates can search the employer through their
job vacancy advertisement posted on the internet.
Less time required in hiring the potential candidate for the firm.
Right people for the right job can be easily found through e-
Recruitment, by matching the candidate’s CVs with the job profile.
The recruitment process becomes more efficient and easy to record

details of the applicant.
The e-Recruitment software and systems are available, through which the
entire recruitment process becomes automated. One of the systems is
the Recruitment Management System, which is a portal that involves
hiring the candidates online and each step involved in the recruitment
process is automatized.
E-Selection
The HR department using the online selection process must ensure that
each step complies with the procedural requirements viz. Project steps,
vendor selection, assessment steps, feedback to the candidates, etc.The
purpose of e-selection is to utilize the maximum human capital at a
reduced cost and in less time.
E-selection has become popular with the conduct of various tests through
online, contacting the candidates through e-mail and conducting the
preliminary interviews and final interview through audio-conferencing and
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video-conferencing. Further, the employers get the reference letters/

opinions from the referees through e-mail.
Advantages of e-Selection
The candidate need not move from his place to take the written test,
preliminary interview, provide additional information and final interview.
Thus, it eliminates inconveniences, reduces cost and time required to
conduct the selection process;
It reduces the time required for other selection techniques; and
It drastically reduces the overall cost of selection process. However, there

are certain limitations of e-selection.
Limitations of e-Selection
It cannot operate certain selection tests like psychological tests;
Mechanical defects in transmitting information reduce the efficiency of

selection techniques; and
Judgement based on the e-selection process cannot be as perfect as

traditional process.
E-Performance Management
Many companies make use of web-based technology to evaluate the
performance of an individual. This can be done either using the computer
monitoring tool, wherein the complete working of an individual can be
recorded, or through writing the reviews and generating the feedback on
the employee’s performance using the web portal.
E-performance Management, a web-based tool, has been designed to make

your performance reviews easier. E-performance management places
effective performance management where it belongs in the hands of
managers. The goals of the organisation are linked to the balanced
scorecard elements giving the organization an overall view of performance
with drill down capability to departments, sub departments and individuals.
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An effective e-performance management system can play a very crucial

role in managing the performance in an organization by:
Ensuring that the employees understand the importance of their

contributions to the organizational goals and objectives.
Ensuring each employee understands what is expected from them and

equally ascertaining whether the employees possess the required skills
and support for fulfilling such expectations.
Ensuring proper aligning or linking of objectives and facilitating effective

communication throughout the organization.
Facilitating a cordial and a harmonious relationship between an individual

employee and the manager based on trust and empowerment.
An effectively implemented e- performance management system can

benefit the organization, managers and employees in several ways as
depicted below:
Organization’s Benefits
It improves organizational performance, employee retention and loyalty,
improved productivity, overcoming the barriers to communication, clear
accountabilities, and cost advantages.
Manager’s Benefits
The managers receive instant feedback on performance with drill down to
individual employee performance. With this there is no need to rewrite
performance contracts each year. Simply you could upload and edit from a
previous period and then, development the needs emanating from
performance discussions would be automatically fed into the individual
development plan.
Employee’s Benefits
Clarifies expectations of the employees, self assessment opportunities
clarifies the job accountabilities and contributes to improved performance,
clearly defines career paths and promotes job satisfaction.
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E-Learning
It means using the internet or organization’s intranet to facilitate the
training and development programmes for the workforce. Getting the
online modules of training, a large number of employees can be covered
irrespective of their locations.
E-learning via intranet (internet) is now a global phenomenon and is

central to training and development to many companies.
E-learning represents the total category of technology-based learning while

online learning is synonymous with web-based learning. The term e-
learning covers a wide set of applications and processes, including
computer-based learning, web-based learning, virtual classrooms and
digital collaboration.
E-learning is enabled by the delivery of content via all electronic media,

including the internet, intranets, extranets, satellite broadcast, audio/video
tape, interactive TV and CD-ROM.
The content of various training and executive development programmes

are placed on the internet/intranet and the trainees are supplied with the
audio/video tapes and CD-ROM. The trainees move on to the programmes
relevant for their skill development based on training needs. They go
through the content, which is moulded.
The Advantages of e-Learning Training includes
1. Flexibility: e-learning can be done in short chunks of time that can fit
around your daily schedule. You don’t have to dedicate an entire day to
the training that has been organised by your company.
2. Mobile: As e-learning can be done on laptops, tablets and phones – it is

a very mobile method. Learning can be done on the train, on a plane or
any other time that could normally be wasted. Whilst you used to be
confined to the classroom, the whole world can now be your classroom.
3. No Travel: As just mentioned, e-learning can be done wherever you

have a device capable of doing so. Therefore again you can fit it in to
your schedule, but also save money on the costs of travel. As mentioned
before on the public scheduled blog, external courses can sometimes
! !326
only be sourced in locations far away from your company so you then
have to pay the costs of travel as well potentially accommodation. E-
learning takes these costs away completely.
4. Lower cost: As you aren’t using a trainer’s time or any room or

equipment, e-learning tends to be the much cheaper option. If you
already have a device capable of carrying out the training on, then the
savings can be considerable. Therefore if you and your company are on
a budget, this can be the ideal option for you. Equally for companies
that have thousands of employees then it can reduce the cost per head
especially on areas such as Money Laundering, Compliance and
Microsoft Office training.
5. Tailored to you: e-learning courses aren’t confined to be fixed to try

and suit the needs of the majority. If you feel you already know a
particular area well and don’t need to spend an hour on it again, then
you can skim over it and concentrate that time on something you feel
you need to work more at. Everyone is able to learn at their own pace –
a massive factor that only e-learning can provide for.
6. Technological Possibilities e-learning is fast becoming a more and

more popular method and with it, so has the investment into how to
improve it further. The computer based nature of training means new
technology is being introduced all the time to help with the learning.
Different apps are helping to further reinforce the learning whilst forums
can be used to greatly increase the amount of interaction and
engagement between learners. This is only going to improve as time
goes on as well.
7. Global: With very few restrictions companies can be confident that their
staff can receive the same content regardless of their location, and in
many cases, their nationality. Therefore if you wish to provide the same
training or have your staff understand and use common methodology, e-
learning is a useful way of ensuring this happens with ease and reduced
cost.
! !327
E-Compensation
An organization using the compensation management online enables it to
gather, store, analyze, and distribute the compensation data or information
to anyone at anytime. Also, the individual can access electronically
distributed compensation software, analytic tools, from any place in the
world.
E-HR Records
Human resource records are created, maintained and updated with the
help of computers easily and at a fast rate. Human resource records, either
partially and fully, can be shifted or transferred from the branch/regional
office to head office or from one department to another department
through intranet/internet.
E-HR Information
Human resource information is generated, maintained, processed and
transmitted to the appropriate places or clients with the help of a software
with high speed and accuracy. In fact, this function of HRM is done
completely, more accurately and perfectly with the help of computers,
internet and intranet.
E-HR Audit
The standard human resource practices or the desired human resource
practices are fed into the computer. The data and information regarding the
actual practices are also fed into the computer; the software automatically
completes the human resource audit and produces the audit report. The
human resource manager then can modify the report by deleting or adding
any comments. 
! !328
18.4 SUMMARY
E-HRM is the integration of all HR systems and activities using the web
based technologies. Operational e-HRM, relational e-HRM and
transformational e-HRM are three kinds of e-HRM. Through e-HRM, the
main activities that could be performed online are Recruitment, Selection,
Training, Performance Management, Compensation.
1. What is e-HRM? Describe the various types of e-HRM.
2. What are the activities of e-HRM?
3. Write a note on e-learning with its advantages and disadvantages.
! !329
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !330

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Program Design and Advisory Team

Prof. B.N. Chatterjee Mr. Manish Pitke

Prof. Kanu Doshi Prof. B.N. Chatterjee

Prof. Dr. V.H. Iyer Mr. Smitesh Bhosale

Prof. B.N. Chatterjee Prof. Vineel Bhurke

Prof. Venkat lyer Dr. Pravin Kumar Agrawal

Prof. Dr. Pradeep Pendse Mrs. Margaret Vas

Prof. Sandeep Kelkar Mr. Anuj Pandey

Prof. Dr. Swapna Pradhan Course Editor

Prof. Bijoy B. Bhattacharyya Prof. B.N. Chatterjee

Mr. P.M. Bendre Course Coordinators

Mr. Ajay Prabhu Ms. Kirti Sampat

Mr. A.S. Pillai Mr. Kishor Tamhankar

COPYRIGHT © by Prin. L.N. Welingkar Institute of Management Development & Research.

NOT FOR SALE. FOR PRIVATE CIRCULATION ONLY.

1st Edition, December 2016

Chapter No. Chapter Name Page No.

1 Introduction to Human Resource Management 4-21

16 Recent Techniques in Human Resource Management 289-300

After studying this chapter you should be able to understand:

What is Human Resource Management (HRM)

Functions involved in HRM

How HR has evolved over the years.

Differentiate between Personnel management, Industrial relations, HRM

Process of HRM in an organisation

Factors affecting HRM in an organisation.

Future of HRM - Strategic HRM & HCM.

1.1 Nature of Human Resource Management (HRM)

1.2 Functions in HRM

1.3 Evolution of HRM

1.4 Difference between Personnel Management, Industrial Relations, HRM

1.6 Factors affecting HRM

1.7 Future of HRM

1.9 Self Assessment Questions

The story continues…….

Rajesh: Yes Sir, I am enjoying my work. As far as studies are concerned, I

Rajesh: What is Human Resource Management (HRM)?? What is the need

1.1 NATURE OF HUMAN RESOURCE MANAGEMENT (HRM)

Human Resource Management is basically the management of human

Organisations have realized that they may be technologically advanced but

1.2 FUNCTIONS IN HRM

HRM typically consists of the following functions:

Planning: Preparing forecasts of future HR on the basis of an

Staffing: Obtaining people with the appropriate skills, abilities,

Developing: Analyzing learning requirements to ensure that employees

Monitoring: This includes job evaluation, performance appraisal, pay

Maintaining: This involves workplace safety, health and welfare policies

Ajay Verma: Well, it all started with the industrialization……..

1.3 EVOLUTION OF HRM

Human Resource Management developed gradually, over a period of time.

Period: Milestones in the Development of Human Resource Management

1890-1910: Frederick Taylor develops his ideas on scientific

1930-1945: The interpretation of the Hawthorne Studies' begins to have

1945-1965: In the U.S., a tremendous surge in union membership

1985-present: Three trends dramatically impact HRM. The first is the

List down the stages in the development of HRM.

1.4 DIFFERENCE BETWEEN PERSONNEL MANAGEMENT,

Personnel Management is concerned with manpower planning, recruitment,

Ajay Verma: I am glad to hear it…

Rajesh: How is the HR process structured in an organisation?

Ajay Verma: Yes, I was just getting to that topic.

Related Reading : Role of HR in Brand Management 

Video Lecture - Part 3 