MBA II SEM

SUBJECT – HUMAN RESOURCE MANAGEMENT

UNIT – IV
SUBJECT TEACHER – Ms. FARHA SUBHANI
What is Performance Appraisal?
Performance appraisal definition can be described as a systematic evaluation of performances
of several employees so that they can understand all abilities of a person and their development
and growth.

Performance appraisal is also done in a very systematic manner which includes measuring the
pay of employees and comparing it with all plans and targets, analyzing the factors needed
behind the performance of work and what employers are expected for better performance and for
their guidance.

Objectives of Performance Appraisal:

The following mentioned are few performance appraisal objectives.

a. Summary of the goals:

Some of the basic objectives of performance appraisals include maintenance of records so that all
packages of compensation, wage structures, salaries and raises have been determined, seeking
and identifying the weaknesses and strengths of all employees for better development and
growth, providing essential feedback towards employees concerning performance and related
statutes.

Not only that, it helps in influencing the work habits of other employees and can also retain the
training programmes of others.

b. Setting goals:

One of the most valuable goals of all performance appraisals is to reach the goals of the
company. There could be metrics which are established on the basis of the performance or even a
percentage which increases the revenue dollars.

Evaluation of performances must be timed by the manager so that they can discuss matters of
professional development and be able to come up with goals that are strategic and may be used
for measuring development.
Both the manager and the employee must keep working together on the lines of success so that
they can improve relationships and make it more effective.

Advantages of Performance Appraisal Process:

a. Promotion:

Performance appraisal can help a lot when it comes to managers and their employees. Not only
does it allow the supervisor to chalk out all programmes of promotion but also makes a lot of
work easy for them.

In that way, those who don’t work hard enough or are inefficient are dismissed or demoted.

b. Compensation:

A second thing that performance appraisal helps in is called compensations.

Seniors can chalk out the packages for their employees in that way. Merit rating is always
possible throughout the appraisal of performance.

Several packages of compensation which include high rates of salary, extra benefits bonus,
allowances which are very much dependent on the appraisal of performance. The criteria must
also be merit instead of seniority.

c. Development of employees:

The procedure is also helpful when it comes to the development of employees. It helps them to
frame the policies of training and several other programmes alongside.

Not just that, it also helps them analyze their weaknesses and strengths so that all new jobs are
given to those who perfectly fit in. It may also allow them to frame the development programmes
in the future.

d. Validation and selection:

Performance appraisal also allows all managers and supervisors to understand what the selection
procedure is all about and who deserves a promotion and validity and who doesn’t.

The supervisors at this point understand their workers and colleagues in a much better way.
Future changes made in the methods of selection can be made in such regards.

e. Communication:

For all organizations, effective methods of communication between all employees and employers
are needed. Though appraisal of performance is needed, the communication must be sought in
several ways such as using the help of performance appraisal where the employers are able to
understand the skills and accept them.

Second is helping in the maintenance of cordial relationships with other workers, developing
team spirit and helping other employees get better. Apart from this, effective communication is
also needed.

f. Motivation:

Appraisal of performance can be used as a tool for inspiration and motivation. Through the
process of evaluation of the employees, the efficiency of the person can be determined once all
targets have been reached.

This could motivate a person quite well and also help them improve their jobs in the upcoming
years.

Disadvantages of Performance Appraisal Process:

a. Unreasonable factors:

The performance appraisal factors need to be perfect and relevant or else it will be difficult to
gain useful data from the appraisals.

b. Biased:

The factors are not given equal importance when conducting appraisals

c. Lack of technical methods:

There are no technical methods or ways to gauge a few important factors like initiative and
attitude.

d. Wrongful assessment affects the company:

Managers may sometimes fail to gauge their employee performance process properly which can
affect the growth of the organization.

Performance Appraisal Methods:

There are plenty of methods you can try for appraisal of performance. Some of the best
performance appraisal and its methods have been discussed here.

1. The method of grading:

In the method of grading, some of the categories have been made in advance and must be defined
in a careful manner. Three categories can exist in total. They should be named as outstanding,
unsatisfactory and satisfactory. There could be several more columns for the grades if you want
it that way.

The performance of the employees has often been compared with the definition of grades. The
employee then has to be allocated which describes them the best in terms of performance. Such
type of grading can be done in the method of semester especially when it comes to the selection
of candidates in the public service sector.

The only negativity about this method is that all employees could be placed on the better side in
terms of performance.

2. Forced-Choice Method:

The method of forced choice came into existence years ago and is being practised till today. It
comes with a bunch of statements and the rater is expected to show how effectively every
statement will describe every individual and how it must be evaluated.

Common methods or choice methods come with two statements which could be negative or
positive.

A few examples of the positive statement include giving proper and clear instructions, can be
relied on whenever a task has been assigned. Negative statements make such promises which are
beyond his limit, favours some of the employees.

3. Method of check listing:

This is another traditional method you can try for measuring appraisals of your employees today.

You must utilize the method of check listing so that the burden of evaluation is eased. In this
method, statements and questions which come with answers such as no or yes must be prepared
by human resource department members.

The checklist must then be given to the one who is rating so that they can tick the box that is
correct. All questions are important and must be answered very carefully.

4. Method of cost accounting:

This method will evaluate the performance of the employee from the benefits that have been
yielded by the organization.

This has to be ascertained by simply establishing a relationship between costs which are involved
in helping the employee as well as the benefits which an organization derives. When you are
evaluating the performance of the employee by using this method, you must take a few points
down.
They include quality of the products that have been produced and the service which has been
rendered, the human relationship they share with others, the cost of time every supervisor spends
in appraising their employees, damages, spoilage, errors, accidents etc.

Performance Appraisal Process:

Here are six steps which are required during the process of performance appraisal. Every step is
crucial to read all of them thoroughly before making any important changes in your regular
methods.

1. Establishing high standards of performance:

The process of an appraisal starts when the standards of performance have been established. The
senior managers have to determine what kind outputs, accomplishments, and skills need to
evaluate.

All of these standards must be evolved out of job descriptions and analysis. The standard of
performance should always be concise and clear so that the objective can be measured and
understood accordingly.

2. Communicating expectations towards all employees:

Once the standards of performance have been built, you must remember to communicate the
matter accordingly to all employees so that they may know what is expected out of them.

The old experiences also show that not being able to communicate towards the employees so that
they know what must be expected. Apart from that, it has also been stated that the standards of
communication towards all employees will compound the problem of the appraisal.

However, it must be noted that transferring information from your manager towards the
employees is not exactly communication. It could become communication only when
transferring information has taken place and has been understood by all employees.

3. Measuring real performance:

The third step that must be taken during the process of appraisal is measuring of the actual
performance.

During this stage, the real performance of all employees is measured on the sort of information
that is available from different kinds of resources, for example, oral reports, written reports, and
even statistical reports.

Personal observation also matters in matters like these. The feeling of the evaluator shall never
influence the measurement of performance of the employees. Measurements have to be based on
objectives, findings and facts stated.
The reason behind this is that what we will measure becomes more important to the process of
evaluation than how we are measuring it.

4. Comparing performance with the standards:

During this stage, the real performance is always compared with standards that are
predetermined. Such comparisons could reveal deviations between actual and standard
performance and will also allow the evaluator that will proceed to the other steps of the entire
process.

In short, having a proper and detailed discussion with those who are concerned in the matter!

5. Discussing with all employees:

Next what you must do in the process of appraisal is to communicate and discuss what the results
of the appraisal are with the employees concerned.

This happens to be quite a difficult and challenging task to accomplish for the manager who is
expected to present an appraisal that is accurate for all employees and make them understand and
accept their appraisal in a realistic manner.

When you discuss matters like these with them, you are able to understand and assess their
strengths and weaknesses in a much better way. It will also help them perform better in the near
future. The impact could be either negative or positive depending on how it has been shown to
the employees and discussed with them.

6. Corrective actions:

The final and most important step in the process of appraisal is initiating the corrective action
whenever it is needed. The areas which need any improvement must be identified and then the
measures have to be improved and corrected so that the performance improves with time and has
been identified at the same time.

Corrective action again could be divided in two. The first one deals with symptoms mostly. It is
called putting out fires. The second one is about what causes such deviations and looks for
adjustment of differences.

Conclusion:
With that, we would like to bring the post to a close. If you have liked reading the article, have
found some benefit from it and have some important feedback to give us, do feel free to
comment in the box below. Also if you have any questions or doubts you would like to clarify,
let us know about some of it. We would love to help you with that.
Always remember that the concept of performance appraisal is not easy but you can definitely
work on a few things and make it better. On that note, good luck!

Criteria for a Successful performance appraisal

Successful performance appraisal systems have a number of common characteristics. The

following discussion focuses on the criteria for a successful performance appraisal system:

1. Clear Objectives: A good performance appraisal should be built around unambiguous

objectives. These objectives should cover all levels and areas of the organization and reflect the
needs of each. The appraisal system should be clear in its purpose.

2. Management and employee endorsement: To be effective, the appraisal system should be

supported by the entire work force. This includes management support for possible expenses
such as additional training, employee meetings, and appraisal forms and other materials, and
staff time.

3. Flexibility: An organization must design its system with enough flexibility to adapt to any
changes that might occur.

4. Predictability: the timing of the performance appraisal and any other feedback sessions should
be predictable. For example, some organizations have an annual performance appraisal close to
the hiring anniversary date of the employee. This enables the employee to prepare for the
evaluation.

5. Performance dialogue: performance discussions between the rater and the employee are
perhaps the most critical component of a successful performance appraisal system.

6. Appraisal Form: The importance of an appropriate appraisal form should not be overlooked.
Many organizations simply adopt “standard” form that may or may not be tailored to their goals
and objectives.

7. Periodic system checks: Systematically evaluating the validity of the performance appraisal
system should be a key feature.

Benefits of Appraisal System

1) Assist to Enhance Employee Performance

The evaluation process needs supervisors to take note of insufficiencies in employees’

performances and must communicate to the respective employees accordingly. The manager or
supervisor can give suggestions to overcome their deficits.
The logical appraisal system helps the line managers and HR people to design policies and
programs for the progress of employees and business. Even it supports to plan daily work
agreeably to assign the right people to an accurate job. The evaluation process must be unbiased
and equally viewed that it can stimulate for developing the careers of every employee.

2) Promotions and Transfers

The merit evaluation system helps to recognize talented employees to groom them as competent.
The organization admits the hard work and accomplishments of employees by giving promotion,
deputation, and transfer. The evaluation system certifies that promotion and transfer are only
offered on the basis of performance, not on seniority and nepotism.

3) Hike in Salary and Compensation

The rating system gives a clear view of an employee’s performance level which is compensated
by enhancement in salary and offering other fringe benefits. A good point rating can be achieved
only through the appraisal system which offers handsome compensation packages like a bonus,
extra reimbursement, various allowances, and requisites. Almost in all organizations, different
categories of employees are paid good compensation packages for their high level of
performance which revealed in the evaluation system.

4) Planning for Providing Training and Development

Through the appraisal procedure, the superiors can comprehend the strengths and weaknesses of
their subordinates which also help the HR department to design training and development
program. The content and method of training vary according to the requirement of employees.
Even the appraisal system decreases the attrition rate because appreciation and bonus enhance
the stability of an employee.

5) Improve Relationship Between Management Group and Employees

After the appraisal, the employees get the opportunity to discuss their concern with superiors
which is not only helpful for resolving any grievance or dispute but also improves the liaison
between the management group and employees.

6) Be Integrated with Strategic Vision

One of the important purposes of conducting an appraisal to communicate employee goals which
are a part of the strategic vision of the organization.

7) the Tool of Inspiration

Performance appraisal acts as an inspirational tool for the employees. Because its process of
weighing up the performance level and the recognition system after achieving the goal can boost
up the efficiency and productivity level of the employees.
8) Detect Valued Performers

Evaluation system aids in recognizing potential employees in the organization. At the time of
taking personnel decisions like who will be promoted to an influential position or who will be
laid-off, the employers take the decision on the basis of performance history, skill level, and
experience. The appraisal system is also helpful for taking inventory of quality people in the
organization. As per the valuation, the HR department takes the decision to recruit new
employees or upgrade the existing workforce.

If the performance appraisal system is properly executed, it can become a powerful tool to
establish an organizational culture where each employee acts for the broad strategic vision of the
organization.

Limitations of Performance Appraisal System

Some of the major limitations of performance appraisal are: 1. Bias of Appraiser 2. Ambiguity in
Standards 3. Insufficient Evidence 4. Several Qualities Remain Without Appraisal 5. Leniency or
Strictness Tenancy 6. Average Rating Problem 7. Influence of Man’s Job and 8. Similarity Error.

1. Bias of Appraiser:

The presence of ‘Halo Effect’ in evaluation of employees is the biggest weakness of this method.

A high rate is given to favoured employees whereas unfriendly employees are rated low.

2. Ambiguity in Standards:

If the standards are not clear, the supervisors may follow different standards for different
employees.

3. Insufficient Evidence:

An employee who can impress the boss may get a positive evaluation though his impression in
his own department may be very poor. In such cases, the performance appraisal will be
superfluous.

4. Several Qualities Remain Without Appraisal:

Through performance appraisal, only few qualities of employees can be measured. All
individuals differ from each other in terms of background, values and behaviour.

5. Leniency or Strictness Tenancy:

Every evaluator has his own valuation procedure which is regarded as his own standard for
evaluation. For example, some teachers are strict in evaluation of answer books whereas others
are lenient. The lenient tendency is known as ‘Positive Leniency Error’ whereas strict tendency
is called as ‘Negative Leniency Error’. The rating may be high or low depending upon the nature
of evaluators.

6. Average Rating Problem:

In order to give very low or very high rating, the top managers are required to give reasons to
justify the rating. The most common error committed in performance appraisal is to give average
rating to all employees. Moreover, low rating antagonizes the subordinates.

7. Influence of Man’s Job:

There is a tendency to give a high rating to highly paid jobs. So a senior employee may get a
higher rating than a junior employee.

8. Similarity Error:

The evaluator tries to look those qualities in subordinates which he himself possesses. Those
who show the similar characteristics are rated high.

360 Degree Appraisal System

It is a system in which employees will get feedback from all the people they work with. There
are about 7 to 12 people who will fill out a form which is usually a feedback form. The contents
of the form may vary from broad range competencies to work environment. The employee who
receives the feedback will also be required to fill out a self assessment which again might consist
of the same components. This system is used to get an improved understanding of every one’s
strengths and weaknesses.

There are three general reasons as to why an organization would go in for a 360 degree appraisal.

 To get a better view of the performance and prospective of future leaders.

 To have a broad insight of developmental needs of manpower.
 To collect more feedback so as to ensure justice to the job performed by the employees.

In 360 degree appraisal system, the feedback is collected from managers, peers, subordinates,
customers, team members etc. A survey is conducted to get close understanding of-on the job
performance of the employees. A 360 degree appraisal has four stages in it:

 Self Appraisal
 Superior’s Appraisal
 Sub-ordinates Appraisal
 Peer Appraisal
It is not an easy task to implement 360 degree appraisal. For this appraisal to be effective one
needs to bear in mind the following:

→ Right skills to be assessed are determined.

→ Appraiser should be selected properly.

→ He should be well aware of the system, if proper training on the appraisal system is not given.

→ Elucidate the intention of this kind of appraisal system.

→ Ensure the process to be simple.

→ Follow up.

Methods of Performance Appraisal

They are broadly classified into Traditional and Modern methods. Let us first discuss the
Traditional methods.

1. Rating Scale Method: It is the most common method of assessing the performance. Under
this method a scale is created from 1 to 10. The components of this method are traits like
attitude, regularity, performance and accountability, which will be rated on a scale of 10. In
India, many telecommunication industries are using this method to evaluate their employees.
Here the employees are assessed as per the nature of the job or company. The number of points
scored for all the traits are finally added; employee who scores more is regarded as good
performer than the employee who has a descending score.

2. Essay Appraisal Method: It is also called the “free form method” because the superior gives
a detailed description of its manpower’s performance. This will include supporting documents
and examples of his/her performance. The main hitch of this method is that it is highly biased.
The rater under this method may use Rating Scale method also to rate the weaknesses and
strengths of an employee to validate his essay appraisal. This method is very time consuming as
the rater should find enough time to collate all the documents. It is considered to be a non
quantitative evaluation method of appraisal.

3. Ranking Method: Under this, the manager compares the performance of employees with
other employees of the same rank or grade. A fixed percentage of employees are kept in different
performance categories like excellent, average, below average, poor etc. This method is used
when the managers have to make decision as to which person is the best worker for a given
period, who has to be promoted, which employee is being laid off etc. Under such circumstances
the Ranking Method comes handy to HR Managers in evaluating them correctly.

4. Critical Incident Method: As the name suggests these are based on events or incidents. Here
logs are maintained for each employee to record the events or decisive incidents of behavior of
employees. At the conclusion of the performance period these events are collated to find out the
rating of the employees. The main drawback of this method is that the negative incidents are
more obvious than the positive ones. Sometimes the employees will not like such close
supervision by managers.

5. Confidential Report System: This method is very well known in government organizations.
Here the superiors will write a confidential report on the subordinates with respect to his/her
behavior and duties in the organization. This report will not be exposed to anyone, and finally
will be referred the top management. In India this method is being used by most of the
government organizations like the Armed Forces, Police department, CBI etc. The main factors
assessed here are:

(a). Temperament of the employee.

(b). Promptness of employee.

(c). Unlawful absenteeism.

(d). Truthfulness and sincerity.

(e). His/her behavior with the public.

6. Check List Method: Under this method, the appraiser is given a set of metaphors to be used
for rating the employees. This comprises of a list of questions based on which the rater evaluates
the acts of the human resources. Let us see the below statements or descriptions used as
checklist:

(a). Is the employee actually interested in the job?   Yes/No

(b). Do they give respect to their superiors?              Yes/No

(c). Do they follow the directives?                               Yes/No

(d). Mistakes are made frequently?                              Yes/No

7. Graphic Rating Scale Method: It is a widely accepted conventional technique of

performance appraisal. Here the core traits of the employees are cautiously defined. These traits
are assigned numbers on a scale of 5 to evaluate for a given appraisal period. The values of each
trait is added to find out the best performer during the period of performance appraisal, the score
will vary from person to person giving the appraiser a clear picture as to who is the best
performer. Look at the example below for better understanding of the method.

Personality Exceptional Excellent Standard Reasonable Poor

Attitude 5 4 3 2 1
Discipline 5 4 3 2 1
Team Work 5 4 3 2 1
Honesty 5 4 3 2 1
 Personality Exceptional Excellent Standard Reasonable Poor
Knowledge of work 5 4 3 2 1
Managerial Skills 5 4 3 2 1
Regular 5 4 3 2 1
Originality 5 4 3 2 1
Responsibility 5 4 3 2 1
Responsibility 5 4 3 2 1

Table Title: Graphic Rating Scale Method

Now let’s see some new techniques of Performance Appraisal. To overcome the drawbacks of
the traditional performance appraisal methods a few modern techniques were used by the
organization.

1. The BARS Method: This is called Behaviorally Anchored Rating Scale which is
comparatively a new one. It’s a combination of two methods like graphical rating scale and
critical incident method. This method consists of a set of behavioral statements that explains the
performance of the resources towards a particular job as good or bad. These statements are
derived from critical incidents or events. Under this method the definite behavior is compared
with the preferred behavior. The critical behavior thus obtained is given a numeric value based
on which performance is rated. The below example can make us understand better.

Performance Points Behavior

Can be laid off 7 Employee can be expected to give important suggestions
Good 6 Employee can be expected to commence resourceful ideas
Beyond Average 5 Can expect him to do well
Average 4 Can cope with difficulty to reach goals
Below Average 3 Can be given training
Poor 2 Can be demoted
Extremely Poor 1 Can be laid off

Table Title: BARS (Behaviorally Anchored Rating Scale)

2. Human Resource Accounting Method: This method measures the efficiency of personnel
management behavior and how the people are used in an organization. This is handing over,
budgeting and reporting of how much cost is involved in the acquisition of human resources,
which includes salaries and wages. There is a saying, ‘the human resources are the assets of an
organization.’ HRA method finds out net worth of these resources in monitory terms. Under this
method the cost incurred on employees right from recruitment to induction is calculated and the
contribution of employees which in this method is the total value added, is also calculated. The
difference between the cost and input is considered to be the performance of the manpower
hired; preferably the contribution from the employee’s side should be greater than the cost
incurred.
3. MBO (Management by Objectives): It is a process where in both the managers and
subordinates recognize common goals and characterize the individual’s responsibility towards
achieving those goals. It is a shared goal setting method, along with setting these goals, the key
constituent of MBO method is a constant performance review sessions that happens between
managers and subordinates. This helps in evaluating the growth on regular basis.

 PROMOTION
Definition:

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

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

Types of Promotion:

Promotion given to employees in an organisation can be classified into three types:

1. Horizontal promotion:

When an employee is shifted in the same category, it is called ‘horizontal promotion’. A junior
clerk promoted to senior clerk is such an example. It is important to note that such promotion
may take place when an employee shifts within the same department, from one department to
other or from one plant to another plant.

2. Vertical Promotion:

This is the kind of promotion when an employee is promoted from a lower category to lower
category involving increase in salary, status, authority and responsibility. Generally, promotion
means ‘vertical promotion’.

3. Dry Promotion:

When promotion is made without increase in salary, it is called ‘dry promotion’. For example, a
lower level manager is promoted to senior level manager without increase in salary or pay. Such
promotion is made either there is resource/fund crunch in the organisation or some employees
hanker more for status or authority than money.

Purposes:

The following are the purposes or objectives of promotion:

1. To recognize an employee’s skill and knowledge and utilize it to improve the organisational
effectiveness.
2. To reward and motivate employees to higher productivity.

3. To develop competitive spirit and inculcate the zeal in the employees to acquire skill,
knowledge etc.

4. To promote employees satisfaction and boost their morale.

5. To build loyalty among the employees toward organisation.

6. To promote good human relations.

7. To increase sense of belongingness.

8. To retain skilled and talented people.

9. To attract trained, competent and hard working people.

10. To impress the other employees that opportunities are available to them too if they also
perform well.

According to Dale Yoder, “Promotion provides incentive to initiative, enterprise and ambition;
minimizes discontent and unrest; attracts capable individuals; necessitates logical training for
advancement; and forms an effective reward for loyalty and cooperation, long service, etc.”

Promotion benefits both employees and the employer. However, it needs to be made with a great
caution because wrong promotion may invite implications of one type or other for the
organisation. So to say, promotion is like a double-edged weapon. Hence, every organisation
needs to evolve and implement a suitable promotion policy for its employees. The following
section deals with the same.

Promotion Policy:

The following characteristics make a promotion policy as sound and good policy:

1. It must provide equal opportunities for promotion across the jobs, departments, and regions.

2. It must be applied uniformly to all employees irrespective of their background.

3. It must be fair and impartial.

4. The basis of promotion must be clearly specified and made known to the employees.

5. It must be correlated with career planning. Both quick (bunching) and delayed promotions
must be avoided as these ultimately adversely affect the organisational effectiveness.

6. Appropriate authority must be entrusted with the task of making final decision.
7. Promotion must be made on trial basis. The progress of the employee must be monitored. In
case, the promoted employee does not make the required progress, provision must be there in the
promotion policy to revert him/her to the former post.

8. The policy must be good blending of promotions made from both inside and outside the
organisation.

Promotion can be made on various bases. Following are the major ones:

1. Seniority i.e., length of service

2. Merit, i .e., performance

3. Educational and technical qualification

4. Potential for better performance

5. Career and succession plan

6. Vacancies based on organisational chart

7. Motivational strategies like job enlargement.

8. Training

As a matter of fact, no single basis of promotion is acceptable and applicable to all organisations.
Every basis has its strengths and weaknesses. For example, while promotion on the basis of
seniority gives satisfaction to the senior employees, it causes frustration to the talented ones.

Similarly, promotion based on merit motivates competent employees to work hard while trade
unions oppose it on the justification of its subjectivity. In India, promotion in the government
departments is made on the basis of seniority of the employees. In case of private organisations,
merit is generally used as a basis for promoting employees. Here, the promotion policy is to
promote the best one available.

Transfer

One of the internal mobility of the employee is transfer. It is lateral movement of employee in an
organization by the employee. “A transfer involves the shifting of an employee from one job to
another without changing the responsibilities or compensation”.

Transfers of employees are quite common in all organizations. This can also be defined as a
change in job within the organization where the new job is substantially equal to the old in terms
of pay, status and responsibilities. Transfers of employees can possible from one department to
another from one plant to another. Transfer may be initiated by the organization or by the
employees with the approval of the organization. It can be also due to changes in organizational
structure or change in volume of work, it is also necessary due to variety of reasons. But broadly
can be done either to suit the conveniences of organization and to suit the convenience of
employees.

The purposes of the Transfer

The transfer are generally affected to build up a more satisfactory work team and to achieve the
following purposes:

  To increase the effectiveness of the organization.

  To increase the versatility and competency of key positions.
  To deal with fluctuations in work requirements.
  To correct incompatibilities in employee relations.
  To correct, erroneous placement.
  To relieve monotony.
  To adjust workforce.
  To punish employees.

Types of Transfers most of the transfers generally carried out four types of transfers

which are discussed below:

Production Transfer: Such transfers are resorted to when there is a need of manpower in one
department and surplus manpower in other department. Such transfers are made to meet the
company requirements. The surplus employees in one department/section might be observed in
other place where there is a requirement.

Replacement Transfers: This takes place to replace a new employee who has been in the
organization for a long time and there by giving some relief to an old employee from the heavy
pressure of work.

Remedial Transfers: As the name suggest, these transfers are made to rectify the situation
caused by faulty selection and placement procedures. Such transfers are made to rectify mistakes
in placement and recruitments. If the initial placement of an individual is faulty or has not
adjusted to work/job, his transfer to a more appropriate job is desirable.

Versatility Transfer: Such transfers are made to increase versatility of the employees from one
job to another and one department to another department. Transfer (Job Rotation) are the tool to
train the employees. Each employee should provide a varied and broader job experiences by
moving from one department to another. This is for preparing the employee for promotion, this
will definitely help the employee to have job enrichment.

PRINCIPLES OF TRANFER
A sound, just and impartial transfer policy should be evolved in the organization to govern all
types of transfers. This policy should be clearly specified so that the superiors cannot transfer
their subordinates arbitrarily and subordinates may not request for transfers even for the small
issues. The management must frame policy on transfers and apply it to all the transfers instead of
treating each case on its merit. Such a policy must be based on the following principles:

1. Transfer policy must be in writing and be made known to all the employees of the
organization.

2. The policy must very clearly specify the types and the circumstances under which company
initiated the transfer will be made.

3. Basis of the transfer should be clearly mentioned in the policy, whether it will be based
seniority or on the skill and the competency or any other factors.

4. It should indicate the executives who will be responsible for initiating and approving the
transfers.

4. It should indicate the executives who will be responsible for initiating and approving the
transfers.

5. The policy should specify the region or unit of the organization within which transfers will be
administered.

6. The effect of the transfer on the pay and seniority of the transferred employee may be clearly
evaluated.

7. It should be prescribed in the policy whether the training or retraining is required on the new
job.

8. Transfer should be clearly defined as temporary or permanent.

9. The interest of the organization are not to be forgotten in framing a policy of transfer.

10. Reasons for the mutual transfer of employees or reasons to be considered for the personal
transfers should be specified.

11. The fact of the transfer should be intimated to the person concerned well in advance.

12. Transfer should not be made frequent and not for the sake of transfer only.

Employee Separation Definition:- The termination of employees from membership of

the organization is referred as employee separation. The rate at which employees leave
the organization is measured by the rate of employee separation.
Types of Employee Separation
There are two main types of employee separations on the basis of the initiation of the
employment relationship termination. These two types of employee separations are as
follow.

1. Voluntary Separation:

When an employee terminates the employment relationship, then this form of employee
separation is known as voluntary separation. Voluntary separation is further divided into
two categories.

 Quits
 Retirements

2. Involuntary Separation:

When employer of an organization ends the employment relationship with any

employee, then this employee separation is called involuntary separation. There may be
a number of reasons for involuntary separations like the employee does not fit with the
requirements of a particular job or due to economic necessity. Involuntary separation is
further divided into the following categories.

1. Discharges
2. Layoffs
3. Rightsizing or downsizing

Reasons of separation

Voluntary Separation
Why would an employee leave his job? The most obvious reason is that the employee is ready to
retire. But the fact is that there are as many reasons for quitting as there are employees.
Sometimes, poor management can be the reason your employees are walking out the door. In
many cases, managers can make changes to improve the situation and help employees make the
decision to stay; in other cases, though, it just makes sense to say goodbye. Some reasons for
voluntary separation include:

 Better opportunities: Many people leave jobs because there is better job available
elsewhere. When that happens, employees may offer their managers the opportunity to
top the better job offer. If your employee is really extraordinary, you may want to discuss
 options with upper management and HR. Can you improve on the employee’s
compensation and benefits package? How can you make it worth their while to stay?
 A family move: Bill just got married, and he and his new wife are moving to California
to be closer to her family. In this case, it may be tough to make Bill a better offer. In
some cases, however, it might be possible to transfer Bill to another division of the
company that’s closer to his new home.
 Illness or disability: In some instances, illness or disability can force an employee to
resign. Sometimes it is possible to accommodate an employee with a physical challenge
by making minor changes to the workplace or schedule. In other cases, however, the
problem is significant enough or affects productivity to such a degree that the employer
can’t accommodate the worker. For example, a graphic artist who is unable to walk can
still do her job with accommodations for a wheelchair, but a waiter who can’t walk is
unlikely to be able to continue in his job. When the illness or disability relates to
someone else in the family (an elderly parent, for example), the employer may be able to
help with a more flexible schedule or options for working from home. Often, though, the
employee’s job requires them to be on the spot for specific working hours.
 Job dissatisfaction: It’s not unusual for employees to leave a job because they’re
unhappy in their work and believe they can be happier elsewhere. There are many
reasons why this can be the case; sometimes the manager is the problem, and often the
manager can help, but just as often they can’t. For example, an employee might leave
because he sees no opportunity for advancement. In some cases, managers can find,
create, or point out ways in which the employee really can advance in the company. In
other cases, an employee might decide that the job is not as interesting or fulfilling as he
had anticipated; again, managers can sometimes (but not always) help make changes to
suit the employee’s needs.
 Changing circumstances: Very often, jobs that were perfect for a period of time are no
longer appropriate. For example, a traveling sales position may have been exciting and
fun for a single woman who is now married and wants to settle down. A strenuous job
may have been ideal for a younger man who is now getting older and wants something a
little less exhausting. A low-paying position may have been acceptable for a person just
getting started but may pay too little when the employee wants to own a home. Again,
managers may be able to help employees figure out options within the company—but it
may also be the case that the employee really needs to make a more radical change.

Involuntary Termination
The word “termination” sounds unpleasantly like “extermination,” but of course it simply means
that an employee has been asked to leave the job. There are two general reasons for termination:
layoffs and firing. When employees are laid off, they are being asked to leave because their
position will no longer exist but they have done nothing personally to deserve termination. When
an employee is fired, it is for “cause,” meaning that something they did (or didn’t do) led to
being fired.

 Layoffs: Layoffs are the unfortunate outcome of changes in industries or problems with
individual corporations. In rare cases, people are laid off simply because their project has
ended. More often, though, they are laid off because their employer has been forced to
 close stores, stop producing certain products, or simply save money. Managers can
sometimes step in and help individual employees to stay with the company by building
new skills or shifting into different departments or divisions. Often, though, there are no
feasible ways to avoid layoffs.
 Firing: There are quite a few reasons why people are fired from their jobs, but in general
people are fired because they (1) broke company rules or laws; (2) were unable or
unwilling to do their jobs; (3) created problems for the company because of their
behavior. Occasionally, people are fired for “political” reasons. For example, a top
manager might be let go to make room for the boss’s son-in-law. In such cases, however,
the employee might well be able to sue the employee, so such firings are rare.

Managing Lay-Offs

When an organization is unable to decrease its labor cost by any other method, then it
is compelling to employ the method of layoff. But before application of layoff method in
the organization, the management must ensure that they have employed other
alternative methods of reduction in labor cost.

Alternatives to Layoffs

There are several methods that can be used as alternatives to the layoff for reducing
the labor costs in the organization. Following are a list of these alternative methods.

1. Employment Policies
2. Changes in the Design
3. Pay & Benefits Policies
4. Training
5. Nontraditional Alternatives to Layoff.

Implementing a Lay Off

The layoff should be implemented with great care & tact by the management because it
is can influence the lives of hundreds of people. There are certain issues that should be
considered before implementing layoff policies in the organization. These issues are as
follows.

1. The notification to the employees

2. Development of the criteria of layoff
3. The communication method with employees that are laid-off
4. Coordination with the media relations
5. Maintenance of the security in the organization
6. Reassurance to the employees who are survivors of the layoff.