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INSTITUTE OF RAIL TRANSPORT
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& Management

Module

6
HUMAN RESOURCE MANAGEMENT IN INDIAN RAILWAYS

Unit 1
Management - Concepts and Evolution 1

Unit 2
Structure of Organisations and Management Processes 23

Unit 3
Management in Future 55

Unit 4
Personnel Management Discipline - An Overview 67

Unit 5
Employee Relations and Labour Legislation 105

Unit 6
Organisational Behaviour 129

Unit 7
Management in the Indian Railways 137
Course Preparation Team
Content Contributor

Shri Purushottom Guha

Former Principal Executive Director (Coaching)
Railway Board
Ministry of Railways

Smt. Amrit K. Brar

Director (Tourism and Marketing)
IRCTC Ltd.,

Course Writer
Course Contributor/ Revised/Updated
Shri A.K. Nigam Shri Sanjeev Sharma
Former Advisor (IR) Director, Finance(AR)
Railway Board Railway Board
Ministry of Railway Ministry of Railways

Language Editing Format Editing

Prof. P.R. Ramanujam Prof. P.R. Ramanujam
STRIDE, IGNOU STRIDE, IGNOU

Acknowledgements are due to

Dr. Sanjaya Mishra, STRIDE, IGNOU
for his Co-ordination

Copyright with
Institute of Rail Transport, 2018 (Revised Edition)

All rights reserved. No part of this work may be reproduced in any form, by mimeograph
or any other means, without permission in writing from the Institute of Rail Transport.

Further information about the Institute of Rail Transport and its courses can be obtained
from the Institute’s office at 104, NCRPU Building, Shivaji Bridge, Behind Shankar Market,
Near IRWO office, New Delhi - 110 001

Printed and published on behalf of Institute of Rail Transport by Shri Pramod Uniyal,
Executive Director.

Printed at : Allied Traders, 455, Patparganj Industrial Estate, Delhi-92

IRT-22 : RAIL TRANSPORT AND MANAGEMENT
MODULE - 1 : Overview of the Transport Sector

Unit 1 : Historical Developments - I

Unit 2 : Historical Developments - II
Unit 3 : Characteristics & Role of Different Modes of Transport
Unit 4 : Cost Structure of Different Modes of Transport
Unit 5 : Unit Cost in Indian Railways
Unit 6 : Pricing of Transport Services
Unit 7 : Urban Transport - I
Unit 8 : Urban Transport - II
Unit 9 : Organisational Structure of Indian Railways

MODULE - 2 : Rail Operations Management

Unit 1 : Transportation
Unit 2 : Organisation of Operations
Unit 3 : Passenger Operations
Unit 4 : Goods Train Operations
Unit 5 : Recent Developments in Freight Operations
Unit 6 : Operating Statistics
Unit 7 : Rules of Safety in Railway Operations
Unit 8 : Accidents - Relief Measures, Enquiry into Causes

MODULE - 3 : Marketing & Commercial Policy

Unit 1 : Commercial Organisation

Unit 2 : Coaching Traffic
Unit 3 : Reservation, Luggage and Parcel Rules
Unit 4 : Goods Traffic
Unit 5 : Pricing of Rail Transport
Unit 6 : Passenger Amenities
Unit 7 : Compensations/Claims
Unit 8 : Marketing Strategies

MODULE - 4 : Logistics & Supply Chain Management

Unit 1 : Basic Concepts of Supply Chain Management

Unit 2 : Supply Chain Operations : Planning and Sourcing
Unit 3 : Supply Chain Operations : Marketing and Delivering
Unit 4 : Supply Chain Management in Multi-Modal Transport
Unit 5 : ITS in Logistics and Transportation

MODULE - 5 : Costing & Pricing of Rail Transport Services

Unit 1 : Theory, Traffic Costing in Indian Railway System and

International Practices
Unit 2 : Costing of Freight and Coaching Services
Unit 3 : Pricing Concepts and Indian Railways’ Rating Policy

MODULE - 6 : Human Resource Management in Indian Railways

Unit 1 : Management - Concepts and Evolution

Unit 2 : Structure of Organisations and Management Processes
Unit 3 : Management in Future
Unit 4 : Personnel Management Discipline - An Overview
Unit 5 : Employee Relations and Labour Legislation
Unit 6 : Organisational Behaviour
Unit 7 : Management in the Indian Railways

MODULE - 7 : Legal & Technical Aspects of Railway Functioning

Unit 1 : Signalling - I
Unit 2 : Signalling - II
Unit 3 : Interlocking
Unit 4 : Systems of Train Working
Unit 5 : Modern Signalling Systems
Unit 6 : Locomotives
Unit 7 : Coaches
Unit 8 : Multiple Units and Other Coaching Vehicles
Unit 9 : Wagons
Unit 10 : Electricity in Railways
Unit 11 : Train Lighting
Unit 12 : Air-Condition of Coaches
Unit 13 : Electric Traction
Unit 14 : Role of Telecommunication and Basic Infrastructure
Unit 15 : Modern Telecommunication Systems
Unit 16 : Track
Unit 17 : Railways Act 1989

MODULE - 8 : Planning, Financial Management & Investment Policies

Unit 1 : Finances on Indian Railways

Unit 2 : Railways Financial Planning
Unit 3 : Organisation and Function of the Finance & Account
Management of the Railways
Unit 4 : Railways, The Public Accountability and Parliament
Unit 5 : Structure of Railways’ Accounts
Unit 6 : System of Railway Accounting : Classification and
Budgetary Management
Unit 7 : Exercising Budgetary Control, Conducting Review of
Financial Performance, Statistics & Economics Analysis,
Traffic Costing, Management Accountancy Performance
Budgeting and Zero-base Budgeting
 6
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Institute of Rail Transport
Human Resource
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Management in
Indian Railways

UNIT-1
Management - Concepts and Evolution

Structure
1.1 Introduction
1.2 Objectives
1.3 Evolution of Management thoughts and Concepts.
1.3.1 Classical School of Management
1.3.2 Human Relations School of Management
1.4 Leadership
1.4.1 Theories of Leadership
1.4.2 Transformational Leadership
1.5 Management by Objectives (MBO)
1.5.1 Steps in establishing MBO
1.5.2 Suggestion for improving MBO programme.
1.6 Functions of Management
1.6.1 Plannings
1.6.2 Organising
1.6.3 Direction
1.6.4 Controlling
1.6.5 Managerial Skills
1.7 Summary
1.8 Check Your Progress : The Key
Further Suggested Readings

1
1.1 INTRODUCTION
Before you read advanced theories of management, strategies and related
issues, understanding of definition, concept of management and its evolution
is essential. This unit has dealt there aspects alongwith leadership styles,
Management by objectives (MBO) and in brief various functions of management.

1.2 OBJECTIVES
After going through this unit, you shall be able to

OO Explain evolution of management Concept and thoughts,

OO Describe theories of leadership;
OO Understand analysis management by objectives (MBO), and
OO Discuss various functions of management.

1.3 EVOLUTION OF MANAGEMENT

THOUGHTS AND CONCEPTS
The term Management has been defined in different ways in the literature on
the subject. However, a basic definition which has common acceptance is that
management is concerned with the accomplishment of objectives through
the efforts of group of people. Koontz defines management as, “The process
of designing and maintaining an environment in which individuals, working in
groups, accomplish efficiently selected aims.” Thus, a manager has to achieve
the objectives of the organisation or the enterprise to which he belongs, through
the efforts of other persons for whose work he is responsible. Objectives or goals
are the final results expected.

For achieving these objectives, a manager has to undertake the following

functions :

OO Planning: a process of determining what is to be achieved.

OO Organising: this involves allocation of resources and establishing the
means to accomplish the planned objectives.
OO Staffing: this refers to identification of personnel requirements and the
problems connected therewith - e.g. identification of staff requirements,
recruitment, training, compensation packages etc.
OO Direction and Leading: this involves motivating the personnel of the
organisation; and

2
OO Controlling: this process involves a comparison of the results achieved
with the goals or plans and taking such action as is found necessary to
achieve the objectives or goals more effectively. (For facility or reference
these may be referred as “PODC”. or PCDO.)

These functions are elaborated in a subsequent part of this lesson. Generally,

Managers are considered as falling in three tiers as under :-

OO Lower level or junior managers comprising supervisors, Asstt officers, etc.

OO Middle level managers comprising the administrative grade officers.
OO Top managers comprising heads of organisations, General Managers,
Directors, Chief Executives, etc.
It has to be noted here that the function of management is not confined to
manufacturing or to business only. Every organisation has certain objectives or
goals and every organisation must have a set up through which such goals can
be achieved. Thus, management is relevant not only to business enterprises, but
also to service organisations, charitable institutions, public utility organisations
etc., for example, hospitals and educational institutions which render a specific
service to the society at large or a section of the society. Management concepts
and management practices are thus relevant to each and every organisation.
They come into play in facilitating these organisations to perform their assigned
tasks in a better manner.

Evolution of management thoughts and concepts as a body of knowledge has

taken place over the past few decades. Management principles should be looked
upon as codification of knowledge and experience gained over a long period of
time.

1.3.1 Classical School of Management

The most widely accepted school of thought is known as the classical school
of management. This adopted the approach of providing rationale and
scientific basis to the management of organisations. It classified the basics
of management business as planning, organising, directing and controlling. It
also sought to apply scientific methods of management and develop specific
principles of management. Taylor, Emerson, Gantt, Gilberth, Fayol and Bernard
are the leading personalities concerned with the classical school of management.
It is their interest in the subject and it is their efforts which gave rise to the
scientific management process.

Taylor is, in fact, recognised as the father of scientific management and earnestly
believed that management is a process in which the scientific method should
be adopted. In his approach, the following four principles were taken as basic to
management :-

3
OO Development and use of scientific method in the practice of management.
OO Using scientific methods to select employees best suited to perform a job.
OO Providing the employees with scientific education and training.
OO Encouraging friendly interaction and cooperation between the
management and the employees, but at the same time keeping
management and workers as separate entities.

The greater part of Taylor’s work devoted to improving management of

production operations. His famous experiment with the loading of pig iron in the
Bethelham Steel Company, is illustrative of his approach. He devised a step by
step method to be followed by the workers in loading and storing pig iron. By his
method he was able to achieve an improvement in loading per man per day from
12.5 tons to 48 tons. In this process, the earnings of the workers also increased
by fifty percent under an incentive system. Thus, Taylor’s approach adopted a
scientific method to improve the output of the workers as also their earnings.
Taylor, however, believed that it is for management to lay down a scientific
method of doing the work with a view to improving output.

In the words of Taylor, ‘Scientific Management’ is knowing exactly what you want
the men to do and seeing that they do it and in the cheapest way.

Taylor’s approach to management involved the following basic principles :

OO Promoting organised knowledge and systems approach.

OO Promoting harmonious group action.
OO Enhancing cooperation amongst workers rather than uncoordinated
individualistic approach.
OO Developing skills of workers.
OO Providing necessary environment in the organisation to allow maximum
potential of workers to be drawn.
OO Maximise productivity and output.
OO Improved compensation to workers through improved productivity.

The important tools employed for Scientific Management can be enumerated as

under:-

Work Study :- This in turn comprised of time and motion study and method
study.

Time study involves a careful study of the time in which a given piece of
work ought to be done or output achieved. Motion study seeks to identify and
eliminate avoidable and unnecessary motions thereby achieving the least waste
of labour. Method study aims at keeping the cost to the minimum. It includes
determining the kind of plant layout and how (in what manner) the various jobs
are to be done.

4
Simplification and standardisation: Simplification seeks to reduce unnecessary
quantities and cuts down unnecessary expenditure by eliminating what is
strictly not required. Standardisation means setting up standards of quality and
performance, as for example, laying down the type, design and specifications
(like measurements, quality etc.) of a product. It includes manufacture of identical
parts and components which would be interchangeable and specifying standards
of performance of workers.

Selection of workers and training: This aims at devising procedures so that

personnel suitable for the jobs to be performed are selected and given proper
training.

Scientific Task Planning: The objectives of scientific task planning are to lay
down the target for production, ensure quality control and minimise costs.

This process involves Routing, Scheduling, Despatching and Follow up. The
Gilberth’s analysis of motions involved in performing work so as to develop the
one best way. Gantt developed the control chart which is used in productions
operations even to this day.

In contrast to the above, Fayol and Bernard concerned themselves with

developing a broader theory on general management. It is Fayol who
propounded the theory of fundamental functions of any manager, comprising
planning, organising, co-ordinating and controlling.

Fayol propounded fourteen principles of management: These have become

well known and any student of management should know about them. These
principles are enumerated below:

(i) Division of work: It is necessary that the work of every person in

an organisation should be limited so as to be conducive to better
performance.
(ii) Authority and responsibility: Authority and responsibility cannot be
divorced. Authority is the power to give directions and responsibility is
towards performance of the task or achievement of results.
(iii) Discipline: This is necessary for the smooth and efficient functioning
of an organization. The authority or right to impose penalties to enforce
obedience and ensure conformity to the rules of the organisation should
be used fairly and judiciously.
(iv) Unity of Command: The organisational arrangements should be
such that a subordinate would be expected to receive orders from and
be accountable to only one superior. If he is required to obey and be
accountable to more than one superior, order is disturbed and stability is
threatened.
(v) Unity of Direction: This principle enjoins that a group of activities in an
organisation directed towards the same objective, should be under one
and the same head. (Whereas unity of command refers to the functioning

5
 of individuals in an organisation, unity of direction refers to the functioning
of the organisation as a corporate body).
(vi) Subordination of Individual Interests: Interest of the organisation
should prevail over those of individuals in the organisation.
(vii) Remuneration: The remuneration paid to the personnel of an
organisation should be just and fair so as to provide satisfaction.
(viii) Centralisation: The extent of centralisation of authority of an organisation
has to be decided on the basis of circumstances of that organisation. It
should be such as to achieve optimum utilisation of the capacity of the
personnel of the organisation.
(ix) Scalar Chain: The chain of command (various levels in the hierarchy)
should be maintained and communication made through it from one level
to other levels. A level in the hierarchy should not normally be bypassed
barring exceptions being made when, in special circumstances, it is found
to be absolutely necessary to do so.
(x) Order: This enjoins the principle that in an organisation there should be a
place for everything and every one and everything should be in its or his
or her place.
(xi) Equity: This principle requires that employees in an organisation should
be treated by management with fairness and objectivity and shown due
consideration. This would pave the way for cordial relations.
(xii) Stability of Tenure: Employees should have a measure of job security.
(xiii) Initiative: To provide motivation through job satisfaction; employees at all
levels should be provided to exercise their discretion and show initiative.
(xiv) Espirit de corps: Management should endeavour to maintain team spirit
and encourage cooperation among employees. This would be conducive
to the achievement of the objectives of the organisation.

In Bernard’s view the most important function of management is to provide the

basis for cooperative effort directed towards the goals of the organisation. He
believed that the degree of cooperation depends upon effective communication
and maintaining a balance between the rewards an employee receives and the
contribution made by the employee.

In all the above approaches, the basic philosophy is one of applying scientific
methods to management. In fact, Taylor proceeded on the premise that it was
economic reward which would lead to higher production.

The above ideas underwent a great change with the development of what has
come to be known as “the Human Relations School” of Management. This
started with experiments conducted by Elton Mayo and Roethlisberger in the
General Electric Co. at Hawthorne (commonly referred to as “The Hawthorne
Effect). The Hawthorne effect is named after what was one of the most famous
experiments (or, more accurately, series of experiments) in industrial history. It
marked a sea change (in thinking about work and productivity. Previous studies,

6
in particular Frederick Taylor’s influential ideas, had focused on the individual and
on ways in which an individual’s performance could be improved. Hawthorne set
the individual in a social context, establishing that the performance of employees
is influenced by their surroundings and by the people that they are working with
as much as by their own innate abilities.

The experiments took place at Western Electric’s factory at Howthorne, a suburb

of Chicago, in the late 1920s and early 1930s. They were conducted for the most
part under the supervision of Elton Mayo, an Australian-born sociologist who
eventually became a professor of industrial research at Harvard.

The original purpose of the experiments was to study the effects of physical
conditions on productivity. Two groups of workers in the Hawthorne factory were
used as subject of studies. One day the lighting in the work area for one group
was improved dramatically while the other group’s lighting remained unchanged.
The researchers were surprised to find that the productivity of the more highly
illuminated workers increased much more than that of the control group.

The employees’ working conditions were changed in other ways too (their
working hours, rest breaks and so on), and in all cases their productivity
improved when a change was made. Indeed, their productivity even improved
when the lights were dimmed again. By the time everything had been returned to
the way it was before the changes had begun, productivity at the factory was at
its highest level. Absenteeism had plummeted.

The experimenters concluded that it was not the changes in physical conditions
that were affecting the workers’ productivity. Rather, it was the fact that someone
was actually concerned about their workplace, and the opportunities this gave
them to discuss changes before they took place.

These experiments thus paved the way for the thinking that factors other than
purely economic rewards have a considerable role to play in the effectiveness
of management. The human relations approach has evolved into behavioural
management science in recent years. A good deal of research has been done
in this area, notably by persons like Abraham Maslow, Mcgregor, Chris Argyris,
Fredrick Herzberg and Renis Likert. These activities cover areas like motivation
and leadership which are important subjects in management concepts and
practice. These are being elaborated in a subsequent part of the lesson.

Apart from the classical and behavioural schools of management, however, a

number of other approaches have also been suggested. Harold Koonz has, in
fact, enumerated as many as eleven different approaches. These are briefly
enumerated below:-

i) Empirical or Case Approach – study of management through case.

Examples of successes and failures of practising managers.
ii) Interpersonal Behaviour Approach – concentrates on interpersonal
behaviour and the study of psychology; and focuses on the study of
motivation and leadership.

7
iii) Group Behaviour Approach – proceeds on the premise that effective
management requires a deep understanding of behavioural patterns of
group members within the organisation.
iv) Cooperative Social Systems Approach- this can be considered as an
outgrowth of the international and group behaviour approach. It is also
referred to as the “organisational theory” approach.
v) Socio-Technical Systems Approach-proceeds on the basis that the
technical system-the machines and methods used-has a strong influence
on the social relations within the working environment.
vi) Decision Theory Approach- based on the premise that the major
responsibility of managers is to make decisions.
viii) Systems Approach-requires that the physical, human and capital
resources of an organisation be inter-related and coordinated within its
external and internal environment.
viii) Management Science Approach- this uses mathematical models,
concepts and symbols in solving managerial problems.
ix) Contingency or Situational Management- advocates that managers
diagnose a given situation and adapt to meet the conditions which obtain.
x) Managerial Roles Approach – propounds that managers have three
dominant roles, viz., interpersonal, informational and decision making.
xi) Operational Approach- recognises that there are significant concepts,
principles, theories and techniques that comprise the effective practice
of management. Accordingly, this approach seeks to draw the requisite
knowledge from different fields of study including sociology, -psychology,
mathematics, economics and industrial engineering.

Check Your Progress 1 :

1. Identity three main features of classical school of management and
relate the to any organization to which you are familiar with.

8
1.4 LEADERSHIP
Importance and relevance of leadership

Effective leadership is essential to the survival and growth of every organisation,

whether it be a business’ enterprise or a service organisation. Leadership can be
described as the process of motivating and directing others to the achievement
of some objectives or goals. A manager must have leadership qualities in order
to be successful in his functions. However, every leader need not necessarily be
a good manager of an enterprise or an organisation, as the objectives which he/
she may be seeking to secure may not coincide with those of the organisation.

Leaders are able to influence others by virtue of their possessing power. This
power can be of a varied nature. For example, it may be the power derived from
the position of a person. This is known as formal power. Examples are heads of
organisations, Chairman of a Corporation, Chief Works Manager of a Factory etc.
It may be the power derived from the authority of the person to reward individuals
working under him by way of pay increases, cash awards, promotions, praise
and the like, or it may be the power to enforce obedience or conformity with the
requirements of the organisation on pain of punishment or other adverse action.
These are together referred to as the reward power and the coercive power.
A person in an organisation may also derive power by virtue of his/her expert
knowledge, skill or experience, whereby others turn to him/her for guidance or
instructions.

1.4.1 Theories of Leadership

Three basic theories of leadership have been propounded. These are related to
Traits, Behaviour and Situation. They can, therefore, be referred to respectively
as the Traits Theory, the Behaviour Theory and the Situation Theory. Earlier
studies in leadership endeavoured to relate effectiveness of leadership to traits
or characteristics like personality and intelligence. However, research has now
established that traits alone cannot go to make an effective leader.

The Behavioural Theory identifies two basic dimensions of leadership. One

relates to the accomplishment of the task or the job and the other relates to the
leadership with the personnel who constitute the followers of the leaders. Widely
well known theory in this regard is that of the ‘Management Grid’ propounded
by Blake and Mouton. In this theory “concern for the task” and “concern for the
person” are plotted in the form of a graph. A person may be “task oriented” with
little regard or consideration for the persons actually working with him/her for
the accomplishment of the task. At the other extreme, a person may be people
oriented with little regard for accomplishment of task. A person could also adopt a
middle position whereby he/she shows almost equal concern ,for the task as well

9
as for the people. Blake and Mouton suggest that utmost concern for the task
and utmost concern for the people is the proper combination making for the most
effective leadership which can achieve the best results.

The five possible styles of leadership, in terms of this theory, are as under:-

i) Impoverished management - wherein the manager has little concern

either for the people or for the task.
ii) Authority- obedience relationship- wherein stress is on efficiency of
operations, with hardly any regard for the human element.
iii) Country Club management- a style under which the manager is friendly to
and thoughtful of his/her people with little concern for the work or output.
iv) Organisation man management- wherein the manager adopts a middle
position, seeking a balance between concern for work and a satisfactory
level of morale achieved through appropriate level of concern for the
people.
v) Team management - in which the manager accomplishes work or task
through a committed set of people who are motivated to see a “common
stake” in organisation to purpose.

More recently, a situational approach has been adopted in leadership theories.

In this approach, the theory is that the most effective leadership is neither task
centered nor people centered. A leader should adopt a style which is flexible
enough to suit the needs of a particular occasion as well as the needs of the
subordinates.

Another theory which has been propounded relates to the level of maturity of the
followers and the demands of the situation. In this approach a leader will depend
on a style which is not only appropriate to the situation but is also related to the
maturity of the followers.

None of these theories taken alone seems to provide a satisfactory answer to the
question, as to what factors go to make an effective leader. The most effective
leadership style will seem to be one that meets the needs of the particular
situation at hand. Careful considerations of the forces in the leader and the
followers and the situations are all interrelated in determining the most effective
leadership style. This can be broadly enumerated as under:-

Leader: Abilities, traits and characteristics, behaviour - task oriented or people

oriented, experience, expectations.

Follower: Abilities, traits and characteristics, experience, expectations and task

relevant maturity.

Situation: This refers to the structure, the technology, the objectives of the
organisation and the external environments.

10
1.4.2 Transformational Leadership
With the increasing complexities which organisations have to face and to cope
with situations of rapid change, a theory has been advanced for a new kind of
leader known as “transformational leader”. This concept has been put forward by
Noel M. Tichy and Mary Anna Devanna in their book “Transformational Leader”.
What distinguishes this kind of leader is that not only does he/she deal with
organisational change but also he/she realises the necessity for change in the
changing corporate scene. Such leaders do not move organisations along set
tracks; they transform organisations along new directions. The transformational
leaders see themselves as agents of change. They can cope with and tackle
problems in a complex and fast changing world. They have the characteristics
of visionaries and they have the capacity to translate their visions into reality for
other people to share.

Check Your Progress 2 :

1. Out of few theories explained above which type of leadership is
suitable to educational institution and why? (Write your answer in
about 50 words.)

1.5 MANAGEMENT BY OBJECTIVES (MBO)

All organisations- whether they be business organisations or other, are
concerned with the achievement of objectives and attainment of goals.
Achievement of its objectives should be the primary concern of an organisation.
We have also noted that management is the process of achieving objectives
through others.

Drucker, the famous management expert, had described “Management by

Objectives” (MBO) in 1954 in his book “Practice of Management”. Since then, this
concept has received considerable attention.

11
The term” Management by Objectives” (MBO) is used to describe the technique
by which employees and management (or rather, subordinates and supervisors)
jointly agree on objectives and periodically assess progress in accomplishing
such objectives.

Management by Objectives (MBO) provides a systematic and organised

approach that allows management to attain maximum results from within the
available resources by focussing or concentrating on the achievable goals. MBO
can be taken as an overall philosophy of management. It constitutes a way of
thinking conducive to concentrating attention on the achievement of results.

Drucker stated that specific objectives must be established in the following areas

OO Market standing
OO Innovation
OO Productivity
OO Worker performance and attitude
OO Physical and financial resources
OO Profitability
OO Managerial performance and development

According to Drucker, the first requirement in managing an enterprise is

management by objectives and self control.

The concept as originally propounded aimed at securing three managerial

needs:-

OO Providing a basis for more effective planning. MBO is looked upon as

a planning system requiring each manager to be involved in the total
planning process through the mechanism of participation in establishing
objectives.
OO It is designed to improve communication within the firm, for, in
implementing the system, managers and employees frequently discuss
the accomplishment of objectives and the achievement of such
objectives.
OO Implementation of the MBO system would encourage acceptance of a
more participative approach to management.

George Odiorne, who was an advocate of MBO, considers it as a means of

avoiding what he calls “Activity Trap”, by this is meant the shifting of emphasis
from mere activities to achievement of results.

The behavioural approach to MBO has been suggested by Douglas McGregor

who advocates it as a method of performance appraisal. His view of MBO is
based upon his motivation theory which has been dealt separately within the
section on motivation.

12
In the late Sixties, MBO assumed a broader perspective when it was sought to
be encouraged in the organisations planning and control processes.

Since early seventies, MBO has evolved into a system of management designed
to encourage management processes and functions in a more logical and
consistent manner.

1.5.1 Steps in establishing MBO

The various steps involved in the successful establishment of the system of
management by objectives can be broadly enumerated as under:-

OO Support and commitment by top management;

OO Establishing long term goals/objectives and strategies;
OO Establishing specific objectives for each firm or wing of the organization;
OO Establishing individual performance objectives and standards (this can be
referred to as action plan);
OO Appraisal of results; and
OO Adopting remedial measures to remove deficiencies which the appraisal
of results may reveal.

The types of objectives used in MBO programme can fall broadly under the
following categories:

OO Routine
OO Problems solving
OO Innovative
OO Personnel development.

Routine objectives refer to matters of procedures like reducing by a specified

percentage delays in preparing returns, carrying out a market test of a product,
etc.

Problems solving objectives are in a higher plane, as they involve identifying of a

problem and seeking to solve it. An example could be providing adequate profit
margin on a particular product which is sought to be raised from the existing
percentage to an agreed higher percentage for which measures will have to be
devised, another example would be reducing the level of rejects, in a production
process.

Innovations are in a still higher plane where greater conceptuality and managerial
skills are called for. For example, developing measures to reduce the turnover
(quitting the organisation) of a particular category of staff where such turn-over
happens to be heavy.

13
Advantages of a MBO programme

The advantages in adopting MBO programmes can be enumerated as under:-

OO Better overall management and achievement of higher performance

levels;
OO Conducive to overall planning system;
OO Helps managers establish priorities and measurable targets of standards
of performance;
OO Encourages adoption of an administrative approach in the organization;
OO Conducive to the control processes; and
OO Provides a good opportunity for career development for individual
managers and employees.

Likely problems

At the same time, certain problems which have been encountered in introducing
and maintaining the MBO system have also to be anticipated. These are as
under:-

OO Absence of support and commitment by top management;

OO Difficulties in establishing specific and concrete goals in certain areas of
functioning of an organization;
OO Emphasis on short term goals at the expense of long term goals (Short
term goals are more feasible and give greater satisfaction to individuals
as well as to the top management hence the tendency to give them
greater attention than long term measures); and
OO Too much time being spent in maintaining the system.

1.5.2 Suggestions for Improving MBO

programmes
Some suggestions for improving the effectiveness of MBO system are given
below:

OO Obtain commitment and support of top management;

OO Specify overall objectives of the programme and disseminate such
information;
OO Remove any misapprehensions that the system is related only to
performance appraisal (annual confidential reports);
OO Recognition that goals must be specific and attainable and that they
contribute to the overall objectives of the organization;

14
OO Willingness to constantly review additional goals, if necessary; and
OO Recognition that MBO is not a panacea (i.e. cure-all) for all the ills
afflicting the organization;
Lewin, Fisher; Shewhart, Roethlisberger, Drucker, Dantzing and Shannon who
are pioneers in Management, have contributed to the advancement of thought
and practice, and their contributions are listed in the table -1.

Table 1
S.No Name Major Contributions
Stressed that the theory of
Henri Fayol
1. administration was equally applicable to all forms of
(1841-1925)
organised human cooperation.
Harrington Studied the Sante Fo Railroad and promoted
2.
(1853-1931) “scientific management” in general usage
3. Frederick W. Taylor Father of Scientific Management Developed high-
(1856-1915) speed cutting time study to industry.
Karl Pearson Developed basic statistical tables and early
4. (1857-1936) statistical techniques, including the chi- square test
and the standard deviation concept.
Emphasised relation of management and
Henry L. Gantt
labour. Stressed conditions that have favourable
5. (1861-1919)
psychological effects on the worker. Developed
charting techniques for scheduling.
Max Weber The foremost pioneer in the development of a theory
6.
(1864-1920) of bureaucracy.
Frank Gilbreth Searched for “the one best way”. Introduced motion
7.
(1868-1924) study to industry.
Mary Parker Follett Led in practical observation about the value of human
8.
(1868-1933) relations to the basic principles of organisation.
Stressed the importance of human and social factors
in industrial relationships.
G. Elton Mayo Questioned the overemphasis on technical skills
9.
(1880-1949) at the expense of adaptive social skills. Led a
team of researchers in the extensive studies at the
Hawthorne plant of Western Electric Company.
Leader in stressing sociological aspects of
Chester I. Barnard management concentrated on the concept of
10.
(1886-1961) authority, the importance of communication and
informal organisations in management.
Kurt Lewin Developed research and theory theory of group
11.
(1890-1947) dynamics.
Pioneer in the use of statistical methods in research.
Ronald A. Fisher
12. Made valuable con-tributions to the design of
(1890-1962)
experiments.
Applied theory of probability and statistical inference
13. Walter .A. Shewhart to economic problems in Bell Laboratories.
Developed statistical control charts.

15
 S.No Name Major Contributions
Made a comprehensive report on the Hawthorne
14. F.J. Roethlisberger experiment. Led in experimental research on human
factors in management.
Developed concept of management by objectives.
15. Peter Drucker As a consultant and writer, popularized new
developments in management.
Developed the basis for practical applications of
16. G.B. Dantzing
linear programming.
17. Claude Shannon Laid the theoretical foundation for information theory.

Check Your Progress 3 :

1. What do you understand by MBO and in which type of organization
practicing MBOs is possible? (Answer in about 60 words)

1.6 FUNCTIONS OF MANAGEMENT

The functions of management, as outlined in the section, can now be considered
further.

1.6.1 Planning
The planning function is concerned with determining the objectives of the
enterprise or the organisation and the means for achieving them. It involves
setting objectives and targets, forecasting the future and planning to meet it. For
example, in the case of a business enterprise, the objective can be to become
a market leader in the particular product or service; the objective could be to
secure a specified share of the market or increase its share of the market to
a specified level. For instance, a business enterprise manufacturing tractors
may aim at capturing at least a third of the total sales of tractors in a year in the
entire country. An inter State road transport organisation may aim at moving

16
ten per cent more of goods as compared to the previous year. In the case of
an educational institution, for example, the objective could be to maintain high
standards of education and shaping of character of the students, and securing
a minimum level of successful candidates in the final examination. A hospital
could have the objective of attending to the maximum number of patients with the
least possible delay of providing a bed to every person who requires Inpatient
treatment and of reducing the total period of treatment. The objectives can be
varied and some of them may not be susceptible to quantification. The goals and
objectives have to be laid down by the organisation according to its corporate
policy. The main point to be noted is that it is the job of the management to spell
out the goals and objectives of the organisation. These objectives are to be
planned against a time-frame.

1.6.2 Organising
After objectives are formulated, management must organise the human and
physical resources of the enterprise. It involves deciding what activities each
department or unit in the organisation should undertake, delegating authority to
subordinates, establishing channels of command and communication etc.

The organising function is thus concerned with developing the framework that
relates personnel, physical resources, working methods, etc. to one another.
Every organisation has a hierarchy which can be referred to as the organisational
structure. The structure has to be so designed as to achieve the objectives
properly. For example, a hospital could have a Medical Superintendent, or a
Hospital Administrator as the Chief who becomes responsible for ensuring that all
the infrastructure are provided, that the various functions of the hospitals are so
coordinated as to provide the maximum facility to the users within the available
resources and that the Hospital complex operates as a coordinated unit. To
achieve the objectives, the hospital must have the requisite number of doctors,
para medical staff like nurses, pharmacists, etc. and other allied staff like office
staff, cleaners, attendants, etc. Similarly, the physical resources like building,
wards, beds, linen, medical equipment etc. are also to be provided. It is easy to
see that all these require to be organised. The organising part of it is not confined
to the initial inputs but is equally relevant to the maintenance of the facilities
and their operation. For example, a hospital has to be maintained in a hygienic
condition. The medical equipment should be in working order. Supply of requisite
medicines, food, linen, etc. must be ensured and so on.

1.6.3 Direction
This function is concerned with enjoining on the members of the organisation to
undertake action consistent with the plans. The function of direction is concerned
with effectively motivating, leading and communicating with the employees in the
organisation.

17
1.6.4 Controlling
This function is concerned with ensuring that the objectives or goals of the
organisation are being achieved. For this purpose, systems of control are
established to oversee proper performance in accordance with the plans. By the
establishment of control systems, management places itself in a position wherein
it can compare periodically the actual performance with the expected one.
Where such review through controls shows deficiencies in any particular area,
corrective action has also to be planned and executed. For example, as part of
materials management, an objective may be planned of maintaining specified
limits. Periodical reviews would be necessary to check whether actual inventory
levels fall within the planned range. If not, causes will have to be ascertained and
remedial action taken.

It has also to be ensured that the different wings of the organisation act in
coordination. Hence, the total management functions include also the function
of coordination. In fact, the different management functions cannot be treated as
constituting water tight compartments. They interact with one another and the top
management has to see that the different functions are so performed that none
of these results in sub-optimisation, i.e., achieving one aspect of performance at
the cost of another. For example, if machinery is acquired with a view to turning
out products of better quality but at the cost of jobs or without having the requisite
skills developed among workers, the overall objective of the organisation will
suffer as in the result there will be discontentment among the workers and/
or machinery not being fully utilised which will lead to problems like agitation,
unrest, poor performance, etc.

1.6.5 Managerial skills

To be successful, a manager has to possess a number of skills. These skills can
be broadly categorised as follows:-

i) Technical Skill: The ability to use specific knowledge, methods or

techniques in performing work is referred to as Technical skill. For
example, a lecturer or professor in a college must know the subject
which he professes to teach. Even when he/she is elevated to the
position of Head of Deptt. or Principal, when he/she assumes managerial
responsibility, his/her professional knowledge is still important not only
for teaching but also for ensuring that the work of the Deptt. is carried
out smoothly and competently and that the lecturers are able to impart
knowledge adequately and satisfactorily. Such knowledge has also to be
updated from time to time.
Ii) Communication Skill : The ability to provide information orally or in
written forms to others in the organisation for the purpose of achieving the
desired results or goals, is referred to as Communication Skill. In fact, this
skill is vital to the success of any one whether in a business enterprise

18
 or elsewhere or even in private life. In the case of managers, however,
this skill acquires particular importance. Communication, it has been
recognised, is a complex process. Hence, management literature deals
with the subject in some detail; more about communication later.
iii) Human Relations Skill: The ability of a manager to understand how to
get along with others in the organisation, whether they be equals (Peers)
subordinates or superiors, is referred to as the Human Relations skill. In
fact, the skill is relevant even when dealing with others (outsiders) who
interact with an organisation or enterprise. Managers can be considered
to have human relations skills if they are able to create an atmosphere
conducive to motivation and healthy human relationship. Ability to
motivate and leadership qualities are important attributes of a manager.
Iv) Analytical Skills: These relate to the ability of a manager to use
analytical approaches or techniques in the performance of his/her
managerial functions. Quantitative techniques are also available to assist
a manager in analysing a situation and in finding effective solutions to
problems coming up in management of the organisation.
V) Decision Making Skill: A manager’s skill in selecting a course of
action from out of several available alternatives, is known as decision
making skill. This skill is essential to managers in performing the
functions of planning, organising, controlling and directing. Decision
making is recognised as an important aspect of management skills. The
ramifications of the process of decision making have been considered
further in a subsequent part.
vi) Conceptual skill: Conceptual skill refers to the ability of a manager to
understand the complexities of the organisation to which he/she belongs
and the environment it operates in. The development of this skill enables
a manager to understand in proper perspective the contribution made
by his/her department as well as by others in the organisation to the
accomplishment of the overall objectives of the organisation and the
environment in which the organisation functions and to duly take into
account these aspects in performing his/her tasks, particularly in the
process of planning.

These skills are required at all the levels of management from the first line
supervisors to the top managers. However, the extent to which the skills are
relevant and are required, varies from level to level. For example, at the level of
top management conceptual skill and decision making skill are by far the most
important. At the lowest level of management, technical skill is more relevant and
the need for conceptual skill and decision making skill is rather limited. At the
middle level of managers, technical skill is still relevant but decision making skill
and analytical skill assume greater importance. With the increasing awareness of
personnel in any organisation of their rights and with the increasing aspirations
and expectations of employees in general, human relations skill has assumed
almost equal importance at every level of managers from the lowest rung to the
highest.

19
1.7 SUMMARY
You have learnt in this unit Concept of Management, various schools of
management, leadership theories, MBO, and function of management- planning,
organizing, direction, controlling and managerial skills.

1.8 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

Three main features of classical school of management are :

OO Scientific approach to management

OO Division of Work
OO Simplification and standardization

Job analysis, work study and time and motion study of shop floors are the
examples of scientific approach to management. Distribution of work and
assigning of duty list are example of division of work. Standardization of
procedures through manual of office procedure, system of maintenance of
machines are the examples of simplification and standardization.

CYP 2 :

The situational theory of leadership is suitable to educational institutions

because educational institutions need command and control which should be
follower specific and context specific providing due flexibility and empowerment
to the faculty and students on one hand whereas control and discipline is also
necessary depending on the situation. Thus, situational leadership is best suited
for educational institutions.

CYP 3 :

Management by objective (MBO) is a systematic and organized approach to

attain maximum output by jointly setting the objectives by the management
and employees and periodically assessing the progress achieved against the
objectives. This helps us to set up a directed and focused contribution at all
levels within the organization.

This approach is suitable in such organizations where tangible objectives can be

set up for example in manufacturing or production environment. However, MBO
approach may not be that much relevant in service sector organizations where
defining objectives and targets become difficult.

Further Suggested Readings

1. Drucker, Peter F- The Practice of Management (Harper & Row, 1954)

20
2. Davis, Keith, Human Bahaviour at work (New York-Mc Graw Hill 1972).
3. Mcgregor, Douglas, the Human side of Enterprise (New York: Mc Graw
Hill, 1960).
4. Likert, Rensis, the Human Organisation (New York, McGraw Hill, 1967).
5. Leavitt, Harold, Managerial Psychology, Chicago (University of Chicago
Press, 1972).
6. Drucker, Peter F, Management: Tasks, Responsibilities, Practices (New
York, Harper & Row, 1973).
7. Fayol, Henri-General and Industrial Administration (New York, Pitman,
1949).
8. Koontz, Harold and O’Donnel, Cyril -Principles of Management (New
York: McGraw Hill, 1976).
9. Mondy, Wayne, Holmes, Robert E, Flippo, Edward B- Management-
Concepts and Practices (Allyn and Bacon Inc., Boston).
10. Roethlisberger, F.S., and Dickson B.J.- Management and the Worker:
An Account of a Research Programme (Harvard University Press,
Cambridge, 1939).
11. George S. Odiorne-Management by objectives (Belmont, California:
Pitman, 1965).
12. Reddin, W.J: - Effective Management by objectives (McGraw Hill Co.,
New York, 1971).
13. Koontz Harold and O’Donnell - Principles of Management (McGraw Hill
Book Co., 1976).
14. Haynes W.W. and Massie J.L. - Management - Analysis, Concepts and
cases (Prentice Hall)_ New Jersey, 1969)
15. McGregor, Douglas - The Professional Manager (McGraw Hill Book Co.,
New York, 1967).
16. Likert, Rensis - New Patterns of Management (McGraw Hill Book Co.)_,
1951
17. Drucker, Peter F. - Management Technology and Society (Pan Books).
18. Drucker, Peter F. - The Practice of Management (Harper & Row, 1954)
19. Goetz, Billy A - Management Planning and Control (McGraw Hill Book
Co.,)
20. Antony, Robert M - Planning and Control System (Harvard Business
School).

21
22
 6
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Institute of Rail Transport
Human Resource
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Management in
Indian Railways

UNIT-2
Structure of Organisations and
Management Processes

Structure
2.1 Introduction
2.2 Objectives
2.3 Organisational Structure.
2.3.1 Centralisation and Decentralisation
2.3.2 Line and Staff Organisations
2.3.3 Formal and Informal Organisations
2.4 Decision making
2.4.1 Steps involved in decision making
2.5 Delegation
2.5.1 Rationale for delegation
2.5.2 Barriers to effective delegation
2.6 Motivation
2.6.1 Theory ‘X’ and Theory ‘Y’
2.6.2 Maslow’s Theory
2.6.3 Motivation – Hygiene Theory
2.7 Work Stress
2.8 Communication
2.8.1 Communication Barriers
2.8.2 Transactional Analysis
2.9 Management of Conflict
2.10 Summary
2.11 Check Your Progress : The Key
Further Suggested Reading

23
2.1 INTRODUCTION
In the earlier unit we have discussed about concept, scope and school of
management. We also discussed about management functions. In this unit we
will discuss about structure of organisations and management process – decision
making, delegation, motivation, work stress, communication and conflict solution.

2.2 OBJECTIVES
After going through this unit, you shall be able to

OO describe various types of organizational structures,

OO explain the process of decision making,
OO analyses various theories of motivation,
OO examine the process of communication and barriers of communications
OO identify types of conflicts and strategies of conflict revolution.

2.3 ORGANISATIONAL STRUCTURE

A modern organisation is generally a large and complex one, employing all kinds
of persons and with many interfaces. The overall objective of an organisation
is, however, common to all its wings. It is, therefore, necessary to ensure that
the various wings of the organisation function in a coordinated manner and that
in any case they do not act at cross purposes. It is thus necessary to set up a
suitable structure of the organisation, establish the various levels referred to as a
hierarchy, the authority and responsibility at each level and the direction in which
authority flows. Hence, the organisational structure has to provide for the lines of
authority, the reporting relationship and the functional linkage among the various
wings of the organisation.

The matters to be broadly considered in this connection, are:

OO Centralisation and decentralisation.

OO Line organisation and staff organisation.
OO Formal and informal organisation.

2.3.1 Centralisation and Decentralisation

Where the authority and the decision making power rest mostly in the higher
levels of the organisation, the organisation is stated to be highly centralised. On

24
the other hand, where decisions are made mostly at the lower levels and the
authority also correspondingly rests at those levels, the organisation is stated to
be decentralised.

The following factors are relevant in determining the degree of centralisation in

an organisation:-

OO The first, of course, is the size of the organisation and its complexity.
OO Where the organisation is of considerable size and is also spread over a
number of locations, decentralisation becomes a matter of necessity.
OO The adequacy of the communication system is also a relevant factor.
OO With an adequate communication back-up, centralisation may not hamper
efficiency and speedy functioning of the organisation.
OO The general philosophy of the organisation in the matter of delegating
powers to lower formations, would also influence its decision on
decentralisation.
OO The diversity in the products manufactured or handled and services
rendered by the organisation is yet another relevant factor. Where
the organisation deals with a number of products and/ or services
but specialisation is required in regard to some of them, it may not be
possible to decentralise the functions in regard to such items, as it may
not be economical to have personnel with the requisite expertise and
knowledge in all its locations.

2.3.2 Line and Staff Organisations

Line organisation refers to that part of the organisation which involves or
manages functions essential to the successful existence of the organisation. For
example, production, finance and marketing may represent the three wings of
the line organisation of a manufacturing company or firm. The line organisation
is conducive to authority and accountability relationship being clear, to speedier
decision making and capacity to adjust to changing needs of circumstances. It
also results in greater closeness of relationship. However, as the organisation
grows and the complexity of its functions increases, the line organisation could
cause problems particularly due to its specialisation in certain functions.

The staff organisation refers to supporting services like personnel, maintenance,

industrial engineering and materials management. The supporting organisation is
required for the effective functioning of any organisation irrespective of size.

A comparatively recent concept is that of project organisation structure. In a

project organisation necessary human talent and physical resources are brought
together. A project organisation is by its very nature a temporary organisation

25
structure designed to achieve substantial results in executing a specific project,
as it concentrates all its energies and skills in completing the assigned project.

When the aforesaid concept is adopted on a long term basis, it is generally

referred to as a matrix organisation. Matrix organisational structure is generally
adopted when it is essential for the organisation to be highly responsive to a
rapidly changing external environment.

2.3.3 Formal and Informal Organisations

Every organisation has formal structure or set up. This is laid down by the
top management. In doing so, the top management seeks to define matters
clearly and explicitly. The task and responsibility at each level are assigned
and the requisite facilities are provided and authority necessary to function is
granted. While some discretion in the discharge of assigned functions has to
be granted so that day to day working is not hampered and initiative - is - not
curbed, there is necessarily an element of rigidity in the formal organisation.
This is so because the authority at the various levels in the formal organisation
is derived from the basic set up laid down by the top management. Thus,
the formal organisation is brought into being by design the authority and
responsibility at the various levels are defined, line of communication and the
channel of command are formulated and the relationships between superiors
and subordinates are also fixed.

However, in every organisation, an informal organisation also comes into being

sooner or later. As the organisation functions from day to day, the personnel
constituting it necessarily interact with one another and this sets into motion the
development of personal or group relationships. It may be different from those
arising out of the formal structure. No conscious attempt is made to create the
informal organisation. It is not formally derived. It owes its existence to mutual
regard and intimacy among various persons working in an organisation. A person
may possess an authority in this informal organisation which he/she may not
have by virtue of hi/her relative position in the formal organisation. In fact, there
are no written rules or authority in the informal organisation. There is no formal
line of communication unlike in the formal organisation. This informal line of
communication is also known as the grapevine. Every person in the informal
organisation has to earn his status or authority. The informal organisation has
considerable influence on the effectiveness of the organisation as a whole and
the job satisfaction derived by the personnel of the organisation. Managers
must recognise the importance of the role of the informal organisation. A good
manager will try to use the informal organisation to good account for achievement
of his/her organisational objectives.

26
 Check Your Progress 1 :
1. What is the major difference between line and staff organization and
formal and informal organization? (answer in about 60 words)

2.4 DECISION MAKING

Decision making is an essential ingredient of the management process.
A manager is constantly faced either with problems to be solved or with
opportunities to be availed of for furthering the objectives of the organisation.
A manager who understands the nuances of the process of decision making
will measure upto his functions more effectively -than one who does not. In the
ultimate analysis the performance of an organisation depends upon timely and
effective managerial decisions.

This does not, however, refer only to decisions made at the top management
level. Decisions have to be made at various levels of the organisation depending
upon type of problem or issue to be resolved. These decisions can pertain
to routine or practical matters connected with day to day operations and
maintenance. They could also pertain to strategic areas and policy aspects.
Similarly, decisions could be programmed or non-programmed. Programmed
decisions pertain to matters of routine or repetitive nature. They are generally
to be dealt with according to specific procedures. Definite procedures are
generally laid down by an organisation to deal with such issues, so that other
problems of the same nature need not be treated as a unique case requiring
a specific decision on every occasion. As instances can be cited, decisions
regarding application for leave, advance, transfer, etc., of individual employees,
dealing with disciplinary cases at various stages (barring those representing
special features), stocking and issue of materials commonly consumed in the
organisation, repairs to assets of a repetitive nature and the like.

27
Non-programmed decisions are required to solve unstructured problems. They
present unusual features and hence the established procedures may not be
sufficient to resolve them. Such decisions thus require creativity and judgements
to be made.

2.4.1 Steps involved in decision making

The process of decision making has certain steps involved. It would be advisable
for a manager to be aware of these steps and to follow them wherever possible.
A manager should be aware at the same time, that there may be occasions when
a unique decision may be required on a subject and it would not be worthwhile or
possible to go about in an entirely systematic and analytical manner to come to a
decision.

There are mainly five stages comprising the decision making process. These are
as under:-

OO Defining or identifying the problem which calls for a decision or solution.

OO Developing or generating alternatives to the problem.
OO Analysing the various alternatives.
OO Making the decision i.e. choosing one of the alternatives as providing an
optimum solution to the problem.
OO Feed-back or review of the effectiveness and/or appropriateness of the
decision made.

Identifying the problem

This is a very important step. Unless the problem is identified correctly, the entire
process gets vitiated. One has to learn to distinguish between the manifestation
of a problem and the root cause of a problem. For example, a fall in production
in a manufacturing unit may be the result of manifestation, of a variety of causes.
The causes could be, for example, faulty machinery, sub- standard materials,
outdated process or lack of training on the part of the workmen. Unless the
precise cause is correctly ascertained, it is easy to see that an effective solution
cannot be found.

Developing alternative solutions

This requires collecting of information, processing and analysing such information

(including facts and figures), interpreting the result and applying knowledge and
experience to generate alternative solutions. Sometimes discussions with others
concerned within or outside the organisation, may be necessary. Some problems
also call for creative thinking or lateral thinking. (Creativity is the ability to invent new
ways of doing things, new things to do or new ways of interpreting old problems).

Effective decision making requires several alternatives to be developed from

which the optimum solution can be selected.

28
Analysing the alternatives

The various alternatives have to be analysed to facilitate the making of a decision

by- choosing that alternative which is considered as providing an optimum
solution.

The following considerations are relevant here :-

OO Financial cost - how much the decision will cost the organisation.
OO All-in cost - this has to take into account what the organisation has to
forgo in taking the decision and the opportunities which may be missed by
the particular decision.
OO Social cost - like effect on employment, environmental pollution etc.
OO Real cost - this includes the financial and social cost. This is the overall
cost to the society.

Quantitative methods of operations research (like linear programming) and break

even analysis could also be used at this stage.

Choosing one of the alternatives

This stage calls for ingenuity on the part of the manager. His experience as a
manager would also help him at this stage. The solution has to be an optimal
one. It should thus measure up to various requirements of the organisation and
not merely solve the problem on hand while creating difficulties (not reckoned
with) elsewhere.

Feed-back

It is advisable, at least in the case of major decision to obtain a feed back after
a reasonable time after implementation of the decision and review the position.
This will enable the manager to see whether the decision has, in fact, turned out
to be as expected, whether it solved the problem satisfactorily and whether any
modifications are called for.

Relate the steps involved in decision making to any major decision you have
taken in your organization.

2.5 DELEGATION
Delegation can be defined as parting with some aspects of authority by a
superior by moving them to a subordinate. It can be described as the process
of making specific work assignments to individuals within the organisation and
providing them with the authority or power to perform those functions.

Delegation of authority and functions is one of the important requisites of proper

management. In a large organisation, all the functions cannot be performed by
one authority. In fact, without delegation, it is virtually impossible in almost any

29
organisation except a one-man set up, to organise employees and jobs and to
get work done. At the same time, the responsibility for proper disposal of work
in upper echelons of an organisation rests with the concerned manager. Hence,
the need for delegation to be in terms which are clear and well understood in the
organisation, as authority should go hand in hand with responsibility. Delegation
is thus essentially a balance between two factors -trust and control. Unless a
superior is willing to trust a subordinate and control, no delegation, worth the
name, is possible.

Developing the skill of proper delegation to appropriately lower levels allows time
to a manager to focus his/her attention on more important items of work where
such attention is really needed.

Delegation should not, however, be confused with merely keeping the people in
an organisation, busy.

A manager who delegates recognises that he/she cannot and should not do
everything himself. In fact, the performance of a manager is to be judged not by
the things he/she does himself or herself but to what extent he/she gets things
done by others at the appropriate level. As pointed out earlier, management is a
process for achieving results through others. Thus, delegation becomes the key
to more effective management.

Delegation is a matter of achieving an appropriate balance between performing a

job oneself or directly supervising a job and ensuring that the overall performance
is properly secured and does not suffer for want of attention at the appropriate
levels. If a manager delegates too much of his/her power, he/she can be
accused of virtually abdicating his/her responsibility. If, on the other hand, he/she
delegates too little, he/she would find himself/ herself spending too much time on
trivial matters which can properly be attended to at lower levels.

2.5.1 Rationale for delegation

The reasons for which authority and responsibility should be delegated can thus
be briefly enumerated as under:-

OO Delegation is essential if the work of the organisation is to be done

effectively and efficiently.
OO Performances of a task with the necessary authority, therefore, should be
delegated as near to the point at which the problem arises as possible
and to persons who are best fitted to solve that problem.
OO This, in fact, should be the guiding principle for delegation. It often leads
to quicker action.
OO Delegation of powers helps a manager to distinguish between work which
has long term effect on the performance of the organisation as distinct
from items of work of day to day nature which do not have such an effect.

30
 A manager will do well to pay more attention to the long term problems
and objectives of the organisation.
OO Delegation helps a manager in using the resources at his/her disposal in
the best possible – manner
OO Authority and responsibility should be delegated to juniors in the
lower rungs of the hierarchy to enable them to develop confidence by
performing certain jobs themselves and accepting responsibility for the
results.
OO Proper delegation ensures that the tasks are completed in the best
possible manner in the shortest time using the right persons.

2.5.2 Barriers to effective delegation

Certain factors, however, operate to act as barriers to proper delegation.
Generally these barriers are self imposed. Difficulties may also arise because
a manager is not clear about the results he/she has to achieve over a period
of time. There is also a tendency for a person even after he/she is elevated
to a higher position, to continue to do the work which he/she had been doing
satisfactorily at the lower level.

Some of the barriers to successful delegation can be enumerated as under:-

OO The superior lacks confidence in the subordinate or the superior is

not prepared to take a chance and delegate. These are instances of
insufficient trust.
OO The superior considers that he/she can do the job better or that it is
better that he/she does the job himself/herself. This would be not only a
case of insufficient trust, it indicates that the superior is not performing a
managerial function in its true spirit.
OO The superior may apprehend that by delegation the subordinate may
develop confidence and competence to such an extent as to pose a threat
to his/her (superior’s) position.
OO Sometimes subordinates or some of them, may not wish to accept the
responsibility which exercise of delegated authority may mean.
OO Subordinates may consider that available rewards (or lack of them) do
not make it worthwhile to shoulder the responsibility which delegation
involves.
OO The level of authority and responsibility in the organisation, may not be
clearly defined. This will create difficulties in proper delegation.
OO The delegates may not possess the requisite knowledge, skill or
experience to perform the delegated job competently.

A manager will, therefore, do well to spend time in developing clarity of thought

over the objectives he/she has to achieve, in indicating such objectives to those

31
who work with him/her and in training and guiding such persons so as to help
him/her achieve these objectives. Constant planning of the manner, work is to be
got done, minimises the risk involved in delegation.

Guidelines for proper delegation

Thus, the following can be enumerated as guidelines to achieve balanced

delegation of power and authority:-

OO Think carefully and ascertain the important results to be achieved over a

given period of time.
OO Clarify the guidelines or objectives to the person for whose work you are
responsible.
OO Reviewing from time to time the delegation made so as to bring it on
line with the changes in pattern of work, level of staff available and other
relevant factors.
OO To be constantly aware that though authority has been delegated by a
manager, responsibility for the satisfactory performance of the job rests
with him/her.

Check Your Progress 2 :

1. How to overcome the major barriers of delegation in an organization?
(answer I 50 words)

2.6 MOTIVATION
Motivation is the process of influencing or stimulating a person who takes action
by creating a work environment, whereby the goals of the organisation and
the needs of the people are satisfied. Where the personnel of an organisation
are motivated, they would be performing their jobs more effectively and more
efficiently.

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The behaviour of people is actuated by their motives. Motives act as the drive
or impulse with an individual causing him/her to behave in a particular manner.
Behaviour is directed towards a goal or fulfillment of a need. By experience, a
person knows the kind of behaviour which results in satisfaction of his/her needs.
For example, when a person feels thirsty, he/ she is motivated to take action
which quenches his/her thirst. So is the case when a person feels hungry. A
satisfied need does not result in motivation. Hence, motivation theory often gets
related to the needs of individuals.

Traditionally, however, management has relied on the use of rewards like

increase in pay, job security, improvement in working conditions and punishments
as for example, by the withholding of rewards, demotions and in some cases
dismissal from service.

The Hawthorne experiments of Elton Mayo referred to earlier, help bring out
how social factors also are relevant in motivating workers. These experiments
can be considered as the starting point of the school of human relationship
management.

It has to be realised in this context that man is not merely an economic animal,
but is a much more complex being. Hence, in today’s environment, management
cannot relay only on the traditional “carrot and stick” method of achieving results.
Motivation is a much more complicated process.

The assumption which managers have regarding other people are major factors
in determining their approach towards motivation.

A number of theories have been developed regarding motivation. The more

important ones are mentioned here.

2.6.1 Theory X and Theory Y

These theories were propounded by Douglas McGregor. McGregor believed
that managers generally attempt to motivate employees by one or two basic
approaches. These approaches he names as ‘Theory X’ and ‘Theory Y’. Theory
X represents the traditional view of management in which it is assumed that
employees require to be coerced, controlled and threatened to get work done.
In this theory, therefore, the basic assumption is that by nature a worker is
lazy, uninterested in work; he/she would not perform his/ her job unless there
is something which would force him/her to do so. McGregor, however, did not-
support this approach. He proposed an alternative philosophy of human nature
which he referred to as ‘Theory Y’. In this theory, the approach of the manager
is informed by the philosophy that people are capable of being responsible
and mature and accordingly they do not require to be coerced or controlled
excessively in order that they may perform effectively. In McGregor’s view,
‘Theory Y’ is a more realistic assessment of people. This theory has gained
considerable importance as the general level of competence of the employees

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has increased due to : (i) universalisation of education (ii) information revolution
which has placed more data and the possibility of computer knowledge in
the hands of lower hierarchy. They are now better informed and need to be
convinced for certain actions and strategies. (iii) Wider employment opportunities.

2.6.2 Maslow’s Theory

This really relates to fulfillment of needs. It is commonly known as Maslow’s

‘Theory of Hierarchy of Needs’. According to Maslow, the needs of a human

being fall into various levels and they are arranged according to their relative
importance. In propounding this theory, Maslow had proceeded on the following
assumptions:-

i) Needs that are not satisfied motivate or influence behaviour.

ii) Needs fall into various levels of relatively increasing importance. iii)
The need at a particular level emerges only when the lower level needs
are substantially satisfied.

The hierarchy comprises the following needs, proceeding from the lowest level to
the highest:-

i) Physiological needs (like hunger, thirst and shelter). .

ii) Safety needs (like safe and healthy working conditions and job security).
iii) Social needs (like friendly associates, organised employee activities etc).
iv) Esteem needs (like recognition for good work, facilities or privileges
associated with status, etc.).
v) Self actualisation needs (like challenging work which calls for imagination
and originality and opportunities for personal growth and advancement).

At the lower levels in an organisation, say at the level of workers, employees

are concerned with pay and security, while at the higher levels, where monetary
compensation is generally adequate, employees are concerned more with status,
achievement and success.

Maslow’s theory is widely known and adopted by many practising managers.

Even though some criticism has been levelled against it and there is no direct
evidence that his hierarhical sequence of needs is correct, the motivational
concerns of workers are reasonably consistent with it.

2.6.3 Motivation - Hygiene Theory

This theory was propounded by Fredrick Herzberg. It was the outcome of
research done among workers to determine the factors which lead to satisfaction
“on the job”. The theory proposes that in reality there are two significantly
different sets of factors. The first set of factors called the “Hygiene factors”

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range from dissatisfaction to no dissatisfaction. They relate to matters external
to the job like company policy, salary, supervision, inter-personal relations and
working conditions. The other set of factors range from no job satisfaction to job
satisfaction. These have been referred to as “motivation factors” or motivators
and are related to the job.

The motivation factors are meaningful and challenging work, recognition

for accomplishment, feeling of achievement, increased responsibility and
opportunities for growth and development.

According to Herzberg, if the Hygiene needs of employees are met, they only
eliminate dissatisfaction; they will not motivate the employees to work harder but
failure to meet the hygiene factors could cause dissatisfaction which will have an
adverse effect on performance. Thus, by providing hygiene factors, employers
can only prevent dissatisfaction.

On the other hand, the motivational factors make a positive contribution to

better performance. The greater the degree to which the motivational factors are
provided, the higher will be the motivation to do better work.

The hygiene factors have, therefore, been referred to as relating to satisfaction

off the job and the motivation factors as relating to satisfaction on the job.

There are criticisms against this theory too, as for example, that in the
methodology employed in the research, analysis of the responses obtained was
highly subjective, that the theory is applicable mostly to knowledge workers like
engineers, accountants and professional people and that the theory focuses too
much attention on satisfaction or dissatisfaction.

Nevertheless, this theory, which is also referred to as the two factor theory, has
made a significant contribution towards a basic understanding of motivation.

A close relationship between Maslow’s Hierarchy of needs and the two-factor

motivation theory can be noticed if one considers them in some depth.

Maturity theory of Argyris

In this theory Chris Argyris suggests that there is a basic difference between
demand of a mature personality and the demands of typical organisation. The
organisation demand that the employee should concentrate on the orders
as given and the procedures as laid down and not question or endeavour
to understand these orders and procedures in a broader perspective. The
employees are given minimum control over the daily work and they are expected
to be passive, dependent and subordinate and they are expected to have a short
time perspective. When faced with such a situation, mature employee may adopt
one of the alternatives, namely:

OO Escape;
OO Fight;
OO Adapt;

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Of these three alternatives, the most typical reaction by employees is third,
namely one of adaptation, in which process they develop an attitude of apathy or
indifference.

However, managers cannot assume as a matter of course that all employees are
mature. Such an assumption may be valid when dealing with highly educated
professionals, technical personnel and managerial employees. To the average
industrial workers, security may be more valuable.

Expactancy theory of Vroom

Victor Vroom developed an approach to motivation known as the Expectancy

Theory. It attempts to explain behaviour in terms of an individual’s goals, choices
and expectations of achieving these goals. The important elements in this theory
are:-

OO Expectancy, i.e., an individual’s perception of chances or probability of a

particular outcome as a result of certain behaviour; and
OO The value an individual places on a substantial outcome: This is known as
Valence Expectancy and Valence determines motivation.
Both these elements must be present before a high level of motivation can occur.
It has to be realised here that all employees of an organisation do not share the
same goals or values regarding pay, job security, promotions, benefits or working
conditions.

An important factor in this theory is recognition of what the employee perceives

as important or of value to him. Thus what the manager believes, the employee
should value or seek to achieve, is not important.

The relevance of this theory lies in the fact that it explains how the goals of
employees influence their behaviour on the job.

Techniques of motivation

In the process of attempts made to motivate employees, different techniques

have been employed. Some of these are indicated below:-

OO Job re-design by way of job enrichment and job enlargement

OO Quality circles.

Job enrichment was strongly advocated by Herzberg. This item (Job enrichment)
is used to describe the process of increasing motivators. Thus it seeks to do by
effecting changes in the content and level of responsibility of job so as to provide
for the satisfaction of the motivation need of the employees. It thus seeks to
provide satisfaction “on the job”. However, where job enrichment programmes
have demonstrated improvements in job performance and in the level of
satisfaction of personnel, they have not always been successful in yielding
positive results.

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Job enlargement on the other hand, provides for only a horizontal expansion of
duties. This does not involve any additional responsibility, but embraces different
jobs at the same level so as to relieve the workers of the monotony of doing one
and the same type of job over and over again.

Quality circles have, of late, gained currency. They are reported to have been
fairly successful in Japan. Essentially, quality circles (Q.Cs) consist of a small
group of employees who get together to identify problems relating to their work
and adopt a brain storming method of finding solutions to them. This method
accordingly provides scope for the employees to utilise their knowledge and
talents. Accordingly, Q.Cs seek to satisfy a higher order need of the employees.
The quality circle concept is based on the belief that there is a vast reservoir of
indepth knowledge among workers and it is the workers who know best what the
problems attendant on their jobs are and what are the practical ways of solving
them. In India too, some efforts have been made to introduce quality circles,
Bharat Heavy Electricals Ltd. (BHEL) is an example.

It has to be noted that while a number of theories and practices have been
advocated in the areas of motivation, no single theory or technique can be taken
as valid and as applicable to all organisations and situations. What is important
for a manager is to understand the concepts forming the crux of each of these
theories and endeavour to know the nature of human behaviour. He/she has
thus to apply one or a combination of these concepts to suit the needs of his/
her organisation in the area’ of human relations. It is important also for him/her to
realise that man is a complex being and a rigid or dogmatic approach to human
relations will lead only to negative results.

Check Your Progress 3 :

1. What is main difference between theory ‘X’ and theory ‘Y’? (Answer
in about 50 words)

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2.7 WORK STRESS
When confronted with an uncomfortable situation, like appearing for an
interview, giving a formal speech, missing a deadline or ending of an important
relationship, different people will have different feelings and reactions, some
negative and some positive. Stress refers to the body’s physiological, emotional,
and psychological responses to an individual’s well –being. When the response
is in the form of a deviation from health functioning, the state is called distress
(Quick et al.1997). The reaction which activates and motivates people to achieve
their goals, change their environment, and face life’s challenges is called
eustress. In other words, this is the stress that is required for survival. However,
most research focuses on distress because it is a significant concern in the
organizational setting (Sauter and Murphy 1995).

Experiencing Stress

How an individual is going to experience stress is determined by four major

factors : (1) an individual’s perception of the situation, (2) the past experience, (3)
existences of social support, and (4) individual differences.

Types of Stress

The degree of stress experienced depends on many factors (Lazarus and

Folkman 1984). First, the demand must be perceived (people must be aware
that it exists) as threatening (having the potential to hurt them if they do not react
appropriately). Second, the threat must be to something that is important to
people (has the potential to substantially affect their well – being). Finally, people
experiencing the threatening demand must be uncertain about the outcome (not
sure if they can deal with it effectively). Based on the stress experienced, it has
been classified into various types:

Constructive Versus Destructive Stress

The word stress often has a negative connotation. It generally refers to

aggravated feelings, because of unpleasant experiences. The impact of distress,
includes ulcers, heart attacks, depression, and suicide. Distress is the destructive
form of stress.

On the other hand, sometimes, stress also has a positive impact, resulting
in a feeling of excitement and enthusiasm. This is also known as eustress or
constructive stress. Some degree of emotional or psychological arousal is
necessary to motivate us for most of our daily activities. The constructive stress
gives us the energy to excel in our work and to be creative (Quick and Quick 1984).

Episodic Versus Chronic Stress

Throughout a normal day, week, month or year, we are likely to experience a

wide range of stress levels, from crisis to relaxation, as we react to deadlines,
emergencies, and vacations.

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The pattern of high degree of stress followed by an interval of relief is referred to
as episodic stress. We endure anxiety, cope with the challenges, and then relax.
An elevated level of stress is necessary during crisis situation as it creates a
sense of readiness to fight or flee followed by a period of relaxation and renewal.

Unfortunately, the patterns of stress people face because of job insecurity, cost of
living, deadlines, and poor relationships are continuous. These types of situations
produce what is known as chronics stress in which a person can neither fight or
flee. This stress is constant and additive. The after-effects of such stress may
vary from aggression and irritability to just bearing the pressure calmly. The cost
of maintaining continuously high levels of chronic stress is often a serious health
breakdown.

Causes of Stress

Employees can experience stress both from their work life and from their
personal life. These sources interact with each other to give rise to various stress
symptoms. Stress in our daily life is the result of many interacting factors. We as
individuals with some exclusive personality traits contribute towards generating
stress. The organizational environment may also play host to potential stressors.
The minor or major changes that occur in the external environment may also
contribute towards generation of stress.

Personality and Stress

Personality play a significant role in how we perceive stress. An experience that

is stressful for one person may be part of a normal days work of another. Our
personality types play a critical role in determining our reactions to stress.

Type A Personality

Cardiologists Meyer Friedman and Ray Rosenman have identified two different
personality types and have labeled them Type A and Type B (Friedman and
Rosenman 1974). The main characteristics of people with Type A personality
are that they are impatient, competitive, aggressive, restless and under intense
perceived time pressure, always attempting to accomplish several things at
once. The Type B personalities do not feel rushed even under pressure and they
take things in a more relaxed manner and enjoy a variety of non-work-oriented
activities.

Hardiness and Optimism

Two other important individual differences related to stress are hardiness and
optimism. Research suggests that some people have what are termed hardier
personalities than others. Hardiness is a person’s ability to cope with stress. People
with hardy personalities have an internal locus of control, are strongly committed
to the activities in their lives, and view change as an opportunity for advancement
and growth. Such people are seen as relatively unlikely to suffer illness if they
experience high levels of pressure and stress. On the other hand, people with low
hardiness may have more difficulties in coping with pressure and stress.

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Life Stressors

Stress in an organizational setting can also be influenced by events that take

place outside the organization. Life stressors generally are categorized in terms
of life change and life trauma.

Organizational Factors

Stress at the organizational level can emanate from different factors. A few of
these are discussed below:-

Task demands : Stress from the task demand emerges from changes enforced
on employees. Change often brings in uncertainty and unpredictability. Change
emerges from changes in the economic condition, technology, leadership, and
structure. Any kind of change requires adjustments from the employees. If one is
not able to respond to these changes effectively, it adds on to the level of stress.

Role demands: Certain negative characteristics of a person’s role at work can

increase the likelihood of his experiencing stress. Job role demands include
high work loads, idle period of time, job ambiguity, and conflicting performance
expectations.

Overload: When there is an expectation from the organization to accomplish

more than the ability of the person, it results in work overload. It has been found
that for top-and middle-level managers, unreasonable deadlines and constant
pressure are the frequent stressors in their jobs (Zemke 1991). Quantitative
overload exists when people are requested to do more work than they can
comfortably do in the allocated time, and qualitative overload happens when the
job requires them to perform beyond their levels of competence and skills.

Underload : Most people wish to remain occupied and face optimum challenges
while performing their jobs. Work underload occurs when people have insufficient
work to fill their time or are not allowed to use enough of their skills and abilities.
Employees who are underloaded often feel bored, weary, are prone to injury, and
frequently absent from work. Machine – based assembly lines are an example of
such a work environment.

Role Conflict : Role conflict exists when job functions contains duties or
responsibilities that conflict with one another. It is most commonly found among
middle managers, who find themselves caught between top-level management
and lower-level managers (Giordano et al. 1979). A typical example of a role
conflict would be when an employee has to decide between the demand made
by the boss to put in extra effort while doing the job or a demand made by the
colleagues to restrain one’s effort while doing the job. Sometimes, role conflict
is also experiences when one has to act contrary to one’s own belief and value
system; for example, when an individual is expected to take unethical or illegal
decisions to safeguard the interests of the organization at the cost of his own
principles and beliefs.

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Role conflict brings about increased tension and reduced satisfaction to the
person concerned. In addition, it also destroys the level of trust and respect
between the two parties concerned, especially the one who is exerting conflicting
role pressures on the role incumbent. The results of this in the form of decreased
morale and social psychological pressure can prove to be very costly for the
person and the organization.

Physical demands: The physical demands of the workplace can also have a
devastating impact on the mental and physical health of the employees. Poor
working conditions in the form of extreme temperatures, loud noises, too much
or too little lighting, radiation and air pollutants are some examples of working
conditions that can take a toll on employees. The first impact of these factors
is on job performance, which starts deteriorating. High travel demands or long
distance commuting, excessive travel, and long hours all add up to increased
stress and reduced performance. In addition to this, advancements in technology
which provides immense relief and efficiency to people who are proficient at it
can cause damage and stress to those who are averse to it.

With the increase in the number of call centres and business process outsourcing
firms (BPOs) in the business environment, the threat of physical demands on
employees has increased in the intensity and can be the cause of stress –
related disorders, if not checked immediately.

Career development : One of the major sources of stress in organizations today

is the aspiration level of employees. The issues related to career planning and
development such as job security promotions, transfers and other developmental
processes like under-promotion (failure to grow in the job as per the aspiration
levels) or over – promotions (promotion to a job that exceeds the competency
levels of employees) can create high anxiety and stress among the persons
concerned. Whenever any change is introduced in the organization, employees
are concerned about its effects on their future. The employees experience many
career-related concerns such as, “Will I be able to contribute effectively in the
new job? Is there a possibility of growth? Is the new job secure?” These concerns
are the main sources of stress among them.

Organizational Politics: Each and every employee of the organization is a

part of a formal or an informal group or team. Good working relationship with
peers, subordinates, and superiors is very crucial for the successful performance
of the organization and also to help employees to achieve their personal and
organizational goals. The disregard for each other in the organization results
in rude behaviour and becomes a cause for stress. A high level of political
behaviour or office politics can also be a source of stress for managers and
employee. A by-product of power struggles within an organization is heightened
competition and increased stress for participants. Managers who are caught up
in power games and political alliances also pass on pressure to subordinates
(Matteson and Ivancevich 1987).

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Aggressive behaviour : A very common form of aggressive behaviour in
organizations is observed in the form of violence and sexual harassment.
Aggressive behaviour that intentionally threatens or causes physical harm to
other employees has been defined as workplace violence. It has been found to
be one of the major sources of stress in firms. Sexual harassment is unwanted
contact or communication of a sexual nature. Today, with more number of women
employees entering the corporate world, this issue has become very pertinent
and has to be dealt with in right ways. Management therefore, has a strong
responsibility to prevent sexual harassment from happening in organizations. If at
all it occurs, it has to be dealt with quickly and firmly. Ignoring genuine complaints
can prove to be costly.

Environmental Factors

The environment in which the organizations operate has a profound impact

on their working. The economic, political, and technological events happening
in the external environment cause stress in varying degrees as they have
many uncertainties associated with them. The anxiety aroused by uncertain
environmental factors carries over into the workplace and then to our personal
lives. Some of these factors are included here under:

Economic uncertainty : Downsizing, rightsizing, retrenchment, restructuring,

etc. are all done in the name of efficiency and cost reduction to improve
profitability. The employees who are made redundant as a result of these
exercise are forced to look for other means of sustenance. With the regulatory
announcement made by the government, organizations are left to find ways to
manage these uncertainties which can cause anxiety and stress both for the
employer and the employees.

Technologies changes : Advancements in technology in the form of automation,

computerization, and robotics has contributed immensely to the productivity and
profitability of organizations. However, it also has caused displacement of skilled
workers who have to now unlearn and learn new skills to match up with the
expectations of the organization. The knowledge of advanced technology also
creates a disparity between the new breed of workers and the old masters of the
game. Older employees are generally resistant to learning necessary technical
skills and competing against the younger employees who are proficient in them.
This gap creates a feeling of negativity and antagonism between the two breeds
of workers, thereby generating stress.

Political uncertainty: Political disturbance in the external environment has

tremendous impact on the working of business organizations. The philosophies,
polices and the systems approved by the political party which is in power
determine the ways organizations have to operate. This is more visible in
government funded organizations like aerospace, defence, and science and
technology. Even unemployed persons can feel stressed out about political
uncertainties as they might affect their social security and welfare.

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Consequences of Stress

Unhealthy chronic stress can result in physiological, psychological, and

behavioural changes in individuals. Some of these symptoms remain unnoticed
for a very long period of time. Individuals who rely on fast-track living tend to
assume these symptoms as a part of their life style and, therefore, keep avoiding
it for a very long period. Since the symptoms of stress are so varied, they may
be overlooked or mistaken. Special attention should be paid to prolonged
headaches, elevated blood pressure, fatigue, and depression.

Physiological Consequences

The physiological consequences of stress include heightened blood pressure,

increased pulse rate, sweating, hot and cold flashes, headaches, and
gastrointestinal disorders. Medical experts have attributed more that 50% of
illnesses such as ulcers, arthritis, and allergies to stress. A very high correlation
has been observed between job dissatisfaction and heart diseases among works
from more then 40 different occupations (Fletcher 1988).

Besides this, stress – related illnesses are a heavy load on individuals and
organizations. The cost is borne not only by individuals but by organizations
as well. The cost to the employer can be visualized from three different
perspectives. The first cost could be in terms of health insurance that the
employer has to pay for very serious illnesses such as heart disease. Secondly,
the majority of the accidents caused by employees in the workplace setting could
be because of the emotional turmoil the employee is going through. Thirdly, there
could be legal hassles between the employer and the employee because of
stress related worker compensation claims.

Psychological Consequences

Excessive amount of stress in an organization can cause boredom,

dissatisfaction, anxiety, tension, irritability, and depression. All of these take
the feeling of well being away from the individual and contribute to poor
concentration, indecision, and decreased attention span at work. If individuals
are not able to change or move away from the stressors, they may resort to
psychological substitutes such as anger, feeling of persecution, displacement,
criticism, negativism, denial, apathy, fantasy, hopelessness, withdrawal,
forgetfulness, and procrastination.

Job burnout Excessive and unmanageable amount of stress depletes the

individual’s effort to combat stress, resulting in job burnout. Job burnout refers
to the adverse effects of working conditions in which the ability to confront and
manage stress reduces significantly and job satisfaction and relief from stress
seem impossible.

Behavioural Consequences

When stress becomes distress, job performance gets affected and workplace
accidents become very common. High stress levels impair our ability to

43
remember information, make effective decisions, and take appropriate actions.
Some of the initial behavioural consequences of distress are sleep disorders,
change in eating habits, increase in smoking and alcohol consumption, and
nervous behaviour such as rapid speech, stuttering and rude behaviour towards
others. Negative stress cause even very polite and sober people to shout at
their colleagues or subordinates. The most extreme form of distress results in
workplace violence directed towards self or others resulting in suicide attempts or
physical attacks on others.

Managing Stress

Stress is an aspect of our life that cannot be avoided. Since it cannot be

eliminated completely, one needs to understand the techniques and strategies to
control its effects and thereby enjoy more productive, satisfying lives both at the
workplace and away from the workplace. Since the source of stress lies both at
the individual level and at the organizational level, the techniques to control the
negative impact of stress have to be identified both at the individual and at the
organizational level.

The management of stress consists of the following three step process:

1. Awareness: The first step towards managing stress is to be aware

of the symptoms of stress, specially the negative ones. Some of the
consequences of stress in terms of physiological, psychological and
behavioural consequences have been discussed earlier.
2. Identifying the source: Once the symptoms are palpable, the second
step is to diagnose the source of the factors that lead to stress.
3. Coping with stress: After diagnosing the stressors, one needs to
develop strategies to cope with them. Stressors can be dealt with in
two ways: one is by directly removing or changing them and secondly,
by helping individuals modify or manage their emotional feelings and
reactions in constructive ways.

Individual Coping Strategies

Since stress has an impact on the individual initially, individuals have to use
coping strategies to manage and control it effectively. The stress faced by
individuals could be because of the circumstances they are in or because of their
own temperament. If the stress is because of the environmental factors or job-
related factors, the individual can use several coping strategies viz.

1. Change the Job

2. Time Management
3. Seek Help
4. Exercise
5. Relaxation

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Organizational Coping Strategies

Organizations are also increasingly realizing that they should be involved in

managing their employees’ stress. There are two different rationales for this view.
One is that because the organization is at least partly responsible for creating
the stress, it should help relieve it. The other is that workers experiencing lower
levels of harmful stress will function more effectively. Two basic organizational
strategies for helping employees manage stress are institutional programmes
and collateral programmes.

Institutional Programmes

Institutional programmes for managing stress are undertaken through established

organizational mechanisms. For example, properly designed jobs and work
schedules can help ease stress. Shift work, in particular, can cause major
problems for employees, because they constantly have to adjust their sleep and
relaxation patterns. Thus, the design of work and work schedules should be a
focus of organizational efforts to reduce stress.

The organization’s culture can also be used to help manage stress. In some
organizations, for example, there is a strong norm against taking time off or
going on vacation. In the long run, such norms can cause major stress. Thus, the
organization should strive to foster a culture that reinforces a healthy mix of work
and non-work activities.

Finally, supervision can play an important institutional role in managing stress. A

supervisor can be a major source of overload. If made aware of their potential for
assigning stressful amounts of work, supervisors can do a better job of keeping
workloads reasonable.

Collateral Programmes

In addition to institutional efforts aimed at reducing stress, many organizations

are turning to collateral programmes for managing stress. A collateral stress
programme is an organizational programme specifically created to help
employees deal with stress. Organizations have adopted stress management
programmes, health promotion programmes, and other kinds of programmes for
this purpose. More and more companies are developing their won programmes
or adopting existing programmes of this type.

Summary

Stress has a disastrous effect on both the quality of life and the quality of work
life. A variety of factors contribute towards stress. Sometimes, stress can be
functional and may add up to the energy levels of the incumbents, but most of
the time it is dysfunctional and has a negative impact. The process of stress can
be explained with the help of the general adaptation syndrome, which comprises
of thee stages -- alarm reaction, resistance, and exhaustion. Stress can be
classified in two ways – constructive versus destructive stress and episodic

45
versus chronic stress. The sources of stress can be traced back to both the
personal life and the work life of individuals. The personal factors leading to
stress are life changes, personal problems, and possessing a Type A personality.
The organizational factors leading to stress are task demands, role demands,
and physical demands. The environmental factors causing stress have been
classified as economic uncertainty, technological changes, and politics.

Dysfunctional stress leads to physiological, psychological, and behavioural

consequences. Physiological outcomes of stress include increased blood
pressure, increased heart rate, hot and cold spells, breathing problems, muscular
tension, and gastrointestinal disorders. Psychological consequences of stress
include boredom, anxiety, dissatisfaction, depression, tension, and irritability.
Behavioural outcomes of stress are sleep disorder, changes in eating habits,
increased smoking and alcohol consumption, nervous mannerisms, and rude
behaviour. Stress needs to be managed both at the individual level and at the
organizational level. Individuals can use coping strategies like changing jobs,
time management, and seeking help from colleagues and bosses if stress
emanates from the work life. At the personal level, to combat stress one needs
to exercise regularly, relax, manage one’s role and handle stress by entering
into meaningful relationships with other people. At the organizational level,
certain institutional level programmes need to be devised and various collateral
programmes like stress management and health promotion programmes need to
be organized.

Check Your Progress 4

1. What is difference between Type A and Type B personalities ?

2. What are organizational factors for causing stress?

46
 3. Discuss individual and organizational strategies for coping stress?

2.8 COMMUNICATION
Communication can be defined as the achievement of meaning and
understanding between people through verbal and non-verbal means in
order to affect behaviour and secure the desired end results. Communication
can be verbal or non-verbal. Thus, communication can be through written
words and spoken language. It can also take place through gestures, facial
expression and other movements of the body. It is important to note that non-
verbal communication is as important as verbal communication. (Non-verbal
communication is sometimes referred to as body language).

The inability to communicate effectively can seriously hamper a manager

or supervisor in the accomplishment of his/her tasks. In fact, this is true
even of a basic worker as in the course of his/her duties he/she has often to
interact with co-workers and superiors. In the case of managers, who have to
achieve objectives through others, improvement in communication skills has
a considerable bearing on their ability to perform effectively the managerial
function.

In its very nature, communication must always take place between two or more
people. The process of communication thus involves a “sender” and a “receiver”.

The important component of the communication process is the channel through

which signals flow between “the sender” and “the receiver”. In a situation
involving only a superior and his/her subordinate, the channel is either downward
or upward.

A manager who communicates an order or a direction down the line is using the
downward channel. Similarly, when a worker or a subordinate is bringing matters
to the notice of the superior or the manager through written or spoken words, he/
she is utilising an upward channel. Thus, the process of communication involves
a number of steps which can be enumerated as under:

47
OO Determining the message-that is the information to be communicated.
OO Putting the message into a form in which it can be transmitted like a
written message, pictures or drawing, bodily gestures etc.
OO Selecting the means or channel of communication like the telephone,
postal correspondence, telegram or telex message etc.
OO Receipt of the message by the recipient.
OO Interpreting or extracting the meaning of the message received.
OO Feed back whereby the recipient of the message lets the sender know
that he/she has received and understood the message.
Complex process

Communication is a more complicated process than is usually realised. If

communication has to be effective, the receiver of a message should be able
to understand it in the sense in which it was communicated by the sender. In
practice, however, often this is not the case due to various breakdowns that can
occur during the communication process. This is so because of what has come
to be known as “barriers in communication”. If these barriers are excessive,
communication in an organisation may get reduced to the point where the firm’s
objectives cannot be achieved.

2.8.1 Communication Barriers

The barriers comprise the technical language and/or psychological factors. The
different factors, in turn, consist of the following:-

OO Timing,
OO When attempt is made to communicate too much information to the
receiver at one time, there is a communication overload.
OO Cultural differences can result in different perception of one and the same
message or words.
OO Vocabulary also plays an important part as it is words which go to make
a written or spoken message. Thus use of jargon or highly technical
terms to others who may not be familiar with them, will vitiate the
communication process.

The psychological barriers can be classified broadly under the following

headings:-

i) Knowledge of what a person wants to say.

ii) Filtering.
iii) Lack of trust and openness.
iv) Pre-occupation with other matters.
v) Selective perception.

48
The following measures would greatly help improve communication between
persons, particularly in an organisational context:-

i) Empathy, i.e. the ability to identify with the various feelings and thoughts
of another person with whom a person interacts.
ii) Developing the skill of listening to other persons, i.e. endeavouring to
understand what the other person says with a measure of sympathy.
Listening (as distinct from merely hearing) helps a manager discover
problems and determine solutions to them. Listening is one of the most
important, most difficult and most neglected skills.
iii) Improving reading skills. The ability to read rapidly and with understanding
is an essential ingredient of successful communication skill.
iv) Improving observation power. We may miss a great deal by not carefully
observing important elements in the environment in which we function.
Supplementing listening and reading with powers of observation can add
considerably to an understanding of what is actually happening.
v) The tone and the expressions of the communicator are as-important as
the words used in communication. The effectiveness of communication is
increased considerably by the fine shades of meaning and emotion in the
words used to communicate.

2.8.2 Transactional Analysis:

The importance of communication in inter personal relations has been
approached from a psychological angle through what has come to be known as
“Transactional Analysis”. In this approach, three ego states are recognised as
existing in each individual, namely the Parent, the Adult and the Child. These
do not represent an actual parent or adult or child but the psychological state
of an individual. Hence the use of Capital `P’, Capital `A’ and Capital `C’. The
manner in which the individual ego states interact can have a significant effect on
inter personal relations and hence in the effectiveness of the performance of an
organisation.

In the case of the Parent ego state, it could be either a Nurturing parent or a
Judgemental (or Negative) parent. The Nurturing Parent may praise or give
reassurance according to the circumstances, e.g. - remarks like “You have done
a wonderful job”, or “I am sure you will be able to overcome this difficulty” are
made by an individual in the Nurturing Parent ego state. A Negative Parent,
however, tends to be critical and over controlling e.g., remarks like “This is no
way of doing a job”, are made when a person is in this ego state.

The Child state also exists in every one of us and may manifest itself, as for
example, when we express happiness with abandon and without any feeling of
restraint. The child in us surfaces on occasions when we give expression to a
feeling of joy or satisfaction, without let or hindrance.

49
In the Adult state, a person tends to appraise a situation and endeavours to make
decisions on a factual and objective basis. In this state, the tendency is to be
logical and rational.

The interaction of these ego states can have a significant impact upon behaviour
of individuals in an organisation. A manager or a supervisor would do well to keep
in mind the fact that a person may not always be in the adult state - proceeding
entirely on the basis of reason and logic. Communication wires can get crossed
when a person is in one ego state and attempts to communicate with another in a
different ego state. For example, an employee in the Adult state may take matters
seriously and is likely to be offended or put off by remarks made in a light vein,
say, by another person in a Child state.

Check Your Progress 5 :

1. What do you understand by barriers of communication? (Answer in
about 50 words)

2. What are the three ego state of an individual? What a manager has
to keep in mind in this regard?
(Answer in about 50 words)

2.9 MANAGEMENT OF CONFLICT

In the ultimate analysis, an organisation is composed of individuals. Every
individual has his own background, attitudes, notions, skills, knowledge and the
like. All these have a bearing on the behaviour of an individual in the course
of working in an organisation. Due to this diversity, conflict is inherent in any

50
organisation. In fact, a certain amount of conflict may prove to be a blessing in
disguise as it may provide challenges and opportunities for having a fresh look
at things and for throwing up creative ideas for meeting the demands of the
situation.

Resolution of conflicts

The techniques in dealing with conflict between two or more individuals or groups
of individuals are numerous. They may range from the use of force of authority by
a supervisor over a subordinate to a constructive approach like a problem solving
approach. The possible methods for resolving conflicts can be enumerated as
under:-

i) Force - use of authority conferred by position in the hierarchy like a

manager, giving inflexible directives to an employee.
ii) Withdrawal - avoiding a situation or an individual which or who may be the
cause of conflict.
iii) Compromise - using a spirit of give and take - a typical example is
negotiations between labour and management.
iv) Mediation or arbitration - the assistance of an outsider or outside agency
is sought to resolve a dispute within the organisation.
v) Expanding resources - the attempt here is to reduce the scope of
conflict by trying to meet competing demands. For example, increasing
opportunities for promotion by placing more posts in higher grades,
acquiring more space to accommodate staff etc.
vi) Problem solving - In this approach an open and trusting exchange of
views and facts is undertaken. It is a healthy approach, which recognises
that either party could be wrong or unreasonable and that conceding a
point made by any person may not necessarily be a sign of weakness:
In this approach, attempts are also made to discuss with other persons
with whom there may be a difference of opinion or thinking, with a view to
finding a commonly acceptable solution.

The particular approach to be adopted in meeting a problem arising due to

conflicts between individuals or among groups, has to be selected with reference
to the facts and circumstances of the case and the particular situation. Whichever
method is adopted, however, the effective use of conflict management has a
material impact on the effectiveness of the functioning of an organisation as a
whole.

2.10 SUMMARY
We discussed in the unit about various types of organisational structures like
centralization and decentralization, formal and informal etc. We further discussed

51
about stages of decision making theories of motivation, work stress, process
of delegation, barriers of communication, transactional analysis and conflict
resolution.

2.11 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

The line organization refers to that part of organization which involves managing
core functions essential to the success of organization for example production,
marketing operations etc. whereas staff organization refers to supporting services
like Personnel, Materials Management, Maintenance etc.

The authority and responsibility of the organization are distributed as per the
formal structure and reporting systems. The formal structure defines the task
allocation and responsibilities at every level. This organizational structure is
referred as formal organization.

The informal organization evolves through the interaction of individuals in the

organization by way of its organizational cultural, beliefs, attitudes and mindsets.
The perceptions and prejudices are developed in the organization and shared
in informal manner. The informal organization also has significant tremendous
impact on its performance.

CYP 2 :

The barriers to effective delegation can be overcome by taking following steps:

OO Developing clear focus about the important results to be achieved.

OO Clear guidelines alongwith delegation and expected quantifiable result
should be laid down.
OO Reviewing progress from time to time after delegation.
OO Being aware that after delegation also the responsibility lies with the
delegating authority.

CYP 3 :

McGregor Theory X and theory Y represents two approaches to management.

Theory X assumes that employees need to be coerced, controlled and
threatened to get the work done based on the assumption that workers are
uninterested in work, lazy and avoid work whereas in Theory ‘Y’ the approach
is based on the belief that people are capable of being responsible, they are
matured hence they do not require coercion or control excessively. Thus, workers
are better informed and need to be convinced rather than coerced.

52
CYP 4 :

1. The major characteristics of type A personalities are that they are

impatient, competitive, aggressive, restless and under intense perceived
time pressure, always attempting to accomplish several things at once.
The Type B personalities do not feel rushed even under pressure, they
take things in a more relaxed manner and enjoy a variety of non-work
oriented activities.
2. Stress at the organizational level can emanate from the following:-
i) Task demands
ii) Role demands
iii) Overload
iv) Underload
v) Role Conflict
vi) Physical demands
vii) Career developments
viii) Organisational politics
ix) Aggressive behaviour
3. The management of stress is a three step process comprising,
awareness, identifying the source and coping with stress. The individual
stress coping strategies are:-
(i) Change the job, (ii) Time Management (iii) Seek help (iv) Exercise
(v) Relaxation
The organizational coping strategies are:-
(i) Institutional programmes
(ii) Collateral programmes

CYP 5 :

1. There are different kinds of barriers to communication which may be

clubbed together as technical/language barriers and psychological
barriers. The technical/language barriers could be simply language,
interpretation of jargons, cultural differences and communication overload
etc. whereas psychological barriers are stereotyping, prejudices, selective
perception.
2. There are three ego states of an individual as mentioned below :
OO Parent Ego State
OO Adult Ego State
OO Child Ego State

53
As a manager one should keep in mind that individuals while communicating
transact from different ego states and that the other person may not be in the
appropriate ego state to make right transaction. The manager, should, therefore
keep these factors in mind while interacting with his colleagues, customers and
subordinates.

Further Suggested Readings

1. Maslow A.H. -= Motivation and Personality (New York: Harper 1954)

2. Vroom Victor - Work and Motivation (New york; John Wiley & Sons, 1964
3. Drucker, Peter F- The Effective Executive.
4. Chris Argyris - Personality & Organisation (Harper, New York, 1957)
5. Katz and Kahn - The Social Psychology of Organisations (John Wiley &
Sons).
6. Simon, Herbert A - the New Science of Management Decision
(Englewood Cliffs, N.J. Prentice Hall 1977).
7. Abraham Maslow - Motivation and personality (Harper, New York, 1954)
8. Harzberg, Fredrick - Work and the Nature of Man (Cleaveland, World,
1966)
9. Homans, George C - The Human Group (Harcourt Grace & Ward Inc.).
10. Newman W.H. and E-K. Wanen - The Process of Management (Prentice
Hall, 1977).

54
 6
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Management in
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UNIT-3
Management in Future

Structure
3.1 Introduction
3.2 Objectives
3.3 The Emerging Scenario
3.3.1 Telematics
3.3.2 Effect on Organisations
3.4 Managerial Obsolescence
3.5 Social Responsibility of Business
3.6 Creative and Innovative Thinking
3.7 Disaster Management and Crisis Management
3.8 Summary
3.9 Check Your Progress : The Key
Further Suggested Reading

55
3.1 INTRODUCTION
We read about management concepts, function and processor in earlier units.
In this unit we would discuss future of Management science with fast changing
social conditions and advancement in computer technology. In this context we
would dial the new concepts – Managerial Obsolescence, social responsibility of
business, creative and innovative thinking and disaster and crisis management.

3.2 OBJECTIVES
After going through this unit, you shall be able to

OO describe telematics and its effect on organization,

OO explain managerial obsolescence, social responsibility of business,
OO analyses creative and innovation thinking; and
OO examine disaster and crisis management in the society.

3.3 THE EMERGING SCENARIO

A question that has to be seriously pondered over by anyone aspiring to be
a manager is “What would be the challenges of management - and hence
managers will have to face in the future.” This is an eminently pertinent question
that is related to the other relevant question whether managers of today -
assuming that they are well equipped to manage in today’s situation - can be
expected and feel confident to carry out their management functions even in
the future, relying only on their experience gained with the passage of time? If
not, the deficiency will have to be made up. One of the obvious methods toward
this end is training through management education. Hence the relevance of this
question to any course designed for the training and development of managers,
including those who aspire to be managers.

The Industrial Revolution brought about a major transformation in the industrial

sector and the socio economic conditions. These also led to major changes in the
way the societies were organised. Joint stock companies came up. Also industrial
enterprises of gigantic scale came up. Large industries employed large labour.
Markets enlarged and transactional business increased.

The next major change from the management standpoint occurred with Henry
Ford’s assembly - line system of production which enabled mass- production
on unprecedented scale. Shop - floor management received considerable
attention from management theorists and emerged as an important branch
of management science. This was followed by refinements in management
practices, in general. Management became a serious and absorbing subject.

56
3.3.1 Telematics
The next phase saw an Information Revolution, which centred around major
strides in telecommunications and computers. These were integrated to produce
a system of information collection, collation/storage and retrieval and analysis
on unprecedented scales. This composite discipline is usually referred to as
“Telematics”.

Technological developments in the next decade or two are expected to take

giant strides resulting in a sea change in the environment within and outside
organisations. The changes will be of a vast magnitude qualitatively as well
as quantitatively as compared to the developments which have taken place in
all the past decades in this century. This will compel us to run fast just to stay
where we are.

These revolutionary changes will centre mainly around the computer and
telecommunications. Vastly advanced computer systems will come into use. They
will function as strategic tools instead of as tactical tools. Computers are thus
expected to move from the sidelines to a central position. The vastly increased
computing power which will become available to organisations on a large scale,
will have a significant effect on the structure and functioning of organisations and
hence on the substance and style of management. Added to this will be the vast
strides made in improved telecommunications. We can, in the foreseeable future,
expect to live in a world linked by great computerised networks that process
voice, data, and video with equal speed. In the next decade or two telephones
are expected to become “Integrated information appliances”. They may have a
large screen which would allow picture-phone references in full colour as well
as have the facility to send and receive messages and documents and provide
access to information sources.

Telematics has already thrown up opportunities to promote coordination,

improve productivity and make management more effective. Air Traffic Control
for instance, relies almost entirely on telematics as navigational and traffic-
control aids. These technological improvements have led to more efficient
use of airspace, reduce terminal congestion, improve air safety and generally
brought about integration of the system. Railway management have similarly
witnessed major changes in management structure due to expensive use of
telematics. Centralised traffic control, direct link between control rooms and the
field units, electric traction control for localising faults, introduction of wagon
distribution packages, marshalling yard managements, planned preventive
maintenance, tracking of consignments etc., have changed the face of the
railway management structure and practices. All this has been possible due to
development in telematics.

Already the trend towards formation of mega corps, which were able to derive
the advantage of scale of operation, is giving way to loosely bound subsidiaries
to expedite decision-making. The reason is that collection and collation of

57
information and decisions in competitive market are so fast that centralised
decision-making is becoming a major hindrance in meeting market competition.
Relevance of the earlier theories of management based on centralized-
motivated team of managers handing down decisions has now been seriously
questioned. Now, major corporate strategies rest on building “micro - strategies”
to be developed by different departments or “pecking orders” down the structure.
Now the emphasis is on “competence building” and “entrepreneurism” to be
developed by “quasi-independent” units. Structural changes in the organisation
are being brought about accordingly.

Many countries are opening up the economies to world markets - rather

integrating their economies with other free economies of the world. This has
necessitated adoption of new management goals, objectives, structures and
procedures. The resultant managerial restructuring is inevitable. Talent has to
be harnessed. Feudal management structure thus is giving way to professional
management practices.

The trend towards universal education has brought about a major qualitative
change in the work force. Delegation of powers can be more extensive.
Organisational purposes can be explained to the layers down the line. There
is emergence of new “inspirational leadership” in management. There is also
greater emphasis now an “human engineering” i.e., getting to know workers,
explaining the corporate objectives, training, retraining, dissemination of
knowledge etc., have become important.

Major developments, likely to shape the future and influence management

practices can be summarised as under :-

(i) Telematics and Information Revolution : This has had the most profound
impact. The world has moved from the transmission technologies to data
processing of transmitted information, interlinked databases, centralised
processing etc. This has changed the entire organisational structure.
Transport sector has also been greatly influenced by these developments:
(ii) Globalisation : politically, economically and socially;
(iii) The rate of change is so fast that human mind, social structure and
social order and management are finding difficulties in keeping pace with
changes;
(iv) Qualitative changes in the composition of the work force : trend towards
universal education; more information in the hands of workers : workers’
better bargaining power;
(v) More leisure now available to the working force : improved longevity of
population in general
(vi) Importance of telematics, micro-electronics, robotics bio-technology,
aero-space, material - sciences (e.g. new type of plastics, fibres, light
materials).

58
3.3.2 Effect on Organisations
Technological advancement on such a vast scale is bound to have a profound,
impact on business, on structure of organisations, the nature of its workforce
and hence on management. The world is becoming “smaller’ as not only travel
from one part of the globe to the other but also communication with any part of
the world - not to talk of communication within a region - is becoming easier and
faster. Physical distance would thus be no hindrance to transactions between
organisations situated in different parts of the globe.

This has in fact led to a new kind of business arrangements between

organisations situated in different countries, known as “Body Shopping”.
Using satellites, fibre optic phone lines and sometimes just ordinary mail,
western companies are sending large scale data processing jobs and software
development or related assignments to clerical workers and computer specialists
in firms in third world countries. Thus companies in one part of the world are
in a position to tap the talents of people in farflung corners of the world, further
decentralizing their workforce.

Again with advances in information technology, managers in the higher echelons

of an organisation can have access to collection and analysis of information
without having a team of middle level managers to do this job for them. In fact the
familiar concept of “Span of Control” in management literature is getting replaced
by the concept of “Span of Communications”.

Further organisations will employ more and more of those engaged in handling
data and in office work using computers than in manual operations- even in
production. With sophisticated machines like computer-numerically controlled
(CNC) machines, knowledge will be more important than manual skills.
The increased white collar jobs will be manned by “knowledge Workers”.
Their educational attainments and attitudes will be different. This change in
composition of the workforce has its impact on policies governing recruitment,
compensation package (Wage Structure) and employer- employees relations.

Managers have thus to learn to deal with these new situations and to adjust
themselves to changes within and outside their organisations caused by
technological changes and otherwise. They will therefore have to constantly
update their knowledge and reorient their attitudes. Otherwise they would face
the problem of becoming obsolescent. Obsolescence of managers is thus an
emerging problem of organisational existence.

Technology, particularly the information technology, as we have noted above,

is bringing about changes in management styles and structure in other ways.
Robotics are taking on monotonous, unpleasant work. Now managers can
operate from their residences as the requisite information no longer needs to
be collected personally. Coordination with other members of the organisation
also can be easily done through automated information- related devices

59
like telephones, fax, E-mail, computer-link ups-etc. These technological
developments have brought about major transformation in the decision - making
process.

With greater use of telematics, transport managers will also be able to do better
“demand management” and are in a position to offer more information and
guidance-service to the customers.

Informed information allows better management of urban area transport - e.g.,

better management of congestion. Now private vehicle owners are being
provided the facility of “on - board route guidance”. Direct contact with vehicle
operators ensures better fleet utilisation in road traffic.

Rapid technological changes also bring into focus need for continuing process
of training both in technical and managerial skills. Managerial needs of the
future could be better met by “computer - literate” managers and those capable
of harnessing the vast database, those ready to learn and relearn their
management lessons rather than the managers of the traditionalist school of
the past.

Check Your Progress 1 :

1. What do you think are other areas that would be affected in society
by ‘Telematics’ (other than listed areas above)? (answer in about 50
words)

2. What do you understand by “Obsolescence’?

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3.4 MANAGERIAL OBSOLESCENCE
Machinery can become obsolescent due to development of new techniques or
methods of working or changes in production processes. Obsolescence can also
set in due to technological advancements. For example, thermionic valves have
become obsolete on the invention of silicon diodes. The chip has rendered many
earlier technologies obsolescent.

In a fast changing situation, managers have to realise that their skills and
knowledge which had stood them in good stead earlier may get outdated and
thus they may find themselves inadequately equipped to deal with their jobs.

Managerial obsolescence has been defined in different ways. One definition

of the term is the failure ; of the manager to do his/her job with the same
competence as once expected. Another defines obsolescence ; as a reduction
in technical skills resulting from a manager’s inability or unwillingness to
keep updated with new technological and other developments. Managerial
obsolescence has been defined in another manner too, namely; the extent
to which a manager’s knowledge and skills have failed to keep pace with the
current and likely future requirements of a manager’s job.

3.5 SOCIAL RESPONSIBILITY

OF BUSINESS
Yet another new concept which is coming up in the management field and which
is here to stay is that of responsibility of business to the society at large. This has
been enshrined in the term the “Social Responsibility of Business”. Traditionally
business organisations have considered themselves as being responsible to
their shareholders, their employees, the Government of the day and to their
consumers or customers. No responsibility to the society at large was recognised
by or demanded of such organisations.

This, however, is no longer the case. It is now increasingly expected of business

organisations to recognize their responsibility to society in general and act
upto such responsibility. This has been caused by more than one factor. Firstly,
the general level of consciousness in society of the rights of its members has
increased. Again it is realised more and more that the activities of organisations
in general and business organisations in particular have an effect among
other things on the physical environment and on ecological balance. We have
historically operated on the assumption that the earth, water and air around us
will absorb all of our waste products indefinitely. We have now begun to realize
that the earth, the oceans and the atmosphere are finite and that nature’s
capacity to assimilate more waste is coming to an end.

61
Again, we are well past the days when an industry could be located almost at
any location determined only by technological and economic considerations
weighing with the particular enterprise. Once the obligations cast by any
statutory legislation or by local (municipal) laws were met, the enterprise
hardly concerned itself with any adverse impact, its activities may have on its
immediate surroundings or on society in general. Now, however, industries and
organisations have started reckoning what is socially good and what is socially
unacceptable, in the absence of such recognition suo muto, social pressures
bring home to them such considerations. Hence these factors have to be fully
taken into account in deciding upon execution and location of each project.
Witness, for example, opposition from some quarters to some of the large
projects for construction of dams on grounds of the resultant problems such as
submerging of vast areas of land including forests, that oustees, are uprooted
from their traditional habitat and the like.

Thus managers have to be conscious all the time of the need to conserve
scarce and non-renewable resources, recognise the importance of maintaining
the ecological balance and take into account, in planning projects and other
activities, societal factors.

A chemical unit, for instance, has to adopt measures to counteract the pollution
caused by its wastes and effluents. Automobile manufacturers have to constantly
update the design of the vehicles not only to reduce the use of materials in the
production stage but also such that the end product consumes less of scarce
fossil fuels which result, incidentally, has the advantage of reducing atmospheric
pollution and adverse effect on the ozone layer. Hence the recognition, for
example, of the need for using composites in the production of automobiles.

3.6 CREATIVE AND INNOVATIVE

THINKING
Management in the future has thus to learn to cope with changes and develop the
capacity to adjust with fast changing situations. This calls for sharpening the thinking
power. For, in future, success will flow, not so much from possession of physical and
material resources, but from creative thinking and innovation. A classic example is
provided by the expanding role of computer software which is a pure product of the
mind and is becoming a chief source of added value in world commerce.

However, by tradition and upbringing most of us are mentally conditioned to

think unilinearly or vertically. For example, if a question is put to us as to what
we make ‘of plus’ we would answer two; some of us may scoff at the idea of
answering such an elementary question. We think only of this elementary and
obvious answer because our mind generally tends to work in a groove, Plus can,
however, have other possible alternative answers like //, _, <, > etc.

Such alternatives occur to us when we allow the mind to freewheel and overcome
the self-imposed barriers. That is when we engage in “Creative thinking”.

62
In this area, particular mention has to be made of Edward De Bono who has
taught for many years his variant of the creative approach called “lateral
thinking”.

Creative thinking is concerned with developing innovative solutions to problems.

When we think linearly, we arrive at a limited number of solutions to a given
problem. On the other hand Creative thinking will show the existence of many
more solutions which may, in the first instance, appear to be starting or even
absurd. Some of them, however, may provide a better solution to the problem on
hand.

Brainstorming helps develop lateral thinking. It has become a well known method
of generating ideas. If a proper atmosphere is created in an organisation,
brainstorming sessions can become useful workshops for creative thinking which
can help find purposeful solutions to the problems which organisations may face,
more so in the challenging times ahead. The main purpose of such sessions is
to encourage the participants to generate as many ideas as possible. They are
not evaluated during the session but subsequently. This helps bring forth ideas
which may, in the first instance appear unworkable or unrealistic but which can
sometimes atleast produce solutions which may not occur to one in the traditional
purely analytical approach to problem solving.

Employees and managers are now having more time for leisure. The working
hours of an average worker are going down. Considerable amount of routine
work and coordination is done by the machines instead of the managers.

Harnessing of knowledge is the key to success in future and management has

to adapt to their changes.”........The replacement of capital with knowledge as
company’s most valuable resource is forcing top managers to rethink their jobs.
The trouble with knowledge is that it is so much more difficult to manage than
capital : fixed in the heads of pesky employees, rather than stored in the bank,
and infuriatingly volatile and short-lived to boot.” (from “The Economist” - June
10th to 16th, 1995-p.165).

Check Your Progress 2 :

1. What is the difference between unilinear or vertical theory to that of
creative thinking? (Answer about 50 words)

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3.7 DISASTER MANAGEMENT AND
CRISIS MANAGEMENT
The various management techniques, concepts and principles referred to in these
lessons deal with the management of an organisation in the ordinary course.

There are, however, occasions when a disaster strikes or a crisis occurs. This
can be for a nation, for a group of people or for an organisation.

For instance, there could be a natural calamity like large scale floods, a
devastating fire or a severe earthquake. Such unfortunate occasions call for
management skills of a somewhat different nature like ability in organising relief,
rescue and rehabilitation at short notice. When the situation may not itself be
clear, ability to think clearly under great mental pressure and physical strength,
capacity to visualize quickly what needs immediate attention and how to ensure
that such attention is given and the like, become important qualities. Where
certain events are expected to take place in a region during certain periods
like seasonal floods in a region prone to floods, some advance planning is also
necessary so that the measures for rescue and relief can be implemented quickly.

Management of such disasters is being now recognized as a subject in itself.

Similarly, a crisis can hit a Government or a business any time. In fact almost all
businesses face a crisis sometime or other during their history. As examples can
be cited, major accidents in nuclear power plants, a large oil spill when a huge oil
tanker hits an iceberg or a rock and a big accident in a chemical plant leading to a
number of cases of death and disability. How quickly, positively and effectively the
management responds in such a situation can often be the making or breaking of the
business. It can also affect the career prospects of individuals in the organisation.

Organisations will, therefore, do well to have plans to meet such crisis situations,
should they materialize. The steps required to be taken for this purpose are:-

i) Examine and determine possible areas of crisis.

ii) Endeavour to determine the legal and commercial implications of a given
type of crisis.
iii) Workout a contingency plan to face such a crisis even rehearse its
implementation.
iv) Develop techniques for quick and effective communication with media. v)
Protect the image of the organisation or business.

3.8 SUMMARY
In this unit we dealt the role of Telematics is emerging scenario of management
and its future; managerial obsolescence, social responsibility business; creative

64
and innovative thinking and management of natural calamities, and crisis
management in organizations.

3.9 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

1. Telematics is giving rise to new structures of organizations, for example

networked organizations. Micro organizations are emerging beyond the
geographical boundaries of the nation.
The employment practices and scenario is vast changing due to
telematics. Short term, contractual and flexi-time employment is
increasing with the aid of telematics.
Control systems are shifting from time specific, manager-subordinate
paradigm to work related output based management practices.
2. In the fast changing business environment and technological inputs in
organizations, old skill sets and competences are becoming out-dated,
apart from the redundant technologies and machines this phenomena
is called obsolescence. In the managerial context unless old practices
are unlearnt and new practices are adopted, the managers become
ineffective in changing environment, this is managerial obsolescence.

CYP 2 :

1. Unilinear or vertical theory of thinking is consequential way of thinking

where as creative thinking is out of the box and lateral thinking. In
unilinear thinking mind is conditioned based on past experience. Hence
thinking is channalised in the same direction or in other words it is
an extension based on the previous experience. Creative thinking is
developed through brainstorming and specially designed methods which
encourage lateral thinking.
Further Suggested Readings

1. Drucker Peter F - The challenging World of the Executive

(Times books, 1985)
2. Drucker Peter F - Managing in the turbulent times (Pan books)
3. Jones, Andrew N & - Combating Managerial Obsolescence (Phillip Allen,
Cooper, Cary L 1980)
4. Business goes Body - Newsweek, July 10, 1989
Shopping
5. Regester, Michael - Crisis management (Hutchinson Business)

65
66
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Institute of Rail Transport
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Management in
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UNIT-4
Personnel Management Discipline -
An Overview

Structure
4.1 Introduction
4.2 Objectives
4.3 Concept and Scope
4.4 Organisation
4.4.1 Organization Structure
4.4.2 Job Analysis
4.5 Recruitment and Manpower planning
4.5.1 Induction
4.5.2 Promotions
4.5.3 Manpower Planning
4.6 Performance Evaluation
4.7 Compensation Management
4.8 Job Evaluation
4.9 Group Dynamism
4.10 Employee Development or Human Resources Development
4.10.1 Methods of Training
4.10.2 Evaluation of Training
4.11 Summary
4.12 Check Your Progress : The Key
References and Suggested Reading

67
4.1 INTRODUCTION
After studying management function and processes and future scenario of
management in earlier units, we discuss in this unit a significant function i.e.
personnel management and various aspects related to it. Recruitment to
retirement – personnel have to be taken care by the organization. The details
related to that are explained in this unit.

4.2 OBJECTIVES
After going through this unit you shall be able to

OO describe the concept and scope of personnel management.

OO explain the process of manpower planning and recruitment
OO analyse performance evaluation and job evaluation; and
OO examine the issues involved in Human Resources Development

4.3 CONCEPT AND SCOPE

The discipline of Personnel Management is based on the need felt in all modern
organizations to establish an effective system of obtaining, development and
utilization of the asset of human resources, which are an important component
of any organization’s strength. Just as Financial Management deals with
management of the financial resources and Materials Management with the
material resources, Personnel Management relates to the management of the
human resources. Appropriately recognizing the value of this asset of human
beings for managing the activities of the organization, achieving its objectives
and producing the targeted results, it has variously been called human
engineering, human relations, personnel administration etc.

In specific terms, Personnel Management is concerned with

OO obtaining, developing and motivating the human resources required by

the organization to achieve its –objectives;
OO developing an organization structure and climate and evolving a
management style which will promote cooperation and commitment
throughout the organization;
OO making the best use of the skills and capacities of all those employed in
the organization;
OO ensuring that the organization meets its social and legal responsibilities
towards its employees, with particular regard to the conditions of employment
and quality of working life provided for them.” (Michael Armstrong)

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An enterprise has two types of resources - human and physical. These resources
do not, by themselves, make an organization. The resources must be arranged
appropriately to harness these for forming the organization. A certain set of rules,
regulations and a structure is necessary for the organization to function.

Management of human resources, as of physical ones, is a complex task. Human

beings, as distinct from physical assets, have their will, sense of self- esteem,
their expectations and aspirations. No two human beings are alike.

Their management therefore must deal with social and psychological aspects.

An individual as part of an organization therefore has three facets: (i) as an

individual : he/she has his/her own personality traits, his/her self esteem, his/
her reactions, etc. (ii) as part of a society, this affects his/her attitudes, his/ her
behaviour, etc. and (iii) as part of the organization, where he/she forms part of a
structure for attainment of certain preset organisational goals.

All these aspects constantly inter-act and determine their behaviour as part of the
organization.

Employees may also be variously placed in an organization - as part of the

management, middle level or the labour force. Their roles in the organization are
thus defined by the responsibilities entrusted and the type of work involved. In the
role of a manager, an employee may influence personnel policy (which affects
other employes) but may also discharge the functions of directing, controlling,
organizing etc. These call for exercise of authority and leadership. These
functions are basically management functions pertaining to personnel aspects.
Other functions may be recruitment, training (development), compensation
packages, retirement benefits etc., dealing interpersonal relationships. These are
operative functions. Personnel Management therefore encompass broadly two
types of functions. These are:

i) Management functions, which include,

OO Planning
OO Organizing
OO Directing
OO Controlling

ii) Operative functions, which encompass

a) Induction (locating sources of supply, appropriate type of human material
required, appropriate number required, timing of recruitment, recruitment
and selection process etc.)
b) Development and training (improving the skills)
c) Compensation - including equitable and adequate remuneration, rewards
for exceptional work motivation etc.

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d) Integration : for best results social, personal and organisational goals
should be as closely identified as possible : Systems of conflict -
resolution must be developed. Management - employee relationships or
inter-group relationships must be smooth and cordial.
e) Communications:effective communication is necessary for participative
management and smooth and harmonious relationship.
f) Severance packages - Bencfits that the employees get on severing their
relationship with the organisation, or retirement, discharge or resignation.
It must be obvious that personnel management covers such functions
as employee relations, negotiations and collective bargaining labour
relations, job design, counselling and employee welfare.

4.4 ORGANISATION
In all large organisations there is generally a separate Personnel Department
or Division, with a chief Personnel Manager heading it. The Chief Personnel
Manager should ideally report to the Chief Executive of the organisation, who will
be a Managing Director or Chairman. The Chief Personnel Manager will have
under him a number of Managers and officers supported by clerical personnel.
The Managers and Officers will be given specific responsibilities like recruitment
and selection, training and development, Industrial Relations, Welfare etc. The
Chief Personnel Manager is responsible to advise the executive on personnel
policy to be adopted by the organization from time to time, framing of rules and
regulations to reflect the policy and administration of the rules, coordination with
the other Departmental heads in implementing the policy. The policy should
be directed towards obtaining the most appropriate human resources for the
organisation, developing them, motivating them to put in the best performance
on the jobs, compensating them monetarily and otherwise and ultimately in
achieving an optimum productivity of the human resources in fulfilling the
objectives of the organisation.

(This is largely based on “Personnel Management” by E.D. Flippo.) Once the

policy is evolved; it is the responsibility of the Personnel Department to set up
procedures and systems to implement the policy. For instance, in the case of
recruitment, the procedure will have to specify the details of the jobs, the method
of selection, laying down the terms and conditions of appointment etc. In the case
of training and development, the system should give the programmes of training
to be organized, selection of personnel for training, organization of training
courses, evaluation of training etc.

The underlying purpose of evolving a personnel policy and establishing

systems and procedures is to facilitate the organization to obtain and maintain a
competent human resources material, ensure equity and justice in compensating,

70
rewarding and motivating the personnel and establish a climate of harmony in the
organization, which will aid in the fulfillment of its objectives.

4.4.1 Organization Structure

This involves first designing the organization structure, which of course, is the
primary responsibility of the top Management itself. Organization structuring
means the establishment of departmental division for carrying out various
functions tike production, marketing, purchasing, financing etc. and within each
function establishing the levels of responsibilities, identification of individual jobs
like foreman, accounts clerk, stenographer etc., detailing the duties for the jobs
and delegation of authority and reporting relationships.

There is no universally accepted structure, which is valid for all organizations.

Every organization has to evolve its own structure most suitable for its business
and activities. But basically in evolving a structure, the various activities have
to be analyzed, grouped, wherever called for, the span of control of Managers
established and it should be ensured that the activities of the various groups or
departments are coordinated. The aspect of human behaviour should also be
taken into account in designing organizational structures, as otherwise, it will
be a mechanical set up which may break down if it does not suit the patterns of
behaviour of the personnel constituting it.

After the broad structure of the organization is designed, individual jobs have to
be designed. This involves specification of the tasks and activities included in
each job, the demands made on the job holder, the responsibilities assigned to
them and the manner in which they relate to other jobs in the organization. Over
a period of time the contents of individual jobs will tend to vary depending upon
the competence and motivation of individual job holders, but broadly certain
basic tasks and responsibilities need to be identified and established for each job
so that the resourcing for the jobs is facilitated.

After the structure of the organization in terms of departmentation and the

structure of individual jobs are broadly evolved, the resourcing for the jobs can be
taken up. But here are certain further detailed steps which need to be followed
before the identification of personnel for jobs can be thought of. The first of these
steps is an accurate analysis of the jobs individually.

4.4.2 Job Analysis

Job analysis involves noting down the characteristics of the job in terms of the
details of tasks and activities, the responsibilities involved and qualifications
required for handling the job effectively. Normally job analysis is done through

71
the technique of work study, which measures the contents of jobs for the
purpose of determining the strength of personnel required. Observation of actual
performance by job holders, interviews with job holders, issue of questionnaires
for reply by job holders and their supervisors are some of the methods adopted
for job analysis.

Job description

Arising out of the material collected in analyzing jobs, we get two documents,
one job description and the other person specification. The main points which are
included in a job description are :

OO The location of the job - Department and section.

OO The designation of title of the job.
OO The designation of the person to which the job holder reports and Grade
of the job.
OO The designations of those whom the job holder supervises or controls.
OO Overall purpose of the job.
OO The main tasks carried out - in order of importance
OO Equipments and tools used.
OO Working conditions i.e., night work etc.

Job Specification

While job description gives the details about the job itself, person of job
specification will give the qualifications, experience and other qualities required
of the individual for a successful performance of the job. The following details
should be given in the job specification, (according to seven- point plan of Alec
Rodger of National Institute of Industrial Psychology, London).

OO Physical make up - Health, Physique, appearance bearing and speech.

OO Attainments - education, qualification and experience.
OO General intelligence - fundamental intellectual capacity.
OO Special aptitudes - Mechanical, manual dexterity, facility in the use of
words or figures.
OO Interests - Intellectual practical – construction related, physically active,
social, artistic.
OO Disposition - acceptability, influence over others, steadiness,
dependability, self-reliance.
OO Circumstances - domestic circumstances, occupation of family.

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 Check Your Progress 1 :
1. What are the key issues to be considered in developing competing
human resources in an organization? (Answer in about 50 words)

2. What do understand the main difference between job analysis and

job specification? (Answer in about 50 words)

4.5 RECRUITMENT AND

MANPOWER PLANNING
After the job description and job specifications are ready the method of
resourcing for the job needs to be decided. Generally jobs are filled either
through internal sources or through external selection. For each job, it is
necessary to lay down the source of recruitment and selection so that advance
action is taken whenever vacancies are expected to occur.

External resourcing is generally done through different sources/methods

OO Advertisement in newspapers/professional journals

OO Employment Exchanges
OO Limited circulation of vacancies to organizations or individuals likely to be
an appropriate source.
Whatever is the method used, the job specification should be brought out clearly
so that applications suiting the job are received and there is a good choice for

73
selection. The method used will depend upon the source which is desired to be
approached whether it is the open market, or restricted sources which are likely
to provide the requisite choice of persons.

To enable all intending applicants to seek to be shortlisted for selection, an

appropriate application form or blank should be standardized and issued to
the applicants. The application blank should be so devised that all relevant
information in regard to the person and his/her suitability for the job are elicited
consistent with the job description and job specification mentioned above.

On receipt of applications in response to advertisements or circulation of

vacancy internally, short listing of the eligible candidates needs to be done
as the first step in the selection process. If the employment exchange is used
as the source, then also a copy of the application form should be sent to the
nominated candidates asking them to fill the same of the purpose of shortlisting.
The number of candidates to be shortlisted for selection will depend upon the
number of vacancies to be filled. If the number of applications are large, then
persons with higher grades in the qualifying school/university examination and
those with longer relevant experience may be shortlisted. Some organizations
call all the candidates answering the job specifications for selection in order that
they do not miss considering any candidate, who may be possessing some merit
in spite of a comparatively inadequate educational attainment or possessing
lesser experience. All shortlisting should be done by the Personnel Department in
consultation with the representative of the concerned line Department, for whom
recruitment is to be made.

There are selection Committees nominated in every organization to conduct

selections for recruitment. The Committees will include a Manager of appropriate
level of the line Department concerned, a Manager of the Personnel Department,
and Managers from other Departments considered appropriate for inclusion.
The procedures for selection should also lay down the methods of selection i.e.,
whether a written test should be held, or an interview should be held, aptitude
tests, psychological tests etc. The procedure should also provide for the method
of evaluation, the marks to be awarded for the various tests, qualifications,
experience, personality etc. The comparative weightages to be given to these
various methods/aspects of selection will depend upon the job characteristics, its
level in the organization and the importance the organization attaches to the need
for selecting the best candidates in the field. All the processes of selection, be it the
written test or the interview should be directed towards determining the potential of
the candidates to perform effectively on the job for which selection is being held.
There are secondary purposes like provision of information to candidates about the
company and giving a favourable image of the company. But the main purpose of
selecting the best candidates for the job should not be lost sight of.

4.5.1 Induction
On the candidates joining the Company, an induction programme is conducted.
He/she is introduced to his/her Manager and colleagues in his/her Department.

74
He/she is also taken round the other Departments to familiarize him/her with the
functions of the different units, the extent of his/her future interaction with others,
the personnel whom he/she should contact for obtaining information in regard
to the job, his own personal benefits etc. He/she will also be given a copy of
the procedure and systems manual of his/her own Department, the Personnel
Manual of the Company and other important documents. This induction
programme is an important event in the process of new employee getting into the
ethos of the Company and needs, therefore, to be conducted very effectively by
the Personnel and line Manager.

4.5.2 Promotions
Promotion is only another method of recruitment in the process of manpower
resourcing, even though from the employee’s point of view, promotion is a great
motivation. Many organizations give full opportunity to their own employees to be
considered at all recruitment levels, if they possess the requisite qualification and
experience. Another policy could be to consider internal candidates exclusively
for a proportion of vacancies in the higher levels, so that there is a regular
upward mobility provided to company’s employees. Some organizations adopt
the principles of seniority or seniority- cum-merit for such promotions. While
such policies would serve as motivation for the company’s existing employees,
occasionally such promotions tend to become routine and under serving
internal candidates might be promoted to the detriment of the interests of the
organization. The policy should, therefore, be designed to keep the requirements
of the organization foremost always in view and ensure that unmerited
promotions do not take place. Procedure and systems for promotion should be
more or less the same as for recruitment from outside.

4.5.3 Manpower Planning

Planning for the human resources of an organization is an important managerial
task. Manpower planning aims “to maintain and improve the ability of the
organization to achieve its objectives through the development of strategies
designed to enhance the contributions of manpower at all times in the
foreseeable future” (Gareth Stainer). In practical terms, manpower planning
involves three basic activities.

OO Demand estimation i.e., analyzing the current and future tasks of the
organization and in relation to them, predicting the number and kind of
manpower required by the organization to achieve its objectives.
OO Supply estimation - i.e., by attempting to lay down the action necessary to
ensure that the manpower required would be available when required.
OO Designing interaction between demand and supply so that the available
skills are utilized to the best possible advantage and the legitimate
aspirations of the individuals are taken into account.

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Every unit manager of an organization should be able to forecast the demand
for the human resources of unit for the plan -period consistent with the business
of work objectives set for him/her. The demand estimation should not only be in
terms of numbers but also of levels, quality and skills. As a result of techniques
such as work study and productivity studies, it is possible to evolve basic norms
for the numbers of men required for the effective performance of the various
activities and jobs of an organization. Some organizations manage an estimation
of the future requirements of employees based on past trends.

Apart from numbers, it is also necessary to specify the skills and qualification.
required of the personnel based on the needs of the activities and jobs. This is
again based on past experience and the Management’s own assessment based
on analysis of individual jobs.

On the supply side, the planning for human resources consists of recruitment,
development and effective utilization of manpower. Recruitment may be from
outside or by promotion, transfer or redeployment of existing manpower.

An ideal manpower planning system requires that the activities of recruitment

and promotion and also training and development of individual employees
are proceeded with in advance in accordance with appropriately laid down
procedures and systems. Advance action for supply of manpower is essential if
the organization is to comply with its business commitments. There should also
be a well-defined policy for the recruitment and promotion systems, because
without such a policy adhoc actions will be taken to cater to each situation,
which will not only demotivate existing employees but also result in failure of the
organization in meeting its objectives.

Training and development activities are an important component of a Manpower

Planning System. These activities help in sharpening of existing skills, and in
acquisition of new skills and knowledge by the personnel of the organization.
There is a need for establishment of detailed plans for training of all employees
who need development. An assessment of the needs for training in different
skills including technical, managerial and behavioural is a prerequisite of such
plans. The sources for training either through internal arrangements or external
agencies have to be identified. After training, the evaluation of the programmes
has to be carried out in order to make up for deficiencies and improve their
contents for the future.

Effective utilization of manpower is also a part of the process of manpower plan.

Every employee should be slotted in the job he/she is best suitable for. Secondly
there could be possibilities of multiple skills being developed in an individual
employees so that under utilization of personnel is avoided whenever there is
shortage of demand for particular skills. Thirdly inessential elements of jobs
should be eliminated and inefficient methods of their performance should be
avoided by improvement of systems and procedures.

In order to make manpower planning effective, it is necessary that there is an

inventory of the existing manpower and its skills on a continuing basis. Such

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an inventory should contain all relevant information including age, educational
qualifications, training undergone, experience details etc. The cost of manpower
should also be included in the inventory. All these details should be computerized
so that they are readily and accurately available for manpower planning
decisions.

Check Your Progress 2 :

1. What do you understand by the concept “induction”? (Answer in
about 50 words)

2. What is the relation between manpower planning and training and

development? (Answer in about 50 words)

4.6 PERFORMANCE EVALUATION

A basic function in the management of personnel of an organization is the
evaluation of job performance of individual employees. There is, therefore, a
system of performance appraisal in many organizations. Performance appraisal
has been defined as the process of reviewing an individual’s performance and
progress in a job and assessing his/her potential for future promotion. The,
process of appraisal records information which is needed :

OO For the manager to assist in guidance of the job holder to improve his/ her
performance and plan his/her career.
OO For the job holder to assess himself/herself and develop further
The purpose of performance appraisal schemes generally are

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OO motivating staff and thus improving performance
OO providing a fair and rational basis for making decisions in regard to
promotion, transfer, training, dismissals etc.
OO to act as a basis for awards for meritorious work
OO improving communication between manager and subordinates
OO as a basis for information for manpower planning and development (From
“A Text book of Techniques and Strategies in Personnel Management” by
David Guest (Terrence Kenny).
There are different methods of appraisal of performance. Generally such
appraisals are made once in a year. Every organization devises its own formats
for appraising performance, which may differ from job to job. In order to be
effective the appraisal has to be related to the contents and objectives of the jobs
and also to the organizational goals. There is no point in writing appraisal reports
in sophisticated formats, which may have no relationship to the jobs.

Some of the more important methods of appraisal are:

Merit-rating: with reference to successful performance of the job, various

attributes and performance measures are identified and included in the appraisal
format. Weightages are given to the various attributes and measures. Individual
employees are given numerical ratings according to the judgement of the
appraising manager for each attribute and the total of the ratings is added up.

Critical Incidents method: In this method the manager records important

incidents that occur during the appraisal period that reflect good and bad
behaviour of the subordinate, with reference to performance on the job.

Self-appraisal: In this method the subordinate is first asked to appraise himself/

herself about the achievements he/she could make on the job and for the
organization. These are then commented upon and assessed by the appraiser.

Objective or results oriented appraisal: The method is commonly used

nowadays. At the beginning of the year the manager and subordinate jointly set
targets or objectives for achievement by the appraisee during the year. At the end
of the period the manager evaluates the achievement of the objectives jointly with
the subordinates and makes his/her assessment report. This method is preferred
in recent times because it is directly related to effective performance of the job.

In all performance appraisal reports an overall assessment is made at the end

as to whether the employee has been “excellent”, “very good”, “adequate” or
“inadequate” on the job. This enables comparison to be made of the performance
of the different employees for the purpose - of career advancement and other
managerial decisions.

The current trend is to avoid evaluating personal attributes like loyalty, disciplined
behaviour etc. unless they are relevant to the effective performance of the job. In

78
this regard characteristics like team-work, goal- orientation etc. become valid for
appraisal in most of the organizations.

Potential appraisal refers to appraisal of employees with regard to positions

beyond the present job. Generally this appraisal is also incorporated in the
performance appraisal reports themselves like promote ability ‘in turn’ or out of
turn’ to higher positions in the Company. Some organizations, however, have a
system of appraising potential through separate methods in another format or
at the time of actual promotion and not mixing up performance appraisal and
potential appraisal.

4.7 COMPENSATION MANAGEMENT

Wages or salary and other monetary and non-monetary benefits are the
compensation an employee derives for performing his/her job in an orgnaization.
If the organization desires to attract and retain the right type of personnel for
achieving its objectives, it has to establish a policy of a fair compensation for its
employees. These benefits have not only to be comparable to those provided
by other organizations in the same industry, location for similar responsibilities
etc. but should also be internally consistent in the sense that the complexity,
importance and value of each job within the organization need to be evaluated
and appropriate differentials in compensation established amongst the various
jobs.

Wages or salary consist of a number of components. The basic wage or pay-

scale is intended to compensate for the performance of the job. Over and above
the basic wage, additional allowances are paid like

OO cost of living or Dearness allowance for compensating for increase in the

price level from time to time;
OO special compensatory allowance for providing for expensiveness of
specific localities;
OO house rent allowance for meeting the cost of renting residential
accommodation;
OO Qualification allowance to those possessing extra educational
qualifications;
OO Basic wage is determined for different jobs with reference to various
factors like;
OO capacity of the organization to pay;
OO Prevailing level of wages in the industry/locality;
OO The characteristics of the job like its complexity, condition of working etc.

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In fixing the rates of wages or salary for the purpose of external relativity,
salary surveys are made to find out the prevailing wages rates in comparable
organizations and in the location where the organization is situated. This is
mainly done in order to fix the salary at such a level that the organization can
attract and retain good human resource material from outside.

But in fixing the wage rate, the organization has also to take into account the
relevant legislation like the Minimum Wages Act, if it applies to it. Ideally also
it would be advisable to go by the principles enunciated by the various wage
Boards and awards of industrial Tribunals in fixing wages for particular industries.

In this context, the concepts of ‘living wage’, `minimum wage’ and `fair wage’ as
enunciated by the fair wages committee appointed by the Government of India in
1949 are worth recapitulation.

Living wage is one that would enable an ordinary worker to provide for himself/
herself and his/her family not merely the bare essentials of food, clothing and
shelter but also for the maintenance of health and decency and a measure of
frugal comfort including education of children, requirements of essential social
needs and insurance against the important misfortunes of life, including old age.

Minimum wage is one that would ensure not merely the bare sustenance of life
but the preservation of the efficiency of the worker providing some education,
medical requirements and amenities.

Fair wage lies between minimum wage and living wage. This would depend upon
factors like the productivity of labour, prevailing rates of wages in the same or
similar occupations in that region, the level of national income and its distribution
and the place of the industry concerned in the economy of the country.

In most of the industries in the organized sector in the country wages are
periodically determined in the collective bargaining forums established for
consultation with the Trade Unions of the organizations or the industry. These
agreements on wages also include provisions regarding other conditions of
service like leave, bonus, hours of work etc. When agreements are not possible,
the provisions of the Industrial Dispute Act, 1947 are resorted to and conciliation,
adjudication by Industrial Tribunals or arbitration are resorted to.

In invoking the provisions of the Industrial Disputes Act, the State Governments
concerned or the Central Government in the case of industrial undertakings
coming under the jurisdiction of the Central Government come into the picture
because reference to adjudication is to be made by them.

In some industries wage Boards are established for determining the wage
structure because of the widespread nature of the industry. In the case of Central
Government employees including Railways employees, salary structure and
conditions of service are determined by the Pay Commissions appointed by the
Government every ten years. These wage Boards and Pay Commissions consist
of an independent Chairman and expert members.

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 Check Your Progress 3 :
1. Distinguish three concepts – ‘living wage’, ‘minimum wage’ and ‘fair
wage’. (Answer about in 50 words)

4.8 JOB EVALUATION

We had stated earlier that in determining wages for jobs, in an organization, not
only should there be comparability with wages prevailing in similar industrial
organizations in the same region and elsewhere in the country also perhaps, but
there should be internal consistency in fixing wages for different jobs within the
organization itself. This internal consistency is ensured by using the technique of
job evaluation.

Job Evaluation is the process of establishing value of jobs in a job hierarchy. Job
Evaluation schemes aim to:

OO establish the rank order of jobs within an organization measure the

difference in value between them and group them into an appropriate
grade in a pay structure;
OO ensure that as far as possible, judgements about job values are made
on objective rather than on subjective grounds - judgements are based
on analytical studies of the content of the jobs irrespective of the
contributions made by the individual job holders;
OO provide a continuing basis for assessing the value of jobs -which is easy.
to understand, administer and control and accepted by employees as fair
(Michael Armstrong).
Before job evaluation is undertaken, job analysis has to be done. The content
and responsibilities of the different jobs are collected and recorded. Such
information may be collected by interviewing job holder, issuing questionnaires,
or by observation of the job being done. We have already dealt with the details of
information collected during job analysis and the drawing up of job description.

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There are different techniques of job evaluation

OO Non-analytical techniques viz., ranking and job classification - where

comparisons are made between “whole jobs” and not between the
different characteristics or features of the jobs.
OO analytical techniques viz. point-rating and factor comparison.

In the ranking techniques, whole jobs are compared with one another and a
relative hierarchy of jobs is prepared in order of importance. Such ranking is done
by experts, who are asked to consider a number of facets of the jobs in preparing
a rank order like complexity of the jobs, knowledge and skills required, physical
effort needed etc. In the first instance, “bench-mark” jobs are identified i.e., the
lowest and highest levels and may be middle level and the other jobs are inserted
in their positions, according to the judgement of the experts.

In the job classification techniques, a predetermined grading scheme defining the

different grades is established. Thereafter the job descriptions are made and the
jobs are fitted into the grades they deserve to be placed in.

Points rating techniques is more analytical than the ranking and classification
schemes. In this technique, the characteristics or factors inherent in different
jobs which are important for the purpose of evaluation are analyzed and listed:
Secondly the different factors have to be given weightage in accordance with
their importance. The typical factors generally considered for job evaluation
are skills and knowledge required, decision-making requirements, complexity,
responsibility for the work of others, resources controlled, relationships, physical
effort etc. Each factor is given the maximum points it deserves in terms of the
weightage assigned to it. For each factor, the total range of points is divided into
degrees according to the level at which the factor is present in the job. Normally,
not more than eight factors are selected and the “degrees of levels” for each
factor should be around five or six.

Each job is then awarded points for the various factors and the degree upto
which the factor is present in the job. For example, if for a clerical job, the
educational qualification is a factor and a matriculation level qualification is
required, the job may get 25 to 30 points out of the 100 allotted to this factor of
educational qualification. For a Senior managerial job, an MBA qualification may
be required, justifying say 75 points. The total number of points awarded to all
the factors for each job is totalled and the jobs are ranked according to the total
number of points.

Points rating techniques is a complicated one and it will be difficult to apply it in

a large organization consisting of many jobs.

Normally job evaluations are done by committees including union representatives

as job evaluation determines the relative wage levels of different jobs in an
organization and it is necessary to ensure that the wages are seen to be fair by
the generality of the employees.

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Other benefits

Salary structures generally consist of scales of pay with a starting pay, annual
increments and final rate of pay for the scale. As stated earlier, apart from
basic rate of pay, supplements are added in the form of dearness allowance,
allowance for costliness of specific locations, House rent subsidy, lunch
allowance, conveyance allowance etc. These allowances vary from organization
to organization depending upon its capacity to pay, its policy and other factors.

Some organizations introduce incentive systems of payment in order to reward

worker’s according to the output produced by them. These are not to be confused
with the bonus payable in our country under the Payment of Bonus Act, 1965.
Under this act, bonus is partly treated as deferred pay as the organizations
coming under its purview profits. There is also a maximum bonus laid down
under the, Act.

Incentive schemes referred to above mainly pertain to production workers of

manufacturing industries and Sales Staff. In such schemes certain norms of
output are laid down through work study for each category of worker. Any out put
beyond this norm is rewarded by payment of incentive bonus. Before devising
incentive schemes care has to be taken to ensure that the norms are fixed fairly
and the outputs are measured properly so that there is neither inflation of the
bonus amount nor a constraint on the workers producing an output according to
their capacity day to day.

While for the worker incentives provide a motivation for higher earnings, for the
organization a well-devised incentive scheme will be a source of reducing the
cost per unit of output. However, these schemes have a tendency to become
irrational in operation over a period of time and need to be watched and worked
carefully.

There are other benefits that the organisations provide to its personnel. These
are medical benefits, leave travel concessions and provident fund, gratuity etc.
Provident Fund and Gratuity are statutory benefits as they are given under the
relevant Acts of Parliament. Leave of different kinds like earned leave, medical
leave, maternity leave are also granted in most of the organisations to facilitate
rest, recreation and recovery from illness etc.

4.9 GROUP DYNAMISM

People are social beings, and they form, join, and work together in groups
to satisfy their needs. Groups generally help people to satisfy their need for
affiliation, affection, and emotional support and help them to achieve other goals
like recognition, performance, and training. An organisation comprises of many
groups, and all its activities are carried out through these groups. For many task,
groups accomplish much more in less time than if the same tasks were carried

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out by individuals separately. Employers can also grow more quality conscious
through group interaction as they learn about other people’s experiences
expectations, and problems. When group members do not work like teams and
ultimately have a dissatisfactory relationship with each other, it is because the
members lack the necessary attitude, knowledge, and skills to work together.
Therefore, it becomes imperative to understand how these groups function and
how they can be more productive and contribute to organizations.

Groups : A group can be defined as a collection of two or more people who meet
regulartly and influence one another over a period of time, perceive themselves
as a distinct entity distinguishable from others, share common values, and strive
for common objectives.

i) Formal Group: A formal group is established by the management and

is expected to perform well defined task to achieve organization’s
objectives.
a) Task Group: it is a temporary formal group that is established to solve
specific issues.
b) Command Group : It is a form of permanent group in the organization
dictated by the structure of the organization.
ii) Informal Groups: Informal groups grow out of the need for friendship
affiliation, companionship, and communication between people.
a) Friendship Groups: Friendship groups are based on common
characteristics like age, common values, and college affiliations.
b) Interest Groups: These groups comprise of individuals who share a
mutual interest and group together to try to achieve their objectives.
Functions of a Group

Groups tend to help individuals and organizations in a number of ways. Broadly,

groups serve two kinds of functions in an organization task and maintenance
(Schein 1980)

Task Functions

Groups carry out certain task functions to achieve organizational goals. These
are :

OO Handling complex tasks: When a task is too complex for an individual

to perform alone, perhaps because it requires competence and expertise
from different areas, it requires the help of a number of individuals
working together.
OO Liaison or coordinating functions: Groups also serve to act as
coordinating mechanism among the members of their own groups as well
as with groups outside.

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OO Implementations of complex decisions: Implementations of complex
decisions requires the understanding and contributions of a large number
of employees of the organization. A group acts as a catalyst to implement
such decisions.
OO Generating new and creative ideas: The interaction between group
members result in the generation of a large number of new and creative
ideas.
OO Vehicle for training new employees: In a group context, it becomes
easier for the new member to get socialized and understand the norms
of the group and the organization. As jobs in organizations have become
complex and interdependent, the role groups cannot be underestimated.

Maintenance Functions

These functions are performed to take care of the personal needs and
expectations of the individual members. They include:

OO Fulfilling the need for social interaction: Individuals have an innate

need for care, friendship, affiliation, and support. Groups help them fulfil
these needs.
OO Providing a sense of identity and self-esteem: If the group that one
belongs to in an organizations has a high status, the individual members
derive a sense of identify and self-esteem from their membership
OO Solving personal problems: Group provides emotional support and help
individuals confront personal problems and crisis.
OO Reducing anxiety and uncertainty: Groups help people to reduce their
anxiety and uncertainty by allowing individuals to share and discuss their
concerns with other members.

Models of Group Development

Groups are formed and developed through several stages. Once formed, working
relationships develop within groups, some groups grow and mature, and others
become stagnant. Different models of group development have been suggested.
A few of these are discussed in this section.

Tuckman’s Model of Group Development

A permanent group in its evolution has to pass through five distinct stages
(Tuckman 1965). Each of these stages in identified with dominant task-related
and maintenance issues. In a temporary group, a fifth phase is also added.
These phases are :

i) Forming: During this stage, the focus is on the task at hand and the
utilization of resources to complete it.

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ii) Storming: As members receive clarify about the techniques of doing the
job, there may disagreements among them.
iii) Norming: As the differences began to resolve, members develop mutual
understanding and clarity with respect to the task in hand.
iv) Performing : As members develop norms for work and interpersonal
relationships, solution to the problem begin to emerge and constructive
attempts are made to complete the job.
v) Adjourning: This stage is more apparent in temporary groups, where the
members have to abandon their membership in the group once the tasks
have been completed.

Woodcock Model of Group Development

A slightly different four-stage model has been given by Woodcock (1979). The
stages in Woodcock’s model are as follows:

i) Stage of lack of clarity: This is a stage characterized by unnecessary

level of authoritarian management and bureaucratic control.
ii) Stage of experimentation: During this stage, the group plans to
experiment and go ahead with risky ventures and considers wider
options.
iii) Stage of establishment of rules: The members become more methodical
with agreed-upon procedures.
iv) Stage of development: There is now in-build flexibility in the system and
creative use of the energy of members.
v) Stage of termination: It is the last stage of development aimed at
finishing the tasks assigned.

Group Processes

There are certain inherent processes existing within each group. After a group
has progressed through the stages of development, it is assumed that certain
stable patterns of relationships exist among its members. Bonds of intimacy
and interpersonal attractions have emerged and influential members have been
identified. Appropriate behaviours for individual members have been established,
and these result in creating a definite structure for the group with certain
important processes which also characterize the “dynamics” within groups. Some
of the important dynamics of the group are discussed below :

Group Norms

Groups develop common expectations called norms to reinforce the behaviour

of people and prevent dysfunctional behaviours. Norms are defined as a set of
expectations about appropriate individual and group behaviour commonly agreed
on by its members. They are established over time for behaviours that have
significant impact on a group, like facilitating its survival, increasing predictability

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of member behaviours, ensuring member satisfaction, expressing value
important to the groups’ identity, and preventing embarrassing interpersonal
problem.

Types of norms: Norms have been classified in a number of ways. The first
classification is into formal norms and informal norms. Formal norms exist as
written rules and procedures for all employees to adhere to. Informal norms
develop as a result of members’ own behaviours and experiences which help or
hinder their performance and satisfaction. Norms can also become functional or
dysfunctional on the basis of the purpose they serve.

Functions of Norms

According to Feldman (1984), The existence of norms within a group serves the
following purposes:

OO Norms provide a reflection of the nature of the group and also its central
values to outsiders.
OO Norms make the expected behaviour of the members more explicit,
therefore, leading to the anticipation of members’ behaviours. This results
in a high level of clarity and smoother functioning of the group.
OO Norms help groups to survive especially in instances of deviancy. When
the group rejects the deviant behaviour of some members, it may make
other members come closer to each other to sustain and support each
other.

Group Roles

Each member plays a particular role in a group, and the way employees perceive
and perform their role in a group has an influence on how the group functions. A
role is defined as a set of recurring behaviour that is expected from a member by
others in a group. Some role performed by group members are functional as they
guide and propel the group towards achieving their objectives. Some roles which
are derived out of the personal needs of individuals are dysfunctional in nature
and block the group from achieving its efficiency and effectiveness (Benne and
Sheats 1948). In general, some of these roles have been identified as task roles
which directly help the group to achieve its goals and objectives and are focused
towards that. There are other categories of roles identified as maintenance roles,
geared towards establishing and maintaining good interpersonal relationships.
There are few personal roles that are based on individual needs and are
generally detrimental to group effectiveness.

Frequently, a role is prescribed by the role holder’s job description. There are
three aspects of roles that have been identified. The first is the expected role. For
example, a HR manager’s role is to manage the HR functions of the organization.
Expected role is based on the concept of “psychological contract.” This is an
unwritten agreement that exists between the employer and the employees, and
it expresses itself in terms of what management expects from the staff and vice
versa. Management is expected to take care of its employees and help them

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grow. Employees are expected to add value to the organization and contribute
to its growth and development. If any of the parties fail to live up to their
expectations, it results in loss of commitment and motivation, thereby resulting in
lowered productivity and poor morale.

The second aspect of the role is the perceived role, which includes the activities
that the role incumbent believes, is necessary to fulfil the expected role. In
ideal situations, there is a perfect compatibility between the expected and the
perceived roles. Incompatibility between them leads to confusion and anxiety.
The third aspect to the role is enacted role. This is a representation of how
a person actually behaves in a given situation, which may be quite similar to
his expected and perceived roles or differ greatly. In case there is a wide gap
between the three aspects of roles, it leads to a number of issues that need to be
handled in group situations. Some of these are as follows:

OO Role ambiguity: When people are uncertain about their duties,

responsibilities, and authority, it causes role ambiguity (Peterson 1995). It
may be because of unclear directions about the expected role, inability to
obtain clarity about the perceived role or difficulty in converting the ideas
into real actions. In all these situations, the result is conflict, confusion,
and lowered levels of performance.
OO Role conflict: Role conflict arises when an individual’s performance of
one role is made difficult by the performance of another role (Peterson
1995). For example, an individual may experience role conflict when his
role as senior executive affects his role as a spouse or parent. There are
different types of role conflict including:
OO Person-role conflict: This conflict arises when there is a conflict between
the personal values and beliefs of the person and the demands of the
organization. For example, if an individual believes in maintaining his
integrity at all cost but the organization or the group expects him to
compromise on some of his value; it creates intra-role conflict.
a. Interrole conflict: This conflict is because of the incompatible
expectations of the two roles that the individual is expected to play.
For example, a clash between his role as a manager and his role as
a friend of an individual in the organization.
b. Intrasender Conflict: This results because of contradictory
messages sent by the source to reach the receiver.
c. Role overload: Role overload arises when an individual is
overloaded with job responsibilities that he is not capable of
performing. In such cases, it is important to prioritize the various
activities in order to handle them at the acceptable level.

Group Cohesiveness

In situations of high levels of agreement among group members with regard to

values and beliefs, cohesiveness is likely to exist in the group. Cohesiveness

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promotes sharing of similar ideas and the mutual acceptance of these ideas.
In high-cohesiveness groups, the close inter-personal bonds of its members
who highly value their association and want to maintain it hold all the members
together. The more cohesive a group, the more effective it will be in meeting
member needs and the more conformity it can demand from its members.

Sources of Cohesiveness

There are factors that have been identified to help to induce and sustain the
cohesiveness of the group. Some of these factors are as follow :

i) Similarity in attitude and goals: People with similar attitudes and goals are
assumed to find each other’s company comfortable.
ii) Successful attainment of the goal: This results in generating positive
feelings among members.
iii) Size : Smaller groups tend to create conditions for advancement of
cohesiveness.
iv) Charismatic leader: If the group has a leader who is charismatic,
cohesiveness is likely to be high.
v) Threats: The cohesiveness of the group is expected to improve in
situations of external competition or threats.
vi) Membership to high status group: Membership to high – status groups are
valued by the members and increases cohesiveness.
vii) Rewards: Incentives based on group performance cultivate a group-
centred perspective.
viii)Gender : Women are thought to be more cooperative and less competitive
with people who they see as friends or team mates.

Consequences of Group Cohesiveness

In a cohesive group, members have common goals and values to satisfy their
needs and they value their membership. As a result, there is a high degree of
conformity to group norms and a high influence of the group on its members.
High cohesiveness can have both positive as well as negative influences on the
members in the areas of productivity, job satisfaction, and growth.

i) Group cohesiveness and productivity: Highly cohesive groups are more

effective in meeting their objectives than groups low in cohesion.
ii) Group cohesiveness and satisfaction: Cohesive groups generally have
a higher reputation in the eyes of their members because of the high
premium they place on the successful completion of the task.
iii) Group cohesiveness and growth: In a highly cohesive group, members
learn from each other and they take pride in the success of the group.

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Common threats of Group Effectiveness

The threat to group effectiveness can be ascribed either to individual members’

needs and expectations or to the systemic failure, that is, inability of the group to
maintain its procedures and function effectively. Some common threats to group
effectiveness are discussed below:

Groupthink

Groupthink exists when pressures for conformity are so great that they tend to
overpower the members’ concern for realistic appraisal of the alternative course
of actions.

Consequences of groupthink There is very little discussion and evaluation

of alternatives in situations of groupthink. There is, generally, no realistic
assessment of the cost incurred or the gains expected out of the alternative
rejected or accepted. No serious attempt is made to obtain the views of the
experts on the issues under consideration. There are no contingency plans
available in case there is failure because of issues, such as bureaucratic inertia,
mistakes or subtle political manoeuvring by the opponents, which could pose a
threat to the successful outcome of the course of action chosen.

Counteracting groupthink Because of the dysfunctional consequences of

groupthink, a number of steps have been suggested to combat and manage
groupthink effectively. Some of these are as follows :

OO Encourage critical discussion: As a leader or the influential member

of the group, one should place a high priority on an open discussion of
doubts and objections when it is appropriate to be sceptical. The leader
should also be prepared to accept criticism for his judgements so that
members do not resort to unwilling consensus.
OO Exercise impartiality : The leader of the group should exercise
impartiality from the beginning of the group activity and avoid stating
preferences and expectations with regard to outcome. The leader also
should try to have a realistic appraisal of all alternative courses of
action and encourage members to offer suggestions so that a quick and
incomplete evaluation of alternatives does not result in the ineffectiveness
of the decisions.
OO Reappraise the first decision: After a decision has been taken, allowing
the members to rethink and report back later helps to clarify certain
cloudy issues. Exposing the problems to the outsider with different special
interests from those of group members and asking them to challenge the
group’s assumption and content also helps gain a newer and, may be, a
better perspective to the decision.
OO Break groups into subgroups: Breaking the groups into subgroups
helps to examine the feasibility and effectiveness of the proposed policy
alternative. This also helps in providing more options to work with, this
arriving at a better solution.

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OO Keep a check on the competitor’s reaction : Try to monitor information
provided by the competitor group and develop alternative models of the
rival group’s intention.

Risky Shift

Some groups are equipped to take greater risk than individuals and a
phenomenon is called the “risky shift” phenomenon. When individuals take
decisions in groups, certain factors determine the degree of risky shift. The
first factor is an upward influence on the level of risk an individual proposes
to take, and it emanates from information about the risks that other members
are prepared to take. This explains the effect of peer group on an individual’s
decision to take a relatively riskier decision when he is a part of a group where
all members are ready to go ahead with a similar proposition. The emotional
interaction during discussion may also create a situation that facilitates a shift
towards a high-risk decision.

When individuals take decisions as a group, they do not have the responsibility
for the outcome at the individual level. They pass on this responsibility to the
entire group, therefore, lowering the commitment to the group. Because each
member feels less personal responsibility for the potential failure of the decision,
consensus is likely to move towards acceptance of higher risks.

Another dimension associated is that of “cautions shift” which is generally

embedded in the culture of the organization. Certain issues in the organization
might have to be interpreted in a cautions manner. After a discussion, the
members may proceed with a more conservative view. Risky or cautions shift is
referred to as “group polarization”. Group polarization occurs when the attitudes
and opinions of the group, in connection with an issue, change during a group
discussion. The change or shift could be risky or cautions.

Social Loafing

One of the assumptions of group dynamics is the productivity of the group should
always be more than that of the individuals contributing singly. If not more, at
least it should be equal to the efforts made by individual members. However,
research studies have proved that individual efforts sometimes actually decline
as the size of the group increases. The tendency for individuals to exert less
effort while working in a group as compared to when they are working alone, is
call social loafing.

Managing a Culturally Diverse Group

People tend to feel comfortable with people whom they perceive to be similar to
themselves. However, the reality is that people are different and this difference
is the root of diversity. Differences in gender, age, race, and language are
clearly identifiable. Today, most developing countries are multi-cultural societies.
Diversity is defined as mutual acceptance and value placed on differences
among people with respect to age, class, ethnicity, physical and mental ability,

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race, sexual orientation, spiritual practice, and other human attributes. Workplace
diversity provides new opportunities for both employees and employers. In
today’s world, it is imperative to capitalize on the talents of employees from
diverse backgrounds because it is their differences that enrich, expand, and
provide the competitive edge. They enable organizations to tap new markets
while increasing effectiveness and productivity.

A group which comprises of culturally diverse individuals generally gets isolated

in a homogeneous organization. The exclusion of the talented members from
the activities of the group can result in reduced performance and efficiency of
the group. This alienation can also result in high employee dissatisfaction, thus
leading to high employee turnover. Because of the different style of working
and learning of these employees, managers may sometimes consider these
employees to be misfit for the organization. However, if a manager is able to
recognize and value these differences, it can enhance the productivity of the
organisation.

In recent years, the Indian workforce has become increasingly diverse with the
addition of workers who do not hold the traditional value of Indian employees.
At the same time, organisations are confronted with problems that cannot be
effectively dealt with by staying within conventional hierarchical and functional
boundaries, and thus we see a growing use of work groups, or teams, that span
these boundaries. Multiple sources of identify in such diverse work teams –
gender identity, and functional group identity – have to be identified, and it should
not be assumed that one can be a surrogate for the others.

Dealing with Culturally Diverse Work Teams

There is a well known tendency for group members to treat some people as
insiders and others as outsiders. This is termed as in-group/out group dynamics.
According to social identity theory, the simple act of categorizing people into
distinctive groups has debilitating effects on attempts to achieve collective goals.
In-group/out-group dynamics can result in stereotyping, intergroup competition,
distrust and prejudice, all of which can inhibit effective group functioning. A
number of techniques of dealing with culturally diverse work groups have been
suggested. A few of them are given below :

Contact : A good manager in an organization attempts to take care of these

dynamics by creating contact with the team members. A long standing belief in
group theory is that contact or increased exposure to others, promotes harmony
and minimizes differences. To reduce the intergroup conflict; another important
aspect is the type of contact and the context in which the group exists. The type
of contact needed is similar to the contact used in negotiations. The language
and strategies of negotiation can be useful in helping team members turn
differences into win – win strategies.

Super-ordinate goals : In situations of social dilemmas between “individual self-

interest” and “collective welfare”, the cause of collective welfare taken precedence
over individual interest. The collective welfare will be preserved if each individual

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restrains self-interest, thus promoting the common good. This relates to the use of
super-ordinate goals, which are the goals larger than the self.

Blending of categories and functions: Work teams are often structured in such
a way that roles or functions within the team are correlated with identity groups.
In a multifunctional team, it is likely that gender and role are correlated.

Evolution of Groups into Teams

The effectiveness of any organization depends upon effective teamwork.

Effective teams evolve from effective group functioning in organizations,
and it requires trust and support of individual members. If members do not
trust or support each other, group meetings easily degenerate into fights and
arguments with no cooperation at all. For a group to evolve into a team, it is
essential to reach to the performing stage. At that stage, the group needs to
possess the following characteristics: agreement with the mission of the team,
shared leadership, collective sharing of accountability, problem solving, and
measurement of effectiveness by collective accomplishment. Some of the
conditions essential for evolving a group into team are as follows :

Supportive organizational conditions : An organization needs to provide

a supportive environment to help a group evolve into a team. Some of
the conditions conducive to the evolution of teams include managements’
unconditional support to the team, team’s support to the organizational goals,
appropriate skills possessed by the team member to carry out activities of
the team effectively and whether the organization can afford to postpone task
accomplishment till members learn to work together.

Skilled team members: The team’s success depends upon the complementary
skills possessed by the individual members. The set of skills that need to be
possessed by the individual members comprises of technical skills, to be able
to complete the job requirement; problem-solving skills, the ability to solve
any problem at a given point of time; decision making skills, the ability to take
appropriate decisions to solve the problems; and interpersonal skills so as to
develop better relationship with superiors, colleagues, and subordinates in the
work environment. Other skills include skills of active listening, mutual influence,
and constructive confrontation to establish common goals and collaborate to
achieve them.

Common Values : For cooperative and collaborative effort, it is essential that

the team members possess some common core set of values to reinforce
accountability. Such common values help members to listen and respond
constructively to others, give the benefit of doubt, provide support, see the
interest of others and acknowledge their contributions.

Matching team roles and preferences: For managing a team effectively,

there has to be prefect compatibility between the roles performed by individual
members and the task in hand. A manager has to accomplish the goals by linking
differentiated roles held by motivated team members.

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Type of Teams

The teams in organizations can be classified into different types. Some of these
are discussed here.

Top-management teams: These teams help to coordinate the activities of the

work teams that are drawn from a number of different areas. Members of the top
management may find it difficult to coordinate as members of a team as they
are generally apprehensive about diluting their individuality for the sake of group
effort, particularly if there is a past record of success. (Hart 1996) On the basis
of their experience as McKinsey management consultants in the United States,
Katzenbach and Smith (1993) concluded that although teams have an advantage
over individuals, there are instances where factors such as the time – consuming
nature of teamwork and a culture of individual rather than collective effort make it
difficult for teams to form, particularly at the top management level.

Cross functional teams: Cross functional team comprise of individuals from the
same hierarchical level but different functional areas, to perform a specific task.
As individuals come from diverse backgrounds, it takes some time for trust to be
established among them.

Quality circles: A quality circle is a small group of employees (4-15) who do

similar work and report to the same supervisor. The group meets regularly on
a voluntary basis to identify and analyse work problems and provide solutions.
Quality circle teams are concerned with improving quality and effectiveness. The
quality circle works on the premise of setting joint objectives through the process
of participation and consequently working together to remove and blocks in the
achievement of objectives. A significant consequence of the implementation
of quality circles is the enhanced commitment to necessary changes in work
practices. It is used to improve productivity, product quality and safety at
work, and the benefits claimed following its use are reduced waste, improved
communication between management and workers, the creation of a problem –
solving environment, increased job involvement, and improve morale.

Self-managed teams: These teams or groups, consisting of 10-15 employees,

are the fallout of the autonomous work groups, and they take on the
responsibilities of their former supervisors. The activities of the self managed
teams consist of planning and scheduling work, controlling the pace of work,
taking decisions, and solving problems. An important feature of the real self
managed team is the selection of people to join the group and allowing members
to evaluate each other’s performance, However, the latter, according to Golzen
(1993), could be a contentious issue.

Virtual teams: In a virtual team, information among the members is shared

through the Internet, e-mail, and teleconferencing. The members may not
have to meet each other, but they relate and communicate with each other by
means of technology. Through these facilities, all members have access to the
same information before making a decision and can move in and out of teams

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according to the requirement. Virtual teams are required when organizations are
desirous of placing their best talent across the country on temporary task forces
or product development groups.

Summary

A great amount of our time is spent in group interactions. In our lifetime, we

join a number of groups. A group can be defined as a collection of two or more
people who meet regularly and influence one another over a period, perceive
themselves as a distinct entity distinguishable from others, share common
values, and strive for common objectives, In most organizations, several different
types of groups are present. The major classification is in the form of formal
groups and informal groups. Formal groups have been further classified into task
groups and command group. Informal groups have been divided into friendship
groups and interest groups.

Groups tend to help individuals and organizations in a number of ways. Broadly,

groups serve two kinds of functions in an organization, task and maintenance
functions.

Groups are formed and developed through several stages. Some groups
grow and mature, and others become stagnant. Different models of group
development have been suggested. Some of the examples include the
Tuckman’s model of group development consisting of five stages, forming,
storming, norming, performing, and adjourning. Another model is the Woodcock
model of group development which includes the stage of lack of clarity, the
stage of experimentation, the stage of establishment of rules, and the stage of
development. The third model is the Punctuated Equilibrium model comprising of
the stage of activity, the stage of inertia and the stage of termination.

After the group has passed through the development process, it is assumed that
the appropriate behaviours for individual members have been established and
these result in creating a definite structure for the group with certain important
processes that also characterise the “dynamics” within groups. Some of these
processes are group norms, group roles, and group cohesiveness. Group norms
are established over time for behaviours that have a significant impact on a
group, like facilitating its survival, increasing predictability of member behaviours,
ensuring member satisfaction, expressing values important to the group’s
identity, and preventing embarrassing interpersonal problems. Norms have been
classified in a number of ways. The first classification is in terms of formal norms
and informal norms. Group roles are defined as a set of recurring behaviour
that is expected from a member by other in a group. Some roles performed by
a group member are functional as they guide and propel the group towards
achieving their objectives. Some roles, which are derived out of personal needs
of individuals, are dysfunctional in nature and block the group from achieving its
efficiency and effectiveness. Group cohesiveness promotes sharing of similar
ideas and the mutual acceptance of these ideas.

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Today, most of the developing countries have become multicultural, giving rise
to diversity at workplace. Diversity has been defined as mutual acceptance and
value placed on differences among people with respect to age, class, ethnicity,
physical and mental ability, race, sexual orientation, spiritual practice, and other
human attributes. Diversity in a work group can occur as a result of five clusters
of attributes; personal demographics; knowledge, skills and abilities; values,
beliefs and attitudes; personality and cognitive and behavioural style; and
organizational demographics. A number of techniques of dealing with culturally
diverse work group have been suggested, which include contact, super-ordinate
goals, and blending of categories and functions.

Effective teams evolve from effective group functioning in organizations, and it

required trust and support of individual members with each other. Conditions
for evolution of groups into teams include supportive organizational conditions,
skilled team members, common value, and matching team roles and preference

CHECK YOUR PROGRESS – 4

1. What is group?

2. What are Group Norms?

3. What are the common threats to Group Effectiveness?

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 4. What are the essential conditions for evolving a group into team?

4.10 EMPLOYEE DEVELOPMENT OR

HUMAN RESOURCES DEVELOPMENT
The term Human Resources Development has been popular since the early

70s, initially it referred to training and development of employees in organization.

However, the more recent thought on HRD gives it a wider connotation and
encompasses a variety of strategies for development of individuals like appraisal
of performance, carrier planning, participative management, job rotation, quality
of work life, employee welfare etc. In this part, however, we shall mainly deal with
the techniques and strategies for training and development.

Every employee entering an organization comes with certain basic skills and
knowledge, which will in most cases be relevant to the job to which he is
recruited. After his/her entry, even if he/she is placed directly on the job

without any pre-job training, he/she learns on the job all the time. The learning
may be relevant to the skills required for the job or it may relate to his

behavior in the organization, inter-action with his colleagues, achievement of

departmental or organizational goals etc. But such learning tends to be

haphazard and idiosyncratic. From the point of the organization and also of
the individual and groups of employees, it is imperative that learning in an
organizational . context is well-directed, systematic and purposeful.

A training department or unit is established (presently called HRD Department)

mainly to make the training function effective in organizations. The role of the
Department is generally that of a coordinator or facilitator of HRD strategies and
activities for the entire organization The main functions discharged by the HRD
Department are categorized into three by Lippitt and Nadler.

The first role is that of Learning Specialist. This means that the trainer must be
able to identify training needs, design appropriate training courses and present
them in such a way that the process of learning is facilitated and maximized.

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The second role of a trainer is that of an administrator who will select and
develop his/her team of staff, plan programmes of training, ensure the finances
for the same and coordinate and communicate the efforts going into the
programmes.

The third role is that of a consultant. In this role, the trainer helps management
examine the organizational problems needing training advises management on
the training plans and contents and reviews the programmes.

The first step in the organization of training functions is, therefore, the
identification of the training needs. The following are some of the sources and
methods of assessing training needs in an organization.

– Personnel records including annual performance appraisal reports. In

these reports the supervisory manager enters the deficiencies of the
employees which call for training inputs and suggests a course of training.
– Training needs survey may be conducted through questionnaires or
personal interview with the employees, bosses, peers and subordinates.
– Training committees may be appointed to report on an ongoing basis on
the training needs of the organization and individual Departments and
suggest programmes.
– An outside consultant may be specifically engaged for the purpose going
into organizational problems and bring out the training needs to solve
them.

Once the training needs have been identified the next step is to convert the
needs into training plans and programmes. With clearly defined objectives and
goals for each programme.

In designing training programmes the following factors have to be taken into

account. These are illustrated in the figure below (Source - A Text book of
Techniques and strategies in Personnel Management - Edited by David Guest a
Terence Kenny).

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The objectives of training for each programme should indicate the skills,
knowledge and attitudes that the trainee ought to acquire at the end of the
training. Certain changes in behaviour of the trainee may also be expected as a
result of the programme.

The following are the principles of learning:

OO The individual should be motivated to learn.

OO Standards of performance should be set for learner.
OO The learner should be guided.
OO He should ‘gain satisfaction from learning.
OO Learning is an active and not passive process.
OO Appropriate-techniques should be used.
OO Learning methods should be varied.
OO Time must be allowed to absorb learning.
OO Learner should receive reinforcement of correct behaviour.

(Source “A hand book of personnel Management Practice - Michael Armstrong)

Thirdly the characteristics of the trainee also influence the design of the
programme.

These are the level of the trainee, his/her capacity, age, attitude etc. Next the
skills of the trainer are relevant. In this case the coordinator of training , the
persons preparing the course materials, the actual deliverer of the programme
are all considered as trainers.

The most important factor in the training design is the resources available.
One of the resources is the trainer himself. Secondly the monetary budget
available, then the equipment and materials, and training space are relevant.
Finally the resource of time available for training also influences the design
of the programmes. Every organization should have a policy on training and
according to the policy and the consequent objectives of training, resources will
be allocated.

Check Your Progress 5 :

1. What are the five (5) main roles to be played by a trainer?
(Answer about in 50 words)

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4.10.1 Methods of Training
The training may be on the job or off the job. In most cases training takes place
both on the job and off it.

On the job training may take different forms.

OO The trainee is straightaway asked to do the job and learn on his/her own.
OO He/she may be assisted by a co-worker to learn on the job.
OO Guided instruction may be given by a competent trainer to learn on the
job.
Sometimes training is given by sending the trainee around the organization to
different Departments and jobs in order to make him/her learn and integrate
himself/herself into the organization. This is called training in the field and is
generally part of an induction training for new employees.

Training can also take place by simulation i.e. a real life situation is specially
created for training to take place. Aeroplane pilots training is imparted through
simulation. In certain training programmes video-playing exercises are done,
which are also forms of simulation.

The next important method of training is case study. Case study involves
detailing of an actual situation which has occurred in an organization and asking
the trainees to discuss the pros and cons of the case, analyze it and suggest
decisions or solutions.

Lecture is of course a time-honoured method of learning in which the trainer

imparts learning verbally and through the medium of pictures, blackboards etc,
Lectures could be followed by questions to be asked by trainees, which are
answered by the trainer. There are other methods of learning like self- learning by
the trainer himself, project work, group discussions etc.

Aids to learning

The following are some of the media and aids to learning:

OO Visual aids, including blackboards, flip charts, overhead projectors,

diagrams etc.
OO Audio aids like tape recorder.
OO Audio visual aids like TV. VCR and films.
OO Mechanical aids including models.

4.10.2 Evaluation of Training

Every training programme has to be evaluated in order to determine whether
the objectives of the programmes have been achieved and whether the trainee

100
has learnt, what he/she was supposed to learn: Kirkpartrick has suggested the
following four steps in evaluating training.

Step 1. Reaction : How well did the trainees like the programme. In this
evaluation the feeling of the trainees is measured and not the learning that has
taken place. This measurement is done in the form of a questionnaire, which is
answered by the trainees at the end of the programme.

Step 2 Learning : What principles, facts and techniques were learned? This
evaluation is done by assessing actual performance in the class-room and pencil
tests.

Step 3 Behaviour : What changes in job Behaviour resulted from the

programme? This evaluation can be done after the lapse of a certain period of
time following the training programme. It can be done through actual observation
of Behaviour of trainees, interviews with supervisors or through questionnaires
etc.

Step 4 Results : What were the tangible results of the programme in terms of
reduced cost, improved quality, etc. This may be relevant in the case of safety
programmes which are expected to reduce accidents or cost- consciousness
programmes, which ought to result in reduced expenditure. This evaluation is
also done through questionnaires, interviews etc.

4.11 SUMMARY
We dealt in this unit an important component of an organization i.e.

Personnel Management. The related issue such as organizations nature, job

analysis, recruitment and manpower planning, performance evaluation, job
evaluation, group dynamism and HRD have been dealt extensively.

4.12 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

1. For developing human resources various aspects need to be kept in

mind viz. The role of individual in organization, the gaps in competency
required to discharge a particular role and the competences available
with the individual. The changes in skill-sets due to introduction of
new technology are some of the directly related issues. In addition
to these, development of human resources should also focus on
building appropriate motivation, commitment towards organization and
appreciation of overall organizational objectives and purpose.
2. Job analysis involves description of responsibilities, the contents of job
which is done based on work and method study whereas job specification

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 is related to the specification of the person which will fit into the job.
Job specification includes qualification, experience, competences and
skills required to discharge a particular job for which job description is
separately made.

CYP 2 :

1. The concept of induction relates to familarisation of new recruits in

the organization. The induction programme include familiarization of
individual employee to his job responsibilities, personal benefits, essential
procedures and systems applicable in his department and the personnel
related policies describing benefits to the individual apart form code of
conduct expected out of him during the job.
2. Training and development flows from manpower planning. The manpower
planning exercise forecast requirement of manpower and type of roles
for which manpower is required. These roles determine the skills,
knowledge and attitude required to discharge such roles. The number
of inflow of manpower and type of competences required to develop
helps organization to design training and development plan. Training and
development plan is to vary with the manpower fluctuations.

CYP 3 :

1. Living wage is the one that enables an ordinary worker to sustain himself/
herself and his/her family. It is determined based on cost of essential
food, clothing and shelter alongwith the essential cost of maintenance
of health, education of children and bare essential social requirements
whereas minimum wage not only ensures bare sustenance of life but also
takes into account the field requirement of efficiency of worker, the basic
needs and amenities. The fair wage, however, lies between minimum
wage and living wage. It is dependent upon the productivity of labour and
the economic health of the industry.

CYP 4 :

1. A group can be defined as a collection of two or more people who meet

regularly and influence one another over a period of time, perceive
themselves as a distinct entity distinguishable from others, share common
values and strive for common objectives group may be of two types
(i) Formal Group, which is established by the management and is
expected to perform well defined tasks. These may be temporary
(Task Group) or permanent (Command Group)
(ii) Informal Group, which grow out of the need for friendship, affiliation
etc. viz “Friendship Group’ and ‘Interest Group’
2. Group norms are defined as a set of expectations about appropriate
individual and group behaviour commonly agreed on by group members.

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 The norms may by Formal and Informal. Formal Norms exist as written
rules and procedures for all employees to adhere to Informal Norms
develop as a result of the members’ own behaviours and experiences
which help or hinder their performance and satisfaction.
3. The threats to group effectiveness can be ascribed either to individual
members’ need and expectation or to the system failure, that is, inability
of the group to maintain its procedures and functions effectively. Common
threats to Group effectiveness are:-
(i) Groupthinks : Groupthink exists when pressure for conformity are so
great that they tend to overpower the members’ concern for realistic
appraisal of alternative course of action
(ii) Risky Shift: Some groups are equipped to take greater risk
then individuals and the phenomenon is called the risky shift
phenomenon.
(iii) Cautions Shift: Interpretation of issues in a cautious manner so that
members may proceed with a more conservative view.
(iv) Social Loafing: The tendency for individuals to exert less efforts while
working in a group as compared to working alone is called social
loafing.
4. The conditions essential for enduing groups into teams are:-
(i) Supportive organizational conditions:- An organization needs to
provide a conducive environment to help a group evolve into a team.
(ii) Skilled team members:- The teams’ success depends upon the
complementary skills possessed by the individual members.
(iii) Common Values:- For co-operative and collaborative efforts, it is
essential that the team members possess some common core set of
values to reinforce accountability.
(iv) Matching team roles and preferences:- For managing a team
effectively, there has to be perfect compatibility between the roles
performed by individual members and the task in hand.

CYP 5 :

1. A Trainer is basically a facilitator. His role is to influence participants to

acquire desired knowledge, skills and attitude. Since training is related to
adult learning, a trainer should also play an important role in facilitating
trainers to unlearn and help them to question their own assumptions
and beliefs. An effective trainer also designs and adopts a methodology
which is most suited to impart a particular learning and makes learning
interesting for the participants.

103
 References and Suggested Readings

OO A Hand Book of Personnel Management & Practices - Michael Armstrong.

OO Personnel Management & Industrial Relations - Dale Yoder.
OO Personnel administration - Pigors & Myers.
OO Report of the National Commission of Labour - 1969
OO Wages in India - K.N. Subramaniam
OO A text Book of Techniques and Strategies in Personnel Management -
Edited by David Guest & Terence Kenny.

104
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UNIT-5
Employee Relations and Labour
Legislation

Structure
5.1 Introduction
5.2 Objectives
5.3 Concept and Scope
5.4 Important Legislative Enactments
5.4.1 Hours of Employment Regulations
5.4.2 Industrial Disputes Act 1947
5.4.3 Trade Unions Act
5.4.4 The Industrial Employment (Standing Orders) Act 1946
5.4.5 The Factories Act 1948
5.4.6 The Payment of Wages Act, 1936
5.4.7 The Minimum Wages Act, 1948
5.4.8 Workmen’s Compensation Act, 1923
5.5 Participative Management
5.5.1 Employer – employee relationship (individual)
5.6 Welfare
5.7 Summary
5.8 Check Your Progress : The Key
References and Further Readings

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5.1 INTRODUCTION
In the previous units you have studied about basics of management and about
personnel management in detail. In this unit we will discuss another important
issues related to employee relation, various legislative enactments, participative
management and employees welfare. As a study of this programme you have to
learn these legislative enactments to interpret the same when needed.

5.2 OBJECTIVES
After going through this unit, you shall be able to

OO describe the concept and scope of employee relations;

OO explain major legislative enactments;
OO identify the process of participating management; and
OO examine the various welfare measures needed by the employees.

5.3 CONCEPT AND SCOPE

The concept, employee relations, embraces the whole gamut of organisation’s
communication process between the management and workers either
individually or collectively on a representative basis. The term industrial
relations refers specifically-to the Management-union relationship, the
negotiations and bargaining that takes place, the conflicts that arise and
the processes of resolution of the conflicts. Industrial relation “is concerned
with the Systems. Rules and procedures used by unions and employees to
determine the reward for effort and other conditions of employment, to protect
the interests of the employed and their employers and to regulate the ways in
which employers treat their employees” (Michael Armstrong - A Handbook of
Personnel Management Practice).

Collective bargaining between unions and employers aims to establish by

negotiation and discussion agreed rules and decisions in matters of mutual
concern to employers and unions as well methods of regulating the conditions
governing employment (Armstrong). Trade unions are formed by the employees
either on the basis of individual organisations or on the basis of industry including
a number of organisations. The main objective of forming unions is to protect
the interests of the workers against management’s attempt to exploit the weak
bargaining position, in which an individual employee finds himself/herself even
in a developed country and to negotiate with the management periodically or
on a continuing basis the conditions of employment including wages, working
conditions, career development, hours of work, holidays, sickness and social

106
security benefits (like Provident Fund, gratuity) etc. Many a time, the trade unions
take up individual grievances of employees also for resolution. But generally all
the general terms and conditions of employment are laid down in what are called
collective agreements periodically entered into between the management and
unions after negotiation. Any differences arising in the course of implementation
of these collective agreements are also resolved by mutual consultation and
discussion between the management and the unions.

All industrial relations systems function within the political and legislative
framework obtaining in the society concerned. Government as representing the
generality of the population has a duty to regulate the economic system in which
industrial and commercial organisations function. At the same time, it also takes
on itself the obligation of protecting the workers from exploitation by the individual
organisations by facilitating through legislation or otherwise the formation of
unions, resolution of conflicts and also promoting the social and economic
welfare of the workers.

The main problems that arise in the effective functioning of the industrial
Relations Systems are related to formation of multiplicity of unions by the
workers in the same organisation or industry primarily due to political factors
and the consequent weakening of the power of negotiations and the inability
of the management to frame a predictable, firm long term policy in regard to
employment conditions. Secondly, frequent conflicts arise in the interpretation of
the agreements or even due to extraneous factors not related to the industry or
organisation but to the social tensions existing in the society.

Whenever conflicts arise there is provision in the collective bargaining

agreements themselves laying down the procedure for resolving the conflicts
say by reference to a neutral arbitrator or the government intervenes through the
processes laid down in the legislative enactments for the same purpose.

The role of Personnel Management is crucial in the successful functioning of

the IR system. The Personnel Manager is in the fore front of negotiation and
bargaining with the unions, reflects the views of the Management, enables the
Management to lay down policies and procedures and is also responsible for the
entire communications process in the organisation from the top to the grassroots
levels and vice verse. The Line manager attends to the day to day work related
problems and also acts as a conduit for channelising individual grievances of
employees, but the major responsibility for trouble shooting in industrial relations
problems vests in the Personnel Department. If prevention is preferable to cure
in the case of physical illness, it is all the more true that industrial conflicts should
be averted before they manifest themselves and the Personnel Manager is in
the best position to anticipate potential situations of conflicts and advise the
management about the course of action to be adopted.

We need also to mention about the role of the courts in the industrial relations
field while the Government passes legislation and administers the machinery,
which is established for regulating the industry, union relationships, very often

107
the courts are called upon to interpret the legislative enactments whenever the
parties themselves are unable to agree even with the intervention of government
or otherwise. In our country particularly all the courts from the lowest to the
highest have played a dynamic role in the working of the labour relation systems,
whether it is the enforcement of the right to form associations and unions or it
is the payment of wages or the’ implementation of social security benefits to
the workers. There have also been innumerable individual cases of industrial
disputes decided by the courts like cases of unlawful retrenchment, dismissal etc.

Let us now deal with the legislative framework for regulating industrial relations
in India. The basic document in the field as in any other field is the constitution
of India, which lays down the philosophy of the people of the country in all these
matters. Article 14 of the constitution guarantees equality before law and the
equal protection of the laws for all the citizens of the country. The workers are
also, therefore, assured this equality. Article 19 guarantees the fundamental
right of freedom of speech and expression, freedom to form associations and
unions etc. The right to move the highest court in the land for enforcement of
fundamental rights is guaranteed by

Article 32. Writ petitions for enforcement of legal rights can be filed in the High
Courts under Article 226 and the Supreme Court can hear appeals under Article
136 within its appellate jurisdiction. All these rights are available to our workers
as they are available to any other citizen.

Then again, there are the Directive Principles of State Policy, which, even
though they are not enforceable in a Court of law as the fundamental rights are,
shall nevertheless be taken into account by the Government in framing laws.
For example, one of the directive principles says that there should- be equal
pay for equal work for both men and women and this has been followed by the
government in enacting a legislation to this effect. Another directive principle
provides that the state shall attempt to bring about workers participation in
Industry. Even though no legislation has been passed specifically to establish
participative management forums, the government has notified various non-
legislative Schemes for adoption towards this end.

Under the Constitution, “Labour” is a subject in the concurrent list, which means
that both the Central Government and the State Governments can frame
legislation on the subject. But so far as Central Government Departments like
Railways are concerned, generally, the legislation and Rules framed by Central
Government will be applicable.

Apart from the enactments made by Parliament and State Legislatures and the
rules and regulations framed thereunder, law is also laid down by the courts
including the High Courts and Supreme Court through their rulings in individual
cases filed by affected parties. These rulings basically interpret the legislations
and become precedents to be followed in other cases having the same features.
There are a number of court rulings in regard to labour laws particularly the
Industrial Disputes Act, one of the important Acts concerning labour on the
statute book.

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5.4 IMPORTANT LEGISLATIVE ENACTMENTS
In the following section the major legislative enactments, mainly selected to
railway employees are explained.

5.4.1 Hours of Employment Regulations

One of the important legislative measures concerning specifically the Railway
employees is the Hours of Employment provisions in The Railways Act 1989.
These provisions in the Indian Railway Act were enacted by Parliament through
an amendment made in 1956 and are contained in VI A (now Chapter XIV) of the
Act. Rules have been framed by the Central Government, the Act and subsidiary
instructions issued by the Railway Board. All these are called the Hours of
Employment Regulations.

Under the HOER, Railway employees are classified into four categories, viz.
“continuous” “excluded”, “intensive” and “essentially intermittent”. All employees
are “continuous” unless they are “excluded” or declared as “essentially
intermittent” or “intensive”.

The “excluded”, categories are for example those employed in a confidential

capacity, armed guards and other personnel subject to police like discipline, staff
of Railway Schools, certain staff of the Health and Medical Department, and
Supervisory staff, declared as such by the Central Government through the rules
framed by it.

An employment is said to be “essentially intermittent”, when it is declared to

be so on the ground that the daily hours of duty of the railway servant normally
include periods of inaction aggregating six hours or more (including at least one
such period of not less than one hour or two such periods of not less half an hour
each), during which the Railway Servant may be on duty but is not called upon to
display either physical activity or sustained attention.

The employment of a railway servant is said to be “intensive” when it has

been declared to be so by the prescribed authority on the ground that it is of a
strenuous nature involving, continual concentration or hard manual labour with
little or no period of relaxation.

Based on the classification of the employees, the HOER lay down the hours
of duty, grant of periodical rest, payments to be made for extra hours of work
put in by the employees etc. For instance, a “continuous” employee shall not
be employed for more than 54 hours a week on an average every month. An
“intensive” worker shall not be employed for more than 45 hours a week on an
average in a month. For an “essentially intermittent” employee the ceiling on the
hours of work is 75 per week.

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The Act provides that temporary exemptions from these Statutory ceilings may
be made by the prescribed authority in order to avoid serious interference with
the ordinary working of the Railway, or in cases of accident, or any unforeseen
emergency or circumstances of exceptional pressure of work etc.

When the weekly ceiling of hours of work is exceeded, the railway employee
concerned shall be paid overtime at not less than two times his ordinary rate of
pay. While this is the statutory provisions on payment of overtime, as a result
of an agreement between the Railway Board and one of the Federations of
Railwaymen, overtime becomes payable if it is rendered beyond a two weekly
average of 108 hours in the case of “continuous” and 90 hours in the case of
“intensive” “workers”.

Section 133 of the Act provides that

OO an “intensive” and “continuous” worker shall be granted each week

commencing on Sunday a rest of not less than thirty consecutive hours.
OO an “essentially intermittent” worker shall be granted each week
commencing on Sunday a rest of not less than 24 consecutive hours
including a full night.
OO an “excluded” employee shall be granted a rest of not less than 48
consecutive hours each month or a rest of not less than 24 consecutive
hours each fortnight.

There are special provisions of rest for Loco and Traffic running staff.

5.4.2 Industrial Disputes Act 1947

This is one of the most important pieces of legislation concerning labour in
India. It seeks to make provision for the investigation and settlement of industrial
disputes.

Industry to which the Act applies is defined to mean any systematic activity
carried on by cooperation between an employer and his workmen, for the
production, supply or distribution of goods or services with a view to satisfy
human wants or wishes. By an amendment made in 1982 the Act excludes from
its purview (i) hospitals and dispensaries (ii) educational, scientific research
and training institutions (iii) charitable and philanthropic institutions (iv) Khadi or
village industries etc.

Industrial Dispute means any dispute or difference between employers and

employees, or between employers and workmen or between workmen and
workmen which is connected with the employment or non-employment or the
terms of employment or with the conditions of labour of any person.

Workman to whom the Act applies is defined to mean any person employed to do
any manual, unskilled, skilled, technical, operational, clerical or supervisory work
for hire or reward but does not include,

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– those subject to Airforce, Army or Navy Acts;
– those in police force or prison service;
– those employed mainly in a managerial or administrative capacity;
– those supervisors, who draw wages exceeding Rs.10,000/- p.m. or
discharge functions of a managerial nature;

The Act provides for the various authorities with different functions for the
purpose of resolution of disputes and maintaining harmony in industrial relations

OO Works committees to be formed in establishments employing 100 or more

workmen. These committees are to consist of representative of employer
and workmen. These committees are meant to promote measures for
securing and preserving amity -and good relations between the employer
and workmen to comment upon matters of common concern and to
compose any material difference of opinion in such matters.
OO Conciliation officers and Boards of conciliation for the purpose of
mediating in and promoting the settlement of industrial disputes.
OO Labour Courts for adjudicating on industrial disputes relating to the
subjects specified in the second schedule to the Act.
OO Industrial Tribunals for adjudication of industrial disputes relating to items
mentioned in the second and third schedules to the act.
OO National Tribunals for adjudicating disputes of national importance or
affecting establishments in more than one state.
OO Arbitrators to be appointed by the parties to the -disputes themselves.
The Act specifies the duties of the various authorities mentioned above
and the procedure they should adopt for discharging those duties.

“Strike” is defined as cessation of work by a body of persons in any industry

acting in combination , or a concerted refusal or a refusal under a common
understanding to continue to work or to accept employment.

According to the Act no person employed in a public utility service shall go on

strike without giving notice of strike within six weeks before striking or during the
pendency of any conciliation proceedings.

Similarly an employer of any public utility service shall not lockout any workman
without giving similar notice. There is also a general prohibition of strike or
lockout in any industrial establishment during the pendency of conciliation,
adjudication and arbitration proceedings. Any strike or lock out which is in
violation of the provisions of the Act will be treated as illegal.

Lay off means the failure; refusal or inability of an employer on account of

shortage of coal, power or raw materials or the accumulation of stock or break
down of machinery or natural calamity etc. to give employment to a workman of
the establishment.

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Whenever a workman is laid off and he has completed not less than one year
of continuous service he shall be paid compensation equal to 50% of the basic
wages and dearness allowance otherwise payable to him for a period of 45 days.
The workmen can be retrenched in accordance with the provisions of the Act
after the period of 45 days.

Retrenchment means the termination of service of a workman for any reason

otherwise than as a punishment inflicted by way of disciplinary action but does
not include,

– voluntary retirement of the workman or

– retirement on attaining the age of superannuation
– termination of service as a result of non-renewal of contract of
employment on its expiry
– termination of service on grounds of continued ill health.

No workman who has been in continuous service for not less than one year shall
be retrenched until.

– the workman has been given one month’s notice in writing indicating the
reason therefore and the period of notice has expired or he has been
given one month’s wages in lieu of notice.
-– the workman has been paid compensation equal to 15 day’s average pay
for every completed year of service or part thereof in excess of six months.
-– notice in the prescribed manner is served on the appropriate Government.

Retrenchment has to be generally on the “last in first out” principle unless there
are valid reasons recorded by the employer for retrenching any other workman.

Retrenched workers have to be given preference in the matter of employment;

when the employer makes fresh recruitment.

The Act by a recent amendment prohibits the employers or workmen or trade

unions from committing any unfair labour practice. The fifth schedule to the Act
lists various unfair labour practices. For instance, the employer shall not interfere
with the workman organising unions, discharge a workmen for taking part in a
strike (Legal), fail to implement awards; settlements or agreements. There are
16 such practices listed in the schedule. As regards workmen, there are eight
practices listed as unfair and prohibited. These include instigating an-illegal
strike, staging demonstrations at the residence of employers, causing wilful
damage to employer’s property etc.

5.4.3 Trade Unions Act

The trade unions Act is one of the older legislations in the field of industrial
relations. It was enacted in 1926. This Act is meant for the object of registration of
Trade unions and defining the law relating to registered Trade Unions.

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“Trade Union” is defined in the Act as any combination formed primarily for the
purpose of regulating the relations between workmen and employers or between
workmen and workmen or between employers and employers or for imposing
restrictive conditions on the conduct of any trade or business.

A Registrar of Trade unions is to be appointed by the appropriate Government for

each state.

Any seven or more members of a Trade union may by subscribing their names
to the Rules of the union and otherwise complying with the provisions of the Act
apply for registration of the Trade Union. Before applying for registration, the
executive of the union has to frame the Rules of the union indicating the name
of the union, its objects, the purpose for which its funds may be utilised, list of
members, the subscription payable by members (which shall not be less than (i)
one rupee per annum for rural workers ; (ii) three rupees per annum for workers
in other unorganized sectors; and (iii) twelve rupees per annum for workers in
any other case); and other relevant matters.

The Registrar shall register the union on being satisfied that the provisions of the
Act have been complied with and will issue a certificate of registration.

The Act provides the objects for which the funds of the union may be spent.
These include

OO payment of salaries and expenses of office bearers

OO expenses of administration of the union
OO expenses of legal proceedings involving the union
OO conduct of disputes of the union with the management
OO old age, sickness, education etc. benefits to members
OO compensation to members for loss arising out of disputes etc.

Trade unions may constitute a separate fund for the promotion of civic and
political interests of its members, which can be utilised for fighting elections to
legislatures, printing and distribution of political literature etc.

The Act provides immunity to the registered Trade unions and their office bearers
from legal proceedings on account of acts in the course of industrial disputes like
breaking the contract of employment, interference with business and also act of
tort.

It will be seen that the Trade unions Act merely provides for registration of Trade
unions and their administration and not for the purpose of recognition of unions
for negotiation and collective bargaining. There has been no central legislation
so far for this purpose as all attempts at enacting such a legislation have not
fructified so far.

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5.4.4 The Industrial Employment (Standing
Orders) Act 1946
The Act has been legislated in order to require employers in industrial
Establishment to define with precision the conditions of employment under them
and to make those conditions known to the workmen employed by them. The
Act applies to every industrial establishment wherein 100 or more workmen are
employed.

Industrial establishment means the following

– tramway service or motor transport service

– air transport service (other than those of military and civil aviation
Departments)
– dock, wharf, jetty
– inland vessels
– mine, quarry or oilfield
– plantation
– workshops and similar establishments
– establishments connected with construction of buildings, roads, bridges,
generation of electricity etc.
– a factory
– a railway.

The industrial establishments to which the Act applies are required to submit to
the certifying officer five copies of drafts standing orders proposed to be adopted
by them. The standing order should provide for the following:

– classification of workmen e.g., whether permanent, temporary, apprentice,

probationer, badli, etc.
– manner of intimating to workmen periods and hours of work, holidays, pay
days and wage rates
– shift working
– attendance and late coming
– conditions and procedure for grant of leave
– requirement to enter premises by certain gates
– closing and reopening of certain sections of the establishment, temporary
stoppages of work and the right and liabilities of the employer and
workers arising therefrom
– termination of employment and the notice thereof to be given by the
employer and workmen

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– suspension, or dismissal for misconduct and acts or omissions which
constitute misconduct
– means of redress for workmen against unfair treatment by the employer
and his servants etc.

The certifying officer will consult the unions or if there is no union, the workmen
in an appropriate manner and consider their points of view before certifying the
standing orders for adoption by the employer. Certified standing order shall be
prominently displayed by the employer in his premises.

So far as Railway employees are concerned the Act does not apply as the
Act exempts those establishments to which inter alia, the Indian Railways
Establishment code applies. However, it should be appreciated that the Act is one
of the important pieces of legislation in the field of industrial relations as it seeks
to enforce certain Standard terms and conditions of employment for the benefit of
industrial workmen.

5.4.5 The Factories Act 1948

The factories Act provides for the health, safety, welfare, and other aspects of
workers in factories. The Act is enforced by the State Governments through their
Factory Inspectorates.

Factory means any premises including the precincts thereof.

1. Where 10 or more workers are working and in any part of which a

manufacturing process is being carried on with the aid of power or
2. Where twenty or more workers are working and in any part of which a
manufacturing process is carried on without the aid of power.

The act also defines “manufacturing process” in detail and it includes:

i) making, repairing etc. of any article for the purpose of its sale, transport etc.
ii) pumping oil, water etc.
iii) generating and transmitting power
iv) printing and similar processes
v) constructing, repairing etc. ships and vessels
vi) preserving and storing any article in cold storage.

The occupier of the factory is required to ensure the health, safety and welfare
of all workers, when they work in the factory. The plants and systems of work
should be safe and without risks to health. Information, instruction and training
should be provided for ensuring safety and health.

Factory premises should be kept clean and free of effluents arising from drain
etc. Accumulation of dirt and refuse should be avoided. Effective ventilation

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should be provided. Over crowding should be avoided. Proper lighting should be
provided. Drinking water arrangements should be made. Latrines and urinal s
should be provided.

In regard to safety, the Act gives details of the arrangements to be made to

protect workers from accidents caused by the machines, electrical equipments
etc. It prohibits employment of young persons on dangerous machines, without
full instructions. It provides for precautions against explosive or inflammable
materials, against fire hazards and hazardous processes.

On the welfare side the Act stipulates for

– provision of washing facilities

– facilities for storing and drying clothings
– facilities for sitting
– first aid appliances
– canteens
– shelters, rest-rooms and lunch rooms
– creches etc.

Another important aspect of the Act is, that it stipulates the working hours, which
shall not be more than 48 hours in any week for an adult. It provides for weekly
holidays. Daily work for an adult shall not exceed nine hours.

The Act also provides that a worker shall be paid overtime at the rate of twice his
ordinary rate of wages, if he works for more than nine hours on any day or for
more than 48 hours in a week.

Employment of women in night shifts is prohibited. No child, who has not

completed 14 years of age shall be employed for more than 4-1/2 hours on any
day or during night

The Act further provides for grant of annual leave with wages

– for an adult at the rate of one day for every 20 days worked
– for a child at the rate of one day for every 15 days worked

It will be seen that the Factories Act is meant to prevent exploitation of workers
by employer and to ensure the safety, health and welfare of workers and restrict
their hours of work, and provide to their rest and recreation through annual leave.

5.4.6 The Payment of Wages Act, 1936

The Payment of Wages Act regulates the payment of wages to certain classes of
persons employed in industry. The object of the Act is to ensure that the wages
payable to employees covered by the Act are disbursed to the employees within

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the prescribed time limit and that no deductions other than those authorised by
law are made by the employer.

The Act applies to persons employed in a factory, or a Railway or in any other

industrial establishment like

– a tramway or motor transport service

– air transport service (other than defence and civil aviation) dock, wharf or
jetty
– inland vessel, mechanically propelled
– mine, quarry or oilfield
– plantation
– workshop or other similar establishment
– establishments connected with the construction and maintenance of
buildings, roads, bridges or canals etc.

The Act however applies only to those workers, whose wages average less than
`24000/- p.m. over a wage period.

Wage periods not exceeding one month shall be fixed by every employer and the
wages shall be paid.

– before the expiry of the seventh day after the last day of the wage period
in the case of establishments employing less than 100 persons.
– before the expiry of the 10th day in the case of other establishments.

The wages shall be paid without any unauthorised deductions. The following
deductions are authorised.

OO fines
OO deductions for absence from duty
OO deductions for damage to or loss of goods in the employee’s custody or
for loss of money attributable to the employee’s neglect or default
OO deductions for house accommodation provided by employer
OO deductions for authorised amenities and services provided by the
employer
OO deductions for recovery of advances and interest thereon
OO deductions for income tax payable by the employee
OO deduction required to be made by an order of court
OO deductions for payment of cooperative societies
OO deductions for payment of premium on his life insurance policy with the
written authorisation of the employee.

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OO deductions for payment of fees to unions with the written authorisation of
the employee.
OO deductions for recovery of losses sustained by the railway administration
on account of acceptance by the employee of counterfeit coin, mutilated
or forged currency notes.
OO deductions for recovery of losses sustained by the railway administration
on account of the failure of the employee to bill or collect the correct
charges of fares, freight, wharfage etc.
OO deductions of recovery of losses sustained by the railway administration
on account of any rebate or refund incorrectly granted by the employee.
OO deductions on account of contribution to PM’s relief fund etc. with the
written authorisation of the employee.

The deductions in any case cannot exceed 50% of the wages or 75% of the
wages if payment to cooperative societies are involved.

5.4.7 The Minimum Wages Act, 1948

The Minimum Wages Act has been enacted to provide for fixing minimum rates of
wages in certain employments.

Wages have been defined in the Act as all remuneration capable of being
expressed in terms of money, which would be payable to a person in respect
of his employment or work done in such employment and includes house rent
allowance but excludes certain items like employee’s contribution to pension or
provident fund, travelling allowance etc.

The Central and State Governments concerned are required to fix the minimum
rates of wages payable to employees in specified employment’s which are
listed in the schedule to the Act. These include different mines, public motor
transport, plantations, oil mills, construction and maintenance of roads or
building operations, woollen carpet or shawl weaving establishments, tobacco
industry, loading and unloading in Railway Goods Sheds and docks and ports,
maintenance of buildings and employment in construction and maintenance of
runways etc.

The minimum wages shall be reviewed periodically at intervals not exceeding five
years.

The minimum rate of wages may consist of a basic rate of wages and special
allowance at rates to be prescribed for compensating for cost of living variations
or

OO a basic rate and cash value of concessions in respect of supplies of

essential commodities or
OO an all inclusive rate for basic wages, cost of living allowance, and cash
value of concession.

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The minimum wages are to be fixed after inquiry by expert committees,
notification of the proposed rates for receiving objections from affected persons
and after considering the report of the committees and proposals by

affected persons. Advisory Boards may be appointed for coordinating the

work of various minimum wages committees. The Board should consist of
representatives of employees and employers in the scheduled employment
concerned and other independent persons.

The minimum wages fixed by the appropriate governments from time to time
shall be paid in cash, unless otherwise authorised. The Act also provides
for fixing of normal working hours, days of rest and payment of overtime for
working in excess of the prescribed working hours. These are to be fixed by the
appropriate Governments.

The Minimum Wages Act is a beneficial legislation in favour of workers in certain

specified employments like mines, road building etc, where the conditions of work
are arduous and exploitation by employers was frequent and usual necessitating
State intervention for protecting the interests of workers.

5.4.8 Workmen’s Compensation Act, 1923

This is one of the oldest Legislative measures enacted for the purpose of
providing for payment of compensation by employers for injury sustained by
workmen due to accident. The Act covers a railway servant as defined in section
3 of the Indian Railways Act, 1890, who is not permanently employed in any
administrative, district or subdivisional office of a railway and all those included in
the Schedule 11 to the Act, which lists some 32 employments for the purpose of
the Act.

The Act provides that if personal injury is caused to workman by accident arising
out of and in the course of his employment, then his employer shall be liable to
pay compensation in accordance with the provisions of the Act.

The employer is not liable

OO in respect of any injury which does not result in the total or partial
disablement of the workman for a period exceeding three days.
OO in respect of any injury (unless it results in death of the employee)
caused by an accident which is directly attributable to negligence of the
employee.
OO the workman having been at that time under the influence of drink or
drugs
OO the wilful disobedience of the workman to an order expressly given or
to a rule expressly framed for the purpose of securing the safety to the
workman or

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OO the wilful removal or disregard by the workman of any safety guard or
other device which he knew to have been provided for the purpose of
securing the safety of the workman.
Compensation is also payable when a workman contracts an occupational
disease in specified employments.

The amount of compensation payable is

(a) When death results from the injury an amount equal to 40% of the
monthly wages of the deceased worker multiplied by the relevant factor or
` 1,20,000/- whichever is more.
(b) Where permanent total disablement results from the injury an amount
equal to 50% of the monthly wages multiplied by the relevant factor or
` 1,40,000/- whichever is more
(c) The factors range from 228.54 for the age of 16 to 99.37 for the age of 65
or more Compensation is payable only for a maximum monthly wages of
` 8000/-
(c) Where permanent partial Proportionate of the loss of earning
disablement results from the injury capacity
Where temporary (partial or total) A half –monthly payment of the sum
(d) disablement results from the injury equivalent to 25% of the wages of the
workman.

Commissioners of workmen’s compensation are appointed under the Act, with

whom rests the responsibility to determine the amount of compensation payable,
the disbursement of the Compensation etc. Especially in the case of death, the
compensation payable has to be deposited with the Commissioner.

The essential features of some of the important legislative measures affecting

railway employees have been recapitulated above. Excepting the industrial
Employment (Standing Orders) Act, the other enactments are very important and
relevant in respect of Railway Servants and the Personnel Officers

should familiarise themselves with them. There are also the following other

Acts of Parliament, which are significant in the area of industrial relations and
provision of social security benefits to workers in general in India, but since they
are not relevant for railway employees, their details have not been included here.
There are

– Payment of Bonus Act, 1965

– Employees Provident Fund and Miscellaneous Provisions Act 1952
– Employees State Insurance Act 1948
– Payment of Gratuity Act, 1972
– Negotiating and consultative machinery.

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Check Your Progress 1 :
1. What is the main classification of the employees of HOER?
(Answer in about 50 words)

2. What is the difference between lay off and retrenchment?

(Answer in 50 words)

3. What safety measures are needed to be adopted in the factories?

(Answer in about 50 works)

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5.5 PARTICIPATIVE MANAGEMENT
So far we have dealt with industrial relations in the form of employer-union
relationships and the state interventions in the field of IR through legislative
measures both for regulating the employer--employee relationships and for
protecting the economic and social interests of the employees. There is another
concept of employer-employee inter-action which is of great significance from the
point of view of enhancing the effectiveness and productivity of organisations.
This is the concept of Participative management.

The concept is called differently in different countries. The names used are “co
determination”, industrial democracy”, “Self management” etc. while the advent
of trade unionism and its further development brought about considerable
improvement in the economic well-being of workers, it could not assist in their
psychological growth. This is because the big organisations of today with their
long hierarchies and superior subordinate relationships tend to alienate the
minds of the workers, who feel, “left out” of the organisational setting. Decisions
affecting the organisation, its growth, profitability, etc., are taken by the owners
and the “management” with little contribution from the workers. The workers have
as much stake in the organisations well-being as the owners and other interests
and, therefore, it is imperative they are also afforded a “say” in the management
by being allowed to “participate”.

There is the socialist argument that capital and labour are equal partners in any
industrial enterprise, but the control of the organisation in the traditional system
is heavily weighted in favour of capital and its agents viz., the managers. There
is, therefore, a need to set right the imbalance by giving the workers an equal
voice in the management of the enterprise. An analogy is also drawn with political
democracy to justify “industrial democracy”. A political democracy is based on the
principle of governance with the consent of the governed. Similarly, an industrial
enterprise should also be managed with full participation and consent of the
workers. These are the arguments propounded by various theorists in favour of
participatory management.

Participative management can take different forms from mere “cooperation” to

“codetermination” it can progress continually as below:

OO workers have right to receive information

OO workers have right to object to decisions
OO workers have right to make suggestions
OO workers have the right of prior consultation but their decisions are not
binding on management.
OO workers have the right of veto
OO workers have the right of co-decision or joint decision making
OO workers have the right of decision

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It will be seen that the power of the workers increases at the expense of the
prerogative of management.’ In Yugoslavia, the ultimate control by workers
of management of enterprises has been in force with their system of self-
management. In West Germany, a system of joint-management exists,
with codetermination right for workers in certain spheres of managerial
responsibilities, consultative rights in others and right to information in still others.

As regards the forums for workers participation, the most widespread are the
joint councils, workers’ councils etc. Where elected representatives of workers
meet along with the managerial staff periodically and take decisions on important
matters and issues regarding the management of the organisation. In some
countries these forums are established through statutory legislation. But in India
the system is informal and only non-statutory schemes are in force.

Another form of participation of workers is by the appointment of representatives

of workers on the Board of Directors of Companies. This enables the workers
to influence decisions on larger policy issues of enterprises. This is the most
controversial form of participative management and the owners and management
generally oppose it because it causes direct erosion of their authority.

Another method of participation could be for workers to become shareholders of

companies and through shareholding gain access to the membership of Board of
Directors. And finally we have the system of total self-management by workers,
which is the one prevalent in Yugoslavia because of the special political and social
system prevalent in that country; which is not capable of adoption elsewhere.

What are the prerequisites for success of workers participation in management?

It would appear that instead of voluntary schemes as are in force in India, there
is a need for statutory backing for participative management as in West Germany
One of the directive principles enshrined in our Constitution provides that the
state shall take steps, by suitable legislation or in any other ways to secure ‘ the
participation of workers in the management of undertakings, establishments or
other organisations engaged in any industry. Since the voluntary schemes have
not “taken off” satisfactorily it would appear that legislation is called for.

Secondly a basic level of trust between labour and management is a prerequisite

for any form of participation to operate effectively. The management should be
prepared to share information with workers and the workers in turn should desist
from using confidential information to the detriment of the enterprise:

Thirdly, there is a need for more training and education of workers and managers
to equip them for participative forums. It is necessary to increase the knowledge
of workers about the economic and financial aspects of operations of enterprises.

5.5.1 Employer-employee relationships(individual)

The relationships between employers and individual employees (as distinct from
collectives in the form of unions, staff councils etc.) is also very important from

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the point of view of motivation and effective performance of organisations. In this
context, communication plays a very vital part.

Organisational communication falls into two categories, the first, person-to-

person communication as in the case of supervisor-subordinate relationships and
dealings and the second, institutional communication like the instructions and
orders issued from the management to lower levels of the hierarchy and reports
from the lower levels up the line to the management.

A very effective communication system is essential for ensuring the effectiveness

of organisations motivation of employees, and achievement of results. For
instance if the policies, plans and programmes decided by top management are
not properly communicated down the line for the personnel below to understand
correctly, their implementation will suffer and be tardy. Similarly if those in charge
of operations do not communicate their problems up the line properly, the top
management will not be in a position to extend timely assistance and again
the organisation will be ineffective. Again the employees may have grievances
to ventilate and the management has to take and communicate decisions on
various conditions and benefits of employment. Unless the communication
system is clear, dissatisfaction and loss of morale may result.

Communication can be written or oral. In either case there could be a number

of barriers to effective communication. The barrier could be semantic in the
sense of the correct words not being used to communicate or psychological
because the receiver has certain rigid perceptions and tends to understand the
communication according to his own perceptions instead of what the originator
of the communication intended. Another reason for distortion in communication
could be due to its having to pass through a number of channels before reaching
the intended recipient. It could get altered at each level and ultimately what
the receiver of the communication understands may be totally different to what
the sender intended to convey. Communication has, therefore, to be precise in
thinking, wording and delivery so that these barriers and their consequences of
distortion are averted. % .

In an organisational context there are different media of communication as’

below:

In-house magazines: These are published once in a month or two conveying

all important decisions of the organisation; its policies and programmes. Also
employees can contribute articles about the important work done by them in their
units.

Bulletins These are issued more frequently in order to communicate decisions

affecting employees.

Notice Boards These are utilised to put up for information of employees the various
general circulars, important day-to-day events like meetings, celebrations etc.

Briefing groups and committees Meetings are held periodically of

representative groups of employees where matters of mutual interest are

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communicated and discussed for the purpose of clarification of management
decisions, ascertaining the employees’ perceptions etc.

Performance appraisal interviews These interviews are held between

Managers and subordinates on one-to-one basis for discussing performance of
the subordinates and reviewing it for the purpose of improvement.

Since communication is an important element in organisational effectiveness, it

is essential that personnel at all levels are trained to be more effective in their
abilities to communicate.

Check Your Progress 2 :

1. What are the different terms used for participating management?

5.6 WELFARE
Welfare is another important aspect of employee relations. In fact personnel
management as a discipline was even initially welfare-oriented.

“Welfare includes such activities as private advice on any type of personal

problem, assistance with problems of health and sickness, special responsibilities
for young people elderly, and retired staff and the provision of sports and social
facilities” (Michael Armstrong).

Welfare is based on the social responsibility of organisations for the employees

who work for them and their families. This is because employees spend the
better part of their life in working of organisations and even their personal
problems tend to arise out of work and the tension created by it. It is the
responsibility of the organisation to look after its employees even outside the
working time and ensure that the employees are enabled to resolve personal and
family problems: Secondly motivation and productivity at work will suffer if the
employee’s personal and family problems bother him at work.

125
There are a variety of welfare services provided by modern organisations. These
include

OO Sickness benefits: Medical assistance is provided for relief from illness

of employees and their family members: This may be in the form of
allowances for meeting medical expenses, provision of company doctors,
clinics and hospital facilities etc.
OO Assistance for education of children of employees:- These could be
educational grants or subsidies or even provision of schools and teaching
establishments in the case of larger organisations.
OO Sports and recreational facilities: Sports and cultural activities amongst
employees and their children are encouraged by organisation of sports
and cultural events grant of facilities for participation by employees in
competitive events etc.
OO Get-togethers, picnics : And other similar events may be organised by the
company in order to bring employees and their families together for social
interaction and enjoyment.
OO Holiday homes: are established and given on subsidised rates to
employees to spend holidays with families.
OO Every organisation appoints a welfare officer to coordinate the welfare
activities. Generally a fund is also established separately to meet the
expenses on welfare.

Check Your Progress 3 :

1. What do you think is the very important welfare needed for employee
in railways?

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5.7 SUMMARY
In this unit we discussed important legislative enactments such as – hours of
employment regulation; industrial disputes Act; Trade Union Act, etc. We further
discussed about the importance of participative management and welfare
measures for the employees.

5.8 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

1. Under the Hours of Employment Regulations, Railway employees

are classified as Continuous, Intenstive, Essentially Intermittent and
Excluded. All employees are continuous unless they are Excluded or
classified as Intenstive of Essentially Intermittent. Excluded categories are
those classified as Supervisory or working in managerial or confidential
capacity etc. Based on the workload and nature of duties, railway servant
can be declared as Intensive or Essentially Intermittent.
2. Lay Off means failure, refusal or inability of an employer to employ a
workman of the establishment due to shortage of power/raw materials/
accumulation of stock or breakdown of machinery. Retrenchment means
termination of service of a workman except as punishment by way of
disciplinary action but does not include voluntary retirement or retirement
on superannuation, termination of service due to non-renewal of service
contract or on the ground of ill-health.
3. The occupier of the factory should ensure health, safety and welfare of all
workers. The Factories Act envisages that arrangement should be made
to protect workers from accidents caused by the machines, electrical
equipments etc. Employment of persons is prohibited on dangerous
machines without full instructions. Precautions should be taken against
explosive or inflammable material against fire hazards and hazardous
processes.

CYP 2 :

1. The names used for participative management are co-determination,

industrial democracy, self-management etc.

CYP 3 :

1. The most important welfare measures required for the railway employees
are medical facilities, education of children and basic recreational
facilities required for the well being of the employee and their families.
These facilities attain special importance in railways context particulary
for remote stations where such facilities are not available in surrounding

127
 areas. Another very important area of welfare is support of Railway
Administration in the case of death of railway employee to the family of
the deceased railway employee in the form of immediate payments of
settlement dues and compassionate appointment of the dependent.
References and Further Readings

OO A Hand book of Personnel Management-Michael Armstrong.

OO Constitution of India.
OO The Railways Act 1989 and Indian Railway Act, 1890.
OO Industrial Law - P.L. Malik.
OO Industrial democracy - Paul Plumberg.

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 6
u
fjog l
Institute of Rail Transport
Human Resource
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Management in
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UNIT-6
Organisational Behaviour

Structure
6.1 Introduction
6.2 Objectives
6.3 Concept of and Organisation
6.4 Definition of Organisational Behaviour
6.5 Organisational Culture
6.6 Summary
6.7 Check Your Progress : The Key
References and Suggested Reading

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6.1 INTRODUCTION
In this unit we discussed about the concept of an organization and various
characteristics an organization possess. We further deal with organizational
culture (OC) and Organisational Behaviour (OB).

6.2 OBJECTIVES
After going through this unit your shall be able to

OO Explain the concept and characteristics of an organization;

OO Analyse the organizational culture (OC) and organizational behaviour
(OB).

6.3 CONCEPT OF AN ORGANISATION

Organization is a tool of management through which resources (physical,
financial or human) are collated to accomplish certain objectives. Simply stated,
it is a unit of two or more persons for pursuit of preset goals. Organization
embraces both the structure and the process of arranging parts with a view
to bring about a coherent arrangement for attainment of such objectives. An
organization is composed of human and physical assets but it must, in addition,
have that intangible element of connectivity which links these elements together
to make it a cohesive unit. Different parts of the organization may have distinct
functions assigned to them but all these must fit into the structure and aim for
common goals set for the organization.

Every organization must have a “structure” - formal or informal, but usually with
elements of both.

An organization is a distinct entity. It has, so to say, a distinct personality, which

is not the sum-total of personality of its top management or the CEO. Loosely
the organization may be identified with a particular person in the sense that
he/she formed the organization or has moulded it or that he/she has almost
unquestioned authority. Even then with such an individual’s disassociation with
the organisation, the latter does not become extinct. Some groups or individuals
may be able to leave strong imprint on their personalities. They may even be able
to impart strong value change direction of the policies, even change the goals.
New technologies, new processes or market forces may necessitate fundamental
changes in objectives. But all this adds new dimensions to the corporate users
and personality. But the corporate entity remains different.

An organisation is a distinct legal entity. It can sue and be sued in its own name.
An individual, however, may be sued or may sue either in his/her individual
capacity or as a functionary of the organisation.

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6.4 DEFINITION OF ORGANISATIONAL
BEHAVIOUR
An organisation, as we have noted above, is a unit of two or more individuals and
must have a structure. Therefore, an organisations decision - making process
also remains structured. It has to deal with hierarchy, delegation of powers,
the problems of selection, leadership, groups, inter-personal relationship. An
organisation must cope with the problems arising from an individual’s place as a
part of a group, the communications channels etc. Above all, an organisation has
to evolve a system of conflict-resolution.

It is now well-recognised that a person’s behaviour as an individual may differ from

the individual as a part of a group. Group may be an association or even a mob. Its
commonality may be based on any number of factors - religion, caste, language,
area, common interests or objectives, common perceptions ,of a problem.

People join groups to pursue common interests or objectives, for power, self-
esteem, status or security. A group may be formal or informal (like structure in
an organisation) loose or slightly controlled but the members interact and are
interdependent.

Group behaviour is influenced by internal or external conditions. Internal

factors may be organisational structure, motivation and resources of group-
members. “Resources” here is used in a wider sense. It includes educational
levels, exposure and cohesiveness However, groups do not exist in isolation.
They exist in a social or organisational set up. Therefore, external factors like
the organisational structure, locus of power, organisational culture have deep
influence on the group behaviour. A group can have its own distinct identity.
Group behaviour is guided by the impact of internal and external conditions and
the objectives it has set before itself.

Like a group, an organisation also has its own identity and personality as distinct
from its human or material components. Like a group, an organisation is also
conditioned by internal and external factors. What differentiates one organisation
from the other is a set of organisational characteristics. These may include

i) Goals- the characteristics of the goals (e.g. profitability or profitable

business with business ethics; development only in terms of profitability or
development with human face). The manner in which organisational goals
are established is important (e.g. establishment of goals from top and
strict conformity expected without comments or carrying the employees
along through discussions to ensure wider acceptance).
ii) Locus of power and delegation. This also include control exercised in the
organisation whether informal organisation exists.
iii) Sense of participation in employees - this affects their perception and job-
satisfaction. It also includes effectiveness of consultation machinery.

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iv) Channels of communication - Does the information flow both ways, as in
many Japanese companies? Are suggestions of the employees sought
and accepted where possible?
v) Level of competency and efficiency - This will depend upon educational
levels, process of entry, training, retraining, emphasis on certain norms
(e.g. punctuality, integrity, personal conduct).
vi) Process of generating motivation or coercion, manipulation to have
organisational changes acceptable.

Motivating factors could be rewards, explanation, discussions, education,

imparting sense of pride in other words, participative management. Coercion,
manipulation on the other hand leave the employees disenchanted.

All this forms part of the organisational culture. Before we discuss organisational
culture (O.C) it is essential to point out that organisational behaviour (OB) is
distinct from the behaviour of an individual or a group which may form part of the
organisation. Maintaining efficiency in an organisation, fairplay with investors,
and consumers; facing competition in the market through improved market
processes or through improved quality of a product, fairness to its employees
ensuring higher levels of productivity and job satisfaction are all examples of
organisational behaviour, as distinct from the group or individual behaviour.

Research in organisational behaviour is undertaken with a view to draw lessons

from the skills and strategies adopted by successful corporations. Study of OB is
also undertaken with a view to understand what and why people do as part of an
organisation, their underlying motivations and reactions and how their behaviour
influences the performance which in turn influences the organisation. It helps
in understanding the underlying factors influencing the organisational culture.
It focusses all factors which makes an organisation “excellent” and the other
verges on mediocrity. It studies inter- relationships of individuals, groups and how
the organisational structure impedes or accelerates organisational development.
It helps in understanding whether and how an enterprise will compete in the
market.

For effective OB studies, one has to make systematic studies of attitudes, factors
favourably or adversely affecting job satisfaction, personality traits, perceptions
of management and expectations of employees, motivational factors, job
design, delegation, communications, inter-personal or group relations, attitude
to development and group dynamics. Each of these can form an important and
independent fields of research. Each of these has impact on other factors.

One important factor influencing organisatioal behaviour is job-satisfaction.

Job satisfaction is a function of many elements. Mainly it depends upon the
perception of employees regarding the rewards due to them for the work in
the organisation and those they actually get. It depends upon the general
attitude of the employee to work and towards the management. In turn it also
determines his/her attitude to work, his/her loyalty to the organisation and his/

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her involvement; with the job. Extent of job satisfaction also reinforces employees
self-worth. If the level of job-satisfaction is low it may result in demoralisation. It
can affect productivity and hence competitiveness of the organisation. It is the
key to the behavioural pattern within the organisation and the organisation’s
relationship with other organisation.

Job Satisfaction depends upon numerous factors. A few important ones are

OO Type of work.
It should suit ability and attitude of the employee.
OO Social status
The work should command respect
OO Freedom to carry out the tasks
OO Adequacy of rewards

In terms of working environments, praise, promotions, clean and comfortable

working conditions, supportive management etc.

Personality traits affecting individual behaviour are too numerous and complex
to be dealt with in details here (shy, aggressive, authoritarian, withdrawn,
cooperative, lazy or active, willing to learn, ambitious, result- oriented or
highly constitutional manipulative, traditional, modern etc.) Organisations also
have similar traits, partly guided by the field of activity and partly by the vision
and strategy of the promoters or management. For instance firms dealing
in consumer articles usually follow aggressive marketing strategies: some
managements develop a culture of constant updating of techniques or adopting
new technologies: some have reputation of being very ethical in their business
dealings or in following laws of the land.

Subject of motivation has been discussed at length elsewhere and so also

rewards, power-structure, leadership etc. Suffice to say that all these are
manifested in distinct organisational behaviour.

6.5 ORGANISATIONAL CULTURE

Man is a social animal. He lives in a society. Society is an “association” based on
common beliefs, ideas, customs and traditions. It guides the behaviour and lays
code of conduct of its members. It develops its own culture. Culture, to a large extent
determines the way of life. It guides inter- personal or inter-group relationships.

Culture, in turn is determined and influenced by historical factors, physical

characteristics, levels of development (economic, sociological etc.). Cultural
background deeply influences ideas, conduct and behaviour. There may be many
sub-cultural differences within a society. However common traits and attitudinal
pattern can be identified in these sub-cultures.

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Just as a society has its own culture, so also an organisation develops its own
distinct culture based on objectives, goals, philosophy of the management on
management-employee or inter-group relationships. Every organisation develops
its own philosophy, set of beliefs, customs, responses, habits and its own internal
conventions and laws. Thereby conventions and conventionalised - behaviour
are nurtured. This broadly envelops the culture of an organisation.

However O.C. cannot be totally dissociated from the social environment

and culture in which the organisation functions. Management attitudes and
organisational practices are circumscribed by the local customs, traditions, laws
etc. For example, in some theocratic States, working hours, banking and lending
practices, the type of business permitted are governed by the religious beliefs
and customs. In Japan workers expect advice and guidance from the employer to
a degree that would be resented in the United States, with the latter’s emphasis
upon freedom and equality”. American cultural values of individuality and self-
sufficiency often lead to competition and rivalry within the organisation. There
is greater emphasis on participative management in Japanese companies.
American workers tend to be independent, highly competitive and aggressive.

Within the constraints of cultural differences, organisation should develop

culture which will ensure coordinated activity, job-satisfaction, positive attitude to
organisational development and lead to efficiency and productivity.

Robbins defines O.C. as “a system of shared meaning held by members that

distinguishes the organisation from other organisations”. This refers to set
of common perceptions held by the members of the organisation. Robbins
lists ten characteristics that mark an organisations culture. By contrasting the
organisations on these criteria, a composite picture of an organisation’s culture
is formed. Also, based on these criteria, OC’s of two or more organisations can
be compared. These characteristics merit reproduction here even at the cost of
repetition as some of these have been mentioned earlier. These are:

OO Individual initiative : the degree of responsibility, freedom, and

independence that individuals have;
OO Risk tolerance : the degree to which employees are encouraged to be
aggressive, innovative, and risk-seeking;
OO Direction : the degree to which the organization creates clear objectives
and performance expectations;
OO Integration : the degree to which units within the organization are
encouraged to operate in a coordinated manner;
OO Management support : the degree to which managers provide clear
communication, assistance, and support to their subordinates;
OO Control : the number of rules and regulations, and the amount of direct
supervision that is used to oversee and control employee behaviour;
OO Identity ; the degree to which members identify with the organization
as a whole rather than with their particular work group or field of
professional expertise;

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OO Reward system : the degree to which reward allocations (that is, salary
increases, promotions) are based on employee performance criteria in
contrast to seniority, favouritism, and so on;
OO Conflict tolerance : the degree to which employees are encouraged to
air conflicts and criticisms openly;
OO Communication patterns ; the degree to which organizational
communications are restricted to the formal hierarchy of authority.

O.C. denotes relatively stable characteristics of the work ethics and behaviour.
It develops over considerable period of time and employees imbibe some of the
values and may be deeply committed to these perceptions and values. As with
societies, so also with organisations changes do take place with technological
break-through strong leadership, market environment, (e.g. loss of business,
financial crisis) new business opportunities etc. Again like a - society, an
organisation cannot afford to be stagnant. It must constantly strive to meet the
challenges of time, yet not lose its moorings, Organisational culture and OB must
adapt and keep in step.

Check Your Progress 1 :

1. What consists of an organizational culture?
(Answer in 50 words)

6.6 SUMMARY
In this unit we dealt the concept and characteristics of an organistation. We
further discussed about organizational culture and organizational behaviour.

6.7 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

The Organizational Culture consists of attitude, beliefs, assumptions and

mindsets which are commonly shared by the members of the organization. It acts
as a glue which binds the organization. Organizational culture as an informal

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control system which plays an important role. Organizational culture determines
the work ethics and guides behaviours of individuals in organization. It dictates
what is right and what is wrong which may not form part of formal control system.
It has a great impact on performance of the organization.

References and Suggested Reading

OO Organisational Behaviour - Stephen P. Robbins

OO Handbook of Organisational Behaviour - Edo J.W. Lorseh. International
OO Dimensions of Organisational Behaviour - N.J.Adler Organisational
Culture - Ed.
OO by Frost, Moore, Louis, Luidberg and Martin Organisational
OO Development -Friedlander and Brown
OO Personnel Management - EB Flippo

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 6
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Institute of Rail Transport
Human Resource
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Management in
Indian Railways

UNIT-7
Management in the Indian Railways

Structure
7.1 Introduction
7.2 Objectives
7.3 Organisational Structure
7.4 Rules for conditions of service in Railways
7.4.1 Recruitment
7.4.2 Promotions
7.4.3 Seniority
7.5 Training and Development
7.6 Salary and benefits in the Railways
7.7 Industrial Relations in the Railways
7.8 Conduct and Discipline
7.9 Summary
7.10 Check Your Progress : The Key
References and Further Reading

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7.1 INTRODUCTION
After going through general management principles and practices in previous
units, we deal all those practices with respect to Indian railways. We cover in this
unit various aspects related to railways such as – organizational structure, rules
and condition of service, training and development, conduct of discipline etc.

7.2 OBJECTIVES
After going through this unit, you shall be able to

OO Describe organizational structure of railways;

OO Explain service conditions of staff;
OO Identify machinery for staff development;
OO Analyse the machinery for industrial relations; and
OO Examine the steps related to conduct and discipline.

7.3 ORGANISATIONAL STRUCTURE

Indian railways are the largest undertaking under a single management in the
country. The Railways employ 1.4 million personnel. Naturally, management of
the human resources has to be organised properly and effectively if the Railways
are to fulfill the objectives set for them of transportation of freight and passenger
traffic in the country.

Organisation

Organisationally the Indian Railways network is controlled, supervised and

administered by the Ministry of Railways (through Railway Board). The system
is divided into sixteen zonal Railways, viz. Central, Eastern, Northern, North
Eastern, Northeast Frontier, Southern, South Central, South Eastern & Western,
East Coast, South Western, North Central, West Central, South East Central,
which carry out the day to day activities of transportation,’ operation and
maintenance of the system. Below the zonal level, there are Divisions under
the Divisional Railway Managers, each Zonal Railway being divided into 2 to 6
divisions according to operational requirements. Again there are six production or
manufacturing units on the Railways viz.,

1. Diesel Loco Works, Varanasi Diesel Locos

2. Chittaranjan Loco Works, Chittaranjan Electric Locos
3. Integral Coach Factory Passenger Coaches & Electric Multiple
Perambur, Madras Units
4. Rail Coach Factory, Kapurthala Passenger Coaches

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5. Rail Wheel Factory, Bangalore Wheels & Axles.
6. Diesel Modernisation Works, Patiala Loco Components
7. Modern Coach Factory, Rail Barely Passenger Coaches
8. Rail Wheel Plant, Bela Wheels & Axles

There is a Research Design and Standards Organisation at Lucknow, Railway

Recruitment Boards at different places, Railway Staff College at Baroda,
and other specialised training schools, at different locations. In short the
Indian Railways is a large system spread over the length and breadth of the
county, which is managed and administered by the Ministry of Railways of the
Government of India.

So far as the personnel function on the Indian Railways is concerned, there is

a Member (Staff) in the Railway Board, who is of the rank of a Secretary to the
Government of India, who is responsible for advising the Ministry on matters of
personnel policy and ensuring administration of the policy. He is assisted by DG/
Staff and two Executive Directors dealing with all personnel matters relating to
officers and staff. However, Secretary/Railway Board deals with all promotions
and transfers of Junior Administrative grade and higher level officers. There are
Executive Director (Establishment), Executive Director (Pay Commission) and a
number of other officers dealing with personnel matters.

At the level of the Zonal Railways, which deal with day to day management of
personnel matters, there is a Chief Personnel officer under the General Manager
and other Senior officers and staff under the C.P.O. At the level of the Division
again, there are APOs and other staff under the Senior Divisional

Personnel officer, Similarly the Production units have their own personnel set- up.

Indian Railways employees consist of several categories and groups, who work
for different Departments. Given below are typical designations of employees
working in various Departments.

Operating : Section Controllers, Yard Masters, Guards, Traffic

Inspectors, Station Masters.
Commercial : Reservation Clerks, Goods Clerks, Catering Inspectors.
Mechanical : Fitters, Loco Drivers, Train Examiners, Loco Inspectors,
Shop Superintendents.
Civil Engg.: Gangmen, Permanent Way Inspectors, Inspector of
Works.
Signalling : & Signal Maintainers, Telecom Inspectors, Telephone
Telecom. Operators.
Elect. Engg.: AC Mechanic, Train lighting Foreman, Overhead Electric
Equipment Maintainers.
Stores : Ward Keepers, Stores Clerks.
Accounts : Accounts Clerks, Jr. Account Assistants, Account
Assistants, Section Officers, Travelling inspector of
Accounts, Inspector of Stores Account
Personnel : Welfare Inspectors, Personnel Clerks.

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The above illustrations will show the variety of staff working on the Indian
Railways which indicates the magnitude of the problems of Personnel
Management on the Railways as the various decisions on salary, promotion, etc.
have to take into account the aspirations and problems and job contents of the
various groups.

The entire personnel of Indian Railways are divided into four groups viz. A. B. C
and D. Groups A and B belong to the gazetted cadre and the Groups C and D to
the non-gazetted.

Check Your Progress 1 :

1. Can you draw an organizational structure of Indian Railways?

7.4 RULES FOR CONDITIONS OF

SERVICE IN RAILWAYS
Indian Railway personnel are basically Government employees and, therefore,
the provisions of the Constitution of India in regard to Civil Servants or
public servants apply to them as well as they apply to other civil servants of
Government. Their conditions of service including the rules for recruiting

them, are basically derived from the provisions of the Constitution. Under the
constitution (Article 309), Parliament may make laws in regard to the conditions
of service of civil servants. Till the laws are made by Parliament (so far laws have
not been made), the President of India is empowered to make rules for regulating
the conditions of service of public servants including Railway employees.

President exercises his power through the council of Ministers and under the
Transaction of Business Rules, in effect the Ministry of Railways (Railway Board)
is empowered to make rules for regulating the conditions of service of Railway
employees except that the Ministry has to consult the Union Public Service
Commission and the Ministry of Personnel in certain matters.

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The Ministry of Railways have laid down the basic Rules governing the conditions
of service of Railway Servants in the Indian Railways Establishment Codes,
Volume I and II, Indian Railway Establishment Manual and other Rules- and
orders issued from time to time.

7.4.1 Recruitment
Recruitment to Group ‘A’ Service and posts on the Indian Railways is made
through the UPSC from amongst those who are graduates in Arts, Commerce,
Economics or Engg. The Group ‘A’ services are, Indian Railway Accounts
Service, Indian Railway Traffic Service, Indian Railways Personnel Service,
Indian Railways Service of Engineers, Indian Railways Service of Mechanical
Engineers, Indian Railways Service of Electrical Engineers, Indian Railways
Service of Signalling Engineers. Indian Railways Stores Services and Indian
Railways Medical Service. Recruitment is made through the UPSC to the
junior scale of the service -annually and the recruits then are promoted to the
higher grades of the services from time to ‘time in accordance with the rules
framed for the purpose. There is a quota of posts in Group ‘A’ which are to be
filled by promotion of Group ‘B’ officers. This promotion is again to be made by
associating the UPSC and with its approval.

Direct recruitment is not made to the Group ‘B’ on Indian Railways except in
the case of a few isolated posts. Generally all posts in Group ‘B’ are filled by
promotion from the highest grades in Group ‘C’ in accordance with the Rules
framed for the purpose in consultation with the UPSC. General Managers
are empowered to make these promotions in accordance with the rules and
procedure laid down for the purpose.

Rules for recruitment to Group ‘C’ and ‘D’ are laid down by the Railway Board.
In the case of Group ‘C’ - recruitment to most of the categories is made through
the agency of Railway Recruitment Boards (previously called Railway Service
Commissions). Such Boards numbering about 19 have been established at
different places in the country. Almost every big state has a RRB located in one
of its main cities generally in the Capital City. The RRB consists of a Chairman
and a Member, who are empowered to advertise and recruit personnel to Group
C posts like Asstt. Station Master, Ti, Clerk, Signaller, Chargeman ‘B’, Draftsman,
Office Clerks, Asstt. P.W.I. etc. and other categories of staff except artisan staff
meant for maintenance and production work in the workshops and elsewhere,
who are recruited by the concerned zonal Railway or the Production unit
themselves.

The RRBs hold written tests for recruitment followed by interviews. The
vacancies to be filled are to be advised by the Zonal Railways to be RRBs in
advance so that panels of successful candidates can be made by the latter
according to the numbers required to be recruited in a year. Panels of successful
candidates are advised to the Railways concerned by the RRBs and the
Railways issue the appointment letters.

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As stated above, artisan staff are recruited by the Railways and Production
units themselves. Initially such staff are recruited as apprentices, trained, and
then absorbed. Qualification from a recognised Industrial Training Institute (ITI)
is prescribed for such recruitment. For Group ‘D’ posts -consisting of unskilled
Khallasis, peons etc. recruitment is made by the Divisions or workshops
themselves through a committee of officers including an officer of Personnel
department and outsiders like Headmaster of a school etc.

7.4.2 Promotions
Promotions from junior Group ‘A’ scale to senior scale like Divisional Engineer,
Divisional Operating Superintendent etc. is made by the General Managers of
the Railways. But beyond this level promotions to Junior Administrative Grade
(Deputy Chief Operating Superintendent etc.) can be authorised only by the
Railway Board. Promotions to the level of Divisional Railway Manager, Chief
Mechanical Engineer etc. which are in the Senior Administrative Grade and to the
level of the General Managers need the approval of the Ministry of Railways and
higher governmental authorities respectively.

As stated earlier, promotions to Group ‘B’ from amongst the Senior Supervisory
grade personnel of Group `C’ can be made by the General Manager according
to be rules and procedure prescribed by the Railway Board. Generally written
tests are held on the subjects pertaining to the Department concerned followed
by an interview by the Departmental promotion committee, which consist of three
Heads of Departments including the Head of the Department in which promotion
is to be made. Those promoted to Group `B’ become eligible to be considered
for officiating promotion in senior scale after three years (which can be ordered
by the General Manager) and permanent promotion to Group `A’ service against
the quota of vacancies in Group `A’ reserved for such promotion which is made
by the Railway Board in consultation and association with the UPSC on an
assessment of the Confidential Reports of the officers, who are within the field of
selection in the seniority list concerned. After permanent promotion these officers
become members of the Group `A’ service concerned and acquire seniority in
that service vis-a-vis the direct recruits according to the rules laid down by the
Railway Board.

Promotions within Group ‘C’ and Group ‘D’ and from Group ‘D’ to Group ‘C’ are
regulated by the Rules and orders laid down by the Railway Board from time to
time. On the Railways posts in Group ‘C’ and ‘D’ for most of the categories or
levels are distributed in different grades on percentage basis as laid down by the
Railway Board. Such percentage distribution of posts into various grades is made
in order to ensure orderly promotion prospects for the employees of various
Departments.

Posts in Group ‘C’ and Group ‘D’ are categorised as non selection and selection
posts. In the case of non-selection posts promotion is simpler as the DPC has to
classify the employees as ‘fit’ or ‘not fit’ according to the seniority and the field of

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promotion. Those fit are promoted after empanelment according to the availability
of vacancies and those not fit are considered again the next year.

In the case of selection posts the procedure of empanelment and promotion is

more complex and merit is given more weightage than seniority. First the number
of vacancies to be filled (existing and anticipated for one year) are determined,
20% of the anticipated vacancies is added thereto to cover unforeseen
contingencies. Then from the seniority list eligible persons to the extent of three
times the number of vacancies are considered in the selection subject to the
condition that persons in more than two grades below the promotion grade are
not to be considered. Selection will normally consist of a written test and an
interview to be held by the Department promotion committee. In addition, the
confidential Reports and the service records of the employees are evaluated by
the DPC.

Marks are to be allotted to the various factors as below: Factors

Maximum marks
Professional ability 50 (written 35 interview 15)
Personality, address. 20
leadership academic and technical qualifications. 15
Record of service
Seniority 15
100

A candidate must obtain not less than 60% in professional ability and also in the
aggregate to be eligible to be empanelled. However for SC/ST candidates the
eligibility criterion is 50% marks.

It needs to be stated here that in accordance with the Government of India’s

policy, the Railways are also committed to provide reservation of posts both in
direct recruitment and promotion panels to the extent of 15% and 71/ % for SC &
ST candidates respectively. A post based roster is to be maintained indicating the
reserved and general vacancy points and empanelment and appointments are to
be made in accordance with the roster points. ,

The names of the successful candidates in selections are placed in the panel
according to their seniority in the lower grade from which promotion is to be
made, except that those who secure more than 80% in the aggregate are
classified as outstanding and are allowed to supercede not more than 50% of the
number of his seniors in the field of eligibility.

7.4.3 Seniority
Seniority is one of the important conditions of service of a Railway employee. It is
very significant for promotions and a few other benefits. It affects so profoundly the
motivation of employees that there are many litigations on the question of seniority.

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The general principle of seniority is that it is counted from the date of
appointment to a particular grade. If seniority of persons belonging to different
cadres or groups is to be determined, then again the same principle of the date
of regular appointment to the grade is followed.

If two person are appointed to a grade on the same date, then the seniority in the
lower grade will be the reckoning factor. If the date of appointment in the lower
grade is also the same, then the age will determine seniority; the older being
senior.

In the case of transfer from one cadre to another on the employee’s own
request, he has to take the seniority at the bottom of the grade. If the transfer
is the interest of administration, then he may maintain his seniority position with
reference to the date of entry into the grade in his original cadre.

Check Your Progress 2 :

1. Explain in brief about the recruitment procedure for Group A and B
staff of railways?

7.5 TRAINING AND DEVELOPMENT

The Indian Railways have over the years developed very good facilities
for training of their staff. So far as the cadre of officers (Group A and B) is
concerned, there are five major training establishments, which have excellent
reputation for the facilities they provide and also for the quality of development
inputs they give.

National Academy of Indian Railways, at Vadodara set up in 1952 imparts

training mainly to Group ‘A’ officers at the time of entry into the Railways
as probationers. The training gives knowledge about general working and
management of all the Railway Departments. There are also refresher courses
and general management courses conducted at NAIR Vadodara. A probationer
has to pass the exams conducted at the end of the course to be eligible for
confirmation on the railways at the end of the period of probation.

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in addition to NAIR Vadodara, there are the following specialised institutes for
training of officers of different technical Departments.

1 Indian Railway Institute of Civil Engineering, Pune for Group ‘A’ and ‘B’
officers of the civil Engineering Department.,
2 Indian Railway Institute of Signalling and Telecommunication,
Secunderabad for Group ‘A’ and `B’ officers and supervisory employees
of the Signalling & Telecommunication Department.
3. Indian Railway School of Mechanical and Electrical Engineering -
Jamalpur for training Group ‘A’ and `B’ officers and supervisors of the
Mechanical & Electrical Engineering Departments, particularly in Diesel
Locos.
4. Indian Railways Institute of Electrical Engineering, Nasik for training in all
aspects of Railway electrical engineering for officers and supervisors.
5. Centralised Training Academy for Railway Accounts for training of
Accounts Personnel.

Incidentally, the Jamalpur Institute also gives pre-service training to the special
class apprentices, who are recruited through the UPSC and trained at the school
for five years before being appointed to the Group ‘A’ service of Indian Railway
Service of Mechanical Engineers.

In addition to receiving training at these Railway training institutes Railway

officers are also given developmental inputs in other institutions in India and
abroad to enhance their managerial capabilities. These institutions are the
Institutions of Management, Administrative Staff College, Hyderabad etc.

For Group ‘C’ staff of the Railways, there are Zonal Training Schools and
Systems Training Schools, staff of different departments like Assistant Station
Master, Guards, Apprentice Permanent Way Inspectors, Inspectors of Works,
Commercial Clerks etc. are given training at the time of entry into service.
Systems Training Schools basically impart training to the technical staff of the
Mechanical Department. These schools also conduct refresher courses to the
staff in service. There are also ‘promotion courses’ to be undergone by the staff
before their promotion.

In addition to the above, there are basic training centres attached to workshops
to train artisan staff.

The Lecturers and Instructors at the training college, institutes and schools are
drawn on “deputation basis” from among the serving officers and employees,
as, they are in the best position to impart training on Railway technology and
management. In order to attract best talent available to these training institutions,
special allowances are granted to the personnel to opt to serve as instructors.

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 Check Your Progress 3 :
1. Which are the agencies responsible for training of group A and B
staff? (Answer in about 50 words)

7.6 SALARY AND BENEFITS IN THE RAILWAYS

Indian Railways employees are basically Government servants as the
organisation is administered by the Government of India as one of its
Departments. Hence the patterns of scales of pay and other important
allowances like Deamess allowance, House rent allowance etc. for Railway
employees, are the same as those for the Central Government employees.

The basic scales of pay and allowances are laid down by the Government based
on the recommendations of the Pay Commissions appointed by it almost once
in 10 years. The first pay commission was established on January, 1946 and
it submitted its report in May, 1947. The second pay commission was set up in
August 1957, 10 years after independence and it gave its report after two years.
The third pay commission set up in April 1970 gave its report in March 1973.
Fourth pay commission was constituted in June 1983 and its report was given
in three phased within four years. The notification for setting up the Fifth CPC
was issued in April 1994. Sixth pay commission was constituted in July 2006 and
gave its report in April 2008. Seventh Pay Commission was set up in Feb / 2014
and it submitted its report in Nov / 2015. The government accepted its major
recommendations in July 2016.

The minimum pay for the lowest scale on the Railways i.e. that of the unskilled
worker has been fixed at ` 18,000. The maximum pay applicable to Chairman
& members of the Railway Board is ` 2,50,000- p.m. (fixed). The scales of pay
consist of a minimum and a maximum and progression from the minimum to
the maximum takes place by way of annual increments. There are a total of 19
scales of pay currently inforce based on the Seventh Pay Commission’s report.

Dearness allowance is granted to railway servants as for other Central

Government employees in addition to the pay admissible in the scale of pay
applicable, to compensate for the increase in the cost of living from time to

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time. Pay scales are fixed at a particular point of time i.e. 1.1.2016. 7th Pay
Commission has recommended for using the same series of Consumer Price
Index (Industrial Workers) with Base 2001=100. However, DA Calculation formula
used for 6th CPC Pay will be revised as DA to the extent of 125% will be merged
with Basic Pay on implementation of 7th Pay Commission recommendations. In
other words, DA on 7th CPC Pay with effect from 1st January, 2016 will be reset to
0%. New DA Calculation Formula based on CPI (IW) after 7th Pay Commission
implementation will be as follows.

Dearness Allowance payable with = (Avg of CPI-IW for the past 12 months
effect from 7th CPC Basic Pay --Average of CPI-IW recorded in 2015)*100 /
(Average of CPI-IW recorded in 2015)

According to Seventh Pay Commission’s recommendations as accepted by the

Government, Deamess allowance is granted every six months from Ist Jan. & Ist
July every year if the CPI (Consumer Price Index) increase warrants it according
to the formula suggested by the Pay Commission. Such increases in D.A. are to
compensate the employees for increase in the price level.

In other words salary comprising the pay and Dearness allowance as fixed
on 1.1.2016 will be increased from time to time to give the protection or
compensation to the extent indicated above.

House Rent Allowance is granted to Railway Servants, who are not allotted
Railway accommodation, to serve as a subsidy to meet the rentals of the houses
they may hire for their residence or if they live in their own houses to meet the
expenses of property tax etc. Presently based on the Seventh Pay Commission’s
recommendations HRA is paid at a prescribed percentage of pay depending on
the classification of the city.

Transport Allowance is paid to the Railway servants at following rates :-

Pay Level Costly Cities (` pm) Other Places (` pm)

9 and above 7200 + DA 3600 + DA
3 to 8 3600 + DA 1800 + DA
1 and 2 1350 + DA 900 + DA

Officers in Pay Level 14 and higher, who are entitled to the use of official car,
will have the option to avail themselves of the existing facility or to draw the
Transport Allowance at the rate of `15,750 + DA pm. Differently abled employees
will continue to be paid at double rate, subject to a minimum of ` 2,250 plus DA.

There are other allowances like Hill Compensatory allowance, Remote area
allowance, winter allowance etc. applicable to those posted in specified places
for compensating them for the peculiar characteristics of living in such places
including climate and other factors.

Incentives schemes are also in force on the Railway, especially the employees
of Production Units and workshops are eligible to be paid incentive payments

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based on the output produced by them. The standards for normal output are fixed
by work study and production above the normal is paid for according to certain
predetermined formula.

Another scheme of incentive in force on the railways is in respect of the running

staff i.e., the locomotive drivers and guards. They are paid an allowance called
“running allowance” based on the kilometrage run by them on a monthly basis,
the rates of the allowance being fixed for 100 k.m. Running allowance rates are
fixed in such a manner that it has an element of pay and also compensation for
out of pocket expenses incurred while going out of the headquarters on running
duty.

Railway Servants are entitled to the benefits of Privilege passes and

Privilege ticket order for themselves and their families entitling them to free
or concessional travel on the Railways. The scale of Passess and PTOs are
laid down by the Railway Board in accordance with the groups to which the
employees belong. After retirement, the Railway servants become entitled to
complimentary passes if they have put in 20 years of service or more.

Retirement benefits admissible to Railway servants are on the same basis as for
other Central Government Servants, These consist of the following:

– Provident Fund dues This basically consists of the contribution

(8 ⅓ % of pay) deducted from the employees pay every month together
with interest due thereon. A part of the amount in the PF account of an
employee can be withdrawn by him even before retirement provided he
has put !n the minimum prescribed years of service for various purposes
like house building, marriage of dependent children, to meet medical
expenses, higher educational expenses etc.
– Pension is granted to Railway Servants at the maximum rate of 50% of
the last pay drawn (called emoluments) for ten months before retirement
provided they have put in atleast 10 years of service before retirement.
Those who have less number of years service to their credit draw
proportionately less pension. 40% of the Pension can be commuted into a
lumpsum and the rest of pension drawn on monthly basis.
– Death-cum-retirement gratuity is a lumpsum amount paid to Railway
servants on their retirement or to the family if the employee dies before
the retirement date. It is calculated at the rate of half a month’s pay
(drawn before retirement or death) for each completed year of service
and is to be paid only if the service is certified as good, faithful and
continuous.
– Nowadays, a dearness relief to compensate for the rise in the cost of
living is also paid on the pension to retired railway servants.
– When the Railway servants dies either in service or after retirement, his
family is paid family pension as a social security measure. Deamess relief
is also payable on family pension.

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On an overall basis it will be seen that the Government as the model employer
provides adequate remuneration and other benefits to its employees in, order to
motivate them and look after the needs of social security of the employees and
their families.

7.7 INDUSTRIAL RELATIONS IN THE RAILWAYS

Since the Indian Railways constitute a vital network in the economic and
social integration of the country, it is essential that the industrial relations in the
undertaking are harmonious and cooperative. Truly the Railways have had an
enviable record of industrial relations, except for occasional instances of strike
and strife.

More than 95% of the railway men belong to the category of workers in the
accepted sense of the term and the rest are managerial personnel. Railway
workers have formed themselves into unions and federations of unions for the
purpose of advancement of their interests on trade unions principles. The trade
union structure on the Railways consists mainly of two federations at the apex
viz., the National Federation of Indian Railway men and the All India Railway
men’s federation with the affiliated unions functioning on the different Zonal
Railways and the production units.

While the all India federation and the affiliated unions on the Zonal Railways
have been granted recognition for the purpose of negotiations and collective
bargaining on the conditions of service of Railway workers, the unions functioning
on the Production units have not been granted recognition and instead staff
councils of elected representatives of workers have been established in these
production units.

From about 1951, Railways have established joint forums of unions and
management for collective bargaining on conditions of employment. A Permanent
Negotiating Machinery (called PNM in short) has been functioning since 1951
and under it, mutual contacts are maintained between the Administration and
the recognised federations and unions on a formal and continuous basis and
negotiations and bargaining are conducted towards the objective of resolution of
grievances and settlement of disputes with the workers.

The PNM functions in three tiers. At the level of the Zonal Railways the
recognised unions have access to the officers at the Zonal Headquarters and
Divisional Headquarters including the General Managers and the Divisional
Railway Managers. At the next tier the federation of the unions hold discussions
with the Railway Board. At the third tier, where disagreement between the
Federation and the Railway Board persist in matters of importance, reference is
made to an ad hoc tribunal consisting of representatives of Railway workers and
administration and presided over by a neutral chairman.

A second structure which has been established for the purpose of negotiations
and collective bargaining for the railway workers is the Joint Consultative

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Machinery (JCM), constituted by the Government in 1966 on the pattern of
the whitley Councils of UK. This forum has been established for all central
Government employees and Railway employees are included in it as they
are also Central Government employees - in fact forming major proportion of
them. Under this JCM scheme, the recognised federations of Railwaymen are
represented at the apex National Council, which is presided over by the Cabinet
Secretary to the Government of India, and which considers issues affecting all
Central Government employees. At the next lower tier, the railway employees
have a Departmental Council, at the level of the Ministry of Railways, which
is presided over by the Member (Staff), Railway Board and discusses matters
exclusively relevant to the interests of railway employees.

Under the JCM schemes, the scope of the functions of these councils include all
matters relating to the conditions of service and work, welfare of the employees
and improvement of efficiency and standards of work. The scheme also provides
for compulsory arbitration (as different from voluntary arbitration in the case of
the PNM) on three subject viz., (i) Pay and allowances (ii) weekly hours of work &
(iii) leave of a class or grade of employees.

Another participative structure is PREM : (Participation of Railway Employees in

Management) sub group consisting of representative of recognized unions.

There are also other joint forums of Management and workers on the Railways
like the Staff Councils in the Production units, which go into the conditions of
service of workers of these units. The structures established for participative
management on the railways also include the Joint Councils and Shop
Councils established in the Production Units and major workshops. There is
also a corporate enterprise group working on the Railways which includes
representatives of Federation of Labour and officers and Railway Management,
and which discusses matters of greater importance for the efficiency of the
Railways like safety, staff productivity, economy measures etc.

Thanks to the effective functioning of these various participative structures, the

industrial relations climate has been fairly healthy on the Railways. There have no
doubt been strikes and agitations in the past but they have been very few and the
proportion of mandays lost due to them has been insignificant on an overall basis.

Check Your Progress 4 :

1. Which are the two major mechanisms created for negotiations in the
railways?

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7.8 CONDUCT AND DISCIPLINE
Rules have been framed by the Ministry of Railways governing the conduct and
disciplines of the Railway employees. These Rules are called Railways Servants
Conduct Rules and Railways Servants (Discipline & Appeal) Rules.

Being basically Government servants as stated earlier, the. Railway employees

are entitled to the protection afforded by the Constitutional Safeguards. The
Rules have, therefore, been framed with due consideration to the provisions of
Articles 309 and 311 of the Constitution.

The Conduct Rules basically lay down the do’s and don’ts of conduct expected of
Railway Servants. They have to maintain absolute integrity and devotion to duty
and avoid ‘Conduct’ unbecoming of a Railway Servant There are many don’ts
like.

– Not to acquire immovable property and movable property above a certain

monetary limit without permission.
– Not to criticise Government policy or specific acts of the Government.
– Not to obtain employment for his relatives with companies with whom he
has official dealings.
– Avoid bigamous marriage.
– Not to give or accept dowry.
– Avoid habitual indebtedness.
– Not to borrow or lend money or make investments with persons or firms
with whom he has official dealings.
– Not to indulge in intoxicating drinking habits.
– Not to join associations or unions whose activities are prejudiced to the
interests of the country.
– Not to take part in political movement or activity.
– Not to take part in the editing or publication of a newspaper.
– Not to communicate official information unauthorisedly.
– Not to undertake private trade or employment.
– Not to canvass for political influence for his service matters.
The Discipline and Appeal Rules specify the various penalties which can be
imposed on a Railway Servant for misconduct and the procedure for their
imposition. The penalties are of two categories i.e., minor and major. The
procedures are different for the two categories: There are disciplinary and
appellate authorities laid down in the Rules for imposing these penalties
for different levels of employees and consideration of appeals against such
penalties. The minor penalties are:

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– Censure
– withholding of Privilege passes or Privilege ticket orders:
– withholding of promotion.
– withholding of increments.
– Recovery from pay of the whole or part of any pecuniary loss caused to
Government by negligence or breach of orders.

Since the imposition of minor penalties is not covered by the constitutional

safeguards, the procedure for imposing them is simpler, even though the
principles of natural justice have to be followed before imposing them. The
disciplinary authority has to advise the delinquent employee of the action
proposed to be taken against him and give him a list of the allegations in writing.
He is to be given an opportunity for countering the allegations and rebut the
charges in writing. An oral enquiry is not ordinarily necessary but is obligatory
before any of the following minor penalties are imposed.

– Withholding increment of pay for period of more than three years.

– stopping increment with cumulative effect.
– If the Provident Fund and pensionary benefits are likely to be affected
adversely by the penalty.

In other cases the penalty may be imposed after considering the reply given by
the delinquent employee.

A Railway Servant may be placed under suspension by the competent authority

when it is contemplated to initiate major penalty proceedings against him or
when such proceedings are in progress. During suspension the employee is
put off duty and is given subsistence allowance instead of pay. Initially 50%
of the pay and allowances is paid as subsistence allowance, which may be
increased or decreased depending upon whether the ‘delay in the completion
of the disciplinary proceedings is for reason beyond his control or for reasons
attributable to him as the case may be.

The major penalties, which can be imposed on a Railway Servant are:

– Reduction to a lower stage in the scale of pay to a lower scale of pay,

grade, post or service.
– Compulsory retirement.
– Removal from service.
– Dismissal from service.

All these penalties are subject to the constitutional safeguards and, therefore,
the procedure for their imposition is more elaborate. The procedure is basically
designed to comply with the principles of natural justice and afford a reasonable
opportunity to the delinquent railway servant to defend himself against the

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charges and the punishment. He should be enabled to advance evidence in
his support, question the evidence produced against him, examine his own
witnesses, cross examine the witnesses of the disciplinary authority and submit a
full explanation of his side of the case before the disciplinary authority comes to
his conclusions on the charges and arrives at a decision regarding the imposition
of the penalty.

The first step in the procedure is for the disciplinary authority to serve on the
employee a document called the chargesheet. The chargesheet is actually a brief
statement of the specific charges indicating the misconduct alleged to have been
committed by the employee and a more detailed statement of the imputations of
misconduct which elaborates the specific accusations contained in the statement
of charges. The employees should also be given a list of documents and a list
of the witnesses through whom the charges are proposed to be established.
He shall be given a reasonable time to scrutinize the documents and present
his written statement of defence. He can ask for perusals of any additional
documents relevant to the charges and also submit a list of witnesses whom he
proposes to examine in support of his defence.

The disciplinary authority then appoints an enquiring authority called the

Enquiring Officer to conduct an oral enquiry into the charges. However the
disciplinary authority may also drop the case at this stage if it is satisfied with the
written statement of defence of the employee or it may decide to impose a minor
penalty and may impose such a penalty after giving a notice to the employee of
the decision and considering the reply given by him.

When an oral enquiry is held the EO. appointed to hold it shall conduct the
proceedings as a quasi-judicial proceedings. A presenting officer is appointed by
the disciplinary authority and the delinquent employee may engage another railway
servant as his defence counsel. In the case of a non-gazetted railway servant the
defence counsel may be a trade union office bearer but not a legal practitioner.

The enquiring authority hears the presenting officer on the charges and the
witnesses and documents are examined. The delinquent employee may cross-
examine the witnesses through his defence counsel.

The witnesses and documents presented by the employee are then examined
and cross examined. The employee is allowed to finally summarise his defence
on the charges in writing.

The Inquiring Officer has to conduct all proceedings in the presence of the
employee. On the conclusion of the proceedings, he compiles his report detailing
the charges, the statement of defence of the employee, analysing the evidence of
the witnesses and documents and then presenting his conclusions and findings
on each of the charges. In the finding he will state whether, according to him,
each of the charges is proved or not proved.

The Report of the Inquiry Officer is transmitted to the disciplinary authority,, who
then records his decision on the charges whether he agrees with the enquiry

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report or not. Where he disagrees with the findings of the enquiry Officer, he has
to record the reason for the disagreement. A copy of the Inquiry Report is then
given to the charged employee alongwith reasons of disagreement, if any, of the
disciplinary authority, to enable him to represent.

The disciplinary authority then considering the representation records a final

decision on the penalty to be imposed on the employee or whether the employee
should be acquitted. Either of the decisions has to be communicated to the
employee.

In cases where the President is the disciplinary authority (in the case of Group A
officer), before imposition of the penalty, the UPSC has to be consulted.

In the following cases, the procedure prescribed in the Rules for imposition of
penalties need not be followed:

– Where a penalty is to be imposed on grounds of conduct which has led to

conviction on a criminal charge.
– Where the disciplinary authority is of the opinion that it is not reasonably
practicable to hold an enquiry.
– Where the President is satisfied that in the interest of the security of the
state, it is not expedient to hold an enquiry.

Appeals can be filed against the penalties imposed by the disciplinary authorities
to the appellate authorities specified in the Rules. There is a time limit of 45 days
within which the appeal is to be filed. An appeal can also be filed against an order
of suspension.

The appellate authority will consider whether the procedure laid down in the
Rules has been followed before the imposition of the penalty, whether the
penalty imposed is consistent with the findings of the disciplinary authority on the
charges and whether the penalty ‘is too severe, adequate or inadequate. It will
pass orders confirming, enhancing or reducing the penalty or totally setting the
penalty aside. It may also remit the case back to the disciplinary authority with
such instructions as it deems fit.

Where the penalty is proposed to be enhanced, then an opportunity has to be

given to the employees to defend himself against such enhancement. If a major
penalty is proposed to be imposed at this -stage but an enquiry has not been
held earlier, then such an enquiry as prescribed in the rules has to be held first
before a decision is taken to impose the penalty.

The Rules also provide for revision / review of orders passed in disciplinary
cases by the President, Railway Board, General Manager and other competent
authorities. While revisions may be made on their own by these authorities or
otherwise review is done only by the President under certain circumstances. The
revising authority may confirm, modify or set aside the penalty or impose a penalty
where none has been imposed earlier or remit the case to the competent authority
with suitable directions. However, if a penalty is to be enhanced, opportunity has

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to be given to the employee to defend himself against the enhancement. if a major
penalty is to be imposed an enquiry should be held if not held earlier.

If the President is the appellate or revising / reviewing authority, the UPSC has to
be consulted before the decision is taken on the penalty.

Central Vigilance Commission

Based on the recommendations of the Santhanam Committee on corruption,

the Central Government has established a Central Vigilance Commission, who
has to be consulted in investigating all cases particularly where Group ‘A’ or ‘B’
officers are complained against of having indulged in corrupt acts and practices.
The commission advises as to the action to be initiated against such officers and
the penalty to be imposed. The disciplinary authority considers the advice of CVC
in taking its decision on these matters. The CVC also advises Government on
procedures to be adopted for prevention of corruption.

In the Railway Board there is a vigilance set-up under an Adviser (Vigilance). On

the Zonal Railways similarly the Senior Deputy General Manager functions as the
Chief Vigilance Officer.

7.9 SUMMARY
In this unit we dealt the following aspects related to Indian Railways:

OO Organizational structure
OO Rules for condition of service
OO Training and development
OO Industrial relations
OO Conduct and discipline

7.10 CHECK YOUR PROGRESS : THE KEY

CYP 1 :

1. Indian Railways consists of 16 zonal railways each being headed by a

General Manager who is responsible to the Ministry of Railways, Railway
Board for Operation Maintenance and Financial Position of Railway.
The General Managers are assisted by a number of Functional Heads
of Departments at the Headquarters. The Railway Board consists of the
Chairman, The Financial Commissioner and Five Members each In-
charge of Traffic, Staff, Engineering, Mechanical and Electrical.
CYP 2 :

1. Recruitment to Group ‘A’ Service in various departments is through

competitive examination held by Union Public Service Commission, and

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 by Promotion of Group ‘B’ Officers. Appointment to Group ‘B’ service is
by promotion of staff employed on the Railway which may be made by
General Manager of the Railway concerned.
CYP 3 :

1. Agencies responsible for imparting training to Group ‘A’ and Group ‘B’
staff are enunciated below :
National Academy of Indian Railways, Vadodara : Foundation and Induction
Training of Newly appointed probationary officers and developmental training of
middle and higher level managers.

Indian Railways Institute of Civil Engineering, Pune : Conducts specialized

courses on Permanent Way, Bridge Technology etc.

Indian Railways Institute of Signal Engineering and Telecommunications,

Secunderabad : Provides training to Apprentices. Training courses on Signal
Engineering, Telecommunications Technology and Electronics.

Indian Railways Institute of Mechanical and Electrical Engineering,

Jamalpur : Conducts Special Courses in Diesel Technology and Workshop
Technology.

Indian Railway Institute of Electrical Engineering, Nasik: Provides Training is al

aspects of Railway electrical engineering for officers and supervisors.

Centralised Training Academy for Railway Accounts Provides Training is

Accounts officers and personal.

CYP 4 :

1. Permanent Negotiating Machinery (PNM) : The machinery is functional

from 1951 and works at three levels.
The second structure for negotiation is Joint Consultative Machinery (JCM)
which was constituted by Govt. of India in 1966. It has got a Departmental
Council of JCM for Railways (DC/JCM) which works at Railway Board’s level.
The DC/JCM is a joint body of both recognized federations where as PNM
meetings are held separately for both recognized federation at Railway Board
level and with the Recognized Union at Zonal Railway and Divisional levels.

References and Suggested Reading

1. Constitution of India.
2. Indian Railways Establishment. Code Vol.I & II.
3. Indian Railways Establishment Manual.
4. Railway Services Conduct Rules.
5. Railways Servants (Discipline & Appeal) Rules.
6. Report of the Fourth Pay Commission.

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