Definitions

Human Resource Management in Smaller Organizations

 Small organizations still use operating managers to handle their basic human resource functions.

 Small independent businesses are generally operated in the same way as small organizations.

 Very small organizations are exempt from many legal regulations.

Human Resource Management in Larger Organizations

 As the organization grows a separate human resource unit becomes a necessity.

 When an organization reaches 200 to 250 employees, it generally establishes a self-contained

human resource department.

 As the organization continues to grow the human resource department grow as well into
specialized departments.

Global perspective of hrm

Global HRM

With the advent of globalization, organizations – big or small have ceased to be local, they have become
global! This has increased the workforce diversity and cultural sensitivities have emerged like never
before. International dimensions of business and the globalisation of business have a significant impact
on human resource management. All this led to the development of Global Human Resource
Management. HRM refers to those activities undertaken by an organisation to utilise its human
resources effectively.

Global HRM is the process of recruiting, allocating and effectively utilizing the human resource in
multinational corporations across the national boundaries. Firms operating in international markets face
different conditions and competitions. Multinationals are characterized by an interdependence of
resources and responsibilities across all business units regardless of national boundaries. These
companies have to cope with large flows of components, products, resources, people and information
among their subsidiaries and this demands a complex process of Notes coordination and cooperation
involving strong cross-unit integrating devices, a strong corporate identity and a well developed
worldwide management perspective.

Forecasting
• Attempts to determine the supply of and demand for various types of human resources to
predict areas within the organization where there will be labour shortages or surpluses.
 ● Layoffs: Layoffs are temporary lose of employment of workers. layoffs are used in case of
short-range surplus, Shortage of raw materials, decrease in demand, machine breakdown,
shortage of power, etc, are the reasons for layoff.

● Loaning: Loaning of valuable resources to other organization is a means of keeping the loaned
employees (normally, managers) on organization’s payroll and bringing them back after the
crisis is over. The parent organization pays reduced salary to the loaned employees, with the
difference usually paid by the new employer.

● Work sharing: like two people working one-half time, together constituting one full- time
employee.

If the surplus is expected to persist for longer periods, employers often encourage an early retirement
on a voluntary basis (golden handshake

Human Resource Forecasting

• Process of projecting the organization’s future HR needs (demand) and how it will meet those
needs (supply) under a given set of assumptions about the organization’s policies and the
environmental conditions in which it operates.

• Without forecasting cannot assess the disparity between supply and demand nor how effective
an HR program is in reducing the disparity.

Delphi Technique
An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a
preselected group of individuals.

The final forecast represents a composite group judgment.

A method of forecasting HR demand that involves a panel of experts using their judgments to make
estimates of short-term future demands

Nominal Group Technique

• The nominal group technique (NGT) was first developed by Delbecq and VandeVen as an
alternative to simple, individual brainstorming of ideas. This process involves multiple experts
(usually line and department managers) meeting face to face to discuss independently
formulated positions of an organizational issue, with the ultimate aim of securing an accurate
assessment of a given situation.

Long run forecasting technique utilizing experts assessment

Scenario Analysis
Scenario analysis provides multiple estimates of future HR demand, contingent on a unique set of
assumptions and circumstances for each scenario. This method involves recognizing uncertainties
about the future. For example, forecasts are contingent upon the overall economic outlook of the firm’s
output. An organization could create three different estimates accordingly, one for a constant economic
situation (e.g., zero growth), a second for some anticipated economic growth (e.g., five percent growth),
and a third for the possibility of economic decline (e.g., five percent reduction).

Work Study Techniques:

Work study is as old as industry itself. Work study, as the name implies, is the study of human work in
the deepest sense and dignity of the word, and not merely in the special and more restricted meaning
used in the physical sciences. Even today it is not limited to the shop floor, nor even to manufacturing
industry. In one form or another it can be used in any situation wherein human work is performed.

• The terms time and motion study have been given many interpretations since their origin. Time
study, originated by Taylor, was used mainly for determining time standards, and motion study,
developed by the Gilbreths, was employed largely for improving methods. While Taylor and
Gilbreth did their pioneering work around the same time, it seems that in the early days greater
use was made of time study and wage incentive than of motion study.

• Work study, therefore, has a direct relationship with productivity.

• The ultimate motive of work-study is the best utilization of men, machine, material and money
i.e. higher productivity. It is important to define the term Productivity. Productivity is a term that
has a number of different meanings although it is most commonly associated with labour
effectiveness in industry. In a broad sense productivity is the ratio of output to some or all of the
resources used to produce the output, e.g.

• Productivity “output per labour hour”.

• Labour Productivity = Units Produced ¸ hours worked

Trend Analysis
Trend analysis predicts the demand for labour based on projections of past relationship
patterns over a number of years between an operational index (e.g., revenue per employee,
productivity per employee) and the demand for labour (number of employees). As one of the
simpler methods of forecasting HR demand, trend analysis assumes that an organization’s past
employment needs are indicative of future needs when linked with an operational index.

Ratio Analysis
Ratio analysis determines future HR demand based on ratios between assumed casual factors
and the number of employees needed. Ratio analysis appears very similar to trend analysis, but
the primary difference is that there is no requirement for significant historical data collection
 Regression Analysis
• Regression analysis is a more complicated method of estimating HR demand, but allows for
adjustment of seasonal fluctuation, long-term trends, and random movement when forecasting.
This method provides statistical projections using mathematical formulas to determine the
correlation between multiple measurable output factors (independent variables) and an
organization’s employment level (dependent variable).

Regression and Correlation

This method seek to provide a measure of the extent to which movements in the values of two
or more variables as for example labour input and sales are related (or correlated) with each
other. The aim is to predict changes in one variable by reference to changes in the other or
others, where the future value of these other (or explanatory) variables are already postulated.
Thus, if a company finds that the number of hours put in by a group of workers bears a strong
relationship to the amount of output from the department, or sales, a knowledge of future
output or sales levels should make possible a forecast of future manpower requirements. Where
only two variables are concerned the analysis is known as simple regression or correlation.
Where more than two variables are considered together, the analysis is known as multiple
regression.

Forecasting Internal Labor Supply

Staffing Tables

Graphic representations of all organizational jobs, along with the numbers of employees
currently occupying those jobs and future (monthly or yearly) employment requirements.

Markov Analysis

A method for tracking the pattern of employee movements through various jobs.

Skill Inventories

Files of personnel education, experience, interests, skills, etc., that allow managers to quickly
match job openings with employee backgrounds.

Replacement Charts

Listings of current jobholders and persons who are potential replacements if an opening occurs.

Succession Planning

The process of identifying, developing, and tracking key individuals for executive positions.

Movement Analysis - a technique used to analyze personnel supply, specifically the chain or
ripple effect that promotions or job losses have on the movements of other personnel in an
organization
 Vacancy model (renewal or sequencing model) analyzes flows of personnel throughout the
organization by examining inputs and outputs at each hierarchical or compensation level

Job Analysis
• Job analysis (JA) is the analysis of subdivided work in the organization, both at the level of the
individual job and for the entire flow of production process.

• Job Analysis can be defined as an examination of the jobs in an organization with a view to
documenting the knowledge, skills and abilities (KSAs e.g., experience) associated with
successful performance of those jobs.

• Job analysis

• The procedure for determining the duties and skill requirements of a job and the kind of
person who should be hired for it.

• Job description

• A list of a job’s duties, responsibilities, reporting relationships, working conditions, and

supervisory responsibilities—one product of a job analysis.

• Job specifications

• A list of a job’s “human requirements,” that is, the requisite education, skills,
personality, and so on—another product of a job analysis.

• Outcomes of Job Analysis

• Job Description

• Outlines the typical job

• duties & responsibilities

• Person Specification

• Outlines the essential and desirable criteria for the person during the job.

METHODS OF COLLECTING INFORMATION

Interview

Group interview

Questionnaire

Narrative description

Observation

Technical conference seminars

 Equipment based Methods

Receiving records and Literature

Studying equipment design specification

Method analysis standardized job analysis questionnaire

Position Analysis Questionnaire

PAQ is a structured job analysis checklist that includes 194 items or job elements that are used to
rate a job.

These job elements are incorporated into the following six dimensions:

1. Information input

2. Mental processes

3. Work output

4. Relationships with other people

5. Job context and work satisfaction

6. Other job characteristics

Functional Job Analysis

Functional job analysis (FJA) is a method for classifying jobs similar to the DOL method, but
additionally taking into account the extent to which instructions, reasoning, judgment, and
mathematical and verbal ability are necessary for performing job tasks.

• FJA is the result of 60 years of research on analyzing and describing jobs

– Conceived in the late 1940s

– Developed to improve job classifications in the Dictionary of Occupational Titles (DOT)

The HAY System

HayGroup have developed a system of job analysis that is used extensively for consulting work in
compensation and organizational analysis.

HAY system uses three factors to analyze each job:

 1) Know-how(the specific knowledge and skills required to perform the job),

2) Problem -solving (the decisions and problems that must be successfully handled on the job), and

3) Accountability (the jobholders responsibilities for critical task completion and for organizational
resources, budgets, supervision of people, etc.).

Job Descriptions and Job Specifications

• Job Description

– Identification of the tasks, duties, and responsibilities of a job

• Performance Standards

– Indicator of what the job accomplishes and how performance is measured in key areas
of the job description.

• Job Specification

– The knowledge, skills, and abilities (KSAs) an individual needs to perform a job
satisfactorily.

• job description include:

– Job title

– Summary

– Equipment

– Environment

– Activities

• A job specification evolves from the job description

– It is especially useful for recruitment and selection

Job Description (Job Oriented) Components

• Job Identification

– Job title

– Reporting relationships

– Department

– Location
 – Date of analysis

• Job Summary

– Describes the job’s contents, its authority, responsibilities hazards etc.

– Relation to other jobs (relation with superior, ,peers, subordinate )

• Location in hierarchy

• Machine tools and equipment used.

• Materials used

• Responsibilities

• Conditions of work, location of work, speed, health hazard

• Accident Hazarads

Job design/ redesign

various factors may lead to job design or redesign in an organisation. This is done by ways of job
enlargement, job enrichment, semi-automated group.

It is the responsibility of the HR to design the jobs within the organisation. Excessive specification and
concentration upon the required efficiency level have an adverse impact upon the motivation of
employees.

In job Analysis the focus is on the job, duties, and specifications, why job design focuses on the interest
of the individuals which which also reflects the interest of the organisations.

Factors that affect job design are:

• Values of specialization and repetitive operations

• Changing Technology

• Labour Union policies

• Abilities of the present employees

• Available supply of potential employees

• Interactive requirement of the job within the system

• Psychological and social need of human beings

Job Enlargement
Definition:
 • Job Enlargement is the horizontal expansion of a job. It involves the addition of tasks at the
same level of skill and responsibility. It is done to keep workers from getting bored. It is different
than job enrichment.

• Examples: Small companies may not have as many opportunities for promotions, so they try to
motivate employees through job enlargement. Beside that if there is shortage or suffering from
dearth of staff, in such case additional duties and responsibilities would be added to available
employees which amount to job enlargement.

• Job Enlargement, a job design technique in which the number of tasks associated with a job is
increased (and appropriate training provided) to add greater variety to activities, thus reducing
monotony.

• Job enlargement is considered a horizontal restructuring method in that the job is enlarged by
adding related tasks. Job enlargement may also result in greater workforce flexibility.

• Job enlargement is another method of job design when any organization wishes to adopt proper
job design it can opt for job enlargement. Job enlargement involves combining various activities
at the same level in the organization and adding them to the existing job. It increases the scope
of the job. It is also called the horizontal expansion of job activities.

Job Enrichment
Job enrichment is a process that is characterized by adding dimensions to existing jobs to make them
more motivating. Examples of job enrichment include adding extra tasks (also called job enlargement),
increasing skill variety, adding meaning to jobs, creating autonomy, and giving feedback.(vertical In
nature)

The goal of job enrichment is to create a motivating job. This can be done, for example, by taking a
regular, ‘boring’ job and adding extra responsibilities that make the job more meaningful for the worker.
Job enrichment is, therefore, part of job design and job redesign.

What is the difference between job enrichment and job

enlargement?
The difference between job enrichment and job enlargement is quality and quantity. Job enrichment
means improvement, or an increase with the help of upgrading and development, whereas job
enlargement means to add more duties, and an increased workload.

Recruitment
Recruitment is a positive process of searching for prospective employees and stimulating them to apply
for the jobs in the organization. When more persons apply for jobs then there will be a scope for
recruiting better persons.

Stages Of Recruitment
 Defining the Job to be
Done

Defining the characteristics

of the Ideal Candidate

Attracting Candidates

Selecting Candidate

Types Of Recruitment
Internal Recruitment

External Recruitment

Selection
Selection is the process of choosing a qualified person for specific role who can successfully deliver
valuable contributions to the organization. The term selection can be applied to many aspects of the
process, such as recruitment, hiring, and acculturation. However, it most commonly refers to the
selection of workers. A selection system should depend on job analysis. This ensures that the selection
criteria are job related and propose value additions for the organization.

Introduction to Training
A training program is an opportunity for employees to acquire skills, attitudes, and knowledge

 Learning is the act by which an individual acquires skills, knowledge, and abilities that
result in a relatively permanent change in behaviour

 Any behaviour that has been learned is a skill

 Motor, cognitive, and interpersonal skills are training targets

TRAINING: The term training refers to the acquisition of knowledge, skills, and competencies as a
result of the teaching of vocational or practical skills and knowledge that relate to specific useful
competencies.

ADDIE MODEL

Evaluating the Training

Three Levels of Evaluation

1. Immediate Feedback

 Survey or interview directly after training

2. Post-Training Test

 Trainee applying learned tasks in workplace?

3. Post-Training Appraisals

 Conducted by immediate supervisors of trainees

Conducting the Needs Assessment

 Organization Analysis

 An examination of the environment, strategies, and resources of the organization to

determine where training emphasis should be placed.

 Task Analysis

 The process of determining what the content of a training program should be on the
basis of a study of the tasks and duties involved in the job.

 Person Analysis

 A determination of the specific individuals who need training.

Task Analysis

Process of determining what the content of a training program should be on the basis of a study of
the tasks and duties involved in the job

Establishing Training Objectives

 Gap Analysis

 The distance between where an organization is with its employee capabilities and where
it needs to be.

 Types of Training Objectives

 Knowledge: Impart cognitive information and details to trainees.

 Skill: Develop behavior changes in how job and tasks are performed.

 Attitude: Create interest and awareness of the training importance.

Feedback and Reinforcement

Behavior Modification
The technique that operates on the principle that behavior that is rewarded, or positively
reinforced, is repeated more frequently, whereas behavior that is penalized or unrewarded will
decrease in frequency.

• Job: Edwin B.Flippo describes job as a group of positions that are similar as to  kind and level of
work. In some instances only one position may be involved,  simply because no other similar
position exists. For example, in the typical firm  the position of human resource manager also
constitute a job since there is only  one human resource manager in the organizing. 

•
Evaluation: Wigley explains evaluation as a data reduction process that  involves the collection
of large amounts of data which are analyzed and  synthesized into an overall judgment of worth
or merit. The implication here is  that the judgment of worth can be supported by the data. In
her review, Foxon  found similar definitions referring to judgments of value or worth. 

• Job Evaluation: It is a systematic and orderly process of determining the worth  of a job in
relation to other jobs. The objective of this process is to determine  the correct rate of pay. It is
therefore not the same as job analysis. Rather it  follows the job analysis process, which
provides the basic data to be evaluated. 

Job Evaluation
• Job evaluation is the process of analyzing and assessing the various jobs systematically to
ascertain their relative worth in an organization. Job is evaluated on the basis of their content
and is placed in the order of their importance.

• Job evaluation is the process of comparing a job against other jobs within the organization to
determine the appropriate pay rate.

• Job evaluation takes place early in the process of creating a compensation system for the
organization. The job evaluation process may contrast with or be used in conjunction with
market pricing, which uses the labor market to set jobs' worth. This process, which may take
several months, is usually completed by a team of knowledgeable senior employees who
understand the functions of most of the organization's jobs. To maintain objectivity, employers
sometimes hire consultants to complete this step in the compensation planning and design
process.

• Job evaluations are often confused with job analysis, but the two activities differ drastically. A
job analysis is the systematic process of examining specific tasks and responsibilities related to a
job, typically for writing a job description. 

Wage and Salary Management

• According to Merriam-Webster, wage is “a payment usually of money for labour or services;

usually according to contract and on an hourly, daily, or piecework basis.”
 • “Wage is a remuneration to labour for the work done or the service rendered by it to the
employer. Of all the problems that face the worker that of wage is the most vital and important
to him.” 

• Thus, a wage is a monetary employee compensation paid by an employer to an employee in

exchange for the work done by such an employee. It can be fixed on hourly basis as well as
collectively based on quantity of work or task done.

• Difference between wages and salary: Wages are generally associated with the employee
compensation which is based on multiplication of an hourly rate of pay with total number of
hours worked. Usually, it is paid daily or weekly.

• Salary, on the other hand, is also associated with employee compensation but it is based or
quoted on an annual basis. Usually, it is paid on a semi-monthly or monthly basis.

Wages Definition

• Section 2 in The Payment of Wages Act, 1936 ,“wages” means all emoluments which are
earned by an employee while on duty or on leave in accordance with the terms and conditions
of his employments and which are paid or are payable to him in cash and includes dearness
allowance but does not include any bonus, commission, house rent allowance, overtime wages
and any other allowance.

• Compensation :

Compensation is what employees receive(financial as well as non financial rewards) in exchange for
their contribution to the organization. Financial rewards includes wages, bonus, pension plans and
paid leaves

Types of Wages
Wages are classified into:

• Minimum Wage-The wages which sufficiently serve the need of certain basic facilities as well as
other needs of the employee and his family according to their social status are termed as Living
wages. They are usually sufficient for the betterment of the employee. The term ‘living wages’ is
not defined in the Minimum Wages Act, 1948.

Thus, to put it briefly, living wages need to be sufficient for some other leisure activities in addition to
food, clothing and shelter which are the basic necessities of man. This other leisure or comfort needs
generally include education for children, treatment during ill-health, the requirement of essential social
needs and measures of insurance against old age etc.

• Living Wage-The minimum wage is the lowest wage in the scale. Below the minimum wage, the
efficiency of the worker is at stake. It includes the simple physical necessities of the worker as
well as some comfort such as the conventional necessities as otherwise, any wage below it will
necessarily need to depletion of the efficiency of the worker. Thus, the minimum wage must
take note of some basic measure of education, medical requirements, and amenities of the
worker and his family.
 • Fair Wage-A fair wage relates to the earning capacity and workload. Therefore, the lower limit
of a fair wage, certainly, should be the ability to pay minimum wage and the upper limit is the
ability or capacity of the industry to pay. Between these two limits, the actual wage will depend
on a consideration of certain variables such as prevailing wage rate, the productivity of the
labour, national income and its distribution among various sectors and the level of industry in
the economy of the country. Thus, it means the wage which is paid to the workers for various
jobs which require equal efficiency, difficulty and pains.

Methods of Wage Payments

I. Time Rate Wage System: It is the oldest and the simplest form of wage fixing. Under this
system, workers are paid according to the work done during a certain period of time at a rate of
per hour, per day, per week, per fortnight, or per month or any other fixed period of time.
According to the section4 of the Payments of Wages Act,1936, not more than one month must
elapse between two wage period. Time wage system adopts time as the basis of worker
remuneration without taking in to account the units produced. The worker is guaranteed a
specified sum of money for a fixed period of his time taking no account of the quality or quantity
of the work done.

II. Piece Rate Wage System: Under this system, workers are paid according to the amount of work
done or numbers of units produced or completed, the rate of each unit being settled in advance,
irrespective of the time taken to do the work. This does not mean that the workers can take any
time to complete a job because of his performance far exceeds the time which his employer
expects he would take, the overhead charges for each unit of article will increase. There is an
indirect implication that a worker should not take more than average time.

Wage Determination
Compensation Differentials

Some differences in wage rates across places, occupations, and demographic groups can be explained by
compensation differentials.

According to the basic theory of the labor market, there ought to be one equilibrium wage rate that
applies to all workers across industries and countries. Of course this is not the case; doctors typically
make more per hour than retail clerks, and workers in the United States typically earn a higher wage
than workers in India. These wage differences are called compensation differentials and can be
explained by many factors, such as differences in the skills of the workers, the country or geographical
area in which jobs are performed, or the characteristics of the jobs themselves.

Education Differentials

Geographic Compensation Differentials

Discrimination and Compensation Differentials

Wage and Salary Administration

 • Wage and salary administration is the ongoing process of managing a wage and salary
structure.

• All managers must be sensitive to these costs and must be vigilant about managing them
properly.

Definition of performance appraisal

 Formal, structured system for measuring, evaluating and influencing an employee’s job-related
attributes, behaviors and outcomes.

 Performance appraisal is the specific and formal evaluation of an employee conducted to

determine the degree to which the employee is performing his or her job effectively.

 Performance management is the general set of activities carried out by the organization to
change (improve) employee performance.

Sources of Performance Appraisal

 Manager and/or Supervisor

 Appraisal done by an employee’s manager and reviewed by a manager one level higher.

 Self-Appraisal

 Appraisal done by the employee being evaluated, generally on an appraisal form

completed by the employee prior to the performance interview.

 Subordinate Appraisal

 Appraisal of a superior by an employee, which is more appropriate for developmental

than for administrative purposes.

 Peer Appraisal

 Appraisal by fellow employees, compiled into a single profile for use in an interview
conducted by the employee’s manager.

 Why peer appraisals are used more often:

 Peer ratings are simply a popularity contest.

 Managers are reluctant to give up control over the appraisal process.

 Those receiving low ratings might retaliate against their peers.

 Peers rely on stereotypes in ratings.

 Team Appraisal

 based on TQM concepts, that recognizes team accomplishment rather than individual
performance
  Customer Appraisal

A performance appraisal that, like team appraisal, is based on TQM concepts and seeks evaluation from
both external and internal customers

Confidential Report
Confidential report system is well known method of performance appraisal system mostly being used by
the Government organisations and in the Indian Judiciary. In this method of appraising system,
subordinate is observed by his superiors regarding his performance in the job and on his duties done.
Thereafter Superior writes confidential report on his performance, mainly on his behavior in the
organization and conduct and remarks if any. confidential reports will be kept confidential and will not
be revealed to anyone and finally confidential reports will be forwarded to the top management officials
for taking decision against person on whom confidential report has made. Confidential reports are the
main criteria for promoting or transferring of any employee mainly in the government sector. All
governmental organisations example judiciary, police Department and other government departments
in the India are using confidential reports method as a tool to know about the employee and to take any
decision connecting to him.

Essay Method- Requires the rater to compose a statement describing employee behavior.

Essay Appraisal: Appraiser writes narrative describing employee performance & suggestions

 Critical Incident Appraisal: Based on key behaviors which illustrate effective or ineffective job
performance.

 Critical Incident Method

 Critical incident

 An unusual event that denotes superior or inferior employee performance in some part of the job

 The manager keeps a log or diary for each employee throughout the appraisal period and notes
specific critical incidents related to how well they perform.

CHECKLIST METHOD

The rater is given a checklist of the descriptions of the behaviour of the employees on job. The
checklist contains a list of statements on the basis of which the rater describes the on the job
performance of the employees.

Another simple type of individual evaluation method is the checklist. A checklist represents, in its
simplest form, a set of objectives or descriptive statements about the employee and his behavior. If
the rater believes strongly that the employee possesses a particular listed trait, he checks the item;
otherwise, he leaves the item blank. A more recent variation of the checklist method is the weighted
list. Under this, the value of each question may be weighted equally or certain questions may be
weighted more heavily than others. The following are some of the sample questions in the checklist.

 Is the employee really interested in the task assigned? Yes/No

  Is he respected by his colleagues (co-workers) Yes/No

 Does he give respect to his superiors? Yes/No

 Does he follow instructions properly? Yes/No

 Does he make mistakes frequently? Yes/No

Graphic Rating-Scale Method

A trait approach to performance appraisal whereby each employee is rated according to a scale of
individual characteristics.

Mixed-Standard Scale Method

An approach to performance appraisal similar to other scale methods but based on comparison with
(better than, equal to, or worse than) a standard.

Behavioral Methods

 Behaviorally Anchored Rating Scale (BARS)

 Consists of a series of vertical scales, one for each dimension of job performance; typically
developed by a committee that includes both subordinates and managers.

 Behavior Observation Scale (BOS)

 A performance appraisal that measures the frequency of observed behavior (critical incidents).

 Preferred over BARS for maintaining objectivity, distinguishing good performers from poor
performers, providing feedback, and identifying training needs.

Evaluating absolute standards:

 Checklist Appraisal: Appraiser checks off behaviors that apply to the employee.

 Adjective Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors.

 Forced-Choice Appraisal: Appraisers choose from sets of statements which appear to

be equally favorable, the statement which best describes the employee.

 Behaviorally Anchored Rating Scales (BARS): Appraiser rates employee on factors which are
defined by behavioral descriptions illustrating various dimensions along each rating scale.

 Management by Objectives (MBO)

 A philosophy of management that rates performance on the basis of employee

achievement of goals set by mutual agreement of employee and manager.

Relative standards:

 Individual Ranking: Employees are ranked from highest to lowest.

 Paired Comparison:
 Each individual is compared to every other.

 Final ranking is based on number of times the individual is preferred member in a pair.

 Forced Distribution Method:

Forced distribution is a method of employee performance appraisal that many companies use. We also
call it the forced distribution method, stacked ranking, or bell-curve rating. It is a rating system that
employers use to evaluate their workers.

Group Appraisal

Group Appraisal Method: Under this method, employees are rated by an appraisal group, consisting of
their supervisor and three or four other supervisors who have some knowledge of their performance.
The supervisor explains to the group the nature of his subordinates' duties.

Human Resource Accounting- Human resource (cost) accounting method analyses an employee's

performance through the monetary benefits he/she yields to the company. It is obtained by comparing
the cost of retaining an employee (cost to company) and the monetary benefits (contributions) an
organization has ascertained from that specific employee.

Assessment Centre- The assessment center method of performance appraisal combines role plays,
situational judgment tests, presentations, group activities, interviews, simulations, psychometric tests
and other techniques to make critical talent decisions.

Field Review Method- In this method, an employee is not appraised by his direct superior but by
another person usually from the HR department. This is an appraisal by someone outside the
assessee's own department, usually someone from the corporate office or the HR department.

360-Degree Feedback
 This is an approach to performance appraisal that involves gathering performance information
from people on all sides of the manager: above, beside, below, and so forth.

 This approach is potentially helpful, especially when used for feedback purposes only.

Problems with Performance Appraisals-Judgmental Errors

 First Impression (Primacy Effect)- Raters form an overall impression about the ratee on the
basis of some particular characteristics of the ratee identified by them.

 Halo error- Evaluator lets an assessment of one individual trait influence the evaluation of all
traits.

 Horn Effect- The horns effect is the tendency for a single negative attribute to cause raters to
mark everything on the low end of the scale. One bad attribute seems to spoil the bunch. 

 Leniency or Strictness Error- A rating error in which the appraiser tends to give all employees
either unusually high or unusually low ratings.

 Error of Central Tendency- A rating error in which all employees are rated about average.
  Stereotyping- Stereotyping is a concept, idea or model attributed to people or groups, and that
are created over period of time. We normally use these clichés to pigeonhole a person and we
automatically assume that they share the same traits and characteristics as the other people in
this group.

 Recency effect- A rating error in which appraisal is based largely on an employee’s most recent
behavior rather than on behavior throughout the appraisal period.

 Poor Appraisal Forms

 Lack of Raters Preparedness

 Ineffective Organizational Policies & Practices

Rater Errors(Others)

 Contrast Error

 A rating error in which an employee’s evaluation is biased either upward or downward because
of comparison with another employee just previously evaluated.

 Similar-to-Me Error

 An error in which an appraiser inflates the evaluation of an employee because of a mutual

personal connection.

Factors that can Distort Appraisals

Attribution Theory

 Evaluations are affected based on whether someone’s performance is due to

 internal factors they can control

 external factors which they cannot

 If poor performance is attributed to internal control, the judgment is harsher than when it is
attributed to an external control.

Industrial Relations

Concept of Industrial Relations:

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry”
refers to “any productive activity in which an individual (or a group of individuals) is (are)
engaged”. By “relations” we mean “the relationships that exist within the industry between the
employer and his workmen.”

The term industrial relations has a broad as well as a narrow outlook. Originally, industrial
relations was broadly defined to include the relationships and interactions between employers
and employees.

Definition of Industrial Relations

As per Dale Yoder Industrial Relations refers to the relationship between management and
 employees, or employees and their organization, which arise out of employment.
Industrial Relations It includes the relations, formal or informal, between the employers and the
employees with or without the presence of recognized trade unions. The relationships are
governed by the rights,

Actors in the IR system:

Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire and fire
them. Management can also affect workers’ interests by exercising their right to relocate, close
or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They
exchange views with management and voice their grievances. They also want to share decision
making powers of management. Workers generally unite to form unions against the
management and get support from these unions.
Government: The central and state government influences and regulates industrial relations
through laws, rules, agreements, awards of court ad the like. It also includes third parties and
labor and tribunal courts.

What is Collective Bargaining?

It is the process by which managers and union leaders negotiate acceptable terms and
conditions of employment for those workers represented by the unions.

Setting Parameters for Collective Bargaining

• Mandatory items, including wages, working hours, and benefits, must be included if either party
expresses a desire to negotiate one or more items.

• Permissive items may be included if both parties agree.

Barriers to Effective Negotiations (con’t)

• A strike occurs when employees walk off their jobs and refuse to work.

• Picketing occurs when workers representing the

union march at the entrance to the employer’s facility with signs explaining their reasons for
striking.

• A boycott occurs when union members agree not to buy the products of a targeted employer.

• A slowdown occurs when workers perform their jobs at a much slower pace than normal.

• A wildcat strike occurs during the course of a labor contract and is usually undertaken in
response to a perceived injustice on the part of management.

• A lockout occurs when an employer denies employees access to the workplace.

Resolving Impasses
• In arbitration both sides agree in advance that they will accept the recommendations made by
an independent third party.

• Under final-offer arbitration, the parties bargain until impasse and then the two parties’ final
offers are submitted to the arbitrator.

The Role of Labor Unions in Organizations

• Labor relations is the process of dealing with employees who are represented by a union.

• A labor union is a legally constituted group of individuals working together to achieve shared,
job-related goals, including higher pay and shorter working hours.

TRADE UNION: An Overview

Definition

• Trade Union is a continuous association of wage earners for the purpose of maintaining &
improving conditions of their working lives.

- Webbs

• A combination, whether temporary or permanent, formed primarily for the purpose of

regulating the relations between workers & employers, or for imposing restrictive conditions on
the conduct of any trade or business & includes any federation of two or more unions.

- Trade Union Act, 1926

Types of Arbitration

• Compulsory Binding Arbitration

• A process for employees such as police officers, firefighters, and others in jobs where
strikes cannot be tolerated to reach agreement.

• Final-offer Arbitration

• The arbitrator must select one or the other of the final offers submitted by the disputing
parties with the award is likely to go to the party whose final bargaining offer has moved
the closest toward a reasonable settlement.

Types of Reward Plans

Intrinsic versus Extrinsic Rewards

• Intrinsic rewards (personal satisfactions) come from the job itself, such as:

– pride in one’s work

– feelings of accomplishment

– being part of a work team

• Extrinsic rewards come from a source outside the job

 – include rewards offered mainly by management

– Money

– Promotions

– Benefits

Financial versus Nonfinancial Rewards

• Financial rewards include:

– wages

– bonuses

– profit sharing

– pension plans

– paid leaves

– purchase discounts

• Nonfinancial rewards emphasize making life on the job more attractive; employees vary greatly
on what types they find desirable.

Performance-based versus Membership-Based Rewards

• Performance-based rewards are tied to specific job performance criteria.

– commissions

– piecework pay plans

– incentive systems

– group bonuses

– merit pay

• Membership-based rewards such as cost-of-living increases, benefits, and salary increases are
offered to all employees.

• Bonuses

• Bonus

– Incentive payment that is supplemental to the base wage for cost reduction, quality
improvement, or other performance criteria.

• Spot bonus

– Unplanned bonus given for employee effort unrelated to an established performance

measure.
 Merit Pay

• Merit Pay Program (merit raise)

– Links an increase in base pay to how successfully an employee achieved some objective
performance standard.

• Merit Guidelines

– Guidelines for awarding merit raises that are tied to performance objectives.

• Lump-sum Merit Program

Program under which employees receive a year-end merit payment, which is not added
to their base pay.

Incentive Awards and Recognition

• Awards

– Often used to recognize productivity gains, special contributions or achievements, and

service to the organization.

– Employees feel appreciated when employers tie awards to performance and deliver
awards in a timely, sincere and specific way.

• Noncash Incentive Awards

– Are most effective as motivators when the award is combined with a meaningful
employee recognition program.