CHAPTER ONE

INTRODUCTION

As human resources have become viewed as more critical to organizational success, many
organizations have realized that it is the people in an organization that can provide a competitive
advantage. Human Resource (HR) management deals with the design of formal systems in an
organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. In an organization, the management of human resources means that they
must be recruited, compensated, trained, and developed.

1.1. DEFINITION BACKGROUND OF HRM

The term human resource may be defined as the total knowledge, skills, creative abilities, talents
and aptitudes of an organization’s workforce, as well as the attitudes, approaches and beliefs of
an individuals involved in the affairs of the organization it is the sum total or aggregate of
inherent abilities acquired knowledge and skills represented by the talents and aptitudes of the
persons employed in an organization.

Several terms have been used by various management scholars to represent human resources.
These includes ‘personnel’, ‘people at work’, ‘man power’, ‘staff’ and ‘employees’. Whatever
may be term used the human resource of an organization includes all individuals engaged in
various organizational activities at different levels. According to Leon C. Megginson, ‘From the
national point of view, Human resource may be defined as the skills, knowledge, creative
abilities, talents and aptitudes obtained in an organization; whereas from the point of individual
enterprise, they represent the total of inherent abilities acquired knowledge and skills as
exemplified in the talents and aptitudes of its employees. Jucius Michael calls these resources
‘human factors’; which refer to ‘a whole consisting interrelated, interdependent and interacting
physiological, psychological, sociological, ethical components.’ Thus human resources are
multi-dimensional in nature. People working in an organization have different needs at different
times. These needs may be physiological, social, and psychological.

Human resources are also identified by other terms like personnel, human assets, and human
capital. Human assets are in intangible form as they exist within the human resources. The
following are few definitions by other scholars:
 HRM is “ the planning, organizing, directing and controlling of the procurement,
development and compensation, integration, maintenance and reproduction of human
resources to the end that individual, organizational and societal objectives are
accomplished.”- Edwin B. Filppo

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 HRM has been defined as the function of units in organizations that facilitate the most
effective utilization of human resources to achieve the objective of both the organization and
employee.- John M. Ivancevic
 HRM is that part of management concerned with people at work and their relationship within
the organization. – Dr. C.B Gupta
 HRM refers to the policies, practices, and systems that influence employees’ behavior,
attitude, and performance.
 HRM is a management function that helps managers’ recruit, select, train and develops
members for an organization.
 HRM is the effective management of people at work.
 Human resource management is defined as a strategic and coherent approach to the
management of an organization’s most valued assets – the people working there who
individually and collectively contribute to the achievement of its objectives.
 Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an
ideological and philosophical under pinning’. He suggests four aspects that constitute the
meaningful version of HRM:
 a particular constellation of beliefs and assumptions;
 a strategic thrust informing decisions about people management;
 the central involvement of line managers; and
 Reliance upon a set of ‘levers’ to shape the employment relationship.

1.2. DIFFERENCE BETWEEN HRM AND PERSONNEL MANAGEMENT

Some experts assert that there is no difference between human resources and
personnel management. They state that the two terms can be used interchangeably,
with no difference in meaning. In fact, the terms are often used interchangeably in help-
wanted ads and job descriptions.

For those who recognize a difference between personnel management and human
resources, the difference can be described as philosophical. Personnel management is
more administrative in nature, dealing with payroll, complying with employment
law, and handling related tasks. Human resources, on the other hand, is responsible
for managing a workforce as one of the primary resources that contributes to the
success of an organization.

When a difference between personnel management and human resources is

recognized, human resources is described as much broader in scope than personnel
management. Human resources is said to incorporate and develop personnel
management tasks, while seeking to create and develop teams of workers for the
benefit of the organization. A primary goal of human resources is to enable
employees to work to a maximum level of efficiency.

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Personnel management can include administrative tasks that are both traditional and
routine. It can be described as reactive, providing a response to demands and
concerns as they are presented. By contrast, human resources involves ongoing
strategies to manage and develop an organization's workforce. It is proactive, as it
involves the continuous development of functions and policies for the purposes of
improving a company’s workforce.

Personnel management is often considered an independent function of an

organization. Human resource management, on the other hand, tends to be an
integral part of overall company function. Personnel management is typically the
sole responsibility of an organization’s personnel department. With human
resources, all of an organization’s managers are often involved in some manner,
and a chief goal may be to have managers of various departments develop the
skills necessary to handle personnel-related tasks.

As far as motivators are concerned, personnel management typically seeks to motivate

employees with such things as compensation, bonuses, rewards, and the
simplification of work responsibilities. From the personnel management point of
view, employee satisfaction provides the motivation necessary to improve job
performance. The opposite is true of human resources. Human resource management
holds that improved performance leads to employee satisfaction. With human
resources, work groups, effective strategies for meeting challenges, and job creativity
are seen as the primary motivators.

When looking for a job in personnel management or human resources, it is important to

realize that many companies use the terms interchangeably. If you are offered a job as
a personnel manager, you may be required to perform the same duties as a human
resource manager, and vice versa. In some companies, a distinction is made, but the
difference is very subtle.

HRM DEVELOPMENT AND IMPLEMENTATION RESPONSIBILITIES

While most firms have a human resources or personnel department that develops and
implements HRM practices, responsibility lies with both HR professionals and line
managers. The interplay between managers and HR professionals leads to effective
HRM practices. For example, consider performance appraisals. The success of a firm's
performance appraisal system depends on the ability of both parties to do their jobs
correctly. HR professionals develop the system, while managers provide the actual
performance evaluations.

The nature of these roles varies from company to company, depending primarily on the
size of the organization. This discussion assumes a large company with a sizable HRM
department. However, in smaller companies without large HRM departments, line
managers must assume an even larger role in effective HRM practices.

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HR professionals typically assume the following four areas of responsibility: establishing
HRM policies and procedures, developing/choosing HRM methods,
monitoring/evaluating HRM practices, and advising/assisting managers on HRM-related
matters. HR professionals typically decide (subject to upper-management approval)
what procedures to follow when implementing an HRM practice. For example, HR
professionals may decide that the selection process should include having all
candidates (1) complete an application, (2) take an employment test, and then (3) be
interviewed by an HR professional and line manager.

Usually the HR professionals develop or choose specific methods to implement a firm's

HRM practices. For instance, in selection the HR professional may construct the
application blank, develop a structured interview guide, or choose an employment test.
HR professionals also must ensure that the firm's HRM practices are properly
implemented. This responsibility involves both evaluating and monitoring. For example,
HR professionals may evaluate the usefulness of employment tests, the success of
training programs, and the cost effectiveness of HRM outcomes such as selection,
turnover, and recruiting. They also may monitor records to ensure that performance
appraisals have been properly completed.

HR professionals also consult with management on an array of HRM-related topics.

They may assist by providing managers with formal training programs on topics like
selection and the law, how to conduct an employment interview, how to appraise
employee job performance, or how to effectively discipline employees. HR professionals
also provide assistance by giving line managers advice about specific HRM-related
concerns, such as how to deal with problem employees.

Line managers direct employees' day-to-day tasks. From an HRM perspective, line
managers are mainly responsible for implementing HRM practices and providing HR
professionals with necessary input for developing effective practices. Managers carry
out many procedures and methods devised by HR professionals. For instance, line
managers:

 Interview job applicants

 Provide orientation, coaching, and on-the-job training
 Provide and communicate job performance ratings
 Recommend salary increases
 Carry out disciplinary procedures
 Investigate accidents
 Settle grievance issues

The development of HRM procedures and methods often requires input from line
managers. For example, when conducting a job analysis, HR professionals often seek
job information from managers and ask managers to review the final written product.
Additionally, when HR professionals determine an organization's training needs,
managers often suggest what types of training are needed and who, in particular, needs
the training.

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1.3. EVOLUTION OF HR MANAGEMENT

Human resource management has changed in name various times throughout history.
The name change was mainly due to the change in social and economic activities
throughout history.

1. Industrial Welfare

Industrial welfare was the first form of human resource management (HRM). In 1833 the
factories act stated that there should be male factory inspectors. In 1878 legislation was
passed to regulate the hours of work for children and women by having a 60 hour week.
During this time trade unions started to be formed. In 1868 the 1st trade union
conference was held. This was the start of collective bargaining. In 1913 the number of
industrial welfare workers had grown so a conference organized by Seebohm Rowntree
was held. The welfare workers association was formed later changed to Chartered
Institute of Personnel and Development.

Recruitment and Selection

It all started when Mary Wood was asked to start engaging girls during the 1st world
war. In the 1st world war personnel development increased due to government
initiatives to encourage the best use of people. In 1916 it became compulsory to have a
welfare worker in explosive factories and was encouraged in munitions factories. A lot of
work was done in this field by the army forces. The armed forces focused on how to test
abilities and IQ along with other research in human factors at work. In 1921 the national
institute of psychologists established and published results of studies on selection tests,
interviewing techniques and training methods.

Acquisition of other Personnel Activities

During the 2nd world war the focus was on recruitment and selection and later on
training; improving morale and motivation; discipline; health and safety; joint
consultation and wage policies. This meant that a personnel department had to be
established with trained staff.

Industrial Relations

Consultation between management and the workforce spread during the war. This
meant that personnel departments became responsible for its organization and
administration. Health and safety and the need for specialists became the focus. The
need for specialists to deal with industrial relations was recognized so that the
personnel manager became as spokesman for the organization when discussions
where held with trade unions/shop stewards. In the 1970's industrial relations was very
important. The heated climate during this period reinforced the importance of a

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specialist role in industrial relations negotiation. The personnel manager had the
authority to negotiate deals about pay and other collective issues.

Legislation

In the 1970's employment legislation increased and the personnel function took the role
of the specialist advisor ensuring that managers do not violate the law and that cases
did not end up in industrial tribunals.

Flexibility and Diversity

In the 1990's a major trend emerged where employers were seeking increasing flexible
arrangements in the hours worked by employees due to an increase in number of part-
time and temporary contracts and the invention of distance working. The workforce and
patterns of work are becoming diverse in which traditional recruitment practices are
useless. In the year 2000, growth in the use of internet meant a move to a 24/7 society.
This created new jobs in e-commerce while jobs were lost in traditional areas like
shops. This meant an increased potential for employees to work from home.
Organizations need to think strategically about the issues these developments raise.
HRM managers role will change as changes occur.

Information Technology

Some systems where IT helps HRM are: Systems for e-recruitment; On-line short-listing
of applicants; Developing training strategies on-line; Psychometric training; Payroll
systems; Employment data; Recruitment administration; References; Pre-employment
checks. IT helps HR managers offload routine tasks which will give them more time in
solving complex tasks. IT also ensures that a greater amount of information is available
to make decisions.

HISTORICAL MILESTONES IN HRM DEVELOPMENT

Table 1 identifies some of the major milestones in the historical development of HRM.
Frederick Taylor, known as the father of scientific management, played a significant role
in the development of the personnel function in the early 1900s. In his book, Shop
Management, Taylor advocated the "scientific" selection and training of workers. He
also pioneered incentive systems that rewarded workers for meeting and/or exceeding
performance standards. Although Taylor's focus primarily was on optimizing efficiency in
manufacturing environments, his principles laid the ground-work for future HRM
development. As Taylor was developing his ideas about scientific management, other
pioneers were working on applying the principles of psychology to the recruitment,
selection, and training of workers. The development of the field of industrial psychology
and its application to the workplace came to fruition during World War I, as early
vocational and employment-related testing was used to assign military recruits to
appropriate functions.

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The Hawthorne Studies, which were conducted in the 1920s and 1930s at Western
Electric, sparked an increased emphasis on the social and informal aspects of the
workplace. Interpretations of the studies emphasized "human relations" and the link
between worker satisfaction and productivity. The passage of the Wagner Act in 1935
contributed to a major increase in the number of unionized workers. In the 1940s and
1950s, collective bargaining led to a tremendous increase in benefits offered to workers.
The personnel function evolved to cope with labor relations, collective bargaining, and a
more complex compensation and benefits environment. The human relations
philosophy and labor relations were the dominant concerns of HRM in the 1940s and
1950s.

HRM was revolutionized in the 1960s by passage of Title VII of the Civil Rights Act and
other anti-discrimination legislation—as well as presidential executive orders that
required many organizations to undertake affirmative action in order to remedy past
discriminatory practices. Equal employment opportunity and affirmative action mandates
greatly complicated the HRM function, but also enhanced its importance in modern
organizations. As discussed more fully in a later section, these responsibilities continue
to comprise a major part of the HRM job. Finally, changes in labor force demographics,
technology, and globalization since the 1980s have had a major impact on the HRM
function.

Table 1: Milestones in the Development of Human Resource Management

Frederick Taylor develops his ideas on scientific management. Taylor

1890- advocates scientific selection of workers based on qualifications and also
1910 argues for incentive-based compensation systems to motivate employees.

Many companies establish departments devoted to maintaining the welfare of

workers. The discipline of industrial psychology begins to develop. Industrial
1910- psychology, along with the advent of World War I, leads to advancements in
1930 employment testing and selection.

The interpretation of the Hawthorne Studies' begins to have an impact on

1930- management thought and practice. Greater emphasis is placed on the social
1945 and informal aspects of the workplace affecting worker productivity. Increasing
the job satisfaction of workers is cited as a means to increase their productivity.

1945- In the U.S., a tremendous surge in union membership between 1935 and 1950
1965 leads to a greater emphasis on collective bargaining and labor relations within

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 personnel management. Compensation and benefits administration also
increase in importance as unions negotiate paid vacations, paid holidays, and
insurance coverage.

The Civil Rights movement in the U.S. reaches its apex with passage of the
Civil Rights Act of 1964. The personnel function is dramatically affected by Title
VII of the CRA, which prohibits discrimination on the basis of race, color, sex,
1965- religion, and national origin. In the years following the passage of the CRA,
1985 equal employment opportunity and affirmative action become key human
resource management responsibilities.

Three trends dramatically impact HRM. The first is the increasing diversity of
the labor force, in terms of age, gender, race, and ethnicity. HRM concerns
evolve from EEO and affirmative action to "managing diversity." A second
trend is the globalization of business and the accompanying technological
1985- revolution. These factors have led to dramatic changes in transportation,
present communication, and labor markets. The third trend, which is related to the first
two, is the focus on HRM as a "strategic" function. HRM concerns and
concepts must be integrated into the overall strategic planning of the firm in
order to cope with rapid change, intense competition, and pressure for
increased efficiency.

1.4. IMPORTANCE OF HRM

Significance of HRM can be discussed in four dimensions; corporate, professional, social and
national
i. Significance for an enterprise: HRM can help an enterprise in achieving its goal more
efficiently and effectively in the following ways:
a. Attracting and retaining the required talent through effective human resource planning,
recruitment, selection, placement, orientation, compensation and promotion policies.
b. Developing the necessary skills and right attitudes among the employees through
training, development, performance appraisal, etc.
c. Securing willing cooperation of employees through motivation, participation, grievance
handling, etc.
d. Ensuring that the enterprise will have in future a team of competent and dedicated
employees.

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 e. Utilizing effectively the available human resources.
ii. Professional significance: Effective management of human resource helps to improve the
quality of work life. It permits team work among employees by a health working
environment. It contributes to professional growth in the following ways:
a. Provide maximum opportunities for personal development of each employee
b. Maintaining health relations between individuals and different work groups
c. Allocating work properly
iii. Social significance: Sound HRM has a great significance for the society. It helps to enhance the
dignity of labour in the following ways:
a. Providing suitable employment that provides social and psychological satisfaction to
people
b. Marinating a balance between the jobs available and the job seekers in terms of numbers,
qualifications, needs and attitudes.
c. Eliminating wastes of human resources through conservation of physical and mental
health
iv. National significance
HRM and their management play a vital role in the development of a nation. The
effective exploitation and utilization of nation’s natural, physical and financial resources
require an efficient and committed man power. There are wide differences in
development between countries with similar resources due to differences in the quality of
their people. Countries are under developed because their people are backward. The level
of development in a country depends on primarily on skills, attitudes, and values of its
human resources. Effective management of human resources helps to speed up the
process economic growth which in turn leads to higher standard of living and fuller
employment.

OBJECTIVES OF HUMAN RESOURCES MANAGEMENT (HRM)

Objectives are pre-determined goals to which individual or group activity in an organization is

directed. Objectives of personnel management are influenced by organizational objectives and
individual and social goals. Institutions are instituted to attain certain specific objectives. The
objectives of the economic institutions are mostly to earn profits, and of the educational
institutions are mostly to impart education and / or conduct research so on and so forth.
However, the fundamental objective of any organization is survival. Organizations are not just
satisfied with this goal. Further the goal of most of the organizations is growth and / or profits.

Institutions procure and manage various resources including human to attain the specified
objectives. Thus, human resources are managed to divert and utilize their resources towards and
for the accomplishment of organizational objectives. Therefore, basically the objectives of HRM
are drawn from and to contribute to the accomplishment of the organizational objectives. The
other objectives of HRM are to meet the needs, aspirations, values and dignity of individual
employees and having due concern for the socio-economic problems of the community and the
country.

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The objectives of HRM may be as follows:

1. To create and utilize an able and motivated workforce, to accomplish the basic organizational
goals.
2. To establish and maintain sound organizational structure and desirable working relationships
among all the members of the organization.
3. To secure the integration of individual or groups within the organization by co-ordination of
the individual and group goals with those of the organization.
4. To create facilities and opportunities for individual or group development so as to match it
with the growth of the organization.
5. To attain an effective utilization of human resources in the achievement of organizational
goals.
6. To identify and satisfy individual and group needs by providing adequate and equitable wages,
incentives, employee benefits and social security and measures for challenging work, prestige,
recognition, security, status.
7. To maintain high employees morale and sound human relations by sustaining and improving
the various conditions and facilities.
8. To strengthen and appreciate the human assets continuously by providing training and
development programs.
9. To consider and contribute to the minimization of socio-economic evils such as
unemployment, under-employment, inequalities in the distribution of income and wealth and to
improve the welfare of the society by providing employment opportunities to women and
disadvantaged sections of the society.
10. To provide an opportunity for expression and voice management.
11. To provide fair, acceptable and efficient leadership.
12. To provide facilities and conditions of work and creation of favorable atmosphere for
maintaining stability of employment.

Management has to create conductive environment and provide necessary prerequisites for the
attainment of the personnel management objectives after formulating them.

HRM - Key Objectives of HRM

Objectives of HRM

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Whilst the precise HR objectives will vary from business to business and industry to industry, the
following are commonly seen as important HR objectives:

Objective HR Actions
Ensure human Pay rates should be competitive but not excessive
resources are Achieve acceptable staff utilization
employed cost- Minimize staff turnover
effectively Measure returns on investment in training
Make effective use of Ensure  jobs have suitable, achievable workloads
workforce potential Avoid too many under-utilized or over-stretched staff
Make best use of employees skills
Match the workforce Workforce planning to ensure business has the right number of staff in the
to the business needs right locations with the right skills
Effective recruitment to match workforce needs
Training programmes to cover skills gaps or respond to changes in
technology, processes & market
Consider outsourcing activities that can be done better and more cost-
effectively by external suppliers
Get the right number and mix of staff at each location where the business
operates in multiple sites and countries
Maintain good Avoid unnecessary and costly industrial disputes
employer / employee Timely and honest communication with employees and their
relations representatives
Sensitive handling or potential problems with employees (e.g. dismissal,
redundancy, major changes in the business)
Comply with all relevant employment legislation

CHAPTER TWO

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HUMAN RESOURCE MANAGEMENT ENVIRONMENTAL CHALLENGES

2.1. THE ENVIRONMENT OF HRM

Many interrelated environmental factors affect HRM. Such factors are parts either organization’s
external or internal environment. The organization has little, if any, control over how the external
environment affects management of its HRs. These factors impose influences of varying degrees
on organization from outside its boundaries. Moreover, important factors within the firm itself
also have an impact on how the organization its human resources.

Environmental factors, which affect human resource management, are either internal or
external.

The environment of an organization consists of the condition, circumstances and influences that
affect the organization’s ability to achieve its objectives. Every organization exists in an
environment that has both external and internal components. As such, HRM program functions
in a complex environment both outside and inside the organization. HR managers, therefore,
should be aware that rapid changes are occurring with the environment in which the organization
operates.

2.1.1. External environments

These are conditions outside the organization influence and restrict actions an organization can
take. These can be explained in detail below:

a. Economic conditions
Organization decisions to hire additional people, to lay current employees, to grant a cost
of living, wage increase are all influenced by economic conditions. Economic conditions
also influence employees. For example, high unemployment rates make many employees
reluctant to quit their present jobs because they are afraid they want find another one.
This reduce turnover. Or worker squeezed by inflation may ask for extra hours of work to
increase their earnings. Therefore, you can say that the economics of the country is a
major environmental factor affecting human resource management.

b. The technological environment

It includes advance in sciences as well as new developments in products, processes,
equipments, machineries and other materials that may affect an organization.

Yes, technological advancement has an implication on training. The HRs of an

organization should be trained to stay up with rapidly advancing technology. Because, as
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 technological changes occur, certain skills also are no longer required, this necessitates
some retraining of the current workforce. Technological advancement has also tended to
reduce the number of jobs that require little skill and to increase the number of that
require considerable skill.

c. The socio-cultural environment

The socio-cultural dimension of the general environment is made up of the customs,
values, demographic characteristics of the society in which the organization functions.

The socio-cultural dimensions influence how employees feel about an organization.

HRM, to day, has become more complex than it was when employees were concerned
primarily with economic survival. Today, many employees have more social concerns
than mere economic interest as early times.

d. The physical environment

It includes the climate, terrain and other physical characteristics of the area in which the
organization is located. The physical element can help or hinder an organizational ability
to attract and retain employees. Housing and living costs can vary from one location to
another and can have a significant impact on the compensation, employees will get.

e. Government regulation
Laws reflect a society’s response to social, political or economic problems. A growing of
share business decisions- one estimate is as many as half- are shaped by the government
laws, regulations and policies. In other words, the government laws and regulation will
give direction for almost half of the decisions of business organization. Equal
employment opportunity, legislation and employment- at- will decisions are especially
significant examples.

Corporate organizations can not hire someone they like. The law says they have to hire
anyone who fits the job. This law requires examination of every single personnel policy
and program to ensure compliance. As more companies operate in many different
countries, simultaneously complying with regulations of many countries poses an
additional challenge.

f. Labor unions
Wage levels, benefits, and working conditions for millions of employees now reflect
decisions made jointly by unions and management. A union is a group of employees who
have joined together for the purpose of dealing with their employer. Unions are treated as
an environmental factor because; they become third party when they bargain with the
company. In a unionized organization, the union rather than the individual employees
negotiate an agreement with management.
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 In many cases unions have forced employers to adopt sound human resource programs.
However, the presence of union can reduce employer’s flexibility in designing human
resource programs. Therefore many organizations wish to maintain or achieve a union
free status. How organizations respond to unions (if they are unionized) the threat of
unionization becomes an extremely important factor in HR decisions. The presence of a
union means many HR decisions must be negotiated with a third party (union). But
unions have an effect beyond those employers whose workers are unionized. Many
organizations make decisions as part of strategy to remain none unionized.

2.1.2. The internal environment

The internal environment also exerts considerable influence on HRM. Those factors that affect
the firm’s HRs from inside its boundaries comprise the internal environment. The primary
internal factors include the firm’s mission, policies and corporate culture. These factors have a
major impact in determining the interaction between HRM and other departments within the
organization. This interaction has a major effect on overall organizational productivity, so it is
vital that the interaction be positive and supportive of the firm’s mission.

a. Mission
Mission is the organization’s continuing purpose or reasons for being. Each management
should operate with a clear understanding of the firm’s mission. In fact, each
organizational unit (division, plant, and department) should have clearly understood
objectives that coincide with that mission.

The specific company mission must be regarded as a major internal factor that affects the
task of HRM. Read the following case to understand how the mission of a firm influences
its HRM activities.

Consider two companies, each having a broadly based mission and envision how certain
tasks might differ from one firm to other. Company A’s to be an industry leader in
technological advances. Its growth occurs through the pioneer new products and
processes. Company B’s goal is one of the conservative growth, with little risk taking.
Only after another company’s product or process has been proven itself in the
marketplace, will company B commit itself.

Company A needs a creative environment to encourage new ideas. Highly skilled workers
must be recruited to foster technological advancement. Constant attention to the
workforce training and development is essential. A compensation program designed to
retain and motivate the most productive employees is essentially important.

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 The basic tasks of HRM are the same for company B, but the mission dictates that they be
altered somewhat. A different kind of work force will likely be needed. Highly creative
individuals may not want to work for company B. perhaps because the mission
encourages little risk taking, most of the major decisions will be made at higher levels in
the organization. Thus management development at lower levels in the organization may
receive less emphasis. The compensation program may reflect the different requirements
of this particular workforce. As this comparison indicates, a human resource manager
must clearly understand the company mission.

b. Policies
Policy is predetermined guide established to provide direction in decision making. As guides,
rather than hard and fast rules policies are somewhat flexible, requiring interpretation and
judgment in their uses. They can exert significant influence on how managers accomplish
their job. For instance, many firms have an “open door” policy, which permits an employee
to take a problem to the next higher level in the organization if it cannot be solved by the
immediate supervisor. Knowing that their subordinates can take problem to a higher echelon
tends to encourage supervisors to try harder to resolve problems at their level.

Many larger firms have policies related to every major operational area. Although policies
are established for marketing, production and finance, the largest number of policies often
related to HRM. Some potential policies statements that affect HRM are:
 Providing employees a safe place to work
 Encourage employees to achieve as much of their human potential as possible.
 Providing compensation that will encourage a high level of productivity in both
quality and quantity
 Ensuring that current employees are considered first in a vacant position for which
they may be qualified.

Because policies have a degree of flexibility, the manager is not necessarily required to adhere
strictly to the policy statement. Often the tone of the policy guides all managers as much as
actual words. Consider, for instance, the policy to ensure that ‘all members of the labor force
have equal opportunity for employment’. This policy implies more than merely adhering to
certain laws and government regulations. Confronted with this policy, the HR manager will
likely do more than merely conform to the law. Perhaps, the manager will initiate attaining
program to permit hiring of minorities or men who are not qualified to perform available job.
Rather than just seek qualified applicants, a firm that actively implements this policy goes
beyond the minimum required by the law.
A policy is a predetermined guide established to provide direction in decision making. Many
large firms have policies related to every major operational area. Although policies are

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 established for marketing, production and finance, the largest number of policies often relate to
HRM.

c. Corporate culture
As an internal environmental factor affecting HRM, corporate culture refers to the firm’s
social and psychological climate. Corporate culture is defined as the system of shared values,
beliefs, habits within an organization that interacts with the formal structure to produce
behavioral norms. An infinite variety of cultures could exist, so we probably should view
them as a continuum.

A closed and threatening culture is at one extreme. In this type of culture, decisions tend to
made at higher levels in the organization; management and subordinate lack trust and
confidence in each other; secrecy abound; and workers aren’t encouraged to be creative and
solve problems. At the other extreme is an open culture which decisions tends to be at lower
level in the organization; a high degree of trust and confidence exist between management
and subordinates; communication is open, workers are encouraged to be creative and to solve
programs. In likelihood the exact nature of any particular corporate culture falls somewhere
between these extremes. Regardless of its nature identification of the corporate culture in the
firm is important. It affects job performance throughout the organization and consequently
affects profitability.

2.2. MODELS OF HRM

1. The matching model of HRM

One of the first explicit statements of the HRM concept was made by the Michigan School
(Fombrun et al, 1984). They held that HR systems and the organization structure should be
managed in a way that is congruent with organizational strategy (hence the name ‘matching
model’). They further explained that there is a human resource cycle (an adaptation of which is
illustrated in Figure 2.2), which consists of four generic processes or functions that are
performed in all organizations. These are:

 Selection – matching available human resources to jobs;

 Appraisal – performance management;
 Rewards – ‘the reward system is one of the most under-utilized and mishandled
managerial tools for driving organizational performance’; it must reward short as well as
long-term achievements, bearing in mind that ‘business must perform in the present to
succeed in the future’;
 Development – developing high quality employees.

Human Capital Human Resource Management

16
Organization
Resourcing HR Reward Employee
development Management Relations
Fig. 2.1: HRM activities

Rewards

Performance
Selection Performance
Management

Development

Fig. 2.2: The Human Resource Cycle (adapted from Fombrun et al, 1984)
2. The Harvard framework
The other founding fathers of HRM were the Harvard School of Beer et al (1984) who developed
what Boxall (1992) calls the ‘Harvard framework’. This framework is based on the belief that the
problems of historical personnel management can only be solved:

17
 When general managers develop a viewpoint of how they wish to see employees
involved in and developed by the enterprise, and of what HRM policies and practices
may achieve those goals. Without either a central philosophy or a strategic vision – which
can be provided only by general managers – HRM is likely to remain a set of independent
activities, each guided by its own practice tradition.

Beer and his colleagues believed that ‘Today, many pressures are demanding a broader, more
comprehensive and more strategic perspective with regard to the organization’s human
resources.’ These pressures have created a need for: ‘A longer-term perspective in managing
people and consideration of people as potential assets rather than merely a variable cost.’ They
were the first to underline the HRM tenet that it belongs to line managers. They also stated that:
‘Human resource management involves all management decisions and action that affect the
nature of the relationship between the organization and its employees – its human resources.’

The Harvard school suggested that HRM had two characteristic features: 1) line managers accept
more responsibility for ensuring the alignment of competitive strategy and personnel policies; 2)
personnel has the mission of setting policies that govern how personnel activities are developed
and implemented in ways that make them more mutually reinforcing. The Harvard framework as
modeled by Beer et al is shown in Figure 2.3.

Stakeholders’
interests:
HRM policy HR out Long term
Shareholders
Management choices: comes: Consequences:
Employees
Government Individual wellbeing
Employee Commitment
Unions Organizational
influence Congruence 18
Human resource  cost effectiveness
flow effectiveness Societal wellbeing
Reward systems
Work systems
Fig. 2.3: The Harvard Framework for Human Resource Management (Source: Beer et al, 1984)

According to Boxall (1992) the advantages of this model are that it:
 incorporates recognition of a range of stakeholder interests;
 recognizes the importance of ‘trade-offs’, either explicitly or implicitly, between the
interests of owners and those of employees as well as between various interest groups;
 widens the context of HRM to include ‘employee influence’, the organization of work
and the associated question of supervisory style;
 acknowledges a broad range of contextual influences on management’s choice of
strategy, suggesting a meshing of both product-market and socio-cultural logics;
 emphasizes strategic choice – it is not driven by situational or environmental
determinism.

The Harvard model has exerted considerable influence over the theory and practice of HRM,
particularly in its emphasis on the fact that HRM is the concern of management in general rather
than the personnel function in particular.

3. A Diagnostic HRM Model

A diagnostic model in HRM is a frame work that can be to help mangers focus on the set of
relevant factors. The model is a map that aids a person in seeing the whole picture or part of the
picture. The model shown in the figure emphasizes some of the major internal and external

19
environmental influences that directly and/or indirectly affect the match between HRM activities
and people.

By studying the diagnostic model you should see that in order to work with people effectively a
number of HRM activities must be efficiently practiced. For example, to encourage individuals
to use their abilities, it may not be sufficient to have only a properly analyzed job. A sound
performance evaluation, equitable benefits and services, and an attractive work schedule may
also be needed. HRM activities are all related to each other and have a combined effect on
people. It is because this effect on people and, ultimately on effectiveness criteria that the HRM
function is now recognized as an important part of an organizational management. The
objectives of the HRM function must be accomplished in order for an organization to remain
competitive and to survive in the environment.

Each area of the diagnostic model is important in achieving the objectives of the HRM. It should
be pointed out that a significant reason for the eventual success of HRM activities is that the
organization’s employees are the best qualified and performing jobs that suit their needs, skills,
and abilities. The matching of people and activities to accomplish desirable goals is made easier
by use of diagnostic map.
Look careful the diagnostic model located on the next page:

External environmental Internal environmental influences:

influences:
Goals
The union Organizational style
Government regulations, laws Nature of the task
Economic condition Work group
Competition Leader’s style and experience
Compensation of Labor force 20
Location of the organization
 Personnel/ HRM program

Personnel/HRM activities:
 Equal employment Opportunity
 Job analyses
 Planning
Effectiveness criteria
 Performance evaluation
 Performance
 Training & Development
 Legal compliance
 Career planning & development
 Satisfaction
 Compensation
 Benefits and services
People  Absenteeism
 Turnover
 Discipline
Abilities  Scrap rates
 Safety & health
Attitudes  Grievance rates
 Work schedule/quality of work life
Preferences  Accident rates
 Evaluation
Motivation
 Recruitment
 Selection  Personality
 Labor relation

Organizational result
Fig. 2.4: A Diagnostic HRM model  Competitive product(s)
 Competitive service(s)

CHAPTER THREE

SUPPORT HUMAN RESOURCE MANAGEMENT ACTIVITIES

3.1. MEANING AND DEFINITION OF JOB ANALYSIS

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A job in organization is created when tasks, duties and responsibilities justify hiring of one or
more people for accomplishing the organizational purpose. A job consists of a group of tasks
that must be performed for an organization to achieve its goals. A job may need a service of one
individual, such as that of the prime minister or the services of ten or more, as might be the case
with ministers in the country.

In a work group consisting of an auditor, two chief accountants, and three accounting clerks,
there are a total of three jobs and six positions. A position is the collection of tasks and
responsibilities performed by one person. There is a position for every individual in an
organization.

Job analysis is the systematic process of determining the skills, duties and knowledge required
for performing jobs in an organization. It is an important human resource technique and is also a
method that enables to obtain information regarding jobs available in the organization.
Job analysis is a procedure used to determine:
 tasks, duties and responsibilities
 the relationship of one job to another
 the working conditions
 the qualification needed for each job

3.2. THE STEPS IN JOB ANALYSIS

There are five basic steps required for doing job analysis. These are:
Step 1: Identify objective of the job analysis information

Step 2: Collection of background information: the makeup of a job, its relation to other
jobs and its requirements for competent performance are essential information needed for a
job evaluation. This information can be obtained by reviewing available background
information such as organization charts (which show how the job in question relates to other
jobs and where they fit into the overall organization); class specification (which describe the
general requirements of the class of the job to which the job under analysis belongs); the
existing job descriptions (which provide a starting point from which to build the revised job
description.)

Step 3: Selection of representative positions to be analyzed: since the analysis of all jobs
would be time consuming, flow representative positions should be analyzed.

Step 4: Collection of job analysis data: job data on feature of the job, required employee
qualification and requirements, should be collected either from the employees who actually
perform a job or from other employees (such as foremen or supervisors) who watch the

22
workers doing a job and thereby acquire knowledge about it; or from outside persons, known
as the trade job analyst’s who are appointed to watch employees performing the job. Duties
of such trade job analyst are:
i. To outline the complete scope a job and to consider all physical and mental activities
involved in determining what the worker does. For this purpose he studies the
physical methods used by a worker to accomplish his task (including the use of
machinery, tools and his own movements and necessary mental facilities)
ii. Find out why worker does a job; and for this purpose he studies why each task is
essential for the overall result;
iii. The skill factor which may be needed in the worker to differentiate between the jobs
and establish the extent of the difficult of any job.

Step 5: Analyzing the job actually

Step 6: Developing a job description: the information collected is to be developed in the

form job description. This is a written statement that describes the main feature of the job, as
well as the qualifications/activities which the job the incumbent must possess.

Step 7: Developing job specification: the last step is to convert the job description
statements in to job i.e. to specifically mention that personnel quality, trait, skill, knowledge,
and background are necessary for the getting the job done.

3.3. METHODS OF COLLECTING JOB ANALYSIS INFORMATION

Job analysis information provides the bases for human resource information system.
Basically, in order to get information for job analysis, the job analyst needs to know that
organization and the work it performs.

Methods used to conduct job analysis are different; this is because organizational needs and
resources for conducting job analysis differ. However, some of the most common methods of
obtaining information for job analysis are:
i. Questionnaire
ii. Interview
iii. Observation
iv. Employee-log
v. Combination of methods

i. Questionnaire: to study jobs, job analyst design questionnaire to collect information

uniformly. This questionnaire reveals the duties and responsibilities, human
characteristics and working conditions and performance standards of the job to be
investigated. The questionnaire method is quick and economical to use. However,
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 accuracy is lower because of misunderstood questionnaires. Since there is a
possibility that some workers may tend to exaggerate the significance of their tasks,
suggesting more responsibility than actually exists; the same type of questionnaire
can also be administered to supervisors to verify the workers responses.
ii. Interview: face to face conversation is an effective method to collect job information.
Interview provides an opportunity for the interviewer to explain unclear question
and probe into uncertain answers. The job analyst often talks with a limited number
of employees first, and then contacts the supervisors for checking the accuracy of the
information obtained from the employees. Although interview method is time
consuming and expensive, but the method ensures a high levels of accuracy.
iii. Observation: the observation method is slow and less accurate than other methods.
This because the job analyst may miss irregularly occurring activities. Nevertheless
actual observation acquaints the analyst with the machines, tools, equipments and
work aids used, the work environments and to obtain visual impression of what is
involved in the job. Observation is used primarily to study jobholder at work, noting
what they do, how they do it, and how much time it takes. However, observation
alone is usually an insufficient means of conducting job analysis, particularly when
mental skills are dominant in a job.
iv. Employee-log: this method enables the job analyst to collect job data by having the
employees summarize their work activities in a diary or log. If entries are made over
the entire job cycle, the diary can be quite accurate and feasible way of collecting job
information. This method is not popular because it is time consuming and less reliable
as some employees may tend to exaggerate their tasks. However, valuable
understanding of highly specialized jobs, such as financial analysis, may be obtained
in this way.
v. Combination of methods: since each method of obtaining information for job
analysis has its sound effects, job analyst often relay on combinations where two or
more techniques are used concurrently. For example, in annualizing clerical and
administrative jobs, the analyst might use questionnaire supported by interviews and
limited observation. On the other hand, in analyzing production jobs, interview
supplemented by work observation may provide the required information.
Combination of methods can ensure high accuracy as minimum costs. Basically, the
job analyst will employ the combination of methods required to carry out an effective
and efficient job analysis.

3.4. IMPORTANCE OF JOB ANALYSIS

A comprehensive job analysis program is an essential ingredient of sound HRM. Job

analysis is the major input for forecasting future HR requirements, job modifications, job
evaluation, determination of proper compensation and the writing of job descriptions.

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 The following are some of the purposes of job analysis:
i. Organization and manpower planning: it is helpful in organizational planning, for
it defines labor requirement in concurrent terms and coordinates the activities of the
workforce, and clearly divides duties and responsibilities.
ii. Recruitment, selection: by indicating the specific requirements of each job (i.e. skills
and knowledge). Job analysis provides a realistic basis for the hiring, placement,
training, transfer and promotion of personnel.
Basically, the goal is to match the requirements with a worker attitude, abilities and
interests. It helps in charting the channels of promotion and in showing lateral lines of
transfer.
iii. Wage and salary administration: by indicating the qualifications required for doing
specific job and the risks and hazards involved in its performance, it helps in salary
and wage administration, job analysis is used as foundation for job evaluation.
iv. Job reengineering: job analysis provides; information which enables us to change
jobs in order to permit their being manner by personnel with specific characteristics
and qualifications. This takes two forms:
a) Industrial engineering activity, which is concerned with operational analysis,
motion study, work simplification methods, and improvements in the place of
work and its measurement, and aims at improving efficiency, reducing unit labor
costs, and establishing the production standard which the employee is expected to
meet.
b) Human engineering activity, which takes into consideration human capability,
both physical and psychological and perhaps the ground for complex “operation
of industrial administration”, increase efficiency and better productivity.
v. Employee training and management development: job analysis provides the
necessary information to the management of training and development of programs. It
helps it to determine the content and subject matter of in training courses. It also helps
in checking application information; interviewing, weighing test results, checking
references.
vi. Performance appraisal: it helps in establishing clear-cut standards which may be
compared with actual contribution of each individual.
vii. Health and safety: it provides an opportunity for identifying hazardous conditions
and unhealthy environmental factors so that creative measures may be taken to
minimize and avoid the possibility of accidents.

In sum it may be noted that job analysis is a systematic procedure for securing and
reporting the information which defines a specific job. It has many uses in the
management of personnel. It determines the qualifications required for a job; provides
guidance in recruitment and selection; evaluates current employees for transfer or
promotion; and establish the requirement for training programs; it is used as a
foundation for job evaluation and helps in employee development by means of
25
 appraisal and counseling; for establishing improved methods of analyzing problems
of health, safety and fatigue; it functions as a guide in connection with discipline and
grievances and as basis for transfers, and layoffs and as a basis for comparison of the
pay rates obtaining in other organizations; and it establishes workloads and job
assignments, it also helps in redesigning the jobs to improve operational performance
or to enrich job content and employee improvement. Managers may develop ways of
giving their employees an increased sense of personnel accomplishment and control
over themselves and their work.

Job analysis produces two kinds of documentations and procedures that are crucial to
personnel activities. These are:
 Job description
 Job/person/recruitment specification

Job description
A job description defines what job holders are required to do in terms of activities, duties or
tasks. They are prescriptive and inflexible, giving people the opportunity to say: ‘It’s not in my
job description’, meaning that they only need to do the tasks listed there. They are more
concerned with tasks than outcomes and with the duties to be performed rather than the
competencies required to perform them (technical competencies covering knowledge and skills
and behavioral competencies).

Job descriptions should be based on the job analysis and should be as brief and factual as
possible. The headings under which the job description should be written and notes for guidance
on completing each section are set out below.

Job title: The existing or proposed job title should indicate as clearly as possible the function in
which the job is carried out and the level of the job within that function. The use of terms such
as ‘manager’, ‘assistant manager’ or ‘senior’ to describe job levels should be reasonably
consistent between functions with regard to grading of the jobs.
Reporting to job title of the manager: The job title of the manager or team leader to whom the
job holder is directly responsible to a given under this heading. No attempt should be made to
indicate here any functional relationships the job holder might have to other people.
Reporting to job holder: The job titles of all the posts directly reporting to the job holder to a
given under this heading. Again, no attempt should be made here to indicate any functional
relationships that might exist between the job holder and other employees.
Overall purpose: This section should describe as concisely as possible the overall purpose of
the job. The aim should be to convey in one sentence a broad picture of the job which will
clearly distinguish it from other jobs and establish the role of the job holders and the contribution
they should make towards achieving the objectives of the company and their own function or
unit. No attempt should be made to describe the activities carried out under this heading, but the
overall summary should lead naturally to the analysis of activities in the next section. When

26
preparing the job description, it is often best to defer writing down the definition of overall
responsibilities until the activities have been analyzed and described.
Main activities, tasks or duties: The following method of describing activities, tasks or duties
should be adopted:
1. Group the various activities identified by the job analysis together so that no more than seven
or eight areas remain. If the number is extended much beyond that, the job description will
become over-complex and it will be difficult to be specific about tasks or duties.
2. Define each activity in one sentence which starts with a verb in the active voice in order to
provide a positive indication of what has to be done and eliminate unnecessary wording; for
example: plan, prepare, produce, implement, process, provide, schedule, complete, dispatch,
maintain, liaise with, collaborate with.
3. Describe the object of the verb (what is done) as succinctly as possible; for example: test new
systems, post cash to the nominal and sales ledgers, dispatch to the warehouse packed output,
schedule production, ensure that management accounts are produced, prepare marketing plans.
4. State briefly the purpose of the activity in terms of outputs or standards to be achieved for
example: test new systems to ensure they meet agreed systems specifications, post cash to the
nominal and sales ledgers in order to provide up-to-date and accurate financial information,
dispatch the warehouse planned output so that all items are removed by carriers on the same day
they are packed, schedule production in order to meet laid-down output and delivery targets,
ensure that management accounts are produced which provide the required level of information
to management and individual managers on financial performance against budget and on any
variances, prepare marketing plans which support the achievement of the marketing strategies of
the enterprise, are realistic, and provide clear guidance on the actions to be taken by the
development, production, marketing and sales departments.

Job description example

Job title: HR adviser; recruitment

Reports to: HR Service Centre Manager
Reports to job holder: none
Job purpose: To provide recruitment services to line managers for jobs below management level
Main duties:
1. Respond promptly to requests from line managers to assist in recruiting staff.
2. Produce person specifications.
3. Agree on the use of recruitment agencies and/or media advertisements or internet notifications
of vacancies.
4. Brief and liaise with agencies and/or draft advertisements for jobs for approval by line
managers and place advertisements or information on vacancies using the media and/or the
internet.
5. Process replies and draws up short lists.
6. Conduct preliminary interviews independently or conduct short-list interviews with line
managers.
7. Agree offer terms with line manager; take up references and confirm the offer.
8. Review and evaluate sources of candidates and analyzes recruitment costs.

Job/person/recruitment specification

27
A person specification, also known as recruitment or job specification, defines the knowledge,
skills and abilities (KSAs) required carrying out the role and the education, training,
qualifications and experience needed to acquire the necessary KSAs. A person specification can
be set out under the following headings:

 Knowledge – what the individual needs to know to carry out the role.
 Skills and abilities – what the individual has to be able to do to carry out the role.
 Behavioral competencies – the types of behavior required for successful performance of the
role. These should be role-specific, ideally based on an analysis of employees who are
carrying out their roles effectively. The behaviors should also be linked to the core values and
competency framework of the organization to help in ensuring that candidates will fit and
support the organization’s culture.
 Qualifications and training – the professional, technical or academic qualification required or
the training that the candidate should have undertaken.
 Experience – the types of achievements and activities that would be likely to predict success.
 Specific demands – anything that the role holder will be expected to achieve in specified
areas, e.g., develop new markets or products, improve sales, productivity or levels of customer
service, introduce new systems or processes.

In turn the documentation and the procedures are basic inputs for diverse personnel functions.

As can be seen above a major use of job analysis data is in the area of HRP. Since jobs in an
organization are different in nature, each requires different knowledge, skills and experiences.
Hence, effective HRP can only take place when these job requirements are taken into account.
In general, job studies are undertaken in order to bring about improvement in work methods,
reduction in errors, elimination of handling un necessary materials and duplication of effort,
reduction in fatigue, increased employee commitment and responsibility and consequently to
improve the performance of the employee. These studies therefore, enable the job analyst to
think in terms of designing/redesigning jobs to achieve the above objectives.

3.5. POTENTIAL PROBLEMS WITH JOB ANALYSIS

In analyzing jobs, certain problems can occur. Some of these problems result from natural human
behavior; others stem from the nature of the job analysis process. Some of the most frequently
encountered problems associated with job analyses are the following.
Top management support is missing. Top management should at least make it clear to all
employees that their full and honest participation is extremely important to the process.
Unfortunately, the message is often not communicated.
Only a single means and source are used for gathering data. As discussed in this chapter,
there are many proven methods for gathering job data. All too often, a job analysis relies on
only one of these methods when a combination of methods might provide better data.

28
The supervisor and the jobholder do not participate in the design of the job analysis
procedure. Too many analyses are planned and implemented by one person who assumes
exclusive responsibility for the project. The jobholder and his or her supervisor sh
ould be involved in the planning of the project.
No training or motivation exists for jobholders. Job incumbents are potentially a great source
of information about the job. Unfortunately, they are seldom trained or prepared to generate
quality data for a job analysis. Also, jobholders are rarely made aware of the importance of the
data and almost never rewarded for providing good data.
Employees are not allowed sufficient time to complete the analysis. Usually a job analysis is
conducted as though it were a crash program, and employees are not given sufficient time to do a thorough
job analysis.
Activities may be distorted. Without proper training and preparation, employees may submit
distorted data, either intentionally or not. For example, employees are likely to speed up if they
know they are being watched. Employee involvement from the beginning of the project is a good
way to minimize this problem.
Participants fail to critique the job. Many job analyses do not go beyond the initial phase of
reporting what the jobholder currently does. These data are extremely valuable, but the analysis
should not stop here. The job should be critiqued to determine whether it is being done correctly or
whether improvements can be made.

3.6. MEANING AND DEFINITION OF HUMAN RESOURCE PLANNING

(HRP)

What is HRP?
Planning in general, involves the process of knowing where you are going and how are getting
there. It enables managers to anticipate and prepare for changing conditions. The same holds true
for HRP. Organization sets up long term and short term objectives that they plan to achieve over
specified period of time. To achieve these objectives, jobs are identified and plans are devised to
fill them. The question is, how do you plan for the openings that develop in your organization?
Thus, planning the required number and type of human resources for your organization and
figuring out the way to satisfy these requirements become a very essential element in effectively
achieving organizational goals.

To look into human resource planning more closely, it helps to go through the various definitions
describing its meaning as indicated below:

 HRP is the process of translating the overall of organizational objectives, plans and programs
in to an effective workforce to achieve specific performance. –L.C. Megginson

29
 HRP is the process of systematically reviewing HR requirements to ensure that the required
number of employees with the required skills is available when they are needed. –W. Mondy

 HRP is the process by which an organization should move from its current manpower position
to its desired manpower position. Through planning managements strives to have the right
number and kind of people at the right places, at the right time, doing things, which result in
both the organization and individual receiving maximum long run benefits. – E.W. Vetter

 HRP is the system of matching the supply of people internally (existing employees) and
externally (those to be hired or searched for) with openings the organization expected to have
over a given time period. -Byers/Rue

 HRP is the process that helps to provide adequate HRs to achieve future organizational
objectives. It includes forecasting future needs for employees of various types, comparing
these needs with the present workforce, and determining the numbers and types of employees
to be recruited or phased out of the organization’s employment group. – Ivancevich

The above definition can best be summarized in the following points depicting the basic process
involved in HRP activity. HRP:
 Determine the impact of organization’s objectives for HR requirement and translate the
goals in to the number and types of workers needed.
 Forecasting:
 The overall HR requirement of an organization, demand
 The availability of HRs from within and/or outside of the organization (supply)
 Analyzes the impact of environmental factors
 Identifies anticipated gaps between the demand supply of HRs
 Determines action plan to close the anticipated gaps
Thus, in summary, HRM is an attempt to forecast how many and what kinds of employees will
be required in the future and to what extent this demand is likely to be met. It involves the
comparison of an organization’s current HRs with likely future needs and, consequently, the
establishment of programs for hiring, training, redeploying and possibly discarding employees.

3.7. STEPS ( PROCEDURES) IN HRP

i. Analyzing the objectives of an organization

The primary use of HRP is to provide the organization with the people needed to perform the
activities that will achieve the organization’s goals. To do this, HRP should start from the
analysis of organizational long term and short term objectives and plans.

30
Organizational objectives give an organization and its member’s direction and purpose and
should be started in terms of expected results. Therefore, the objectives and plans at all levels of
organization provide the basis for determining personnel needs. These plans usually indicate
major sales, production and financial goals. This information tells the human resource planner
whether volumes will be going up staying about the same, or going down.

Organizational plans could also reveal whether or not there will be any changes in the basic
technologies the organization uses to make, market, and distributes its products or services. Such
changes typically are introduced as a means of increasing employee productivity and thus,
reducing future human resource requirements. They also alter the skill requirements of jobs, and
thus the nature of job categories that are being planned for.

Therefore, the organizational goals and plans are identified and short term plans at divisions and
departmental levels are known, HRM will be in the positions to be plans HR needs in line with
organizational needs. The human resource planner should ensure that any assumptions made
when developing the human resource plan are consistent with the organizational plan.

ii. Determining future human resource requirements

The second step in HRP is predicting for the employees with the characteristics needed to
perform present and future jobs. Objectives analyzed in the first step should be translated in to
human resource needs- specific skills needed to reach the increased level, number of workers,
managerial capabilities, new technological capacity, etc. with the specific objectives, it will be
possible to determine the jobs needed to be done, how many and what types of employees will be
required etc.

There are two procedures involved in determining future Hr requirement. First, there is the
process of determining the job needs. Second, there is the process of determining the number of
people required.

Determination of job needs is done through job analysis. It is the process used to determine what
each job is and what is required to perform it. It includes determination of personal
characteristics required of any employee to perform each job, such as training time, attitudes,
temperaments, interests, physical capacities, ability to adjust to working conditions.

Determining the number of people needed is done through various forecasting techniques.

iii. Determining future HRs availability (Supply)

Once a manager has determined the types and numbers of employees required these estimate
must be analyzed in light of the current and anticipated human resources of the organization.
This process involves a thorough analysis of presently employed personnel and a forecast of
31
expected changes in the supply of internal and external personnel. Developing a profile of an
organization’s current employees provides information on the skill, ability, training,
qualification, etc of presently available employees to fulfill the forecasted human resource
requirement. Such information is obtained from skill inventory, management inventory, and
succession planning, and replacement charts. There are also some statistical techniques used to
determine future supply of HRs.

Along with the assessment of presently available HRs, a forecast has to be done on expected
changes to the present employees. There could be additions of HRs as a result of promotions,
transfers, returns from leave of absence, recruitments, and etc. there could also be reductions of
HRs as a result of demotions, retirements, disability and etc. the result of these manipulations is
the estimate of future HRs availabilities at the end of the planning period.

iv. Conducting external and internal environmental scanning

Determination of HRs requirement and availability cannot be done without the assessment of
environmental factors impacting the demand and supply of HRs in an organization. HHP, like
any other planning activity should take in to consideration the anticipated change in external and
internal environment before deciding on the actions needed to be taken to satisfy the HR
requirements of the organization.

Environmental scanning is the term applied to the process of tracking trends and developments in
internal and external environments of an organization and documenting their implications for
HRP.

Periodically, this data is assembled and trend reports are prepared and made available to those
responsible for HRP. Such reports are important to HR planners since it puts them in an excellent
positions to influence the future HR requirements and to ensure that action decision s are realistic
and supportive of the organizational objectives.

v. Reconciling requirements and availability (identified anticipated gaps – shortage

or surplus)
In this step the information concerning future HR requirements and availability as well as
external and internal environmental conditions must be brought together to identify potential
gaps. The result of this effort is to show any shortages of manpower both in number and kind and
to highlight where overstaff exist (now or in the near future). This information is necessary to
make the appropriate decision in satisfying the required HRs within the planning period.

The reconciliation process is best examined by means of an example. Table 3.1 shows a
reconciliation chart for a hypothetical organization.

Table 3.1: Reconciliation: Matching HR requirements with HR availabilities

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 Job HR requirements Beginning inventory HR availability Gap
category (after adjustments)
1 140 136 137 (3)
2 200 255 251 51
3 300 291 282 (18)
4 357 375 282 (93)

In job category 1, there is an expected shortage of three employees. General HRP deals with the
future and thus some level of imprecision is expected. Thus, a figure as small as three employees
can be ignored.

In job category 2, there is predicted surplus of 51 employees, a potentially serious problem. What
do you think is the cause for this surplus? For example, further investigation of the cause might
be showing this to be result of the automation of certain tasks formerly done manually. This fact
must be documented as part of the reconciliation process.

In job categories 3 & 4, there is a shortages of 18 and 93 respectively. What are the causes for
these shortages? It may not be sensible to say that growth of the organization has a part for the
shortage since the forecasted requirements (300 and 375) are only slightly than beginning
inventory (291 and 357). However, factors such as quits or promotion outs can be taken as
feasible reasons for the shortages. Each of these factors needs to be further assessed to see if they
are really the reasons for the shortages and thus be able to figure out the best course of action to
take.

In brief, the reconciliation process, gaps between anticipated HR requirements and availabilities
are identified and reasons for this clarified. Even the relatively simple reconciliation shown in
figure 3.1, suggests that the organization will have to deals with both employees’ shortages and
surpluses, all the contributing factors.

Larger more complex organizations that rely on Markov analysis to estimate future HRs
availability can also use their computer models to do reconciliations. The process is known as
simulation or “what if” analysis. Here analysts systematically alter selected probabilities of
movements and use the computer models to calculate the effects on expected HR availabilities.
The idea is first to generate several solutions that bring availabilities in line with requirements
and then to settle on the one that seems most efficient and feasible.

vi. Developing action plan to close the anticipated gap

Once the future demand and supply of HRs is reconciled, action plan must be developed for
achieving the desired results. If the net requirements indicate a need for additions, plans must be

33
made to recruit, select, orient, and train the specific numbers and types of personnel required. If a
reduction in labor is necessary plans must be made to realize the necessary adjustments through
layoffs, terminations, early retirements, voluntary resignations, etc.
vii. Controlling and evaluating the plan
The final element in any HRP process is to provide a means for management to monitor results
of the overall program. This step should address such questions as:
 How well is the plan working?
 Is it cost effective?
 What is the actual versus planned impact on the workforce?
 Where are the plan’s weaknesses?
 What changes will be needed during the next planning cycle?

Figure below depicts the typical HRP process and steps it involves. In an actual planning process
the steps are interdependent and sometimes, the first step and the last step may be proceesed
simultaneously. And the planner sometimes may not explicitly process some steps. However, an
effective HRP should consider all the steps discussed above.

Fig.3.1: Human Resource Planning Process

Strategic Management Human Human
Decisions Compared with

Technological forecasts Annual employment Existing employment

Economic forecasts requirements inventory
Market forecasts
Numbers Compared with After applications of
Organizational planning
Skills expected loss and attrition
Investment planning
Qualifications rates:
Annual operating plans
Occupation
Performance
Numbers 34
Skills
Experience
Qualifications
Career goals
Occupation
Performance
 Decisions:
Variance Increase overtime
Increase part-time

Decisions:
Layoffs If yes
If none
Early retirement

End
If surplus If shortage

3.8.
IMPORTANCE OF HRP

 Helps in planning job assignments

 Helps cope with fluctuations in staffing
 Identifies recruiting needs
 Provides other useful information

3.9. FACTORS
AFFECTING HRP

Factors affecting HRP can be categorized as external and internal.

I. External factors affecting HRP
A. Labor market analysis: the labor market involves the job opportunities and compensation
offered by employees. Success in finding new employees depends on the labor market and on
the skills of the employment specialists in the HR department. The scope of the labor market
is influenced by the following factors:
a. Occupation: it refers to the skills and qualifications required in an occupation. It is
essential for HR planners to assess the availability of job candidates in specific

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 occupation (engineers, accountants, lawyers, etc.) from which they will recruit. For
instance, there could be an undersupply of certain occupations requiring an
organization to offer attractive employment contracts to attract them. Such a problem
is even more pronounced since there is a limited mobility among occupations.
b. Geography: A relevant labor market also depends on the geographic boundaries. For
highly skilled jobs, such as managerial, professionals, technical skills, the relevant
market of labor may be a region or an entire country. The labor market for unskilled
jobs is generally the local community. Thus, supply of labor force could be limited to
specific geographic area or region. For instance supply of qualified HR is very limited
in some region s of Ethiopia.

Even though the national and the local labor markets differ significantly, there will
still be some exchange between them depending on potential employees’ willingness
to move from one region to another. This movement tends to increase the labor supply
in areas with shortages.
c. Industry: The supply of skilled labor may be limited based on the industry in which
the organization competes for labor and sells its products/services. Some industries
required highly skilled employees but supply of such skilled manpower may be limited
in the industry. The more competition an organization faces in the industry, the more it
is expected to offer employees better compensation for their contributions.
d. Community attitudes: community attitudes often affect the nature of the labor
market. Anti-business or no growth attitudes may cause employers to locate elsewhere.
Fewer jobs mean a loss of middle class workers. The shrinking workforce discourages
new businesses and the cycle is complete.
e. Demographic: Demographic trends are another long term developments that affect the
availability of external supply. Fortunately, for planners, these trends are known years
in advance of their impact. To gain information, on the demographic trends of the
labor forces, planners can use publications on the population estimate of the census
Bureau, projections of the total labor forces; the percentages of the population that
will be in the workforce; and projected changes in the workforce by sex, age, race,
marital status, and other criteria. Currently, most industrial nations are experiencing
slowing of their population growth, especially among their more educated classes. As
a result, shortage among skilled workers may exist even though over population
growth suggests an expanding workforce.
B. Social, political and legal: challenges are easier to predict, but their implications are
seldom clear. Generally, laws and regulations prescribe the types of practice that are
either required or prohibited and the possible consequence of failing to abide by the
requirements. Many laws and regulations follow economic or social changes that have
affected the nation. The same applies to employment laws and regulations that have
direct and indirect impact on human resource planning by dictating some of the decisions
employees are likely to take. Some of the employment laws and regulations include:
36
  Expanding of employment
 Compensating workers at levels that allow them to maintain at least a minimum
standard of living
 Providing income maintenance during periods of job loss, disability or retirement
 Encouraging employees abilities to bargain collectively
C. Technology changes: the way business is done, is difficult to predict and is difficult to
predict, and is difficult to assess. Many thought the computer would cause mass
unemployment. For example, today the computer industry directly or indirectly employs
millions of people. Technology complicates HRP because it tends to employment in one
department (book keeping for example) while increasing employment in another (such as
computer operations). The growing use of computers – especially networks of
interconnected personal computers even allows companies to recognize and “downsize”
further complicating HRP process. The use of robotics and other forms of computerized
automation will undoubtedly complicate future employment planning even more.
D. Competitors: they are another external challenge that affects the demand for HRs.
growing foreign competition has forced many organizations around the world to reduce
their work force in order to remain economically viable. The search for labor costs has
led some firms to relocate facilitates or to consolidate operations in such industries as
automobiles, electronics, data processing, and even research and development.

3.7.1. Internal factors affecting HRP

Besides external factors, human resources planners find current challenges within the
organization they serve. Internal challenges arise because employers pursue multiple objectives.
These objectives require tradeoffs between financial, sales, service, production, employees, and
other goals. Since HRs goals, objectives are just one set among many in the eyes of top
management; HR managers must confront internal challenges with a balanced concern for other
needs. HR planners find several internal challenges in helping the organization achieve its
objectives some of these challenge affect the demand for HRs while other affects their
availability. Some of these factors include:
A. Organizational decisions: major organizational decisions affecting the demand for HRs
are:
i. Strategies and operational objectives: organizations have strategic and operational
objectives determining the direction of the business. The organization’s strategic plan is
the most influential decision. When organization changes their strategies, they are
determining the direction that they should take. Consequently, all plans that follow the
strategic decisions will also change including the human resource requirement in terms of
quantity, skill and experience.

37
 If the objective of top management includes stable growth and if utilization of HRs are a
significant objective, employment planning will be less important than if the objective
include rapid expansion, diversification, or other factors with a significant impact on
future employment needs.

If long term objectives are to be met, HRs specialists must develop long range HR plans
that accommodate strategic plan. In the short run, planners find that strategic plans
become operational in the form of budgets. Budget increases or cuts are the most
significant short run influences on HR needs.
ii. Sales and production forecasts: they are less exact than budgets but may provide even
cooker notes of short run changes in HR demand. Failure to adjust to a reduced
employment demand may require a reduction in workforces or lay off.
iii. New ventures also mean changing Hr demands: When a new venture is begun
internally from scratch, the lead time may allow planners to develop short range and long
employment plans but a new venture began an acquisition or merger, causes an
immediate revision of HR demands and can lead to reorganization new job designs.
Reorganizations especially, after a merger or an acquisition, can radically alter HR needs.
At a time when companies are constantly acquiring, merging, spinning of divisions,
entering new businesses, and getting out of old ones, management must base strategic
decisions more than ever on HR considerations – matching skills with jobs, keeping key
personnel after mergers, and solving the human problems that arise from such changes as
new technology plant closures.

B. Workforce factors: the demand for human resources is modified by such employee
actions as retirements, resignations, terminations, deaths, and leaves or absences. When
large numbers of employees are involved, past experience usually serves as a reasonably
accurate guide. However, reliance on past experience means that Hr managers must be
sensitive to changes that affect past trends.
In a country such as Ethiopia, the role of HIV/AIDS on the demand for HRs should be
well understood. HR planners need to be aware of the growing epidemic and its impact
on the labor force to better determine the demand for future employees.

C. Financial condition and flexibility

Financial status of an organization has a particularly critical influence on HRP activities.
If an organization is in a good financial condition, it is likely to increase the quantity of
its employees or even offer higher salary increments to its employees. However, if the
organization is not in a good financial condition, it is most likely to reduce its employees.
This is especially true for those labor intensive organizations such as education, health
care, and government institutions where majority of the budget is assigned to cover
salaries and other benefits.

38
D. Nature of the tasks:
The kind of employees found in a given organization is highly influenced by the kind of
tasks or activities performed. The type of people employed and the task they do also
determine the kind of planning process. Need for unskilled employees does not have to
be planned two years ahead; but computers salespersons, for example, need years of
training before coming on track. Planning for highly skilled employees usually require
more care and forecasting.

E. Culture and philosophy of organization:

Organizational culture refers to “values, beliefs and traditions shared by all member of an
organization.” If an organization has a well defined and practice culture, its employees
should be able to feel comfortable to operate in that environment and adhere to the
established culture. The organization’s culture will have the impact on the HRP activities
which usually tends to fill open positions through promotions, transfers, and other
internal sources in order as a way of maintaining organizational culture.

F. Union expectation and power: to a lesser extent than the government, unions may strict
the ability to hire and promote employees, so they, too, are a factor in planning. Labor
unions exist to protect employees’ right in a more organized and effective way. Union’s
interest, expectations, and power differ from one union to another. It depends on the kind
of industry they are in, the number and involvement of its members and the response of
the management to the demands and questions of the unions. Thus, the type of union
management is dealing with affects its decision to deal with most planning decisions.
G. Information system: HRP requires large amounts of detailed information about
employees. Clearly, the acquisition, storage and retrieval of information present a
significant challenge. Included are:
 A challenge in gaining cooperation from others in an organization to get much of
the information it needs
 A challenge in dealing with reliance on computer based information systems
affecting the human resource management’s abilities to safeguard the privacy of
employee records

H. Identity crises: HR planners work in an environment characterized by ambiguous

regulations, company politics, and diverse management styles. As the result many
managers and HR specialists suffer from the identity crises and fail to develop strong
sense of mission (direction), they often spend much of their time looking for something
meaningful to do while the organization questions the reasons for their existence.

I. Lack of support from top management: some times HRP activities do not enjoy top
management support and continued blessings. In the absence of support from one senior

39
 executive in the organization, HR specialists find it difficult to obtain information on
various vital inputs. Thus for HRP to be viable in the long run, it must have the full
support of at least one influential senior executive. Such high ranking support can ensure
the necessary resources, visibility, and cooperation necessary for the success of HRP
program.

J. Size of initial effort: Many HRP programs fail because of an overcomplicated initial
effort. Successful HRP programs start slowly and gradually expand as the program is
successful. The key is start from developing accurate and up to date information on its
employees which will be the basis to every step of HRP process.

K. Coordination with other management and HR functions: achieving coordination with

other management and HR functions, sometimes seem to be impossible. There is a
tendency for HRP specialists to become absorbed in their own world and not interact with
others.

L. Integration with organization plans: in effective communication channels between the

organization’s planners and the HR planners contribute failure of HRP. For it to be
successful, HR plans should be derived from organizational plans.

M. Lack of balance between approaches used: the question of striking a happy and
harmonious balance between quantitative and qualitative approaches to HRP, sometimes,
poses several impediments – if not looked in to seriously initially. Some people view
HRP as a numbers game designed to ensure the flow of people and resource in, out, up,
and down across different organizational units. Such an exclusive focus on quantitative
routes may force the organization to discount, the more important, qualitative route
emphasizing individual concerns such as individual promotability and career
development.

N. Lack of participation and coordination: in order to succeed, further, HRP requires

active participation and coordinated efforts on the part of operating managers. However,
this is easier said than done where operating managers look at the whole exercise with
skepticism and growing mistrust.

O. Forceful introduction of techniques: finally HRP people should not try the forceful
introduction of certain sophisticated techniques just because many companies have
started using them. Such a tendency to adopt one or more of these methods (explained
earlier) not for what they can do, but rather because ‘everyone is using them’ may not
yield fruitful results.

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 CHAPTER FOUR

RECRUITMENT AND SELECTION

4.1. EMPLOY
EE RECRUITING

4.1.1. DEFINITIONS AND BASIC CONCEPTS

Recruitment is the process of attracting individuals to the requirement of the job to be filled. The
process of attraction is based on the anticipated or existing vacancies. The pool is attentive to
attract a number of candidates who have appropriate qualifications related with the job
specifications that has already been produced at the preliminary stage of recruitment.

41
 4.1.2. PURPOSE OF RECRUITMENT

Most organizations face a frequent need to recruit staff. The need may arise either from
anticipated or actual vacancies or the management to employ new personnel to the organization.
However, in most cases, it is the HRP that determines the need for additional or substitute
employees for the organization.

The needs for recruitment arise when another alternative to fulfill the vacancies is not open to
the organization. The HRP indicates the needs for the jobs to be filled. The organization has the
choice between recruitment and another course of actions such as a real location of the job, for
example, by combining it with other tasks, and also search for another alternative ways to meet
the demand, for instance, by internal temporary transfer, etc. when these alternatives are not
appropriate and or another choices are not open to it, then the need arises and the recruitment
process starts. Now, let’s proceeds to the points which need to be considered in the recruitment
process.

The need to recruit is created either as a response to the planned changes such as expansion or
diversification or the need to maintain the status quo when the turn over occurs and vacancies
appear in the organization. Besides these, early retirement might motivate the recruitment of a
more young profile staff, with new idea to the organization.

Below are some of the basic reasons for the need of appropriate recruitment:
 For greater productivity: the pool of effective personnel through appropriate
recruitment procedure is essential for the organization to be effective.
 Better moral and lower turnover: appropriate recruitment can result in motivating
employees and lower turnover
 Conducive working environment and good public image: appropriate practice will
allow building up good working place to the staff, good public image, and better
reputation for the organization.

4.1.3. FACTORS GOVERNING RECRUITMENT

Environmental factors simply mean the external political, social, legal and economic issues, and
internal policy and procedural issues that may influence the recruitment process. If the
organization has been operating in this environment, these factors should be taken in to account
when engaging in recruitment process.

4.1.4. SOURCES AND METHODS OF RECRUITMENT

42
Recruitment sources are the locations where qualified individuals can be found. Recruitment
methods are the specific means by which potential employees can be attracted to the firm. The
sources of recruitment can be classified in to two types, internal and external, each with its own
relative advantages and disadvantages; let’s examine each of these sources.

4.1.4.1. Internal
recruitment sources and methods
a. Internal recruitment sources
Internal sources are the most obvious. These include personnel already on the payroll of an
organization, i.e. its present workforce. Skill inventory helps as to get information about
existing employees. It is information maintained on non managerial employees in a company
regarding their availability and preparedness to move them laterally or in to higher level
positions.
Generally included in the skill inventory is this information about a worker:
 Background and biographical data
 Work experience
 Specific skills and knowledge
 License or certifications held
 Training program completed
 Previous performance appraisal evaluation

A properly designed and updated skills inventory system permits management to readily
identify employees with particular skills and match them as well as possible to the changing
needs of the company.

Management inventory also helps to obtain information on managerial positions in an

organization that enables to move one executive from one place to other.

This source also includes personnel who were once on the payroll of the company who plan to
return or whom the company would like to rehire, such as those who quit voluntarily, or those on
production layoffs.

b. Internal recruitment methods

Management should be able to identify current employees who have capable of filling position as
they become available. Helpful methods used for internal recruitment includes promotion,
transfer, job posting and bidding procedures.

Job posting: is a procedure for informing employees that job opening exist.
Job bidding: is the technique that permits employees who believe they possess the required
qualifications to apply for the posted jobs.

43
The purpose of job posting is to notify all employees of available positions within organization.
The positions are posted on employee bulletin boards or are announced in company newsletters
or broachers. Employees who believe they are qualified are encouraged to apply for the position.
The job posting and bidding procedures minimize the complaint commonly voiced in many
companies that insiders never hear of a job opening until it has been filled. It reflects an openness
that most employees generally value highly.

A job posting and bidding system does have some negative features. An effective system
requires the expenditure of considerable time and money. When bidders are unsuccessful,
someone must explain to them why they were not chosen. If care has not been taken to ensure
that the most qualified applicant is not chosen, the system will lack credibility. Even successful
implementation of such system cannot completely eliminate complaints. An effective job posting
involves the following guidelines:
 Procedure should be clearly explained to all employees (procedures must be consistent to
avoid employees suspicion)
 Job specification must be clear (results in fewer and better applicants)
 Must be specific with respect to the length of time the positions will be open
 Application procedure must be made clear
 Ensure that applicants get adequate feed back once a selection is made
 Reasons for non-acceptance
 Suggested remedial measures
 Information concerning possible future openings
 Assistance in the posting process

4.1.4.2. External
recruitment sources and methods
a. Sources of the external recruitment
External recruitment is attracting applicants from various sources outside the organization. The
vacancy is usually announced on TV, radio, internet, newspaper, magazines, and etc. At times,
an organization must look for beyond itself to find employees, particularly when expanding its
workforce. The following circumstances require external recruitment:
 To fill entry level jobs
 To acquire skills not possessed by current employees
 To obtain employees with different backgrounds to provide new ideas

Organization may attract employees from a variety of external sources:

44
  High schools and vocational schools
 College and universities
 Competitors and other firms
 The unemployed

b. Methods of external recruitment

By examining recruitment sources, a firm determines the locations of potential job applicants.
What comes next is to attract those applicants by specific recruitment methods. Some external
methods of recruitment are discussed below:

Advertisement
This is a mode of generating applications which is frequently used. Advertising communicates
the firm’s employment needs to the public through media such as radio, TV, newspapers,
magazines, journals and other publications. However, these advertisements generally attract a
large number of unqualified applicants and increase the cost and time involved in processing
them. The advertisement should therefore, be specific and include sufficient detail.

When using recruitment advertisements, employers should ask four key questions:
 What do we want to accomplish?
 Who are the people we want to reach?
 What should the advertising message convey?
 How should the message be presented? In which media should it run?

A well thought out and planned advertisement for an appointment reduces appreciably the labor
and time subsequently required to be put in. a good carefully worded advertisement can also help
in building the image of the organization since very often; potential candidates are first
introduced to the company through advertisement in the media.

Employment agencies
Three different types of employment agencies exist to help employers and workers find each
other. Public or state agencies, private employment agencies, and management consulting firms
all provide valuable employment matching services. The major difference between them is the
type of clientele served.

Public and state agencies: All states provide a public employment service. One major function
of these agencies is assisting workers receiving unemployment benefits to find employment.
Many states have excellent and extensive employment services. The U.S. Department of Labor
sponsors a site called CareerOneStop at www.careeronestop.org that offers career resources to
job seekers, students, businesses and workforce professionals along with links to job service

45
listings in every state. In addition to matching employers with qualified workers, many public
and state agencies assist employers with testing, job analysis, evaluation programs, and
community wage surveys. Workers seeking employment can receive assistance with career
guidance, job seeking skills, and training.

Private agencies: How do private employment agencies, which charge for their services,
compete with state agencies those give their services away? Private agencies collect fees from
employers or employees for their matching services. The private employment agency’s fee can
be totally absorbed by either the employer or the employee, or it can be split. The alternative
chosen usually depends on demand and supply in the community involved. Private agencies may
also provide a more complete line of services than public agencies. They may advertise the
position, screen applicants against the criteria specified by the employer, and often provide a
guarantee covering six months or a year as protection to the employer should the applicant not
perform satisfactorily. Some of the largest private agencies are Manpower, Addeco, and Kelly
Services.

Management Consulting Firms: Frequently called executive recruiters or “headhunters,” these

are actually specialized private employment agencies. They specialize in middle and top-level
executive placement, as well as hard-to-fill positions such as actuaries, IT specialists, or
managers with international experience. In addition to the level at which they recruit, the
features that distinguish executive search agencies from most private employment agencies are
their fees, their nationwide contacts, and the thoroughness of their investigations. In searching
for an individual of vice-president caliber, whose compensation package may far exceed
$250,000 a year, the potential employer may be willing to pay a high fee to locate exactly the
right individual to fill the vacancy: up to 35 percent of the executive’s first-year salary is not
unusual as a charge for finding and recruiting the individual.

Executive Search Firms: Executive search firms canvass their contacts and do preliminary
screening. They seek out highly effective executives who have the right skills, can adjust to the
organization, and most important, are willing to consider new challenges and opportunities. Such
individuals may be frustrated by their inability to move up quickly in their current organization,
or they may have been recently passed over for a major promotion. The executive search firm
acts as a buffer for screening candidates and, at the same time, keeps the prospective employer
anonymous. In the final stages, senior executives in the prospective firm can move into the
negotiations and determine the degree of mutual interest.

Employee Referrals and Recommendations

One of the better sources for individuals who will most likely perform effectively on the job is a
recommendation from a current employee. Why? Because employees rarely recommend
someone unless they believe the individual can perform adequately. Such a recommendation
reflects on the recommender, and when someone’s reputation is at stake, we can expect the
46
recommendation to reflect considered judgment. Employee referrals also may receive more
accurate information about their potential jobs. The recommender often gives the applicant more
realistic information about the job than could be conveyed through employment agencies or
newspaper advertisements. This information reduces unrealistic expectations and increases job
survival.

As a result of these pre-selection factors, employee referrals tend to be more acceptable

applicants, who are more likely to accept an offer, and, once employed, have a higher job
survival rate. Additionally, employee referrals are an excellent means of locating potential
employees in that hard-to-fill positions.

Schools, Colleges, and Universities

Educational institutions at all levels offer opportunities for recruiting recent graduates. Most
educational institutions operate placement services where prospective employers can review
credentials and interview graduates. Most also allow employers to see a prospective employee’s
performance through cooperative arrangements and internships. Whether the job requires a high
school diploma, specific vocational training, or a bachelor’s, masters, or doctoral degree,
educational institutions are an excellent source of potential employees.

High schools or vocational-technical schools can prove to be a good source of part-time and
entry level employees. Community colleges along with other two- and four-year colleges and
graduate schools can provide professional and managerial-level personnel. Although educational
institutions are usually viewed as sources for inexperienced entrants to the workforce, it is not
uncommon to find individuals with considerable work experience using an educational
institution’s placement service. They may be workers who have recently returned to school to
upgrade their skills or former graduates interested in pursuing other opportunities.

Job Fairs
Once thought to be a little old fashioned and not very cost effective; job fairs are making a
comeback as an effective recruiting tool. Often held on or near college campuses in the spring,
they’re a good opportunity to build a company’s employment brand. They can also be staffed by
employees, providing a great employee development tool. The primary purpose is to contact
prospective employees and collect information and résumés, but it’s not uncommon for online
applications to double in the days following a job fair event. Most employers go out of their way
to make sure that even unsuitable candidates leave the job fair with a favorable impression of the
company. Many are counseled on the additional requirements and training they would need to be
successful candidates. Employees staffing the events gain valuable leadership training and are
often energized to promote the virtues of their employer long after the event.

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A new twist on the concept is virtual job fairs. They have the same purpose and feel as
traditional job fairs, but are held totally online. Some even include avatars—virtual online
images of people—and virtual company recruiting booths. Job seekers and recruiters meet online
by logging into a specific Web site at a specified time. They may be held by a single company or
group of employers. Sponsors have included Unisfair, CollegeGrad.com, and the National
Association of Colleges and Employers, and participants have included Microsoft, Cisco
Systems, and IBM. They are popular with tech-savvy Gen Y job seekers because they don’t
involve expensive travel or the need to dress up.

Professional Organizations
Many professional organizations, including labor unions, operate placement services for the
benefit of their members. Professional organizations serving such varied occupations as
industrial engineering, psychology, accounting, legal, and academics publish rosters of job
vacancies and distribute these lists to members. It is also common practice to provide placement
facilities at regional and national meetings where individuals looking for employment and
companies looking for employees can find each other—building a network of employment
opportunities.

Professional organizations, however, can also apply sanctions to control the labor supply in their
discipline. For example, although the law stipulates that unions cannot require employers to hire
only union members, the mechanisms for ensuring that unions do not break this law are poorly
enforced. As a result, it is not unusual for labor unions to control supply through their
apprenticeship programs and through their labor agreements with employers. Of course, this
tactic is not limited merely to bluecollar trade unions. In professional organizations where the
organization placement service is the focal point for locating prospective employers, and where
certain qualifications are necessary to become a member (such as special educational attainment
or professional certification or license), the professional organization can significantly influence
and control the supply of prospective applicants.

Unsolicited Applicants
Unsolicited applications, whether they reach the employer by letter, e-mail, online application,
telephone, or in person, constitute a source of prospective applicants. Although the number of
unsolicited applicants depends on economic conditions, the organization’s image, and the job
seeker’s perception of the types of jobs that might be available, this source does provide an
excellent supply of stockpiled applicants. Even if the company has no current openings, the
application can be kept on file for later needs. Unsolicited applications made by unemployed
individuals, however, generally have a short life. Those individuals who have adequate skills and
who would be prime candidates for a position in the organization if it were available usually find
employment with some other organization that does have an opening. However, in times of
economic stagnation, excellent prospects are often unable to locate the type of job they desire
and may stay active in the job market for many months.
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Online Recruiting
Newspaper advertisements and employment agencies may be on their way to extinction as
primary sources for conveying information about job openings and finding job candidates,
thanks to Internet recruiting. Most companies, both large and small, use the Internet to recruit
new employees by adding a “careers” section to their Web site. Those organizations that plan to
do a lot of Internet recruiting often develop dedicated sites specifically designed for recruitment.
In addition to building the employment brand of the organization, they include the typical
information you might find in an employment advertisement, such as qualifications sought,
experience required, and benefits provided. They also showcase the organization’s products,
services, corporate philosophy, and mission statement. This information should increase the
quality of applicants, as those whose values don’t mesh with the organization would not bother
to apply.

It’s important to note, however, that the goals of recruiting should not be forgotten simply
because of the use of technology. That is, it’s in the best interest of the organization to continue
to provide as much job description information as possible so the unqualified do not apply. Why?
Studies indicate that nearly 80 percent of all résumés submitted are inappropriate for the
position. But fortunately, that does not always result in severe inefficiencies for employers.
Thanks to the use of technology and key word searches, most of the unqualified applicants
receive their “no thank you” responses directly from the computer—without a human ever
having to get involved. The best designed Web sites include an online response form, so
applicants need not send a separate résumé by mail, e-mail, or fax. Applicants fill in a résumé
page and click the “submit” button. Cisco Systems, for example, receives nearly all of its
résumés electronically.

Many online job sites, including Monster, CareerBuilder, Yahoo Hot Jobs, and Craigslist provide
extensive job listings of nearly every imaginable job category while industry specific sites such
as Dice.com provide listings for one area such as technical careers. The employment agency
Manpower has even opened an office in the cyberspace world of Second Life.

Many job candidates are also using the Internet to their advantage. They set up their own Web
pages with online resumes to “sell” their job candidacy. When they learn of a possible job
opening, they encourage potential employers to “check out my Web site.” There, applicants have
standard résumé information, supporting documentation, and sometimes a video where they
introduce themselves to potential employers. Although résumés are frequently searched by
recruiting firms that scan the Internet in search of viable job candidates, many employers are
concerned that using video résumés in the initial screening process might make them vulnerable
to claims of discrimination based on information they might infer by viewing the candidate’s
video.

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Internet recruiting provides a low-cost means for most businesses to gain unprecedented access
to potential employees worldwide, even for senior-level executives. And online job posting can
be very cost effective. For example, Craigslist job listings are free for most listings except for
those in several of the nation’s largest cities. It’s also a way to increase diversity and find people
with unique talents such as being bilingual.

The social networking sites often referred to as Web 2.0 including Face book and LinkedIn
provide opportunities for contacts with people indicating interests or affiliation with specific
industries or employers. Microsoft and McDonald’s are working on building a visible presence
on Face book. LinkedIn claims to have over 100,000 recruiters registered. Ernst & Young
answers questions from college students on Face book—people they are trying hard to recruit.
Healthcare company Johnson & Johnson has even developed its own social network for nurses.
New sites are developing and offering services that operate similar to online matchmaker
eHarmony, to assess job seekers and perfectly match them with prospective employers.

Recruitment Alternatives

Much of the previous discussion on recruiting sources implies that these efforts are designed to
locate and hire full-time, permanent employees. However, economic realities that include
employee layoffs, coupled with management trends such as rightsizing, have created a slightly
different focus. More companies today are hiring temporary help (including retirees), leasing
employees, and using independent contractors.

Temporary Help Services

Organizations such as Kelly Services, Manpower, and Accountemps supply temporary
employees. Temporary employees are particularly valuable in meeting short-term fluctuations in
HRM needs. Although traditionally developed in office administration, temporary staffing
services have expanded to a broad range of skills. It is now possible, for example, to hire
temporary nurses, computer programmers, accountants, librarians, drafting technicians,
administrative assistants—even CEOs.

In addition to specific temporary help services, another quality source of temporary workers is
older workers; those who have already retired or have been displaced by rightsizing in many
companies. An aging workforce and certain individuals’ desire to retire earlier have created skill
deficiencies in some disciplines. Older workers bring those skills back to the job. The reasons
older workers continue to work vary, but they bring several advantages: flexibility in scheduling,
low absenteeism, high motivation, and mentoring abilities for younger workers.

Employee Leasing
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Leased employees typically remain with an organization for longer periods than temporary
employees. Under a leasing arrangement, individuals work for the leasing firm.28 Organizations
can use employee leasing companies to provide employees for specialized areas like human
resources or accounting, or it can lease its entire staff. Employee leasing companies, called
Professional Employee Organizations or PEOs, can provide substantial cost savings to
organizations that lease employees rather than hire them, particularly for smaller employers. The
PEO manages employees for many employers, so they can negotiate large group discounts for
benefits such as health, life, vision, and dental insurance. They might also be able to offer a
wider variety of benefits than a smaller employer.

Independent Contractors
Another means of recruiting is the use of independent contractors. Often referred to as
consultants, independent contractors are taking on a new meaning. Companies may hire
independent contractors to do specific work at a location on or off the company’s premises. For
instance, claims processing or medical and legal transcription activities can easily be done at
home and routinely forwarded to the employer. Frequently, independent contractors have the
same access to online technology (Internet, Smartphone) that telecommuters do.

Independent contractor arrangements benefit both the organization and the individual. Because
the worker is not an employee, the company saves costs associated with full- or part-time
personnel, such as insurance benefits, Social Security taxes, and workers’ compensation
premiums. Additionally, such opportunity is also a means of keeping talented and dependable
individuals associated with your company. Suppose an employee wants to work but also be
available to his or her school age children, take care of elderly parents, or just wants a more
flexible situation. Allowing the individual to work at home, on his or her time, can be a win-win
solution to the problem.

4.1.5. Internal Vs external Recruitments

Recruitment Advantage disadvantage

source

Internal  It is less costly  It perpetuates the old concept

 Candidates are already oriented of doing things.
towards organizations  Moral problems for those not
 Organizations have better promoted
knowledge about the internal  It abets raiding
candidates  Candidates current work may
 Enhancement of employee be affected
morale and motivation

51
  Good performance is rewarded.

External  Benefits of new skill, talents,  It is costly.

experiences from new individual.  Adjustment of new employee
 Compliance with reservation policy to the organization culture
become easy takes longer time.
 Scope for resentment and heartburn  Better morale and motivation
are avoided. associated with internal
recruitment is denied to the
organization.

4.2. EMPLOY
EE SELECTION

4.2.1. DEFINITION AND CONCEPT

Selection is the process of choosing an individual from a group of recruited candidates those best
suited for a particular job.

Employee selection is the process of determining which individuals, either inside or outside the
organization are to staff the organization. The purpose of employee selection is to select the
candidates that are most likely to aid the organization in furthering its objectives.

The task of employee selection is significantly matters the effectiveness of the organization.
Because it is really a human being that can bring a difference and a change for any organization.
Therefore the need to select highly qualified and caliber that best suit for the job should be
critical. This is why the need for selection is vital for every organization.

The purpose of selection is to identify and choose the best individuals for the jobs. It requires
managerial attention. The managers should give considerable weight for the proper selection;
otherwise, without proper selection of staff, the organization cannot effective even if it has
adequate plan, efficient structure and system.

This is the fact that the human side of the resource matters. If there are poor performers with an
organization, the organization’s achievement will be declining. Therefore, the organization has to
give significant attention for the selection so that competent people can enter in to the
organization. Hence, they can make difference and can achieve organization’s objectives.

To sum up, the need of selection is to identify and choose the best qualified and competent
individuals from the pool of candidates. This in turn will result in or imply the successfulness
and effectiveness of the organization. However, if the poor qualified candidates are selected, or

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simply random hiring decision of staffing has been made, the decision will hurt the
organization’s development. This is the reason why selection is vital for an organization.

4.2.2. SELECTION PROCESS

Selection process involves the following steps:

a. Preliminary interview
Here is the first step where the selection process starts. Selection process begins with initial
screening of applicants in order that those applicants who are obviously far from the criteria and
cannot meet the requirement will be rejected. The interviewer asks few straightforward
questions. Any other detailed discussion with this kind of candidates is only a waste of time and
should be short cut.

b. Review of application of employment

This is the next step of selection process after preliminary interview. At this stage, standardized
application form is developed and provided to the applicants so that they complete the form. The
contents of the application should be related with the criteria of specific job i.e., with the
qualities of the requirements of the job. Even though there may be difference from organization
to organization, or from job to job, the most common contents of application form is the heading
which contains name, address, telephone number, physical condition, experience, education,
skills and work conditions. The discriminatory elements such as gender, race, religion, etc should
not be contained in this content.

After the applicants complete this form the next task is that the organization makes review or
evaluation of the information contained in the form. The objective of this task is to compare the
information completed by the applicants in the form with the job description and job
specification so that organization is able to decide whether a potential match exist between the
organization’s criteria and applicant’s qualifications.

c. Administration of selection tests

Recently selection tests have increasingly being used to identify the successful candidates from
the pool of short listed candidates. Some form of testing commonly used are testing ability,
aptitude, numeric, literacy, etc. in these ways the organization identifies which applicant can
perform best on the job. Selection test assist managers in assessing applicant’s qualifications and
this in turn help for better selection decisions.

Selection test should be designed properly. The following discussion covers the basic
characteristics of selection tests:

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Standardized: uniformity of the procedures and conditions related to administration tests should
be free of discriminatory issues. For instance, in test room noisy, time used etc. the general
standard is that the test must be directly related with job.

Objective: properly designed tests are objective. For example, multiple choice, and true false are
objective tests.

Norms: this can provide a frame of reference for comparing applicants’ performance. Besides,
an appropriate level of score result should be established so that applicants’ result below the
score will be rejected.

Reliable: reliability refers to whether selection method, if repeated, would reproduce the same
results again. Likewise the selection test should provide consistent results.

Valid: validity is the central need for a selection test. The test should be able to measure the
qualities and abilities that the job requires. A test has no value if it cannot indicate ability to
perform the job. It has validity only if it can select candidates who are most likely to perform
well in the job and reject those who are least likely to perform well in the job.

These tests that are commonly used in selection are:

i. Aptitude test
This is a test for physical and mental ability. In the case of physical ability test, each candidate
who has passed an initial screening is invited to actual do the job as part of the selection
procedure. This form of test is aimed at assuring whether each applicant can physically able to
perform the work. Applicants involved in jobs are measured or tested for their strength etc.
another form of physical ability test is medical examination prior to taking up a job.
Mental ability test is the test of literacy, numeric and intelligence. An intelligent employee is
able to do the job more quickly and effectively and is better at adapting to the work environment.
Besides these, high intelligence can find solutions when unpredictable and unusual problems
arise.
ii. Analogous test (work sample test)
This form of test requires an applicant who is able to perform a task r set of tasks representative
of the job. The applicant who performs best in the test is then recruited on the assumption that
he/she will perform best in the actual job.

iii. Personality test

This has been familiar for many years. This test can be based on many beliefs. One can be of
the assumption that the individual’s personality can be the determinant of success. Another
assumption is that certain jobs require certain discipline and personalities.

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 A number of personalities attributes such as being persuasive socially acceptable and
respected, confident and independent, tradition, stable, optimistic and so on need to be tested.
Personality tests are used for identifying or screening and evaluating the appropriateness of
the individual to the culture of the organization.

d. The employment interview

This is the way of exchange of information and conversation between interviewer and applicant.
Interview is common practice in almost all organizations. Since the applicants who reach at this
step are those who pass the preliminary interview and selection tests, these applicants are most
likely to be qualified and promising and hence, interview becomes now a good tool used to
closely approach them and assess their qualities.

Note that again as in all other steps, interview should be given higher attention on the cases of
legal consideration that affect the selection process. Above all, interview is the most exposed or
more vulnerable to changes of discrimination. The best solution again is, in all ways, follow the
qualities job requires. All questions designed and all ways of conversations should be job related.

Objectives of the interview

The objective of the interview should be set so that better results will be gained. One of the basic
objectives of interview is to obtain additional information about the applicants. Here, these
pieces of information are those data that can complement the data already provided by all other
selection tools. This is to mean that do not hold interview to obtain or to check items that you can
get on the application form completed by individuals. Doing so is simply a waste of time. The
interview should be looking for additional indicators to complement the data that are already
there, and do not try to obtain information that you can get from the application form.
Besides these, to obtain additional data, the interview also claims to clarify some data that might
appear not clear and to make further assessment of the data that already exist in order to make
sound selection decision latter.

Contents of interview

The content of interview can differ from organization to organization or from job to job.
However, the basic contents that should be seen in employment interview are:

i. Technical competence
One of the ways that individual’s technical competence can be seen is through academic
achievement. Therefore, the interviewer has to elaborate and assess any factors related to
academic performance such as GPA of the college or university she or he has graduated with.
The other way through which that technical competence can be revealed is through occupational
competence. Thus, the interviewer has to explore an applicant’s occupational experience. This is
55
by finding the individual’s skills, abilities, and willingness to carry the responsibility the job
requires.

ii. Personal qualities

One of the important personal qualities is interpersonal competence. Interpersonal competence
is, for example, the quality of being able to do with others smoothly etc. this is an important for
better performance of the job. The quality of being able to do with others is very important. If
individuals cannot work well with other employees, the performance of the job will be
endangered and will face failure. In order to assess applicant’s personal competence, questions
regarding the applicant’s interpersonal relationship with family and friends and his/her
interaction and personality in social and civic situations will be investigated.
iii. Potential
This includes the applicant’s career orientation; i.e., the applicants career objective.

Types of interview

The knowledge of knowing types of interview can help the interviewer to determine which type
of interview is more effective, reliable and valid. There are two types of interviews. These are:

 Unstructured (non directive) interview

This is the condition, which involves the interview in asking probing open ended questions.
Here, applicants are allowed to talk much and then obtain information required thereby. This
type of interview is time consuming, may expose to subjective appraisal of the candidate and
hence be low reliability and little valid. However, if the interviewer is highly trained and skilled,
the approaches may be a good way to obtain significant information from the applicants.

 Structured (directive) interview

This type of interview involves a series of job related questions, which are prepared and
consistently asked of each applicant for a particular job. The questions should be job related and
consistent with each applicant. Here structured and systematic interview procedure is pursued in
order to information necessary to evaluate candidate fairly and objectively. This type of
interview helps to reduce subjectivity and inconsistency of unstructured interview and hence
increase reliability and accuracy.

Structured interview commonly contains four types of questions:

 Situational questions
Ask questions about job situations to evaluate what the applicant would do in the particular
situation.
 Job knowledge question

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This is used to evaluate the applicant’s job related knowledge. It may relate to the basic
educational and managerial skills of the applicants.
 Job sample simulation questions
This is a situation in which an applicant is required to actually perform a sample task from the
job.
 Work requirement questions
This is the interview intended to determine the applicant’s willingness to conform to the
requirements of the job. It is also used to evaluate the individual’s commitment as to what extent
she/he is devoted to the work situation and is able to do so.

Methods of interview

There are a number of methods of interview. Among these few are discussed below:
 One on one: interview where the applicant meets one on one with the interviewer. Hence,
this is a typical employment interview method.
 Group interview: where many applicants meet with one or more company
representatives.
 Board interview: where one candidate is interviewed by a number (by many) of
representatives of the organization. In this case applicant’s anxiety might increase.

e. Reference and background check

 Reference checks
Organization needs to be aware that the information provided by the applicants in the application
form may sometimes be not true. For instance, there may be forged document and information.
Therefore, there should be a check up about the accuracy of the information contained in the
application form. A letter, a telephone, or both can normally do this.

The most common type of information needed for the reference is:
 Dates of employment
 Job title
 Absentee record
 Promotions and demotions
 Compensation
 Reasons for termination

The comments from a reference can be biased positively as applicants might carefully select their
reference in order to present a positive image and are not likely to use a person who they could
think can an unfavorable response. Therefore, the organization needs to consider these points.

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  Background checks
Undertaking the background check of the applicant is necessary. His/her past employment
history might be good input to make better selection decision later. For example, the past work
experience may fit to the current job requirement.
Besides this positive aspects, the background check help to detect the problem that might appear.
For example, background check can reduce the risk of those who deceives the organization by
pretending to have abilities, skills, etc that he or she does not really have.

f. The selection decision

All the other stages of recruitment and selection process that we had gone through up to now
have been used to reduce the number of candidates. But now we have reached at the most critical
step and this is where the actual choosing or selecting decision is undertaken. Now is the step
where the fittest applicants will be selected.

g. Physical examination
This is the next step to selection decision. It involves physical examination for the successful
applicants. The selected individual is invited for medical examination. The need for the physical
examination is:
 To determine whether applicant is physically capable of performing the job. For example,
if the medical examination report indicates the heart problem and the individual is not
able to perform the type of job he is selected for, he is most likely to be rejected.
 To identify and reject individuals who have a disease that can spread by contact. Because
this can really harm the organization’s employees.

Here the need of medical examination is obvious. In fact the legal issue is also obvious. But you
do remember now again that all what you are doing should only be job related. Therefore, the
medical examination accepted here is a result that shows that the job performance could be
affected if a person is employed. Thus, the issue is related to job requirements and individuals
with this real problem must be rejected.

h. Employed individual
Here is the end of selection process. The individual that successfully completed all the steps and
even the medical examination and is promising to be the fittest match for the requirements of the
job will be employed.

Now you have completed the whole process of recruitment and selection and have ended up with
employed individuals. The next task of personnel or HR department is to socialize and integrate
this new employee with the organization. This is the aspect of internal relation with employees
(internal employee relation).

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 4.2.3. FACTORS GOVERNING SELECTION

i. Legal consideration
Organizations and their managers should be aware of the legal environment in which they are
operating, and hence the legal issues. Among these, the following discriminatory elements
should be noted.
 Gender issues
Using criteria for final screening points and decisions that reflect or are based on gender is
unpleasant and is not legal unless for specific jobs which require men and women only.
Therefore, an organization and its manager should be aware of this and be adjusted to it.
 Race and national origin
Selection decision practiced by using discrimination in race and national origin are also
unpleasant and illegal. Therefore, selection decision should be made without regard of these
factors. Information and data that reflect or are used to determine national origin and race such as
his /her nation, place of birth, for the purpose of selection, should not be requested.
 Physical handicap and physical requirements
Specification of requirements that restrict physical handicap and/or physical requirement should
be used only when the requirements are necessary for performing that particular job; i.e., if the
nature of the job demands it. Unless there are such requirements related to job, discriminating
individuals based on their physical conditions should not be requested in the selection process.
 Religion
Selection decision, made on discrimination of religion, is illegal unless, the organization is
working for its own religious sake. In public sector organizations, like in the Ethiopian Civil
Service System, and in any private business company, selection decision based on religious
belief is unacceptable.
 Speed of decision making
The speed of decision making matters in the selection decision process. The time available to
make the selection decision can have a major effect on the selection process. For some jobs, the
requirement for selection decision is not within shorter time. The speed of decision making
should be taken within shorter time, which, in turn can have implication on the selection process.
Anyway, the managers have to recognize the factors and should be adjusted accordingly while
engaging in selection decision process.
 Organization Hierarchy
Thinking about hiring for two levels: hiring a top level executive such as a manager and hiring a
person to fill a clerical position such as typist. Do you think that different approaches should be
used to employ the two level positions? If your answer is yes, you are correct. The hiring of
these two level personnel should be approached in different ways and levels. In depth
background checking would be conducted to ensure the character and capabilities of applicant

59
for a high level position. However, an applicant for clerical position might only be tested for the
minimum requirements such as ability of word processing, and the like.
 Applicant pool
Unless another factors such as speed decisions and the background of the applicants matter,
selecting one person from ten applicants can allow more advantage to get the required qualified,
skilled personnel. It is in this way that the number of applicants can really affect the selection
process. Unless a few applicants with highly required qualities and skills are available, it is better
to recruit from among several qualified candidates for a particular job.
 Type of organization
What do you think about the variation of selection process with respect to type organization such
as private business, government organization and non for profit organizations such as NGOs
(Non-Governmental Organization)? Do you think there exists in selection decision or not?
If you reply yes, you are right. For example, a private business organization can select based on
nepotism. The owner of the business can select the applicant that might be in a circle of his
family or friends. However, government organizations or civil service systems make the
selection decision based on employment law and serious examinations. Likewise, selection
process in NGOs is different.

4.3. ORIENTA
TION (INDUCTION)

4.3.1. ORIENTATION DEFINED

Orientation is the next step after selection process. This is the area where the employed applicant
comes and integrates with the organization. It is the initial HR department effort, undertaken in
order to have good employees. The orientation program is basically designed for new employees.
Orientation is defined as the guided adjustment of new employees to the organization, to the job
and to the work group. The arrangement in which new employee will be allowed to be socialized
and be acquainted with the policies, rules and the work conditions and the working group of the
organization.

4.3.2. THE MAJOR ELEMENTS OF ORIENTATION

Orientation process includes the following major points:

 The new employee is allowed to know the policies, rules, values, procedures, and basic
principles of the organization. This is to mean that the new employee is socialized and
integrated with policies, rules, values, procedures and basic principles of the
organization.
 The work conditions, the task and responsibilities, the performance expected, the
resource used etc.

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  The issue of promotion and overall employee benefits and salary issues will be spelt out.
 The point of disciplinary actions, demotion, termination, transfer, retirement, etc will be
stated at the orientation.

4.3.3. PURPOSE OF ORIENTATION

Orientation has the following three basic purposes:

 Allowing the newly employed individuals to adjust to the organization
This is the initial purpose of orientation that helps the new comer adjust to the organization,
since the organization wants the new employees to be productive. This in turn requires the new
employees to have knowledge of the work condition and the overall atmosphere of the
organization. Besides these, the new comer has to reduce his/her anxieties and feel comfort and
confident in the environment of the organization, and be ready to apply and use his/her
knowledge and skill to the work. These all process and conditions will be then done and
achieved by orientation program.
In an orientation program, the new employee will reduce his/her anxiety and fear, and becomes
be familiar with organizational policies, procedures and be aware of what is involved in doing
the job and in turn adjusted to the organization. These all will allow him/her to maximize
productivity.
In addition, the orientation helps to reduce the turn over that is associated with difficulties and
discomfort to working environment of the organization. Initial job turnover may occur as the
results of failure to accept new employees. Therefore, the orientation program will reduce such
discomforts, and hence, will reduce the turnover associated with such issues.
 To provide information about the tasks and performance expected
Have you ever experienced the plan orientation program provided to you by your organization at
the start of the year (or the plan started to implement)? If you make good investigation, this form
of orientation is increasingly being used in Ethiopia. At the start of the New Year, the year’s
plan orientation will be provided to those executives. Orientation on the plan will be given. The
essence of this activity is to provide information about the entire task and plan performance
expected from individuals.
From the above experience, you can note that existing employees, let alone the new employees,
will need information on the tasks and performance expected from them. The issue is much more
important for the new comers. These employees need to know precisely what is expected of
them. Therefore, these new employees should be informed what is involved in their tasks, the
performance result and standard of achievement they have to meet inorder to have pay and
promotion.
 To create a favorable impression on new employees
Since the orientation allows the new employee to be aware of what is important to him, about the
organization, the tasks and the performances expected and reduce the level of fears and anxiety,
the new employee has now build comfort, confidence in to his/her work area and new

61
organization. Now, she/he enters in to his or her work confidently and comfortably. These ways
can create a good and favorable impression on the new employee of the organization and its
work.
It is difficult and ineffective to dump all the elements of the orientation at a time. There should
be series of steps for effectiveness of orientation. Therefore, the following are steps for effective
orientation.

4.3.4. LEVELS OF ORIENTATION

An effective orientation program needs three steps:

 The first step is providing general information about the organization
Issues that are related all employees i.e., the organizational policies and procedures, salary etc
are stated. In addition, information about the product and service of the organization and its
benefits to its customers, and the whole society is provided. This step is also used for reducing
the fear and anxiety experienced by the new employee.
 The second step of orientation now focuses on employee work area
This is over view of the department, the task and performance expected, or the job requirements,
and also an introduction to other employees. The rules and procedures of the work required from
the employee are stated here. The employee’s immediate supervisor often undertakes this.
 Evaluation and follow up
The orientation program is nit the thing is done once and forgotten. It should be supervised and
the result of the steps should be measured. Therefore, follow up is required, and then the
supervisor and the HR department should organize the supervision.
To what extent are the purposes and the benefits of orientation achieved? The successfulness of
socialization and integration to the work group and to the organization should be evaluated
approved to be so. In general, orientation is not something that is done once at time and then
forgotten. But supervision and follow up should be frequent and the results should be evaluated
and measured.

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 Chapter- 5

Training and Development of Personnel

Training and Development

Training and development of people is one of the fundamental operative functions of

personnel management. According to a Chinese scholar, “If you wish to plan for a year, sow
seeds; if you wish to plan for ten years plant trees; if you wish to plan for life time develop man”.

Employee training is the process where people learn the skills, knowledge, attitude, and
behavior needed in order to perform their job effectively. Training is a learning experience
which seeks a relatively permanent change in an individual that will improve the ability to
perform on the job.

Training is different from development. Training is a short term process involving a

systematic and organized procedure by which non managerial personnel acquire technical

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knowledge and skill for a definite purpose. Development is a long term educational process
consisting of a systematic and organized procedure by which managerial personnel acquire
conceptual and theoretical knowledge for general purposes.

Distinction between Training and development

Training Development

1. Short term process Long term process

2. given to technical people given for managerial staff

3. people acquire technical knowledge Executives acquire conceptual and

and skill theoretical knowledge

4. It is job centered It is career oriented or career focused.

(growth oriented)

Need and purpose of training

In the modern corporate environment, the necessity of training employees may arise for
different reasons;

1. to enable existing employees and new recruits to undertake operations involving new
technology.
2. to adopt the existing methods and techniques to changing needs.
3. to improve the efficiency of work performance by employees.
4. to achieve higher productivity.
5. to reduce supervision time, minimize spoilage and wastage of material.
6. to develop the potential abilities of workmen.

Training of any kind should have the objective of improvement of behaviour so that the
performance of the trainee becomes more useful and productive for himself and for the
organization. Training normally concentrates on improvement of operative skills, interpersonal
skills, decision making skills or a combination of these.

The basic purpose of training is to help and to meet company objectives by providing
opportunities for employees at all organizational levels to acquire the requisite knowledge, skills
and attitude.

Objectives of training.

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 1. to impart training to new entrants the knowledge and skill, they need for an intelligent
performance of their tasks.
2. to assist employees to perform their tasks more efficiently.
3. to lower the turnover and absenteeism and increasing the job satisfaction since training
can improve the employees self-esteem.
4. to prepare employees for promotion to positions which require added skill and
knowledge.
5. to improve the quality of output.
6. to lower the cost of wastes and equipment maintenance
7. to bridge the gap between the existing performance and potential performance.
8. to improve health and safety.

Importance of training

1. Reduction in learning time

A well planned systematic training programme always help to shorten the learning
time to reach the acceptable level of performance.

2. Better performance of employees

The systematic training leads to better performance of employees in their present
job because their knowledge and skill for doing the job will improve.

3. Boost employee morale

Training provides a big boost to the morale of the employees. If an employee is
satisfied on the job, he tends to have high morale. A trained employee performs his work
with knowledge, skill, and pride and derives job satisfaction.

4. Reduction in supervision
Training brings about a high degree of self discipline and self supervision among
employees. Management control and supervision with trained employees become easy and
smooth.

5. Reduction in operational problems

Training of both supervisors and operating employees can help to reduce
operational problems like turnover, absenteeism, accidents, grievances, low morale etc.
Trained supervisors are able to establish better relationship with their subordinates and seek
employee cooperation in the achievement of organizations objectives.

6. Fulfill manpower needs of the organization

The best way to over come recurring problems of recruiting skilled workers is to
establish apprentice training programme. Thus, training helps in identifying talented and
promising men for different types of skilled jobs in the organization.

7. Increases organizational stability and flexibility

With the availability of trained personnel is the organization, it can have stability
and flexibility. It increases stability because there is a reservoir of trained replacement. It is
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 flexible because trained employees possess multiple skills that can be transferred to other
jobs as the situation demands.

8. Beneficial to employees
Training is beneficial to employees because organizational knowledge and skills,
increases their market value and they have better chances for promotion and ability to accept
higher responsibilities.

Methods of training

I. On the job training

II. Off-the job training
III. Apprenticeship training
IV. Vestibule training

Classification of training methods

On-the job training Off-the job training Apprentice training Vestibule training

1. Job Rotation 1. Lectures

2. Delegation 2. Conferences
3. External programme

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 3. Promotion and Transfers 4. Role Playing
4. Appointment as ‘Assistant to’ 5. Group Discussions
5. Membership of a Committee 6. In Basket Method
6. In Company training 7. Incident method
7. Case Study 8. T-group training
8. Coaching (Internship training) 9. Grid training
9. Understudy (Apprenticeship) 10. Simulation

I. On-the job training

It includes all attempts to train personnel in the work environment. It places the
employee in an actual work situation and makes them appear to be immediately productive. It is
learning by doing.

1. Job rotation

The purpose of position rotation or job rotation is to broaden the work experience of the
trainee in various positions. The trainee is periodically rotated from job to job instead of sticking
to one job. So he acquires a general working knowledge of different jobs. Management trainees
and educationists used to preach “move our managers round”. Also it gives him a broad exposure
to the strengths and weaknesses of the company.

2. Delegation

Delegation is a powerful training tool at all levels. When juniors are delegated authority,
they learn how to handle it along with responsibility and achieve results. This gives them good
training in decision making which is helpful in their development.

3. Promotion and Transfers

A promotion brings higher level responsibilities and challenges which develop managers.
Transfers bring them in contact with new people and new situations, which provides a good
training.

4. Appointment as ‘assistant to’

The assistant to the Managing Director, has to take several decisions of such diverse
nature that he gets trained in various aspects of the company’s working and gets exposed to the

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Managing Directors job. His viewpoint is broadened. It gives the assistant great confidence to
handle different kinds of situation.

5. Membership of a committee or junior board

In this method managers from different disciplines are represented and it provides them with
exposure of different view points on different subjects. Thus it constitutes a training ground for
developing better insight. Sometimes, middle level managers are made to work like a junior
board of directors. Executives from various functional areas serve on ‘boards’ and are required to
analyze problems and recommend solutions to top management.

6. In company training programmes

Realizing the great importance of training managers, affiliates of MNC’S or giant foreign
companies started their own in-company training programmes. Some of them started regular
training colleges on the pattern of the American and the British companies.

7. Case study method (Learning by doing)

This method was first developed by Christopher Langdell in the 1880’s. The case is a set
of data, written or oral description and summary of such data that present issues and problems
that the trainee has to find out solutions. The trainees are given cases to analyse and are asked to
identify the problem and to recommend solutions for it. The case study method is useful for
developing decision making skills and for broadening the perspective of the trainee.

8. Coaching (Internship training)

It is a method under which a superior teaches job knowledge and skills to the subordinate.
It is applied to managerial personnel and provides wide variety of job experience. The emphasis
in job coaching is on learning by doing.

9. Under study Apprentice ship

Under this method, the superior imparts training to subordinate as his under study. It is
generally used to impart skills requiring long periods of practice.

II. Off the job training

It refers to training, which is not a part of the job activity. This type of training is
generally theoretical in nature and is imparted in class room type of atmosphere. The actual
location may have no connection with the company. It is more associated with knowledge than
with skills. The different methods are discussed below;

1. Lectures (class room instruction)

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 It is one of the simple ways of imparting knowledge to the trainees. Lectures are formal
organized talks by the training specialist, to teach concepts, principles, attitudes, theories etc.
The lecture method can be trained within a short time.

2. The conference method

In this method, the participating individuals discuss points of common interest to each
other. A conference is basic to most participative group centered methods of development. It is
a formal meeting’, conducted in accordance with an organized plan, in which the leader seeks to
develop knowledge and understanding by obtaining a considerable amount of oral participation
of the trainees.

3. . External programme
External programme are the programmes which are run by Management Associations or
external bodies or organizations. Managers are aware of the modern management practices and
they have learnt a great deal through the opportunity provided by the interaction with other
managers at such seminars and conferences.

4. Role playing
Role playing was developed by Moreno. It has been defined as “a method of human interaction
which involves realistic behaviour in the imaginary situations”. The idea of role playing involves
action, doing and practice”. In role playing, trainees act out a given role as they would in a stage
play. The role players are simply informed of a situation and of the respective roles they have to
play. This method is useful in providing new insight and with opportunities to develop
interaction skills.

5. Group discussion
One or more trainees prepare a paper on a subject in consultation with the person in
charge of the seminar. It may be a part of a study or related to theoretical studies or practical
problems. After presentation by the trainee, it is followed by critical discussion. The chairman
of the seminar summarizes the contents of the papers and the discussions.

6. In basket method
This device consists of letters, notes, documents and reports designed to simulate on the
job reality of the managers in-basket. The trainee deals with the in-basket materials as he would
in his own job. Usually feed back is provided so that he can appraise his results. This method
creates high involvement and built-in motivation.

7. Incident method
In the usual case study method, the entire problem is presented to the trainee, where as in
the incident method only a brief incident is presented to provoke discussion in the class. The
group then puts questions to the instructor to draw out of him the salient facts and additional
information needed to arrive at a reasonable solution. This method draws the participants into
discussion with greater emotional development.

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 8. T-group training
This technique is also known as sensitivity training, laboratory training and executive
action. It is concerned with the real problems existing with in the T-group itself. T-groups are
really small discussion groups with no set leader. It helps participants to learn more about
themselves, their weaknesses and emotions to find how to behave more effectively in inter
personal relations and to develop more open relations among people.

9. Simulation
It is a training technique which indicates the duplication of organizational situations in a
learning environment. It is a mockup of a real thing. Simulation refers to a range of techniques
in which trainees have to act and reflect business in real situations so as to practice making
decisions, or in working together as a group or both.

10. Grid training

The ‘managerial grid’ is an organizational development technique, developed by Robert
Blake and Jane Mouton. The grid represents several possible leadership ‘styles’. Each style
represents a different combination of two basic orientations concern for people (1,9) and concern
for production (9,1).

The management training programme is built around this managerial grid. It aims at
developing open confrontation of organizational problems and high people high production (9,9)
leaders.

(high) 9 1,9 9,9

8 (Country club) (Team)
7

Concern 6

for 5 5 5
people 4 (Middle Road)
3

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 (Low) 1

1 2 3 4 5 6 7 8 9

III. Vestibule training (Training Centre Training)

It is a classroom training which is often imparted with the help of the equipment and
machines which are identical with those in use in the place of work. This technique enables the
trainee to concentrate on learning the new skill rather than on performing an actual job.
Theoretical training is given in the classroom, while the practical work is conducted on the
production line. The major purpose of this method is to give instruction and training.

IV. Apprenticeship training

Apprenticeship training is the oldest and the most commonly used method for training in
crafts, trades and is technical areas. This training combines both on the job and off-the job
training. The apprenticeship period is 2 to 3 years for persons of superior ability and 4 to 5 years
for others. During the apprentice period, the trainee is paid an allowance which is less than the
wage of a fully qualified worker.

CHAPTER SIX

PERFORMANCE APPRAISAL

6.1. MEANING
OF PERFORMANCE APPRAISAL

Let’s begin our discussion of performance appraisal by defining the concept. Performance
appraisal is the identification, measurement, and management of human performance in
organizations.

As the identification above indicates, formal performance appraisal is a system set by the
organization to regularly and systematically evaluate employees’ performance.

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The overall objective of performance appraisal systems is to evaluate and give feedback to
employees that will improve them and thus, the organization’s effectiveness.

The tendency to make judgments about oneself or about people one is working with appears to
both inevitable and universal. However, without a carefully structured system of appraisal and
evaluation, people will judge the performance of coworkers, subordinates, superiors, and peers-
arbitrarily and informally.

This tendency to judge, without systematic procedures, has the potential to create serious
motivational, ethical, and legal problems within the firm. On the other hand, structured appraisal
system is more likely to be lawful, fair, defensible, valid and reliable.

6.2. PURPOSE
S OF PERFORMANCE APPRAISAL

Organizations usually conduct appraisals for administrative and/or developmental purposes.

Performance measurements are used administratively whenever they are the basis for a decision
about the employee’s work conditions, including promotions, terminations and rewards.

Performance appraisal is the basis for decisions about:

 Employee work condition
 Promotions
 Terminations
 Rewards

Specifically performance appraisal is greatly useful in the following ways:

 Sustaining and enhancing employee performance
Appraisal is an aid to create and maintain a satisfactory level of performance by employee on
their present jobs. The mere knowledge that their performance is being assessed and that such
assessment will have an important bearing on their future within the organization, is a powerful
incentive for them to sustain, and if possible better, their present level of performance.

 Motivation: a vital component of any motivation model is performance, particularly

effort performance and performance reward linkages. If the performance appraisal system
reinforces broadly, the faith of the employee, that effort will lead to satisfactory
performance which leads to rewards, and if he knows clearly what is expected of him,
then he is prepared to overlook some of the inevitable flaws and there is every likelihood
of the system. Acting as a motivator for better and higher levels of performance. If the
performance is linked to the reward the employees will be geared to perform well.

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  Determining training needs: performance appraisal is a useful indicator of training needs.
If an employee is not performing up to expectations, a training program may enable him
to correct any skill or knowledge, deficiencies. Furthermore, a general feedback on
training requirements of employee enables the organization to develop training programs
that will fit the needs of most employees. For example, if most, supervisors report a
pressing need for refresher training courses, then such courses can be organized by the
company.
 Employee development: performance appraisal gives the supervisors an opportunity to
indicate employee’s long term career goals and plans as well as highlights needs and
requirements for his future growth and development. Also, by way of appraisal sessions,
the supervisor can advise the employee on the steps to be taken for higher achievement.
He can also give the employee short term, specific suggestion on how to improve
performance in order to accomplish long term objectives.
 Making promotion and transfer decision: employees usually promoted or transferred
based on performance appraisal results. Systematic assessment of an employee over a
period of time by a number of supervisors helps to make the process reasonable and
sound. Such decisions would natural have to give due considerations to the requirements
of both the firm and the employee.
 Compensations, rewards and punishments: performance appraisal results provide a basis
for decisions regarding compensation, rewards, and punishments.
Performance appraisal can be base as employees who receive favorable evaluation, tends
to receive organizational rewards, such as merit pay increases, incentives, higher
commissions, better pay scales, increments, etc., while those with unfavorable
evaluations receive organizational censure, warning, delayed promotions, demotions, etc.
the objective of linking pay and other personnel decision to performance is to motivate
employees to do better. Unfortunately, matching rewards and disincentive to performance
is far more difficult than it sounds.

Firstly, performance must be accurately and openly assessed. Secondly, the rewards
offered must be truly valued by employees and finally, the organization’s performance
based system must be viewed by employees, as both fair and fairly administered.

Truly unpleasant consequence can follow if employees believe the system to be

irrational, biased or a means of distributing favors by supervisors and managers.

6.3. PROCESS
OF PERFORMANCE APPRAISAL

Establish Performance Standards

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The appraisal process (Exhibit 6-1) begins with establishment of performance standards in
accordance with the organization’s strategic goals. These should evolve out of the company’s
strategic direction—and, more specifically, the job analysis and the job description discussed in
Chapter 3. These performance standards should also be clear and objective enough to be
understood and measured. Too often, standards are articulated in ambiguous phrases that tell us
little, such as “a full day’s work” or “a good job.” What is a full day’s work or a good job? A
supervisor’s expectations of employee work performance must be clear enough in her mind so
that she will be able to, at some later date, communicate these expectations to her employees,
mutually agree to specific job performance measures, and appraise their performance against
these established standards.

Communicate Expectations
Once performance standards are established, it is necessary to communicate these expectations;
employees should not have to guess what is expected of them. Too many jobs have vague
performance standards, and the problem is compounded when these standards are set in isolation
and without employee input. Communication is a two way street: mere information transfer from
supervisor to employee is not successful communication.

Measure Actual Performance

The third step in the appraisal process is performance measurement. To determine what actual
performance is, we need information about it. We should be concerned with how we measure
and what we measure. Four common sources of information frequently used by managers
address how to measure actual performance: personal observation, statistical reports, oral reports,
and written reports. Each has its strengths and weaknesses; however, a combination of them
increases both the number of input sources and the probability of receiving reliable information.
What we measure is probably more critical to the evaluation process than how we measure.
Selecting the wrong criteria can produce serious, dysfunctional consequences. And what we
measure determines, to a great extent, what people in the organization will attempt to excel at.
The criteria we measure must represent performance as it was mutually set in the first two steps
of the appraisal process.
Compare Actual Performance with Standards
The fourth step in the appraisal process is the comparison of actual performance with standards.
This step notes deviations between standard performance and actual performance. The
performance appraisal form should include a list and explanation of the performance standards. It
should also include an explanation of the different levels of performance and their degree of
acceptability against the performance standard. This provides a valuable feedback tool as the
manager moves on the next step, discussing the appraisal.

Discuss the Appraisal with the Employee

As we mentioned previously, one of the most challenging tasks facing appraisers is to present an
accurate assessment to the employee. Appraising performance may touch on one of the most
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emotionally charged activities—evaluation of another individual’s contribution and ability. The
impression that employees receive about their assessment has a strong impact on their self-
esteem and, importantly, on their subsequent performance. Of course, conveying good news is
considerably easier for both the appraiser and the employee than conveying bad news. In this
context, the appraisal discussion can have negative as well as positive motivational
consequences.

Initiate Corrective Action if Necessary

The final step in the appraisal is the identification of corrective action where necessary.
Corrective action can be of two types: one is immediate and deals predominantly with
symptoms, and the other is basic and delves into causes. Immediate corrective action is often
described as “putting out fires,” whereas basic corrective action touches the source of deviation
and seeks to adjust the difference permanently. Immediate action corrects problems such as
mistakes in procedures and faulty training and gets the employee back on track right away. Basic
corrective action asks how and why performance deviated from the expected performance
standard and provides training or employee development activities to improve performance. In
some instances, appraisers may rationalize that they lack time to take basic corrective action and
therefore must be content to perpetually put out fires. Good supervisors recognize that taking a
little time to analyze a problem today may prevent the problem from worsening tomorrow.

1.Establish performance standards with employees.

2. Communicate expectations
Exhibit 6-1: The Appraisal Process
3. Measure actual performance

4. Compare actual performance with standards

5. Discuss the appraisal with the employee

The appraisal process evaluates employee performance by measuring progress toward goals.
6. If necessary, initiate corrective action

6.4. PERFORMANCE APPRAISAL METHODS

The previous section described the appraisal process in general terms. In this section we will
look at specific ways in which HRM can actually establish performance standards and devise
instruments to measure and appraise an employee’s performance. Three approaches exist for
doing appraisals: employees can be appraised against (1) absolute standards, (2) relative
standards, or (3) outcomes. No one approach is always best; each has its strengths and
weaknesses.

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Evaluating Absolute Standards
Our first group of appraisal methods uses absolute standards. This means that employees are
compared to a standard, and their evaluation is independent of any other employee in a work
group. This process assesses employee job traits and/or behaviors. Included in this group are the
following methods: the critical incident appraisal, the checklist, the graphic rating scale, forced
choice, and behaviorally anchored rating scales. Let’s look at each of these, focusing on their
strengths and weaknesses.

Absolute standards: Measuring an employee’s performance against established standards.

Critical Incident Appraisal: The critical incident appraisal focuses the rater’s attention on
critical or key behaviors that make the difference between doing a job effectively and doing it
ineffectively. The appraiser writes down anecdotes describing employee actions that were
especially effective or ineffective. For example, a police sergeant might write the following
critical incident about one of her officers: “Brought order to a volatile situation by calmly
discussing options with an armed suspect during a hostage situation, which resulted in all
hostages being released, and the suspect being apprehended without injury to any individual.”
Note that with this approach to appraisal, specific behaviors are cited, not vaguely defined
individual traits. A behavior based appraisal such as this should be more valid than trait-based
appraisals because it is clearly more job related. It is one thing to say that an employee is
“aggressive,” “imaginative,” or “relaxed,” but that does not tell us anything about how well the
job is being done. Critical incidents, with their focus on behaviors, judge performance rather than
personalities.

The strength of the critical incident method is that it looks at behaviors. Additionally, a list of
critical incidents on a given employee provides a rich set of examples from which employees can
be shown which of their behaviors are desirable and which ones call for improvement. Its
drawbacks are that (1) appraisers must regularly write these incidents down and doing this on a
daily or weekly basis for all employees is time-consuming and burdensome for supervisors; and
(2) critical incidents suffer from the same comparison problem found in essays—they do not lend
themselves easily to quantification. Comparison and ranking of employees may be difficult.

Critical incident appraisal: A performance evaluation that focuses on key behaviors that
differentiates between doing a job effectively or ineffectively.

Checklist Appraisal: In the checklist appraisal, the evaluator uses a list of behavioral
descriptions and checks off behaviors that apply to the employee. As illustrated below, the
evaluator merely goes down the list and checks off “yes” or “no” to each question.

Once the checklist is complete, it is usually evaluated by the HRM staff, not the appraiser
completing the checklist. Therefore, the rater does not actually evaluate the employee’s
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performance; he or she merely records it. An HRM analyst scores the checklist, often weighting
the factors in relationship to their importance to that specific job. The final evaluation can either
be returned to the appraiser for discussion with the employee, or someone from HRM can
provide the feedback.

The checklist appraisal reduces some bias in the evaluation process because the rater and the
scorer are different. However, the rater usually can pick up the positive and negative connections
in each item—so bias can still be introduced. From a cost standpoint, too, this appraisal method
may be inefficient and time-consuming if HRM must spend considerable time in developing
individualized checklists of items for numerous job categories. Checklists are completed by
supervisors, but evaluated by HR staff. Items rated may have different weights.

Checklist appraisal is a performance evaluation in which a rater checks off applicable employee
attributes.

Exhibit 6-2: Sample Checklist Items for Appraising Customer Service Representative
Yes, No

1. Are supervisor’s orders usually followed? ______ ______

2. Does the individual approach customers promptly? ______ ______
3. Does the individual suggest additional merchandise to customers? ______ ______
4. Does the individual keep busy when not serving a customer? ______ ______
5. Does the individual lose his or her temper in public? ______ ______
6. Does the individual volunteer to help other employees? ______ ______

Graphic Rating Scale Appraisal: One of the oldest and most popular methods of appraisal is
the graphic rating scale. An example of some rating scale items is shown in Exhibit 6-3. Rating
scales can be used to assess factors such as quantity and quality of work, job knowledge,
cooperation, loyalty, dependability, attendance, honesty, integrity, attitudes, and initiative.
However, this method is most valid when abstract traits such as loyalty or integrity are avoided,
unless they can be defined in more specific behavioral terms.

To use the graphic rating scale, the assessor goes down the list of factors and notes the point
along the scale or continuum that best describes the employee. There are typically five to ten
points on the continuum. The challenge in designing the rating scale is to ensure that factors
evaluated and scale points are clearly understood and are unambiguous to the rater. Ambiguity
can introduce bias.

Why are rating scales popular? Although they do not provide the depth of information that
essays or critical incidents do, they are less time-consuming to develop and administer. They also
provide a quantitative analysis useful for comparison purposes. Furthermore, in contrast to the
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checklist, more generalization of items makes it possible to compare individuals in diverse job
categories.

Graphic rating scale: A performance appraisal method that lists traits and a range of
performance for each.

Exhibit 6-3: Sample of Graphic Rating Scale Items and Format

Graphic rating scales provide a list of job skills and a continuum for the rater to evaluate the
employee’s performance on each skill. Graphic rating scales are relatively easy to complete and
attempt to provide objective feedback.

Performance Performance Rating

Factor
Quality of work Consistently Occasionally Consistently Sometimes Consistently
is the unsatisfactory unsatisfactory satisfactory superior superior
accuracy, skill,
and
completeness of
work
Quantity of work Consistently Occasionally Consistently Sometimes Consistently
is the unsatisfactory unsatisfactory satisfactory superior superior
volume of work
done in a normal
workday
Job knowledge is Poorly Occasionally Can answers Understand Has
information informed unsatisfactory about most all phases of complete
pertinent to the about work questions job mastery of
job that an duties about job all phases of
individual job
should have for
the satisfactory
job performance
Dependability is Requires Requires Usually can Requires Requires
following constant occasional be counted on little absolute
directions and supervisions follow-up supervision minimum
company supervision
policies without
supervision

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Forced-Choice Appraisal: Have you ever completed one of those tests that presumably gives
you insights into what kind of career you should pursue? A question might be, for example,
“Would you rather go to a party with a group of friends or attend a lecture by a well-known
political figure?” If so, then you are familiar with the forced-choice format. The forced-choice
appraisal is a type of checklist where the rater must choose between two or more statements.
Each statement may be favorable or unfavorable. The appraiser’s job is to identify which
statement is most (or in some cases least) descriptive of the individual being evaluated. For
instance, students evaluating their college instructor might have to choose between “(a) keeps up
with the schedule identified in the syllabus, (b) lectures with confidence, (c) keeps interest and
attention of class, (d) demonstrates how concepts are practically applied in today’s organizations,
or (e) allows students the opportunity to learn concepts on their own.” All the preceding
statements could be favorable, but we really don’t know. As with the checklist method, to reduce
bias, the right answers are unknown to the rater; someone in HRM scores the answers based on
the answer key for the job being evaluated. This key should be validated so HRM is in a position
to say that individuals with higher scores are better-performing employees.

The major advantage of the forced-choice method is that because the appraiser does not know
the “right” answers, it reduces bias and distortion. For example, the appraiser may like a certain
employee and intentionally want to give him a favorable evaluation, but this becomes difficult if
one is not sure of the preferred response. On the negative side, appraisers tend to dislike this
method; many do not like being forced to make distinctions between similar-sounding
statements. Raters also may become frustrated with a system in which they do not know what
represents a good or poor answer. Consequently, they may try to second-guess the scoring key to
align the formal appraisal with their intuitive appraisal.

Forced-choice appraisal: A performance evaluation in which the rater must choose between two
specific statements about an employee’s work behavior.

Behaviorally Anchored Rating Scales: An approach that has received considerable attention by
academics in past years involves behaviorally anchored rating scales (BARS). These scales
combine major elements from the critical incident and graphic rating scale approaches. The
appraiser rates the employees based on items along a continuum, but the points are examples of
actual behavior on the given job rather than general descriptions or traits. The enthusiasm
surrounding BARS grew from the belief that the use of specific behaviors, derived for each job,
should produce relatively error free and reliable ratings. Although this promise has not been
fulfilled, it has been argued that this may be partly due to departures from careful methodology
in developing the specific scales rather than to inadequacies in the concept. BARS forms are time
consuming to develop correctly.

Behaviorally anchored rating scales specify definite, observable, and measurable job behavior.
Examples of job-related behavior and performance dimensions are generated by asking
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participants to give specific illustrations of effective and ineffective behavior regarding each
performance dimension; these behavioral examples are then translated into appropriate
performance dimensions. Those sorted into the dimension for which they were generated are
retained. The final group of behavior incidents is then numerically scaled to a level of
performance each is perceived to represent. The identified incidents with high rater agreement on
performance effectiveness are retained for use as anchors on the performance dimension. The
results of these processes are behavioral descriptions such as anticipates, plans, executes, solves
immediate problems, carries out orders, or handles emergency situations. Exhibit 6-4 is an
example of a BARS form for an employee relations specialist’s scale.

BARS research indicates that, although it is far from perfect, it does tend to reduce rating errors.
Possibly its major advantage stems from the specific feedback that it communicates. The process
of developing behavioral scales is valuable for clarifying to both the employee and the rater
which behaviors represent good performance and which don’t. Unfortunately, it, too, suffers
from the distortions inherent in most rating methods. These distortions will be discussed later in
this chapter.

Behaviorally anchored rating scales (BARS): A performance appraisal technique that generates
critical incidents and develops behavioral dimensions of performance. The evaluator appraises
behaviors rather than traits.

Exhibit 10-4: Sample BARS for an Employee Relations Specialist

This behaviorally anchored rating scale (BARS) evaluates how well an HR employee relations
specialist can understand and interpret company policies by describing the levels of performance.
Better performance earns higher point value.

Behaviorally Anchored Rating Scale

Position: Employee Relations Specialist
Job Dimension: Ability to Absorb and Interpret Policies
This employee relations specialist:
9 Could be expected to serve as an information source concerning new and changed
policies for others in the organization
8 Could be expected to be aware quickly of program changes and explain these to
employees
7 Could be expected to reconcile conflicting policies and procedures correctly to meet
HRM goals
6 Could be expected to recognize the need for additional information to gain a better
understanding of policy changes
5 Could be expected to complete various HRM forms correctly after receiving
instruction on them
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4 Could be expected to require some help and practice in mastering new policies and
procedures
3 Could be expected to know that there is always a problem, but go down many blind
alleys before realizing they are wrong
2 Could be expected to incorrectly interpret guidelines, creating problems for line
managers
1 Could be expected to be unable to learn new procedures even after repeated
explanations

Source: Reprinted from Business Horizons (August 1976), copyright 1976 by the Foundation for
the School of Business at Indiana University. Used with permission.

Relative Standards Methods

The second general category of appraisal methods compares individuals against other
individuals. These methods are relative standards rather than absolute measuring devices. The
most popular of the relative methods are group order ranking, individual ranking, and paired
comparison (see Workplace Issues).

Relative standards: Evaluating an employee’s performance by comparing the employee with

other employees.

Group Order Ranking Group order ranking requires the evaluator to place employees into a
particular classification, such as the “top 20 percent.” This method, for instance, is often used in
recommending students to graduate schools. Evaluators are asked to rank the student in the top 5
percent, the next 5 percent, the next 15 percent, and so forth. But when used by appraisers to
evaluate employees, raters deal with all employees in their area. So, for example, if a rater has
twenty employees, only four can be in the top fifth; and, of course, four also must be relegated to
the bottom fifth.

The advantage of this group ordering is that it prevents raters from inflating their evaluations so
everyone looks good or from forcing the evaluations so everyone is rated near the average—
outcomes not unusual with the graphic rating scale. The main disadvantages surface, however,
when the number of employees compared is small. At the extreme, if the evaluator is looking at
only four employees, all may be excellent, yet the evaluator may be forced to rank them into top
quarter, second quarter, third quarter, and low quarter. Theoretically, as the sample size
increases, the validity of relative scores as an accurate measure increases, but occasionally the
technique is implemented with a small group, utilizing assumptions that apply to large groups.

Another disadvantage, which plagues all relative measures, is the zero-sum game consideration.
This means that any change must add up to zero. For example, if twelve employees in a
department perform at different levels of effectiveness, by definition, three are in the top quarter,
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three are in the second quarter, and so forth. The sixth-best employee, for instance, would be in
the second quartile. Ironically, if two of the workers in the third or fourth quartiles leave the
department and are not replaced, then our sixth-best employee now falls into the third quarter.
Because comparisons are relative, a mediocre employee may score high only because he or she is
the “best of the worst.” In contrast, an excellent performer matched against “stiff” competition
may be evaluated poorly, when in absolute terms his or her performance is outstanding.

Individual Ranking The individual ranking method requires the evaluator merely to list
employees in order from highest to lowest. In this process, only one employee can be rated
“best.” If the evaluator must appraise thirty individuals, this method assumes that the difference
between the first and second employee is the same as that between the twenty-first and the
twenty-second. Even though some of these employees may be closely grouped, this method
typically allows for no ties. In terms of advantages and disadvantages, the individual ranking
method carries the same pluses and minuses as group-order ranking. For example, individual
ranking may be more manageable in a department of six employees than in one where a
supervisor must evaluate the nineteen employees who report to her.

Individual ranking: Ranking employees’ performance from highest to lowest.

Paired Comparison The paired comparison method selects one job trait, and then compares
each employee in a group with the others. A score is obtained for each employee by simply
counting the number of pairs in which the individual is superior at the job trait, ranking each
individual in relationship to all others on a one-on-one basis as shown in Exhibit 6-5. If ten
employees are evaluated, the first person is compared, one by one, with each of the other nine,
and the number of times this person is preferred in any of the nine pairs is tabulated. Each of the
remaining nine persons, in turn, is compared in the same way, and a ranking is formed by the
greatest number of preferred “victories.” This method ensures that each employee is compared
against every other, but the method can become difficult when comparing large numbers of
employees.

Paired comparison: Ranking individuals’ performance by counting the times any one individual
is the preferred member when compared with all other employees.

Exhibit 6-5: Ranking Employees by Paired Comparison:

Job Skills Evaluated: Innovation and Creativity
Employee being rated
Comparison Admir Betty Carmen Dante Emilio
with
Admir - - - -
Betty + + - +

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 Carman + - - -
Dante + + + +
Emilio + - - -

In the paired comparisons, five employees are being compared for their innovation and creativity
on the job. The plus (_) means the employee being rated is better than the comparison employee,
the minus (–) means the employee being rated is worse than the comparison employee. The
employee receiving the most _s will be the highest ranked employee. In this chart, Admir is
ranked highest with the most _s.

Using Achieved Outcomes to Evaluate Employees

The third approach to appraisal makes use of achieved performance outcomes. Employees are
evaluated on how well they accomplished a specific set of objectives determined as critical in the
successful completion of their job. This approach may be referred to as goal setting but is more
commonly referred to as management by objectives (MBO). Its appeal lies in its emphasis on
converting overall objectives into specific objectives for organizational units and individual
members.

MBO makes objectives operational by a process in which they cascade down through the
organization. The organization’s overall objectives are translated into specific objectives for each
succeeding level—divisional, departmental, and individual—in the organization. Because lower-
unit managers participate in setting their own goals, MBO works from the bottom up as well as
from the top down. The result is a hierarchy that links objectives at one level to those at the next
level. For the individual employee, MBO provides specific personal performance objectives.
Each person, therefore, has an identified specific contribution to make to his or her unit’s
performance. If all the individuals achieve their goals, the unit will meet its goals. Subsequently,
the organization’s overall objectives will become a reality.

Management by objectives (MBO): A performance appraisal method that includes mutual

objective setting and evaluation based on the attainment of the specific objectives.

6.5. PROBLEMS ASSOCIATED WITH PERFORMANCE APPRAISAL

There are several problems that hinder the success of the performance appraisal scheme. These
problems can be classified in to three general categories: system design and operating relating
problems, rater related problems, and rate related problems.

a. System design and operation related problems: performance evaluation system

breakdown because they are poorly designed. The designed can be blamed if the criteria
for evaluation are poor, the technique sued is complicated, or the system is more form

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 than substance. If the criteria used focus solely on activity rather than output results, or
on personality traits than performance, the evaluation may not be well received. Some
evaluation techniques take a long time to do require extensive written analysis, both of
which many managers resist. If the problem, another technique can be chosen. Finally
some systems are not on line and running. Some supervisors use the system, but others
just haphazardly fill out the paper work. Top management’s support for performance
evaluation can remedy this problem of ritualism.
b. Rater related problems: even if the system is well designed, problems can arise if the
raters (usually supervisors) are not cooperative and well trained. Supervisors may not be
comfortable with the process of evaluation, or what Douglas McGregor call, “playing
God”. This is often because they have not been adequately trained or have not
participated in the design of the program. Inadequate training of raters can lead to a series
of problems in completing performance evaluations including:
 Standard of evaluation
 Halo effect
 Leniency or harshness effect
 Central tendency
 Recency of events
 Personal bias (same as me or different from me)

 Standards of evaluation: problems with evaluation standards arise because of perceptual

differences in the meaning of the words used to evaluate employees. Thus good, adequate,
satisfactory, and excellent may mean different evaluators. Some teachers are “easy A,” while
other almost never gives an A. they differ in their interpretation of excellent. If only one rater
is used, the evaluation can be distorted. This difficulty arises most often in graphic rating
scales but may also appear with essays, critical incidents, and checklists.

 Halo error: halo error, in ratings, is one of the major problems in most performance
evaluation systems. It is the perception of an evaluator that one factor is of a paramount
importance and then gives a good or bad overall rating to an employee based on this
particular factor. It occurs when a rater assigns ratings on the basis of an overall impression
(positive or negative) of the person being rated. Moreover, halo error is an evaluation error,
which arises when an evaluator fails to discriminate among the different dimensions of the
performance of an evaluation.

 Leniency effect or harshness: Leniency or harshness effect performance evaluations require

the rater to objectively reach a conclusion about criteria of performance. Being objective
is for everyone. Raters have their own rose colored glasses with which they “objectively”
view subordinates. What some raters see is everything good- these are lenient raters. Other
raters see everything as bad – this is harshness.

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 Raters can assess their own harsh and lenient rating tendencies by examining ratings. This
self assessment is sometimes unusual. Another method used to reduce harsh and lenient
rating tendencies is to ask raters to distribute ratings – using a normal distribution (e.g., 10
percent of the subordinate will be rated excellent, 20% of the subordinates rated good, 40%
of them rated fair, 20% below fair, and 10% rated poor).

 Central tendency: many raters avoid using high or low ratings. They resort to a philosophy
that everyone is about average and rate subordinates around a 4 on a 1 to 7 scale or a 3 on a 1
to 5 scale. This type of “average” rating is almost useless. It fails to discriminate between
subordinates. Thus, it offers little information for making HRM decisions regarding
compensation, promotion, training needs, and what should be feedback to rates. Raters must
be aware of the importance of discriminating across rates and the use of evaluations. This
sometimes stimulates raters to use less central (average) ratings.
 Recency or Events error: one difficulty with many of the evaluation system is the time frame
of the behavior being evaluated. Raters forget more about past behavior than current
behavior. Thus, many persons are evaluated more on the results of the last several weeks than
on six months average behavior. This refers to the recency of events rating error.

Some employees are well aware of this difficulty. If they know the date of evaluation, they
make it their business to be visible and noticed in many ways for several weeks in advance.
Many evaluation systems suffer from this difficulty. It can be eliminated by using techniques
such as critical incident, or management by objectives (MBO) or by irregularly scheduled
evaluations.

 Personal bias or error: Bias is a “mental leaning or inclination; a bent”. A person who is
biased is looking at everything from his or her particular slant, or point of view, is so used to
looking at the world this way that he or she may never even have considered that others see
things differently.

In appraising the performance of employees, it is essential that the appraiser realizes that
he /she, as well as the employee, both have their bias that is angle from which they see
things. Keeping this in mind, the appraiser will be more apt to hear the employee’s view as
well as acknowledge that he/she is capable of making biased judgments and decisions in the
evaluations of employees.

c. Employee related problems of performance appraisal: for the evaluation system to work
well, the employees must understand it, feel it is fair, and be work oriented enough to
care about the results. One way to develop understanding is for the employees to

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 participate in system design and be trained to some extent in the process of performance
evaluation. Another is the use of self evaluation system.

Performance evaluation may also be less effective than desired if the employee is not
work oriented and see work only as a means to an end sought off the job. It might be seen
only as paperwork unless the evaluation is so negative that the employee fears
termination.

Some critics believe that employees who are rated poorly will not improve their
performance but will give up. This problem is, compounded if the technique used is
viewed as a zero-sum game – that is, some win and some other lose as a result of it.

In addition to the above problems of following are some of the company encountered
conflicts in performance appraisal:
 Conflicting intra-individual goals: desire for honest feedback Vs desire for self-
concept affirming feedback
 Conflicting individual and organizational goals: persons desire for rewards Vs
organization’s desire for openness to feedback and helpfulness in supplying
necessary information.

CHAPTER SEVEN

COMPENSATION

7.1. BASIC CONCEPTS OF EMPLOYEE COMPENSATION

Compensation in an organization

It is axiomatic to suggest that an organization is only being as good as the people it is able to
attract and keep. It is important that firms take the time necessary to find the right people to fill
job openings. Choosing people to work for an organization generally means choosing people for
a long time; these people should be thought of as investments. As people are likely to be
essential ingredients in the firm’s success, it is incumbent up on the firm to protect this
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asset/investment. As such, the firm must pay employees what they are worth or else they may
choose to work for another firm. The firm’s compensation policy must be managed
appropriately.

The term compensation refers to all forms of financial returns and tangible benefits that
employees receive as part of an employment relationship. An effective compensation system
typically has the following characteristics:
 It enables an organization to attract and retain qualified, competent workers
 It motivates employee performance, fosters a feeling of equity, and provides direction
to their efforts
 It supports, communicates, and reinforces an organization’s culture, values and
competitive strategy
 Its cost structure reflects the organization’s ability to pay
 It complies with government regulations

7.2. FACTORS AFFECTING COMPENSATION

Within most organizations, there are defined or generally understood pay levels for jobs. They
usual take the form of a pay structure which may cover the whole organization or groups of
related occupations (job families). There may be different structures at various levels- for
example, senior management, other staff, manual workers etc. in some organization, however,
the pay system, is flexible and relatively unstructured. It may, for example, consist simply of
individual rates for the various jobs (spot rates) which bear no apparent logical relationship to
one another are determined by management intuitively. Structure for manual workers may also
consist of spot rates which are based on negotiation, custom and practice.

Pay levels and ranges may be determined by job evaluation, which assess the relative internal
worth of jobs (internal relativities), and by market pricing, which assesses external relativities. It
is also possible that pay levels may respond to increases in the cost of living (inflationary
pressure).

Individual rates may be governed by the pay structure, in the form of fixed rate for the job or by
scale of fixed increments. (A fixed increment is a predetermined addition to an individual’s rate
of pay related to service in the job). The increment may apply within a pay bracket, with fixed
minima and maxima in a graded structure or by progress through defined pay ranges in a pay
spine (a series of incremental pay points extending from the lowest to the highest job covered by
the structure with in which pay ranges for the jobs in the hierarchy are established).
Alternatively, pay progression within brackets or bands or within job families may vary
according to individual performance, competence, and/or skill.

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Essentially, three factors affecting the pay level of individual employee are the value of the job
to organization, the value of the person to the organization, the value of the job or the person in
the marketplace. These three factors can be defined in more detail:
 Internal job value: organizations generally relate pay to the relative contribution or
internal value of the jobs people do. The bigger the job the more they are paid.
 External job value: the rate of pay for job and people will be influenced by market rates
in accordance with the policy of the organization on how it wants its own rate to relate to
market levels and the degree to which market forces affect the salaries required to attract
and retain people of the quality the organization needs.
 The value of the person: individual employee may be paid more because it is perceived
that he is making bigger contributions, and is performing better (however, that is
measured), have achieved a higher level of skill or competence than other employees, or
have been in a job longer.

There are, however, other important factors that can affect pay levels generally:
 The employer: three issues which concern employers may affect levels of pay. The first is
affordability- how much is the organization prepared to pay employees in general or
individuals in particular? The second is the policy of the business on whether it is a
higher payer (prepared to pay above market rates to get and keep good quality people), a
medium payer (willing simply to match market rates, possibly relying on other features of
the organization to attract and retain employees) or a lower payer (having to accept
probably for financial reasons, that it must pay less than the market rate). The third the
national minimum wage, which will particularly affect employees in low wage
companies.
 Trade unions: pay levels may be determined through collective bargaining. Trade unions
will want their members’ pay to keep ahead of inflation, to match market rates and reflect
any increase in the prosperity of the business. The amount of pressure they can exert on
pay levels will depend on the bargaining strength of the trade unions with employer in the
pay negotiation.

7.3. EMPLOYEE BENEFITS AND SERVICES

7.3.1. Employee benefits defined

Employee benefits (as defined by Armstrong and Murlis, 2005) are elements of remuneration
given in addition to the various forms of the cash pay. They provide a quantifiable value for
individual employees, which may be deferred or contingent like a pension scheme, insurance
cover or sick pay or may provide an immediate benefit like a company car. Employee benefits
also include elements which are not strictly remuneration, such annual holidays (leaves).

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Employee benefits (as defined by Gomez Mejia et al, 1995) are group membership rewards that
provided security for employees and their family members. They are sometimes referred to as
indirect compensation because the compensation is given to employees in the form of a plan
(such as health insurance) rather than cash. A benefits package complements the base
compensation and the pay incentives components of the total compensation.

7.3.2. Personal needs services

Here, we will emphasize on the benefits packages that are meant for satisfying the personal
needs of employees.

a. Holidays (Annual leave)

Annual leave entitlements are a major benefit. Long entitlements may be given to senior
executives and they may be also given in recognition of working unsociable hours or
agreeing to flexible working practice. Some organization specify minimum as well as
maximum holidays, requiring employees to take of two weeks from their entitlement to
ensure that they get away from work for at least one reasonably lengthy period a year. Many
employers also need to satisfy when holidays can be taken, either to ensure that everybody is
not off work at the same time when continuous working has to be maintained, or to ensure
that everybody is off during an annual shutdown.
b. Compassionate leave
Granted when close relatives are ill, or die, or to deal with other unforeseen events,
compassionate leave is normally the subject of formal policy in larger employers. It usual
paid leave for a limited period and unpaid for a longer period. This provision gives the
opportunity for the organization to show concern for the individual and recognition of the
importance of family responsibility at times of personal hardship. Sensitivity in dealing with
requests for compassionate leave, or offering it when it is clearly necessary, can do much for
employee morale- not just for the employee concerned, but for the immediate work group
which see that the colleague be has been well treated at a time of personal crisis. Here, in
Ethiopia, a worker is entitled to leave with pay for three working days when his/her relative
up to second degree dies.

c. Maternity leave and maternity pay

More women are active in the workforce and a growing number of women choose to or have
to return to work (either full or part time) after their babies are born. This reflected changing
demographic patterns: the requirement for both partners to work to make ends meet where
housing costs are high, the growing number of single parent families, and the fact that more
women (particularly professionals) are starting families later with no intention of breaking
their career. The nuclear family with the wife at home is a reality for only small proportion of
the population and, for better or worse, a diminishing one. In light of these changes, a
growing number of employees are developing a variety of family- friendly policies, including
enhancing maternity arrangements. Currently, UK employment law entitles all female
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 employees to 14 weeks maternity leave, with the right to return to work on the same terms
and conditions that applied before the leave, irrespective of service, hours worked, status of
employment and size of the work force. In addition, employees with at least two years
service are entitled to up to 14 weeks leave in total, referred to as ‘maternity absence, and
commonly called “extended leave.”

A woman has a statutory right to continue benefit from all non remuneration terms and
conditions of employment during the 14 weeks of maternity leave. This raises questions of
exactly what constitute remuneration, for example;
 Is annual leave accrued during maternity leave?
 Is payment made for public holidays missed during maternity leave?
 Do company cars continued to be provided?
 Does the company maintain pension contributions?
 Does the employee still receive medical, life and disability insurance?
 Is the individual entitled to benefit from profit related pay schemes, bonus or
commission payments?

The management of maternity leave and pay requires care. It is not helped currently because
women have to make firm statements about their intentions to return to work after childbirth,
whether or not they know what they want to do and in order to protect themselves in the event of
stillbirths. Many of the potential difficulties can be avoided by ensuring that employees have a
clear idea of the legislation and that their employer respects this and will make sensible and
reasonable provisions for them. Poor treatment of a woman taking maternity leave will affect
morale for all her immediate colleagues.

In Ethiopia, women workers are entitled to maternity benefits during their pregnancy including
maternity leave. The maternity leaves can be categorized as:

Leave for medical checkup: an employer has a duty to grant leave with pay to a pregnant woman
worker for medical examination connected with her pregnancy. This is a duty up on employer
imposed by the law, but the woman has the duty to present a medical certificate of her
examination. There is no fixed period of time for which a woman is entitled to such leave. This is
just for medical checkup. But, if in case, her conditions of health require rest recommended by
her medical doctor, she is entitled to leave with pay for purpose of getting the medically required
rest.

Prenatal leave: a pregnant worker woman is entitled to get prenatal leave with pay. The employer
is duty bound to give a period of 30 consecutive days of leave with pay to her preceding
presumed date of her confinement. But what will happen if the woman does not deliver the child
on the presumed date or within the 30 days period? In other words, will she be entitled to

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additional days of leave? In this case, the employer is duty bound to give additional prenatal
leave until their confinement.

Postnatal Leave: this is a leave with pay granted to a woman after her confinement. It is the
period of sixty consecutive days beginning from the date she gives birth to the child. As we have
seen under the discussion on prenatal leave, if the woman does not deliver the child within the 30
days period, we have said that she is entitled to additional leave. What if she delivers the child
before she finishes the 30 days prenatal leave? In this case, if delivery takes place before the 30
days period has lapsed, the postnatal leave will commence. That means, the prenatal leave will
end there and the postnatal leave will start.

d. Paternity leave:
Paternity leaves are offered for fathers to allow them take care of family responsibilities. While
there is currently no statutory paternity leave, a growing number of employers (e.g., in UK) do
have formal provisions for such leave. Most organizations with some paternity leave provision,
typically offered five days paid leave, with some organization providing 4-5 weeks unpaid leave
for employees with one year of service. Otherwise compassionate leave may be granted or the
employee is expected to use part of his annual leave entitlement. Some other European countries
tend to be more generous, recognizing perhaps that most families stop at two children and he
amount of leave involved for most men in a life time is less than some need to take as sick leave
in one year. In deciding policy in this area, employers need to take account not just of the cost,
but of the benefit obtained from recognizing and encouraging involvement in family
responsibilities.

e. Career breaks:
These are breaks given to employees for the purpose of rearing children. A growing number of
employers in some developed counties are providing for employees (both men and women) to
take up to five years off to rear children. People taking breaks are usually brought in regularly to
keep up to date with developments both in their skills area and the organization in general and
are entitled to return full or part time to work with no loss of job status.

f. Sabbaticals:
Although sabbaticals are comparatively rare benefits, they can be a useful retention factor for
professionals able to use the time to travel and update their knowledge. They may also be
granted to long serving employees either as straight leave or as time to get involved in something
of value to community. There is no set pattern to the length of leave given; it varies from a few
weeks up to a year.

Other benefits
Other benefits include:
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  Subsidized meals in staff restaurant
 Clothing allowance/cleaning tokens for employees who have to wear company uniforms
 The refund of telephone rentals and the whole or part of the cost of calls for those
required to work at home or from home on occasions
 Educational allowance for expatriates- to ensure continuity of education for their children
 Credit card facilities for petrol or other purchase- especially for those who do a lot of
travelling
 Mobile telephone/fax machines and lap top computers- typically job need related but
perceived as a reward too
 Funding of non job related evening classes or training to encourage employees to broaden
their interests and skills- an area where ‘leading age’ employees such as Ford and Mars
have taken major initiatives.

CHAPTER EIGHT

INTEGRATION AND MAINTENANCE

8.1. INTEGRATION

Integration function is the process of reconciling the goals of an organization with those of its
members. Integration involves motivating employees through various financial and non financial
incentives, providing job satisfaction, handling employee grievance, workers participation in
management, conflict resolution, employee counseling etc.

8.1.1. EMPLOYEE DISCIPLINE

8.1.1.1. Nature of discipline

In simple words, discipline means orderliness or the absence of disorder, chaos and confusion in
human behavior and action. It occurs when employees behave in an orderly and responsible
manner. According to Richard, D Calhoon, Discipline may be considered as the force that
prompts individuals or groups to observe rules, regulations, standards and procedures deemed
necessary for an organization.” In the words of Ordway Tead, “discipline is the orderly conduct
of affairs by the members of an organization who adhere to its necessary regulations because

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they desire to cooperate harmoniously in forwarding the end which the group has in view, and
willingly recognize that, to do this, their wishes must be brought in to a reasonable unison with
the requirements of the group in action.”

8.1.1.2. Objectives of disciplinary action

The objectives of discipline are as follows:

 To gain willing acceptance of the rules, regulations, standards and procedures of an

organization from the employees
 To develop the feeling of cooperation among the workers
 To maintain good industrial relations
 To promote morale and efficiency among the workers
 To develop a sense of tolerance and respect for human dignity

8.1.1.3. Types of discipline and causes of indiscipline

8.1.1.3.1. Type of discipline
Discipline is of two types: positive and negative
Positive discipline: it implies a sense of duty to observe the rules and regulations. It involves
creation of an atmosphere in the organization whereby employees willingly conform to the
established rules and regulations. Positive discipline can be achieved through rewards and
effective leadership. Generally, discipline is thought of only in the negative sense but positive
discipline is more effective. According to spriegel, “positive discipline does not replace reason
but applies reason to the achievement of common objective. Positive discipline does not restrict
the individual but enables him to have a greater freedom in that he enjoys a greater degree of self
expression in striving to achieve the group objective, which he identifies as his own.” Positive
discipline promotes cooperation and coordination with a minimum of formal organization. It
reduces the need for personal supervision required to maintain standards.

Negative discipline: it is also known as punitive or corrective discipline. Under it penalties and
punishments are used to force workers to obey rules, regulations. The objective is to ensure that
employees do not violate the rules and regulations. Negative disciplinary action involves such
techniques as fines, reprimand, demotion, layoff, termination, etc.

Negative discipline does not eliminate undesirable behavior rather it merely suppresses it. It
requires regular monitoring causing wastage of valuable time. Punishment also causes
resentment and hostility. While exercising negative discipline, management should proceed in a
sequential manner viz. an oral reprimand, a written reprimand, a warning, temporary suspension
and dismissal or discharge.

8.1.1.3.2. Causes of indiscipline

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The main causes of indiscipline are as follows:
i. Ineffective leadership; according to Henry Fayol, “discipline is what the leaders make it.”
ii. Lack of a well defined code of conduct to guide behavior on both sides
iii. Faulty supervision
iv. Divide and rule policy of management
v. Bias or favoritism in disciplinary actions- unfair management practice
vi. Lack of timely redressal of employee grievance
vii. Lack of protection opportunities causing a feeling of stagnation
viii. Defective communication system
ix. Inadequate attention to personal problems
x. Victimization and excessive work measure
xi. Uninteresting work
xii. Drunkenness and family problem
xiii. Political and trade union influences
xiv. Low wages and poor working conditions

8.1.1.4. Principles and procedure for disciplinary action

Despite best effort, acts of indiscipline occur and it becomes necessary to take a disciplinary
action. While taking a disciplinary action the following principles of natural justice should be
followed:
i. The employee charged should be given an opportunity to present witness of his own
choice on whom he relies
ii. The employee should be given the right to cross examine management’s evidence
iii. The evidence of management should be taken in the presence of the employee
iv. No material should be used against the employee without giving him an opportunity to
explain
v. The enquire against the employee should be fair and impartial
vi. The punishment award should not be out of proportion to the misconduct committed
vii. Disciplinary action should be taken in private so as not to hurt the ego and social status of
the employee.
viii. Disciplinary action should be taken by the immediate boss of employees
ix. Disciplinary action should be consistent for all
x. The supervisors behavior towards the employees should remain as it was before taking
the disciplinary action

8.1.1.5. Procedure of disciplinary action

The procedure for taking disciplinary action involves the following steps:
i. Preliminary investigation: first of all the preliminary inquiry should be held to find out
whether a prima facie case of misconduct exists
ii. Issue of a charge-sheet: once the prima facie case of misconduct is established, the
management should proceed to issue a charge sheet to the employee. Charge sheet is
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 merely a notice of the charge and provides the employee an opportunity to explain his
conduct. Therefore, charge sheet is generally known as a show cause notice. In the charge
sheet, each charge should be clearly specified. There should be clearly separate charge
for each allegation and charge should not relate to any matter which has already been
decided up on.
iii. Suspension pending enquiry: in case the charge is great, a suspension order may be given
to the employee along with the charge sheet
iv. Notice of enquiry: in case the worker admits the charge, in his reply to the charge sheet,
without any qualification, the employer can go ahead in awarding the punishment without
further enquiry. But if the worker does not admit the charge and the charge merits major
penalty, the employer must hold enquiry to investigate in to the charge. Proper and
sufficient advance notice should be given to the worker indicating the date, time and
venue of the enquiry so that the worker may prepare his case.
v. Conduct of inquiry: the inquiry should be conducted by an impartial and responsible
officer. He should proceed in a proper manner and examine witnesses. Fair opportunity
should be given to the worker to cross-examine the management witnesses.
vi. Recording the findings: on the conclusion of the enquiry, the enquiry officer should
record his findings and the reasons thereof. As far as possible he should refrain from
recommending punishment and leave it to the decision of the appropriate authority.
vii. Awarding punishment: the management should decide the punishments on the basis of
findings of the enquiry, past record of the worker and gravity of the misconduct.
viii. Communicating punishments: the punishment awarded to the worker should be
communicated to him quickly. The letter of communication should contain reference to
the charge sheet, the enquiry and the findings. The date from which the punishment is to
be effective should also be mentioned.

8.1.2. LABOR RELATION

8.1.2.1. The meaning and scope of labor relations

Labor relations refer to the efforts of maintaining satisfactory accommodation and resolving
disagreements between employees and management. It is the study of the relationship that is
developed between organized labor and management. The term is commonly used to describe
employee-employer relationships in both the union and non unionized portion of the economy. It
is also known as labor management relationship.

Labor relation involves the interaction of three major groups: the labor unions, the management
staff of employing institutions, and government agencies.

 Labor union refers to officials or leaders of the union elected by the members. They are
represented by the employees that represent the most significant category. Employees

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 determine whether a negotiated labor agreement is accepted or rejected and whether a
threatened strike is actually carried out.
 The management staff of the employing organization refers to the mangers or officials of
the corporate structure that represent the stockholders or owners. They negotiate and
administer work rules at several levels and functions with union officials.
 The government participate through executive, legislative and judicial activities at
national, state, and local levels

Since organized labor management do not operate in a vacuum, the field of labor relations also
includes the examination of the environment in which the parties operate.

8.1.2.2. Elements affecting labor management relations

Elements of the environment affecting the nature of labor management relations include:
 Nation’s labor policy and the administrative work rules and procedures
 Technology of the workplace (the equipment used at the workplace, the place and
scheduling of the work, the characteristics of the work and tasks to be performed)
 State of the economy
 Social conditions
 Attributes of the labor market
 Third party neutrals (arbitrators selected by the union and management officials to
mediate the two parties).

Labor management relations are characterized by both conflict and cooperation. A central focus
of labor relation is the study of the attitudes, relationships, practices and procedures developed
by organized labor and management to resolve or control their conflict. As labor management
relations mature over the years, the parties are usually better able to work together to resolve
their disagreement. Fewer problems lead to conflict and a larger number of issues can be handled
cooperatively. With the passage of time, parties develop a mechanism or system of
accommodation for resolving their disagreement without denying their differences. As a result
labor management cooperation is more prevalent today than in the past. Therefore, labor
relations involve the study of the conditions related to labor-management collaboration as well as
the practices and procedures needed to facilitate cooperation.

8.1.2.3. Labor relations process

The basic objective of labor management relations is to establishing an agreement regarding the
conditions under which employees will render services to the employer. These relations, as
already noted, are governed by legislative rules. They are subject to variety of economic,
administrative, and personal forces which the parties can bring to bear. The following are the
basic process through which labor management relations can be conducted:
 Preparing for negotiation

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  Negotiation of labor agreement
 Identify the subject areas of agreement
 Living with the contract or administration of the negotiated labor agreement.

Preparing for negotiation

This phase includes:
 Recognizing the legitimate rights of employees to join unions
 Understanding the diverse of the union organization
 Recognizing the legitimate rights of management and union officials and
 The responsibility of management and union officials to abide by related laws and labor
agreement provisions

In many ways preparing to negotiate a contract is the most crucial stage of union management
relations. Blustering or noisy and obstructionist tactics are poor substitutes for solid facts and
logical analysis about wages, hours and working conditions. Good preparation calls for a
considered program of information to be gathered, subjects to be studied, and assignment of
responsibilities.

Finally careful assignment of responsibilities should be made for gathering and analyzing
information, suggesting proposals, and deciding upon the company’s position. Supervision and
foreman, for example, are excellent sources of information on how the current contract is
operating. They should be asked to submit reports on these matters. Staff members in the legal,
personnel, commercial, statistical departments should be assigned specific topics regarding the
pertinent information which they are expected to collect and such materials should be funneled
or channeled to one department or person who is responsible for classifying, summarizing, and
interpreting the findings. The personnel or industrial relations department is the logical choice
for this agreement.

Negotiation of labor agreement

After employees recognize the unions as the workers’ bargaining agent, top executives attempt to
carry out the work of bargaining with unions. Negotiation includes developing and applying
appropriate strategies, tactics, and impasse-resolution techniques. Although union management
relations are generally handled by each company on an individual basis, there are instance in
which bargaining and dispute settlements have been handled on an industrial wide level.

The unions gained many concessions unnoticed by the top executives who considered wages
alone were important in negotiation. The advantages gained by unions with regard to grievance
handling, seniority, and discharge rules are evidences of ineptness displayed by some top
executives.

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Significance attempts are also made in various industries to bring all interested parties together to
create better labor management relations. A committee representing various communities, civic,
and business interest is formed. It discusses current industrial problems, formulates policies, and
helps to settle disputes through mediation, strikes, conciliation and arbitration.

8.1.3. COLLECTIVE BARGAINING

Collective bargaining is the technique that has been adopted by unions and management for
compromising their conflicting interests. It is called bargaining because employees, as a group,
select representatives to meet and discuss differences with the employer. Collective bargaining is
opposite of individual bargaining, which takes place between management and a worker as an
individual, apart from his fellow employees. Collective bargaining plays a significant role in
improving the labor-management relations and in ensuring industrial harmony. The negotiations
for collective bargaining require joint session of the representatives of labor and management.
These help a lot in better understanding of each other’s point of view as well as the problem.
Through discussion and interactions, both the parties learn more about others and
misunderstandings may be removed. Although all major differences may not always be stored
out, collective bargaining helps in easing many minor differences and there are many instances
in which even major disputes are said to have been settled without any work stoppage or outside
intervention. Accordingly its role in conflict resolution is very significant. It builds up safety
valves, allowing the opposite group’s excess steam to escape without blowing the whole
mechanism to pieces.

8.1.4. GRIEVANCE HANDLING

8.1.4.1. The meaning of grievance handling

Broadly speaking grievance means any real or imaginary feeling of dissatisfaction and injustice
which an employee has about his employment relationship. According to Dale S. Beach,
“grievance is any dissatisfaction or feeling of injustice in connection with one’s employment
situation that is brought to the attention of management.” In the words of Michael J. Jucious,
“grievance is any discontent or dissatisfaction, whether expressed, or not, whether valid or not,
arising out of anything connected with the company that an employee thinks, believes or even
feels, is unfair, unjust or an equitable”.

8.1.4.2. Features of grievance

An analysis of the above definitions reveals the following features of grievance:
 A grievance reflects dissatisfaction or discontent or a feeling of injustice
 The dissatisfaction must arise out of employment not from personal or family problems
 The dissatisfaction may be expressed or implied. A grievance may be expressed verbally
or in writing. Gossiping, jealous argumentation, careless use of materials, poor

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 workmanship, untidy housekeeping, etc are verbal grievances. Written grievances are
often called complaints. Day dreaming, absenteeism, tardiness, indifference to work,
labor turnover, etc, indicate implied grievances.
 The dissatisfaction may be valid and legitimate or irrational or ridiculous or false.
 A grievance arise only when employee feels that injustice has been done to him
 Grievance if not redresses in time tend to lower morale and productivity of employees

8.1.4.3. Methods to identify grievance

The best approach towards grievances is to anticipate them and take steps to tackle them before
the grievance assume dangerous proportions. An ordinary manager redresses grievances as and
when they arise. An excellent manager anticipates and prevents them. Managers can know and
understand grievances with the help of the following methods:
Exit interview: an interview of every employee who quits the organization can reveal employee
grievance. Most of the employees quit the organization due to some dissatisfaction. Great
amount of care and empathy is necessary for a successful for exit interview.
Opinion survey: a survey may be conducted to elicit the opinions of employees regarding the
organization and its management. Group meetings, periodical interviews with workers and
collective bargaining sessions are also helpful in knowing employee discontent before it becomes
a grievance.
Gripe boxes: in these boxes employee can drop their anonymous complaints. These are different
from the suggestion boxes in which employees drop their suggestions with their names written
on them.
Open door policy: it implies a general invitation to the employees to informally drop in the
manager’s room any time and talk over their grievances. This policy is useful in keeping touch
with employee’s feelings. But it suffers from the following limitations:
 This policy is workable only in very small organizations. In big organizations top
managers do not have the time to meet a large number of employees daily
 Under this policy the frontline superiors are bypassed. He should first of all know the
grievance of his subordinate.
 This policy does not permit the top management to assess a superior’s skills in handling
grievance.
 Top management is not familiar with the work situation in which the grievance
developed. It cannot therefore correctly evaluate the information provided by the
aggrieved employee.
 Lower level employees hesitate to enter the room of top manager and speak freely.

In large organizations, management by walking around might be preferable to open door policy.
In this system the mangers walk through the employees, observes them and if necessary listen to
their problems.

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According to Michael Armstrong, a well designed and properly structured grievance redressal
procedure provides:
 A channel or avenue by which any aggrieved employee may present his grievance
 A procedure which ensure that there will be a systematic handling of every grievance
 A method by which an aggrieved employee can relieve his feelings dissatisfaction with
his jobs, working conditions, or with the management, and
 A means of ensuring that there is some measure of promptness in the handling of the
grievance

8.1.4.4. Requisites of a good grievance procedure

An effective grievance procedure should contain the following characteristics:
1. Legal sanctity: the procedure should be in conformity with the existing law. It should be
designed to supplement the existing statutory provisions. Wherever possible, the procedure
should make use of the machinery provided under legislation. The procedure may be
incorporated in the standing orders or collective bargaining agreement of the organization
2. Acceptability: the grievance procedure must be acceptable to all, therefore, and should be
developed with mutual consultation among management, workers and the unions. In order
to be general acceptable, the procedure must ensure:
 A sense of fair play and justice to workers
 Reasonable exercise of authority to managers and
 Reasonable participation to the union
3. Promptness: the grievance procedure must aim at speedy redressal of grievance. This can be
ensured in the following ways:
 As far as possible the grievance should be settled at the lowest level
 There should be only one appeal
 Time limit should be prescribed and rigidly enforced at each level
 Different types of grievance may be referred to appropriate authorities
4. Simplicity: the procedure should consist of as few steps as possible. Channels for handling
grievances should be careful developed. Employees must know the officers to be contacted at
each level. Information about the procedure should be communicated to the employees.
5. Training: supervisors and unions representatives should be given training in grievance
handling. This will help to ensure effective working of the grievance procedure.
6. Follow up: the working of the grievance procedure should be reviewed at periodical
intervals. Necessary improvement should be made to make the procedure more effective.

8.1.4.5. Guidelines for handling grievances:

1. Consider every grievance important however, irrelevant or insignificant it appears
2. Directly meet the aggrieved employees and give them a full hearing
3. Discuss the grievance in private

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 4. Ask the union representative to identify the specific rules/regulations allegedly violated
by the management
5. Handle every grievance with the contractual time limits
6. Find out whether the procedural requirements specified in the agreement have been duly
complied with.
7. Examine the proposal record of the aggrieved employees
8. Treat the union representative as your equal
9. Identify the relief the worker/the union seeks
10. Fully inform your own superior of all grievances
11. Don’t postpone the grievance in the hope that people will see the reason themselves
12. Put all grievances in writing
13. Gather all relevant facts about the grievance
14. Communicate and enforce the decisions
15. Follow up the action to determine its effect on aggrieved employee.

8.2. MAINTENANCE

Maintenance function is concerned with protecting and promoting the physical and mental health
of employees. For this purpose, several types of fringe benefits such as housing medical aid,
educational facilities, conveyance facilities, etc are provided to employees. Social security
measures such as provident fund, pension, maternity benefits, group insurance etc are also
arranged.

8.2.1. EMPLOYEE SAFETY AND HEALTH

8.2.1.1. Concept of employee health

Health is state of complete physical, mental and social well being and not merely the absence of
disease. It is the outcome of the interaction between the individual and his environment.
According to the joint ILO/WHO committee on organizational health, employee health is:
 The promotion and maintenance of physical, mental and social well being of workers in
all occupations
 Prevention among workers of ill health caused by the working conditions
 Protections of workers in their employment from risk resulting from factors adverse to
health
 Placing and maintenance of the workers in an occupational environment adapted to his
physical and psychological equipment
Thus, modern concept of health anticipates and recognizes potentially harmful situations and
applies measures to prevent disease and infirmity.

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 8.2.1.2. Importance of employee health
Workers spend a great deal of their time in industrial settings. In many industries workers are
exposed to various types of health hazards. Unless the working conditions- lighting, ventilation,
cleanliness, temperature, space etc are proper, workers cannot concentrate on their work. They
do not feel work hard continuously for long time. As a result productivity will be low. Secondly
ill health will force workers to be absent from work. There would be high rate of absenteeism
and labor turnover. The quality of work will suffer and the firm’s resource will be wasted. In
addition, industrial discontent and indiscipline will arise. Thus, employee health is essential for
the following reasons:
 To maintain and improve productivity and quality of work
 To minimize absenteeism and labor turnover
 To reduce industrial unrest, indiscipline and accidents
 To improve employee motivation and morale
 To reduce spoilage and cost of operations
 To preserve the physical and mental health of employees

In recent years, increasing attention is being paid to employee health and safety due to pressure
from trade unions, labor laws, and enlightened attitudes of employers. According to ILO,
“occupational health services should be established in or near a place of employment for the
purpose of:
 Protecting the workers against any health hazard arising out of work or conditions in
which it is carried on
 Contributing towards worker’s physical and mental adjustment and
 Contributing to establishment and maintenance of the highest possible degree of physical
and mental well being of the workers

8.2.1.3. Occupational hazards and diseases

In certain industries workers are exposed to health hazards and disease. These arise due to the
following:
Chemical substances: carbon dioxide, sulpheric acid, limes and alkalis cause injury when they
are absorbed through skin and inhaling. Workers may suffer from skin disease, asthma, heart
disease, neurological disorders and cancer. Their effect is slow but commutative. These are
difficult to diagnose and may become chronic and incurable. Gas fames and dust in stone
quarries, mines, stone crushing, lead or zinc smelting etc cause disease.
Biological hazards: bacteria, fungi, viruses, insects, malnutrition, excessive drinking, and job
stress affect employee health
Environmental hazards: these include radiation, noise, vibrations shocks, etc, X-ray or
radioactive exposure may cause eye strain, genetic disorder and cancer. High noise of machinery
may cause hearing loss, vibrations and shocks may cause nerve injury and inflammation of
tissues in the body

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Atmospheric conditions: inadequate ventilation, improper lighting, extreme temperature, etc will
affect health and efficiency of workers

8.2.1.4. Protection against health hazards

Two types of measures can be taken to protect employee health against occupational hazards:
Preventive measures and
Curative measures

The preventive category includes:

 Pre-employment and periodic medical examination
 Removal of health hazards to the maximum possible extent
 Check over women and other workers exposed to special risks
 Training of first aid staff
 Educating workers in health and hygiene, etc

The curative measures consist of treatment for the affected workers. Off course, prevention is
always better than cure. Use of less toxic materials, providing protecting devices, controlling
noise, dust fumes, gases, etc are some of the convenient and inexpensive measures that can be
taken by employers to prevent health hazards.

8.2.2. CONCEPT OF EMPLOYEE SAFETY AND ITS SIGNIFICANCE

Industrial workers are exposed to several types of hazards and accidents. Due to rapid
industrialization, mechanical, chemical, electrical, and radiation hazards have increased. Every
year thousands of employees are injured in factories, mines, ports, railways, etc. leading to total
or partial disablement. An industrial accident is a sudden unexpected occurrence in an industrial
undertaking causing body injury to one or more persons and interruptions in the orderly progress
of work.

Employee safety and efficiency are directly related to each other. Safety measures prevent
accidents and ensure regular flow of work. Safety also helps to improve the morale and
productivity of workers. It contributes to team work and sense of belonging among workers.
Surveys and studies reveal that wherever safety measures are good, labor productivity is high.
This is so because employees can concentrate on their work with confidence and without fear.
Moreover, rules and regulations prescribed under labor laws require employees to provide
certain minimum safety measures to their employees. Therefore, every employer should pay due
attention to industrial safety and take adequate steps to prevent industrial accidents.

8.2.2.1. Causes of industrial accidents

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Industrial accidents take place due to several reasons arising from people, working conditions,
and other factors. These causes may be classified as follows:
Unsafe conditions: these refer to work related or technical causes. These are the biggest causes
of accidents in industry. These work related works are as follows:
The job itself: some jobs are inherently more dangerous than others. For example, the job of a
crane-man as compared to that of a supervisor is more risky.
Work schedule: night shift is more accident prone than day shift due to fatigue and sleepiness.
Psychological conditions: emotional disturbance and mental preoccupation often cause accidents.
Over work, monotony, boredom, anxiety, fatigue and frustration disturb concentration and
mental alertness leading to accidents.
Machinery and equipment: defective equipment ungraded machinery, breakdown of machines,
and hazardous arrangement of machines and equipment inadequate safety/control devices,
overloading, improper illumination, insufficient ventilation, poor housekeeping, poor
maintenance and supervision are common causes of accidents in industry. Safety experts point
out that there are some high danger zones like hand lift trucks, wheel barrows, gear and pulleys,
saws and hand rails, chisels and screw drivers, electric drop lights, etc.

Unsafe acts: these arise due to lack knowledge and skills, bodily effects and faulty attitudes.
Some examples are given below.
a. Operating without authority
b. Failure to use safety device
c. Failure to listen to warning
d. Careless throwing of materials on the floor
e. Operating at unsafe speeds
f. Using unsafe equipment
g. Removing or disconnecting safety devices
h. Lifting things improperly
i. Taking unsafe position under suspended loads
j. Using unsafe procedure in loading and unloading
k. Cleaning, oiling, repairing or adjusting moving machines
l. Teasing or quarreling, day dreaming or horseplay
m. Personality and behavior which make some people more accident prone

Miscellaneous causes: young, untrained and inexperienced workers cause more accidents than
old, trained and experienced workers. Alcoholic and drug addicted workers are more accident
prone. Workers having distributed family life are likely to cause more accidents due to stress.
Unsatisfactory behavior of supervisors may also cause accidents on the part of workers.

8.2.2.2. Measures to ensure industrial safety

The main steps that can be taken to ensure safety and security of employees are as follows:

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1. Safety policy: every industrial establishment should formulate and implement a safety
policy. Once the safety policy has been spelt out, the establishment should formulate a safety
program. The main aim of the program should be to reduce the number of hazardous factors
which are likely to cause accidents, and to develop safe working habits among to its employees.
The safety program must have the top management support and active cooperation of employees.
Safety must be an integral part of all phases of planning, supervision and controlling. The job
should be engineered for safety, employees should be educated in safe procedure and safety rules
should be properly enforced.
2. Safety committee: a safety committee should be constituted in every large factory. It should
consist of the representatives of both employer and the employees. The committee should be
constituted under the chairmanship of a safety director /manager. The committee should educate
and impress up on the line managers about the safety measures required in the establishment.
The safety program should be formulated and implemented through the safety committee.
3. Safety engineering: proper engineer procedure must be adopted to eliminate or minimize
work hazards. Full attention should be paid to safety in the design, layout, and installation of
plant and machinery. Safety engineering helps to minimize unsafe conditions. The main elements
of safety engineering are as follows:
 Guarding of machines: The machinery which pose danger to the employee working on
it should be properly covered or fenced. According to rule 82 of the ILO Model Safety
Code, guards should be properly designed, so that they will provide positive protection.
Prevent access to the danger zone, cause no inconvenience to the operator and protect
against unforeseen operational contingencies.
 Material handling equipment: materials handling is the common source of accident.
Therefore, the flow of materials during all stage of production should be properly planned
to eliminate hazards. Proper equipment, adequate space and aisle (pathway) should be
provided to ensure risk free and smooth flow of materials. In addition, there should be a
well designed system for the detection presentation and control of fires. Inflammable
liquids and materials expose workers to great risks. Therefore, utmost care should be
exercised in handling and storage of such materials.
 Safety Devices: safety glasses to protect the eyes from hazards of fire, glare, dust and
fumes should be provided to workers. Hard protective caps may be provided to prevent
head injuries. Gas makes may be given to prevent the inhalation of poisonous fumes;
gloves to protect hands against acids, safety shoes, and safety appeal, etc may be
provided for use by workers.
 Ergonomics: it deals with physiological and anatomical aspects of man and his
interactions with working environment. It is being increasingly used to improve man-
machine system. For example, equipment, machinery and work procedures should be
redesigned to minimize accidents.

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  Plant maintenance: all equipments and machines should be kept in perfect working
order through regular cleaning; oiling, repairing etc. there should be periodic inspections
of machines equipments and electrical installations and cables.
 General housekeeping: all passages meant for movement of employees should be kept
free from all obstructions. Tools and parts should be stored safely after use. There should
be solid and even flooring. All floors should be kept clean and dry. Waste cans and sand
pails should be safely stored.
4. Safety education and training: safety education and training should be provided to
workers, supervisors, executives to develop safety consciousness and safe working habits.
Workers should be trained in the proper use of safety devices. The need for good housekeeping
and safe materials handling should be stressed. Principles of first aid and precautions required in
case of fire and the accidents may be explained. Posters, bulletin boards, house organs, displays,
cartoons, slogans, signs and safety films may be used for safety education, training and safety
publicity campaign. Safety contests may be organized and prizes awarded to the most safe
employee/work group/department to develop safety competition. Disciplinary
action/punishments may be used for breach of safety regulations.

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 CHAPTER NINE

1.1. BASIC CONCEPTS OF MOVEMENT AND SEPARATION

The outcomes of career development action are employee mobility there are two types of
employee mobility in career development action & they are:
 Internal mobility
 External mobility

i. Internal mobility
Internal mobility refers to movement of an employee within an organization. An employee
prefers lateral mobility as long as he is sure of getting suitable placement / employment within
the organization. Similarly, organizations may resort to internal mobility until they find
candidates to different jobs. Basically internal mobility is necessary to match the employee’s
skill and requirement with the requirement of the job and these of the organization continuously
internal mobility is needed because of the following reasons:
 Expansion and diversification of production/operation
 Changing government rule in human resource management
 Social and religious conditions of the employees
 Technological change that result in enhancement of job demands
 Problem related with interpersonal relations
 Changes in job structure, job design, job grouping, etc
 Introduction of creative innovative ideas
 Impact of national economic and business trends on job design and demands
 Changes in employee skills, knowledge and abilities

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Purposes of internal mobility
1. To improve the effectiveness of the organization
Employee suitable for the job requirement can be mostly secured through proper placement and
job reassignment to internal employees as and when vacancies occur. Employee’s contribution
and commitment would be maximized to the organization when she is placed in the right job.
This right placement, in addition to the other factors, contributes much to improve the
organizational effectiveness.
2. Maximize employee efficiency
Employees’ existing skill, knowledge etc, can be aptly utilized when a proper job is assigned to
them besides other factors. Upward job assignment to an employee certainly helps in motivating
the employee, boosting his moral and improving his commitment to the job and organization in
utilizing the skills of higher order which were higher to unutilized. Even horizontal mobility of
employee helps in reassigning the jobs where employees’ skills can be better utilized. Thus, the
internal mobility helps for optimum utilization of employee skills and in turn maximizes
employee efficiency through motivations.
3. To ensure discipline
Discipline is highly essential to implement the programs in right time and in right manner.
Demotions can be used to ensure discipline and to correct the wrong placements and job
assignments.
4. To adapt to organizational changes
Organizational changes include operational changes like changes in production levels and
schedules, market level share, schedule and direction, economic changes like inflation, changes
in technology expansion, diversification, geographic speed etc. All these organization changes
should be met by proper job reassignment to the existing employees. Promotion meet the
demand for higher order skills, transfers meet the demand for any adjustment in the same or
similar level of skills, knowledge, etc., while demotions meet the demand of the depression.

ii. External mobility

External mobility refers to movement of an employee from one organizational to another seeking
better placement base on his skills and the requirements and needs of various organizations.
Employees resort to external mobility techniques and organization resort to candidates when the
chances of suitable placement on either side or both the sides are non existent within an
organization. Generally, speaking external mobility is of two types:
a. Accessions
b. Separations

a. Accessions are additions of new candidates to the existing employees. Accessions include
employment of new candidate, recruitment of former employees, called back to worker after
layoff, etc.
b. Separation is termination of employment. It includes among other things:
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  Voluntary quit or resignation
 Layoff
 Disciplinary layoff or discharge
 Retirement
 Deaths

1.2. HUMAN RESOURCE MOVEMENT

Concept of transfer
Transfers of employees are quite common in all organizations. A transfer may be defined as a
change in job within the organization where the new job is substantially equal to the old in terms
of pay status and responsibilities. Transfers are possible from one department to another or from
one plant to another.

Transfer Vs promotion
The term transfer refers to changes in which the pay, status, and conditions of new position, or
job are almost the same as that of the old. In case of promotion, the new position has higher pay,
status and job conditions as compared with old. A transfer may be associated with a higher pay,
but it is counterbalanced by changes in other conditions.

Promotion implies to an upward elevation of an individual in terms of job responsibilities, pay

scale and status. It represents an advancement, and going up a step in the career ladder. It is case
of upward mobility which most of the employees seek for their career development. But transfer
refers to a lateral shift of employee from one job position to another on the same occupational
level and pay scale.

Promotion represents recognition of and re ward for merit, good performance and behavior and
so on. It tends to improve satisfaction of the person promoted and to induce him to perform
better. Transfer does not have these implications. Considerations of merit and seniority do not
generally enter in to transfer matters; there may however be some instance where an employee
with good performance is transferred to another unit to utilize his skills more meaningfully. The
incentive value of transfer is generally low unless the new job position has more powers.

Reasons for transfer

The need for transfer may arise due to several reasons. It may be made to achieve the following
objectives:
 To meet organizational needs: a company may transfer employees due to changes in volume
of production, in technology, in production schedule, in product line, in organization
structure etc. All these changes require shift in job assignments.

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 To satisfy employee needs: employee may request transfer because they dislike their boss or
fellow workers or due to lack of opportunities for future advancement. Personal problems of
employees like health, family circumstances etc. may also require transfer. For example, an
employee may like to be shifted to near his native place. Sometimes transfers are made to
avoid interpersonal conflicts and to provide an outlet from blind alley jobs.
 To better utilize employees: an employee may be transferred because management feels that
his capacity would be utilized better elsewhere. An employee who is not performing
satisfactorily may be more suitable in another job.
 To make the employee more versatile: employees may be transferred to different jobs to
widen their knowledge and skills. In some companies transfers are made as a matter of
policy after an employee has stayed on a job for specified period. Such rotations from one
job to another serves as a method of training and reduce monotony.
 To adjust the workforce: there may be changes in the volume of work in different sections,
or plants. Employees from the overstaffed plant or office may be transferred to where
vacancies exist.
 To provide relief: transfers may be made to give relief to the employee who are
overburdened or doing risky work for long period.
 To punish employees: employees indulging in undesirable activities may be transferred to
remote places. This type is in the form of disciplinary action. This practice is wide spread in
government offices. In some organizations, transfers are made because permanent stay may
cause fraud, bribery, politicking, etc. Employees with such problem may be transferred to
some other jobs.

Types of transfers
Most organizations generally carry out four types of transfers which are discussed below:
Production transfers: Such transfers are resorted to when there is a need to manpower in one
department and surplus manpower in the other. Thus, production transfers are made from a
department which is over staffed to the other department where manpower needs have increased
or vacancies have occurred through separations. This prevents layoffs from the overstaffed to the
other departments. It is not a good policy to have in the same organization layoffs in one
department and employees being recruited in another department for the similar types of jobs
production transfers stabilize employment in the organization and so they must be controlled
centrally through the personnel department.

Shift transfers: in multi-shift plans, the employee may be shifted from one shift to another for
personal reasons e.g., marriage, infant care, old parents, etc. or for organizational reasons such as
need for balancing of manpower because of excessive absenteeism, labor turnover, or some other
problem.

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Remedial transfers: such transfers are made to rectify the wrong selection and placement of
personnel. For instance, if the initial placement of an individual is faulty or he cannot adjust on
the job, his transfer to the more appropriate job is desirable. This will act as follow up measure of
selection and placement procedures and will help the employees to adjust themselves to suitable
jobs.
Versatility transfers: such transfers are made to increase versatility of the employees from one
job to another and one department to another. Transfers or (job rotations) are used as a device to
train employees. Each employee is provided a varied another broader job experience by moving
from one job to another. Such transfer helps the employee to get prepared for further promotions.
Besides, this will help the organization because enrichment of employees would make them not
only more effective but also ready for filling higher jobs.

Purposes of Transfers
The following are the advantages of transfers
 Increase in productivity and effectiveness of the organization
 Greater job satisfactions to employees
 Stabilize fluctuating work needs
 Improve employees skills
 Remedy for faulty placements
 Improve labor relations
 Develop employees for future promotions
 Avoid monotony and boredom

The concept of Promotion

The meaning of promotion

Promotion refers to advancement of an employee to a higher post carrying greater
responsibilities, higher status and better salary. It is the upward movement of employees in the
organization’s hierarchy, to another job commanding greater authority, higher status and better
working conditions. When an employee is assigned a higher level job with more pay and powers,
he said to be promoted. Promotion may be temporary or permanent, depending up on the needs
of the organization. When an employee is assigned to a higher level job without increase in pay,
it is called a ‘dry promotion’.

Promotion Vs transfer
Transfer implies movement of employee to another job at the same level and pay scale without
increase in authority and status. On the other hand, promotion means movement of an employee
to a higher job level with increase in authority, status and pay. Transfer is horizontal movement
of an employee whereas promotion is a vertical movement. Promotion is a tool of motivating
employees but transfer has little motivational value.

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Promotion Vs up gradation
Up gradation implies movement of employees to a higher pay scale without change of job. The
job itself is elevated to a higher grade without increase in authority and status. On the other hand
promotion involves change of jobs with increase in status, authority and pay. Both promotion
and up gradation are used to reward employees for better performance and to motivate them for
greater effort. Due limited vacancies at higher levels, it is not possible for management to
promote all employees. Therefore, up gradation may be used to motivate those employees who
cannot be promoted.

Purpose of promotion
Promotion from within the organization to fill up the senior posts shall have the following
purposes:
 To recognize an employee’s performance and commitment/loyalty and motivate him
towards better performance
 To boost the morale and sense of belongingness of employees to organization
 To develop a competitive spirit among employees for acquiring knowledge and skills
required by higher level jobs
 To retain skilled and talented employees
 To develop a competent internal source of employees for higher level jobs
 To utilize more effectively the knowledge and skills of employees
 To attract competent and suitable employees for organization

However, the filling up of senior vacancies from amongst the employees of the organization is
also not free from demerits. First the more talented outsiders may not be employed and persons
promoted to senior jobs may not possess the required qualities. Second, mobility of labor is
halted. Once a man joins an organization, he will stick to that organization. Employee turnover to
a certain extent is good for the health of the organization. Third, in promotion, there may be a
clash between factors like seniority and ability. The decision may lead to favoritism. Last faster
growth of the business is hindered by the limited talents of the insiders.

In order to avoid the disadvantages from filling up senior vacancies through promotion, a sound
policy of promotion should be designed. It should lay down what percentage of vacancies in
higher posts is to be filled up by promotion from within the organization and what shall be the
basis of promotion, i.e., seniority of ability, or combination of both.

The policy higher level jobs by promoting employees working at lower levels creates a feeling of
content among employees. It improves their job satisfaction and motivation by providing greater
income, status and responsibilities. By building up loyalty, promotion reduces, labor turn over.
Employees will have little incentive to work hard and stay in the organization if higher level jobs

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are reserved for outsiders. Promotion stimulates self development and creates interest in training
and development programs. According to Yoder, promotion provides incentive to initiative,
enterprise and ambition; minimize discontent and unrest; attracts capable individuals necessitates
logical training and advancement and forms an effective reward for loyalty and cooperation, long
service, etc.

Filling up all the higher level vacancies through promotion leads to in breading and stagnation
wherein new thinking does not enter the enterprise. Therefore, promotion should not be entirely
from within. It should be used as the norm but people from outside should be brought in
periodically in to higher level jobs.

Concept of Demotion
Demotion implies the assignment of an employee to the job of lower rank lower pay. It refers to
down ward movement of an employee in the organizational hierarchy with lower status and
lower salary. Demotion is just the opposite of promotion. It is a down grading process and a
serious type of punishment. Demotion affects the status, career and income of the employee. It is
insulting and causes emotional turmoil. Therefore, demotion should be used tactfully and only
when it is absolutely necessary.

The tool of demotion should be used only when it is the absolute necessary. However, there
should not be any injustice to any employee in this regard. Demotion should be made for genuine
reasons, promotions are easily accepted by employees but demotions are not accepted easily as
they affect their status, career and position. Demotion is usually treated as an insult and naturally
resented by the employees in one way or the other. It is, therefore, desirable to avoid demotions
as far as possible. Demotions should be an exception and not a normal rule.

Reasons of demotion
Demotions become necessary due to the following reasons:
 Adverse business conditions: due to recession and other crisis, an enterprise may have to
combine departments and eliminate job. Consequently junior employees retrenched and senior
employees may be required to accept lower level positions until normalcy is restored.
 Incompetence: some of the employees promoted on the basis of seniority and past
performance may fail to meet the requirements of higher level jobs. Such employees may be
demoted to jobs suitable to their knowledge and skills. Thus, demotions help to correct errors
in promotion.
 Technological changes: on account of changes in technology and work methods, some
employees may be unable to handle their jobs or adjust to new technology. These employees
may have to be demoted.

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 Disciplinary measure: demotions may be used as a tool of disciplinary action against erring
employees. However, demotions should be used rarely in exceptional cases because it affects
just satisfaction and morale of employees. Demotion should not be used as a penalty for poor
attendance record, violations of rules of conduct or insubordination because such action
produces defensive behavior without any improvement in behavior or performance.
Types of demotion
Use demotion action when an employee moves from one position to another position with a
lower salary range. There are two kinds of demotions. These are:
 Voluntary demotion and
 Involuntary demotion

Voluntary demotion:
It is a movement to a class with a lower salary range up on the request or concurrence of an
employee. This is distinguished from an involuntary demotion, which is not at the concurrence of
the employee and which may occur due to the rejection on probation, in lieu of layoff, or
disciplinary action.
A voluntary demotion may be:
 Within the department
 Between the departments with the concurrence of the appointing department
 Initiated by the employee
 Initiated by management
 Can only occur when both the employee and management mutually agree

Reasons for voluntary demotion

The following reasons are some of the instances that may constitute a request for a voluntary
demotion:
 Employees illness or poor health
 Change of career, employee development, greater chance for promotion, better utilization
of education or training, different field of work
 Relocation of residence; such as transfer of spouse, desire to work near family, climate
change for family health reasons
 Transportation difficulty; such as desire to work near residence, commuting to another
office is easier
 Conditions of employment such as:
 Desire for a different shift
 Less than full time work
 Desire for field assignment or office assignment
 Desire for less or no supervisory responsibility

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  Desire for a job with less pressure
 Loss of license required to perform in the class
 To further education or personal development
 Stipulation after appeal from adverse action
 Action to correct the misallocation of positions

Involuntary demotion
Involuntary demotion is when a disciplinary action has been taken against an employee by the
department, and the employee is used to a position with a lower salary range maximum.

1.3. HUMAN RESOURCE SEPARATION

Separation is the termination of employment. The reason can be voluntary or involuntary. Here
activities included in separation are discussed below.

1.3.1. Retirements
The last transition in most employees’ careers is retirement. Daniel Feldman defines retirement
as ‘the exit from organizational position career path of considerable duration, taken by individual
after middle age, and with the intention of reduced psychological commitment to work
thereafter. As Feldman’s definition indicates, retirement is not a homogeneous phenomenon, and
it is useful to recognize difference in voluntaries, completeness and timing. While the age
discrimination in employment Act has essentially eliminated mandatory retirement, other forms
of involuntary retirement exist, such as when health problems force an employee to stop
working. Retirement may or may not take place at the age considered “normal” and may be
either complete (the individual withdraws from all forms of employment) or partial (he or she
continues to work part time for the same or a different employer).

Majority of the separation of employees from the organization is by way of retirement. Every
organization should have clear cut rules as to retirement and it should help the employees to
adjust themselves after retirement. Employees who have rendered the service to the organization
for a number of years expect the organization to provide for their future, when they have retired.

Retirement of an employee is an important event in his life and also has an important effect on
the organization when he worked for major portions of his life. Therefore, at the time of parting
or farewell, the personnel manager should arrange special interview with the employee. He
should thank the employee for his service to the organization and ask him to speak about the
changes or improvement he would like to be introduced in the organization.

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 1.3.1.1. Types of retirement
Retirement may be of the following types:
a. Compulsory retirement: the employee must retire compulsorily after attaining specific
age. In Central Government and State Government Office, the retirement age is 60. But
in case of private organizations, employees may be given extension so long as they are
suitable to the work. Managerial or technical personnel may be reemployed after the
period of service if the contract of service is over.
b. Forced retirement: If an employee is found guilty either in court of law or has violated the
conditions enumerated in the service agreement, he may be forced to retire from the
service with or without any benefit, though he has not attained the retirement age.
c. Premature retirement: if an employee becomes disabled in an accident or due to some
disease, he may be given the option of retiring by the management before attaining the
retirement age with full benefits of retirement. There may be other some personal reasons
also for premature retirement such as bad health, family problem, etc.

An important stage in the life of an employee is retirement. It requires a great deal of adjustment
on his part. Employees require preparation through communication and counseling. The
personnel department and the immediate superior of the retire employee should be farewell. At
the farewell the employee is thanked for his services and given a token gift. He may be requested
to suggest improvement in the organization. All the dues and benefits of the retiring employee
should be paid to him before the farewell.

1.3.1.2. Impact of retirement on the organization

From the organization’s perspective, retirement can be a positive process. It allows new
employees with up to date skills to enter the organization and replace older workers whose skills
may have become obsolete. This process encourages innovation and new thinking in the
organization. Retirement also motivate employees, since older workers tend to be higher in the
organizational hierarchy and their departure provide opportunities for promotion. New
employees also typically cost less than older workers because their salaries are lower. When
head count must be reduced, providing incentives for early retirement is among the less painful
alternatives.

Not all effects of retirement are positive, however, the loss of older worker increases the level of
uncertainty with which the organization must contend. In an increasing number of cases, well
qualified replacements for retiring workers are extremely difficult to find. When older workers
leave, they take with them a wealth of knowledge about the organization’s environment; the
contacts and influence they have built up in dealing with the environment are also lost. The
climate within the organization may become more unstable, since older worker are often main
success of internal knowledge about “who is who?” and how to get things done, as well as about

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the organization’s norm and traditions. If organizations have failed to anticipate or plan for the
loss of staff through retirement, further disruptions can result.

1.3.2. Resignation
When separation is initiated by the employee himself, it is termed as resignation. Although some
resignations may permit an organization to rectify mistakes in procurement of personnel or to
bring new blood in to the affected unit, but excessive turnover may prove costly to the
organization. There are resignations which are avoidable and which are, on the other hand,
unavoidable. The personnel managers and the line managers should investigate the real causes of
resignation and try to escape avoidable resignations by bringing some improvements in an
organizational climate. It is a hard fact that investment in recruitment, selection and training of
employees is lost due to resignations.

Sometimes, there unavoidable resignations such as those for reason of marriage (frequent in case
of girls) or for entering a different career. In any case, it better to conduct “exit interview” to
obtain data to analyze causes of turnover. Such interview may be conducted by a reasonable
person from the personnel department. The exit interview also serves some additional purposes,
such as making certain the employees leaving the organization has fully handed over the charge
to somebody else and that the employee understands that the disposition of his various benefit
programs. The main requirements of the successful exit interview are as follows:
 Try to find out the real cause of resignation and ensure that the employee has fully
handed over the charge to somebody else
 Explain to the employee that the purpose of the interview is to improve the organization
climate
 Win the employees confidence by assuring him that whatever he says will be kept strictly
confidential
 The interview should be conducted by responsible officer from the personnel department
 The interview should show a great deal of patience and listen sympathetically
 Present the employee his final pay cheque and wish him good luck
 Assure the employee of the company’s continuing interest in his welfare.

1.3.2.1. Causes of resignation

Resignation has been intensively studied for decades and there are literally hundreds of studies of
variables that help predict resignation. Traditionally, most research on why employees resign has
considered two classes of variables: those external to the organization and those internal to the
organization. External factors include the unemployment rate and employees perception of the
external job opportunities available to them. Resignation/turnover is higher when unemployment
in the labor market is low, so that alternative employment appears readily available to job
leavers. Even in poor labor market, if an employee believes that he can easily find superior
alternative employment, the propensity to turnover will be higher.

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Internal factors are usually based on employees’ attitudes or perceptions with respect to the
current job. The attitudes of job satisfaction and organizational commitment are usually
significant predictors of a decision to quit, with leaver being less satisfied and less committed
than stayers. Employees are also more likely to leave if they believe that the organization treats
them unfairly; if they have a poor relationship with their manager; if job requirements are
conflicting, unclear, stressful; if opportunities for growth, skill development, and promotion are
lacking.

A great deal of research has confirmed that these attitudes and commitment are correlated with
turnover, but the relationships are not especially strong. A new predictor of staying versus
quitting has been proposed that shows some promise – the embeddedness of the employee in the
job setting. This approach considers that employees have a web of links and relationships
between their family lives work lives and community. When these links are numerous and tight,
employees are less likely to resign. Leaving a job means leaving the work itself, work friends,
employer-provided programs, and other work related activities. If the individual fits the job and
community well and has developed many links, it is a substantial scarifies to sever (cut) these
links by quitting the job. Other sacrifice may occur when the employee must forgo unvested
pension benefits, a company car, other benefits based on seniority such as eligibility for
sabbaticals. Research has shown that embeddedness contributes to the prediction of resignation
above and beyond measures such as job satisfaction, organizational commitment and perception
of viable employment alternatives.

1.3.3. Discharge
Dismissal or discharge involves separating an employee from the payroll for violation of
organizational rules or for inadequate performance. Discharge is often labeled capital
punishment for the employees and so is considered a drastic step. It must therefore be resorted to
with great care and must be supported by a just and sufficient cause. Since discharge is s
traumatic experience for every concerned, most managers are reluctant to undertake such action.
But, despite this, discharge of employees is not uncommon and managements guard the
prerogative to discharge as an indispensible tool for maintaining standards of performance. It is
generally used as a last step after all attempts at salvaging the employee have failed. An
employee may be discharged on the ground of unsatisfactory performance or misconduct.
Unsatisfactory performance refers to persistent failure on the part of the employee to perform his
assigned work duties to meet standards for his job. This may be due to various reasons. An
employee may show an adverse attitude towards the organization or may not take interest in his
work. He may not be properly skilled or qualified to handle his job efficiently. An employee is
discharged on the ground of unsatisfactory performance, when it is clear that he has no potential
to improve over the job.

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Misconduct refers to willful violation of organization rules and regulations by an employee. It
includes indiscipline, insubordination; dishonesty and so constitute the major cause of
dismissals.

Whatever may be the cause of dismissal, it should be done at the last step after all attempts at
salvaging employee have failed. The causes for such action should be clearly laid down and
communicated to the employee being dismissed. As a safeguard, responsibility for dismissal
should not rest only on the immediate superior.
1.3.4. Layoff
The purpose of layoff is to reduce the financial burden on the organization in the event that
human resource cannot be utilized profitably. Layoff involves temporary removal from the
payroll of the people with surplus skills. Layoff is sometimes used as a synonym for
retrenchment, but it may also mean that an employee is temporarily put off work with the
likelihood of being recalled once business picks up. The term retrenchment is usually used to
refer to permanently discharging an employee because he or she will not be needed for the
foreseeable future.

As said earlier, lay off is resorted to reduce financial burden, but the employer has to give
compensation to the employees even though they have not rendered any work (because of
inability of the employer). Lay off involves great cost to the organization. So the employer
should take every step to avoid the causes of layoff. Lay off means temporary separation of the
employees and it may later on lead to retrenchment of the employees. Whatever may be the case,
the organization has to suffer a great loss because it loses the benefit of all expenses incurred on
selection, placement and training and secondly, compensation has to be paid to the employees
laid off.

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 CHAPTER TEN

SEXUAL HARASSMENT IN WORKPLACE, E_HRM AND EMPLOYMENT

10.1. EQUAL EMPLOYMENT OPPORTUNITY

Civil right laws, judicial interpretations of the laws, and many sets of guidelines have outlawed
discrimination based on race, religion, national origin, age, sex, and physical disability. In short,
they have attempted to frame national policy on equal employment opportunity (EEO). Although
no law has ever attempted to define the terms precisely discrimination, in the employment
context it can be viewed broadly as the giving of an unfair advantage or disadvantage to the
members of the particular group in comparison with the members of the other groups. The
disadvantage usually results in a denial or restriction of employment opportunities, or in an
inequality in the terms of benefits of employment.

It is important to note that whenever there are more candidates than available positions, it is
necessary to select some candidates in reference to others. Selection implies exclusion; and as
long as the exclusion is based on what can be demonstrated to be job related criteria, that kind of
discrimination is entirely proper. It is only when candidates are excluded on a prohibited basis,
one that is not related to job (e.g., age, race, gender), that is unlawful and unfair discrimination.
In short, EEO implies at least two things.
1. Evaluations of candidates for jobs in terms of characteristics that really do make
difference between success and failure (e.g., in selection, promotion, performance
appraisal, layoff)
2. Fair and equal treatment of employees on the job (e.g., equal pay for equal work, equal
benefits, freedom from sexual harassment)

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 10.1.1. The equal pay act
The equal pay act requires that men and women who do same job in the same organization
should be paid the same rate of pay for that is substantially equal in skills, efforts, responsibility,
and working conditions. “Same pay” means that no difference is acceptable. Equal pay for equal
work; according to Ethiopian civil servants Proclamation No.515/2007 Article 7:
All positions of equal value shall have equal base salary.

Pay differentials are legal and appropriate if they are based on seniority, merit, quantity of work,
or any factor other than sex.

Determining whether two employees are doing the same job can be difficult. The law specifies
that jobs are the same if they are equal in terms of skills efforts, responsibilities, and working
conditions. Thus, it is permissible to pay one employee more than another if the first employee
has significant extra job duties, such as supervisory job responsibility. Pay can also be different
for different work shifts. The law also specifies that equal pay is required only for jobs held in
the same geographical region. This allows an organization to make allowance for the local cost
to living and the fact that it might be harder to find qualified employees in some areas.

The law contains several explicit exceptions. First, it does not prohibit the use of merit pay plan.
That is an employer can pay a man more if he is doing a job better than his female worker. In
addition, companies are permitted to pay for differences in quantity and quality of production.

10.2. SEXUAL HARASSMENT

Sexual harassment is displayed by unwelcome sexual advances, requests for sexual favors, and
other verbal or physical conduct is made either explicitly or implicitly a term or condition. Of an
individual’s employment, submission to rejection of such conduct by an individual is used as the
basis for employment decision affecting such individual or conduct has the purpose or effect of
unreasonably interfering with an individual’s work performance or creating an intimidating,
hostile or offensive work environment. Sexual harassment can take many forms, including:
 Unwanted physical contact like touching and grabbing
 Rude jokes or suggestive remarks
 Leering or inappropriate staring cat calls, embarrassing whistles or similar sounds
 Insulting remarks about sexual orientation names written on walls or desks (“for a good
time, call…”)
 Display of sexually offensive pictures, pornography or graphite
 Using the word “girl” or “woman” as a putdown (for example, “you run like a girl”)
 Stalking

Sexual harassment is not:

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  A hug between friends
 Mutual flirtation that feels good for both people
 Sincere compliments

10.3. PREVALENCE OF SEXUAL HARASSMENT

According Scema Shuka, sexual harassment is rife in corporate India. Now companies are
walking to the bitter truth that it is bad for employee morale, corporate reputation and even
profits.

A Delphi based NGO conducted study on sexual harassment and reports that:
 Sexual harassment prevalent even in companies where the victims are highly educated
and have considerable economic leverage.
 80% of respondents report that women are treated unfairly by supervisors, and coworkers
 49% of the employees encountered sexual harassment consequences

Sexual harassment cases affect:

 Work life, private life and privacy of women employees
 Work life and private life of men employees
 Working relations and work related interactions
 Employee morale
 Productivity
 Corporate reputation
 Profitability and market value of a company share

Measures to reduce sexual harassment

No company of the third millennium can afford to allow “Rvana Attitude” in the minds of male
employees. Hence, some of the organizations have taken steps to minimize sexual harassment.
These include,
 Instructing the male employees on ‘how to deal with coworkers of the opposite sex’
through a workshop.
 Educate the employees in the training program as to what constitutes sexual harassment
 Companies must have complaints committee headed by a woman
 Companies should have a clear policy on ‘sexual harassment’ and inform all the
employees of such a policy
 Companies should take disciplinary actions wherever necessary
 Companies should not have ‘unisex toilets’

10.4. WORKFORCE DIVERSITY MANAGEMENT

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What is diversity?
Diversity simply refers to human characteristics that people different from one another. The
sources of individual variations are complex, but they can generally be grouped in to two
categories:
 Those over which people have little or no control and
 Those over which they have some control

Individual characteristics over which a person has little or no control include biologically
determined characteristics such as race, age, sex and certain physical attributes, as well as the
family and society into which she or he born. These factors exert a powerful influence on
individual identity and directly affect how a person relates to other people.

In the second category are characteristics that people can adopt, drop, or modify during their
lives through conscious choice and deliberate efforts. These include work background, income,
marital status, military experience, political beliefs, geographic location, and education.

Why manage workforce diversity?

Unless effectively managed, the presence of diversity among employees may create
misunderstanding that have a negative impact on productivity and team work. It may also result
in overt or subtle discrimination by those who control organizational resources against those who
do not fit into the dominant group.

In addition to being illegal, excluding certain people from participation in an organization

because of their group membership is counterproductive because to prevent effective people
from contributing to or remaining with the organization.

To survive and prosper in an increasingly heterogeneous society, organizations must capitalize

on employee diversity as a source of competitive advantages.

Managing diversity means establishing a heterogeneous workforce to perform to its potential in

an equitable work environment where no member or group of members has an advantage or a
disadvantage. Managing diversity is not the same as managing affirmative action. Affirmative
action refers to actions taken to overcome the effects of past or present practices, policies, or
other barriers to equal employment opportunity to correct imbalances, in justices and past
mistakes. Over the long term, however, the challenge is to create a work setting in which each
person can perform to his or her full potential and therefore compete for promotions and other
rewards on merit a line. Table below highlights some key differences between equal employment
opportunity or affirmative action and diversity.

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 EEEO or AA Diversity
Government initiated Voluntary
Legally driven Qualitative
Problem focused Productivity driven
Assumes assimilation Opportunity focused
Internally focused Assumes integration
Reactive Internally and externally focused
Proactive
Fig. major difference between EEO and AA (affirmative action) and diversity

There are five reasons diversity has become a dominant activity in managing an organizations
human resources.
 The shift from a manufacturing to a service economy
 Globalization of markets
 New business strategy that require more team work
 Mergers and alliance that require different corporate cultures to work together
 The changing labor market

10.5. AIDS AND THE WORK PLACE

Manager and human resource professionals should understand the legal implication of HIV and
AIDS in the workplace because many claims of AIDS related discrimination cases have been
fold.

According to Occupational Safety and Health Administration (OSHA) standards employers must
write an “exposure control plan” which details the procedures for identifying the individuals at
risk and how the organization will comply with the standards; “universal precautions” which
detail how blood and body fluids are handled “cleaning protocols,” which details the location of
cleaning supplies and the handling of cleaning wastes. Further more employers must provide
“personal protective device” such as gloves, masks, mouth guards, and smocks for workers who
might come in contact with blood and other bodily fluids; “communicate the presence of
hazards” which places warning labels and signs for restricted areas; educate and train employees
of OSHA standards; and keep records as evidence that companies are complying. Employers
who violate the regulations are subject to OSHA penalties.

OSHA mandates that businesses have a comprehensive HIV/AIDS policy and communicate the
plan throughout the workplace.

Having HIV infection or AIDS would not prevent people from performing the essential functions
of most jobs. Thus, organizations must make reasonable accommodations for infected

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employees. Reasonable accommodation might include adjustments to work place schedule or
work station modifications.

Employers cannot ask job candidates about their HIV/AIDS status or require job candidates to
take an HIV test before making a job offer. Testing can be done and questions posed after a job
offer is made. However, test results must be kept confidential. The job offer cannot be withdrawn
on the basis a positive HIV test unless the employer can demonstrate that the person would pose
a direct threat to workers or customers that this threat could not be eliminated through reasonable
accommodation. Such demonstration would be all but impossible in most jobs.

Organizations should proactively address the AIDS issue by developing an AIDS policy. Figure
below outlines some of the issues that the employers must consider when developing an AIDS
policy.
Fig. 10.1.: Issues in the development and implantation of an AIDS policy
 Who is responsible for development and implementation of the policy?
 What are objectives of the AIDS policy?
 What is covered under the AIDS policy?
 What rights will covered employees have particularly interims of workplace
accommodation and confidentiality?
 What benefits will victims receive?
 Who is in charge of administering the policy?
 What kinds of training supervisors and managers have, particularly to prepare them to
manage coworkers’ concerns and fears?
 How does the company deal with job restructuring issues, accommodation, and requests
for transfers by AIDS victims and coworkers?
 How should the AIDS policy be communicated to employees?
 How should organizations deal with affected workers’ productivity problems?
 How can organizations help victims cope by providing support and referral services?

In addition to development and implementation issues, the content of the policy should address
all terms and conditions of employment, from hiring and job assignments to compensation and
termination. Such a policy sends a clear signal of the importance the company place on its
human resources and the support it provides to AIDS victims.

An effective AIDS policy should not only outline the procedure to be followed when an
employee contracts HIV infection, but also educate the workforce. Many employees fear that
they can contract the disease by working alongside someone who has AIDS. Educational
programs can eliminate these fears by providing accurate information about the disease and how
it is transmitted.

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What is the role of managers and supervisors in dealing with AIDS in the workplace? Managers
should be able to answer the employee question about AIDS and effectively deal with any AIDS
related issues that arise. For these reasons, the educational efforts should involve familiarizing
supervisors and managers with the organizations AIDS policy and training them in how to deal
with AIDS issues.

10.6. WORKFORCE EMPOWERMENT

10.7. E-HUMAN RESOURCE MANAGEMENT

Introduction
Information is recognized as an important source. A wide variety of information needs of
business are recognized in to “Management Information System (MIS). MIS consists of
interconnected subsystems. The computer is an electronic tool used to collect, organize, analyze,
interpret and communicate vast amount of information with great speed. Electronic data
interchange (EDI) facilitated the speedy, secured and accurate transfer of documents across the
globe. Computer makes possible a paperless working system. The interlink age of computers
enable the transaction to be processed in an integrative approach through the world.

E- Business
E-business is about using the convenience, availability and worldwide and worldwide reach to
enhance existing business or creating new virtual business. According to the concept developed
by the IBM, e-business combines the traditional information system with the vast reach of the
web and connects critical business system directly to critical business constituencies viz.
production, marketing, finance, customers, suppliers, and employees via, internets, extranets and
the World Wide Web.

E-business within the organization uses the intranet. Business to Business (B2B) dealings take
place with the extranet. Extranet consists of two or more intranets connected via the internet
whereby two organizations are allowed to have access to the information of each other and to
interact with other.

Neural Networks

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Yet another information technology breakthrough is the neural network which changes the way
people do their jobs. Neural Networks combine computer software and chips that are capable
mimicking brain functions. These brain networks are currently regarded as one of the most
important forms of emerging information technology and they have an impact on the way work
is done. For example, when a purchase order is issued to the vendor, he is simultaneously enters
the order online data base. All the activities in the operation are entered into the on line data
base. Finally, when the goods are received, the person at the receiving-end checks a computer
terminal to ensure that the shipment corresponds to the purchase order in the data base. If it does,
the employee enters this information in to the database and the computer automatically issues a
cheque to the suppliers. Otherwise the employee is empowered to to refuse the shipment and
goods will be returned to the supplier.

ASPECT OF E-HRM

Thus, electronic aspect of e-business process transmits the information in the original form
and/or in the processed form to all the parties concerned. Now, we shall discuss the electronic
aspect of HRM (E-HRM).

Electronic aspect is embodied in all the areas of HRM where there is transmission of information
from one employee to another employee and from one client to other both internally and in the
processed form is highly an essential in most of the functions and activities of HRM. Discussion
of important aspects of E-HRM will follow on:

E-job design and job analysis

“Job design and job analysis” most of the organization tended towards ‘dejobbing’ environment
and introduced alternative work schedules, flexi job, broad job branding, employee
empowerment, multi-skilling etc.

HR managers’ job under this environment is identifying the skill requirements of the company,
identifying the employee skills and matching these two. HR managers do these activities through
‘listing skills’ and ‘competence mapping’. The information of listing skills and competency
mapping are placed on the net. Then, the system matches the listing skills and competency
mapping and produces the output of identifying the employee suitable for a particular
task/activity. Thus, the E-HR plays a vital role in dejobbed environment.

E-Human Resource Planning

Computer programs are developed and used extensively for the purpose of human resource
requirements based on the data and information. These programs indicate the number of
employees required at each level for each category of the jobs based on sales and production
forecasts. “Human Resource Planning,” the recent trends in this function are outsourcing and
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contingency clause. The extranet which connects the intranets of different organizations
identifies the suitable people from other organizations for the purpose of outsourcing and also to
draw them where and then contingency situations arise.

E-Recruitment
Organizations advertise the job vacancies through the World Wide Web (WWW) or send the
information directly to the most competent people through e-mail. The job seekers send their
applications through email using the internet. Alternatively, job seekers place their CVs in the
WWW through various sites like JOB HOTS.com, which can be drawn by the prospective
employers depending up on their requirements.

Advantages of E-Recruitment
 A click on the mouse presents 240,000 job sites to the candidates
 It reduce the cost by 95% of the traditional recruitment
 It reduces the time for normal 43 days of traditional recruitment to just a few days
 It presents a list of job opportunities to the candidates when he submits details of his skill
set
 It shortlist the candidates by matching the candidate’s qualifications, skills, etc with those
of skills and the right competencies inbuilt in the software
 It also prepares interview schedules and communicates the same to the candidates
 It streamlines the entire recruitment process for a given time and unlimited job
requirements
 The number of people required for handling of applications is reduced drastically

 In view of these advantages a number of employers around the world recruit the people
using internet.

E-Selection
Selection has become popular with the conduct of various tests through online, contacting the
candidates through email and conducting the preliminary interviews and final interview through
audio-conferencing and video conferencing. Further, the employer gets the reference
letters/opinions from the referees through email.

Advantages of E-Selection
 The candidates need not move from their place to take the written tests, preliminary
interview, provide additional information and final interview. Thus it eliminates the
inconvenience, reduces cost and time required to conduct the selection process
 It reduces the time required for other selection techniques
 It drastically reduces the overall costs of selection process

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Disadvantages of E-Selection
Although, the above advantages, there are, on the other hand, limitations of E-Selection. These
are:
 It cannot operate certain selection tests like physiological tests
 Mechanical defects in transmitting information reduce the efficiency of selection
techniques
 Judgment based on the E-Selection process cannot be as perfect as traditional process.

E-Performance Management
Several software packages are developed to measure employee performance and offer suggestion
for improvement of employee performance. Many employers tend towards these software
packages and computerize the employee performance appraisal systems.

The software on employee performance appraisal provides a number of statements and sub-
statements on each of the performance categories. The appraiser selects and clicks the
appropriate rating for each statement. The system generates a detailed report, by the time the
appraiser has moved all the performance categories and sub factors. This report can be modified,
comments can be added or deleted by the appraiser and a final report can be prepared by a
manager.

Further, organizations use computer networks, sophisticated telephone systems, and video
equipment to monitor and record the employee work activities.

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