Interview prep

What Are the Roles of An AWS Cloud Support Engineer?

“An AWS Cloud support engineer maintains cloud computing systems. The work involves technical
computer programming as well as computer hardware management. An AWS cloud support engineer
is responsible for checking systems to identify potential problems or weaknesses. Other duties
include:

 Performing day-to-day administration and customer care cloud services

 Responding to escalated customer issues using phone, web conferencing, and email
 write effective handoff from shift-to-shift for cloud support problems
 Coordinating with other services teams where cloud & virtualization specific issues are
escalated
 Contributing to new products and feature enhancements and documentation
 Producing written documentation regarding actual or proposed cloud deployments.”

What Are the Qualities That an AWS Cloud Support Engineer Need to Be Successful?
“To work in this career successfully, the AWS cloud support engineer should possess a business, data
analysis, technical, security, management, teamwork, communication, programming, leadership,
problem-solving and customer service skills.”

What Major Challenges Did You Face During Your Last Role? How Did You Manage Them?
“In my previous role, I faced security issues such as broken authentication, compromised credentials,
account hijacking, data breaches, hacked APIs and interfaces. These challenges opened my eyes that I
worked hard to ensure that the company’s security and privacy were intact. I would verify that the
SaaS provider had secure user identity management, access control, and authentication mechanism. “

Describe Your Daily Routine as An AWS Cloud Support Engineer

“I begin my day by checking out my voice messages and emails to see whether there is anything that
requires my urgent attention. My daily routine involves assisting clients with their AWS applications,
building and maintaining AWS test instances as well as debugging reported problems. I also work
with other AWS cloud developers to help me understand and support the product.”

Describe Briefly About Your Experience

“Working as a cloud support engineer. This role has been rewarding and interesting. In my six years
of working, I have gained enough skills in routine involves assisting clients with their AWS
applications, building and maintaining AWS test instances as well as debugging reported problems.
Given a chance, therefore, I will utilize my skills, expertise, and experience to make a success of this
role.”
What Is the Biggest Challenge That You Foresee in This Job?
One of the major challenges companies will face in the near future is lack of expertise and resources.
As companies keep on increasing more workload in the cloud, technology is advancing rapidly.
Keeping up with the right tools is becoming a challenge. This has made me advance training in it to
prepare on how to cope with these challenges should they affect our company.”

Share With Us Your Greatest Achievement.

“My greatest achievement took place in my previous role as a cloud specialist.  I was employed at a
time when the company was facing a shortage of cloud specialists. Since the company was small-
sized, adding more cloud specialists to the tea seemed costly. I suggested to the president of that
company how we can automate some tasks. He was not sure how to go about it but I assisted him.
Through automation, some tasks such as backups at specific periods and monitoring some resource
patterns became easy. At the end of the day, the company was able to accomplish alt yet at a minimal
cost.”
What is Cloud Computing?
Cloud computing is an on-demand availability of computer system resources that uses the cloud to
provide the services when the user needs them. It also helps the users avail of a more extensive
network of global web servers.
This is because it’s seen the fastest adoption into the mainstream than the other technology within the
domain. This adoption has been fuelled mainly by the ever-increasing number of smartphones and
mobile devices which may access the web.
Cloud computing isn’t just for organizations and businesses; it’s also useful for the standard person. It
enables us to run software programs without installing them on our computers and store and access
our multimedia content online. Pooled computing resources available through cloud computing have
tremendous benefits to business organizations.
Can you list the various cloud service models?
'Cloud computing offers three cloud service models which are IaaS, PaaS and SaaS. IaaS, also known
as infrastructure as service, offers users with computing, storage and networking resources as per
demand and pay as you go basis. This saves the cost of purchasing and maintaining physical servers.
Some examples include AWS EC2 and IBM cloud. Platform as a service or PaaS is an extension of an
IaaS. Along with providing all the services available in IaaS, it also allows programmers to develop,
test and deploy an application on the cloud. Some examples of PaaS vendors include Azure and SAP
cloud.
SaaS, also known as software as a service, enables end users to access cloud applications through an
Internet browser, along with all the underlying infrastructure and platforms. Advantages of using SaaS
include accessibility, scalability, reduced operational and infrastructure costs, increased security and
access to analytic tools. Some examples of SaaS vendors include Salesforce, Dropbox and Google
Workspace'.
What are the disadvantages of cloud computing?
'Some common issues associated with cloud computing include data leakage, cloud downtime, limited
control, account or server hijacking, costing and data loss or theft. Though the pay-as-you-go model is
flexible and lowers hardware costs, it may not be very beneficial for short-term projects that have
fewer requirements. It is essential for companies to conduct thorough research and cost analysis
before opting for cloud services.

What are the various deployment models in cloud computing?

'Several factors determine the type of cloud environment, including ownership, scale, security, access
and the nature and purpose of the cloud. A cloud deployment model determines where and who
controls the servers one uses. Various cloud deployment models include public cloud, private cloud,
hybrid cloud, community cloud and multi-cloud. Public clouds make systems and services accessible
to anyone. Because of its open nature, the public cloud may be less secure. Private cloud is a one-on-
one environment for a single customer and is suitable for storing confidential information. It provides
greater security and control over cloud resources.
Hybrid clouds incorporate the advantages of both public and private clouds. Businesses can avail the
benefits of both the deployment models by moving data and applications between the two based on
their needs. Community cloud allows a group of organisations to access its systems and services. It is
cost-effective, secure and enables collaboration and data sharing between organisations. Multi clouds
refer to employing multiple cloud service providers to suit a business' needs. This reduces latency and
ensures high availability of cloud services.

CLOUD COMPUTING APPLICATIONS

 Communication and collaboration

 Media streaming
 Big data analytics and insights
 Streamlining business processes
 Storage backups and data recovery

7. Give the best example of open source Cloud Computing.

Open–source cloud is a cloud service or solution built using open–source software and

technologies. This includes any public, private or hybrid cloud model providing SaaS, IaaS,
PaaS, or XaaS built and operated entirely on open–source technologies.
The best example of open-source Cloud Computing is OpenStack.
 1. Pay-per-use model: We only have to pay for the services we use.
2. 24/7 Availability: It is always online! There is no such time when you simply cannot
use our cloud service; you’ll use it whenever you want.
3. Easily Scalable: it’s effortless to proportion and down or turn off as per customers’
needs. For instance, if your website’s traffic increases only on Friday nights, you can
opt for scaling up your servers that particular day and then scaling down for the rest of
the week.
4. Security: Cloud computing offers excellent data security. Especially if the data is
mission-critical, then that data can be wiped off from local drives and kept on the
cloud only for your access to stop it from ending up in the wrong hands.
5. Easily Manageable: You only have to pay subscription fees; the Cloud Provider
entirely maintains all maintenance, up-gradation, and delivery of services. This is
backed by the Service-level Agreement (SLA).

What is the difference between cloud computing and mobile computing?

Cloud Computing is when you store your files and folders in a “cloud” on the Internet. This will
allow you to access all your files and folders wherever you are in the world– but you do need a
physical device with Internet access.

Mobile computing is taking a physical device with you, and this could be a laptop or mobile
phone, or some device. Mobile computing and cloud computing are somewhat analogous, and
mobile computing uses the concept of cloud computing. Cloud computing provides users with the
data they require. In contrast, applications run on the remote server in mobile computing and give
the user access to storage and managing the data.

What are some large cloud providers and databases?

Following are the most used large cloud providers and databases:

 Google BigTable
 Amazon SimpleDB
 Cloud-based SQL
List the open-source cloud computing platform databases?

Following are the open-source cloud computing platform databases:

 MongoDB
 CouchDB
 LucidDB

List the platforms which are used for large-scale cloud computing.

The timely processing of massive digital collections demands large-scale distributed computing
resources and the flexibility to customize the processing performed on the collections.
The platforms that are used for large-scale cloud computing are:

 Apache Hadoop
 MapReduce

What do you mean by CaaS?

CaaS is a terminology used in the telecom industry as Communication As a Service. CaaS offers
enterprise user features such as desktop call control, unified messaging, and desktop faxing.

Why is cloud computing the future?

Considering the various benefits of cloud computing to organizations, a good case is that cloud
computing is increasingly becoming the new normal. Cloud computing helps society deal with
future problems like managing big data, cyber security, and internal control.

In addition to the present, emerging technologies like AI, distributed ledger technology, and
many other capabilities are getting available through cloud computing. Consequently, these
technologies adapt to varied platforms like mobile devices, increasing their use.

Innovations supported cloud computing, like cloud automation. Therefore, the Industry cloud is
also being developed to integrate cloud computing into specific industrial activities, making
various operations even more streamlined. The verdict for cloud computing is that it’s a
transitional technology that has helped organizations in several jurisdictions deliver their products
and services better than before.

What are the disadvantages of the SaaS cloud computing layer?

1) Security

Data is stored in the cloud, so security may be an issue for some users. However, cloud
computing is not more secure than in-house deployment.
2) Latency issue

Since data and applications are stored in the cloud at a variable distance from the end-user, there
is a possibility that there may be more significant latency when interacting with the application
compared to local deployment. Therefore, the SaaS model is not suitable for applications whose
demand response time is milliseconds.

3) Total Dependency on the Internet

Without an internet connection, most SaaS applications are not usable.

4) Switching between SaaS vendors is difficult

Switching SaaS vendors involves the slow and challenging task of transferring massive data files
over the internet and then converting and importing them into another SaaS.

61. What is the difference between traditional data centres and the cloud? 

Traditional Data Center Cloud Data Center

Physically present, on-premise, and tangible and Remotely located, off-premise and
accessible. intangible.

Businesses pay capital expenditures for the

Businesses pay only the operational
acquisition of hardware and software resources
cost for using the resources being
and operational expenditures like those for usage,
used.
maintenance, and repair of resources.

Management and administration of the resources Management and administrative

are the responsibility of personnel within the responsibilities are the responsibilities
business. of the cloud providers.
 Multiple challenges to scaling, like availability of
Completely and almost instantly
resources and latency in the acquisition process
scalable as per requirements.
due to the procedures involved

Failure may lead to loss of business as the A cloud service provider is responsible
responsibility of downtime and repair of services and trusted to replace the resources
is entirely on the business, affecting the reliability due to its promise of reliability and
of services. availability.

What is Motivation?

Motivation is the word derived from the word ’motive’ which means needs, desires, wants or
drives within the individuals. It is the process of stimulating people to actions to accomplish
the goals.

In the work goal context, the psychological factors stimulating the people’s behaviour can be
-

 desire for money

 success
 recognition
 job-satisfaction
 team work, etc

The process of motivation consists of three stages: -

 1. A felt need or drive.
2. A stimulus in which needs have to be aroused.
3. When needs are satisfied, the satisfaction or accomplishment of goals.

Therefore, we can say that motivation is a psychological phenomenon which means needs
and wants of the individuals have to be tackled by framing an incentive plan.

Importance of Motivation

 Puts human resources into action

 Improves level of efficiency of employees
 Leads to achievement of organizational goals
 Builds friendly relationship
 Leads to stability of work force

Motivation is important to an individual as:

1. Motivation will help him achieve his personal goals.

2. If an individual is motivated, he will have job satisfaction.
3. Motivation will help in self-development of individual.
4. An individual would always gain by working with a dynamic team.

motivation is important to a business as:

1. The more motivated the employees are, the more empowered the team is.
2. The more is the team work and individual employee contribution, more profitable and
successful is the business.
3. During period of amendments, there will be more adaptability and creativity.
4. Motivation will lead to an optimistic and challenging attitude at work place.

motivating the staff/employees in an organization:

 Evaluate yourself
 Be familiar with your staff
 Provide the employees certain benefits
 Participate in new employee’s induction programme
 Provide feedback to the staff constantly
 Acknowledge your staff on their achievements
 Have stress management techniques in your organization
 Use counselling technique
 Give the employees learning opportunities
 Smile often
 Listen effectively
 Ensure effective communication
 Develop and encourage creativity
  Don’t be rigid. Be flexible
 Adopt job enrichment
 Respect your team

Motivation Incentives - Incentives to motivate employees

Incentive is an act or promise for greater action. It is also called as a stimulus to greater action.
Incentives are something which are given in addition to wagers. It means additional
remuneration or benefit to an employee in recognition of achievement or better work.

Incentives provide a spur or zeal in the employees for better performance.

Monetary incentives- Those incentives which satisfy the subordinates by providing them

rewards in terms of rupees. Money has been recognized as a chief source of satisfying the needs
of people.

Non-monetary incentives- Besides the monetary incentives, there are certain non-financial

incentives which can satisfy the ego and self- actualization needs of employees. -

a. Security of service
b. Praise or recognition
c. Suggestion scheme
d. Job enrichment 
e. Promotion opportunities

Positive Incentives

Positive incentives are those incentives which provide a positive assurance for fulfilling the needs
and wants. For example-promotion, praise, recognition, perks and allowances, etc. It is positive
by nature.

Negative Incentives

Negative incentives are those whose purpose is to correct the mistakes or defaults of
employees. The purpose is to rectify mistakes in order to get effective results. For example-
demotion, transfer, fines, penalties.

Workplace Motivation

Link Rewards directly to Performance

Compliment employees

Be transparent
 Work on your PDP (Personal Development
Plan)

Participate and Network

Self-Motivation at Work

Communicate and talk to get motivated

Remain optimistic

Discover your interest area

Self-acknowledgement

Monitor and record your success

Encourage learning

Break your bigger goals into smaller goals

Some Factors that can Motivate Employees

 The organizational structure is another aspect that can motivate employees. For
instance, it has been found that flat organizations as opposed to hierarchical
organizations motivate employees more.
 The organizational culture plays an important role in motivating employees. The
examples of Google, Facebook, and start-up companies where the organizational culture
is open and collegiate are relevant in this regard.
 HR managers have an important role to play in motivating employees by interacting with
them, finding their grievances, and proposing solutions to behavioral problems. There
are many multinationals like Fidelity where the HR managers hold one on one sessions
with the employees to foster an open and inclusive culture where employees do not hold
anything back and where they are encouraged to be as forthright as possible.
  organizations that promote diversity as an organizational imperative are known to
motivate women employees who feel less threatened and less insecure than in
organizations where bias and prejudice are rampant.
 many organizations have the habit of saying one thing and doing something else
altogether which means that they are hypocritical in their approach. Such organizations
cannot motivate the employees particularly at the lower levels since the fresh recruits
and those with less experience often look to the senior managers and the leadership for
integrity and consistency.

Motivation and Morale - Relationship and Differences

Morale can be defined as the total satisfaction derived by an individual from his job, his work-
group, his superior, the organization he works for and the environment. It generally relates to
the feeling of individual’s comfort, happiness and satisfaction.

According to Davis, “Morale is a mental condition of groups and individuals which determines
their attitude.”

morale is a fusion of employees’ attitudes, behaviours, manifestation of views and opinions - all
taken together in their work scenarios, exhibiting the employees’ feelings towards work, working
terms and relation with their employers. Morale includes employees’ attitudes on and specific
reaction to their job.

There are two states of morale:

High morale

Low morale

Classical Theories of Motivation

The motivation concepts were mainly developed around 1950’s. Three main theories were made
during this period. These three classical theories are-

 Maslow’s hierarchy of needs theory

 Herzberg’s Two factor theory
 Theory X and Theory Y

Maslow’s Need Hierarchy Model

Human behavior is goal-directed. Motivation cause goal-directed behaviour. It is through

motivation that needs can be handled and tackled purposely. This can be understood by
understanding the hierarchy of needs by manager. The needs of individual serves as a driving
force in human behaviour. Therefore, a manager must understand the “hierarchy of needs”.
Maslow has proposed “The Need Hierarchy Model”.

Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This
theory is a classical depiction of human motivation. This theory is based on the assumption
that there is a hierarchy of five needs within each individual. The urgency of these needs varies.
These five needs are as follows-

1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter.
In other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- Job security, financial security, protection from animals, family
security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness,
and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom) and external esteem needs
(recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of
becoming / what you have the potential to become. It includes the need for growth and
self-contentment. It also includes desire for gaining more knowledge, social- service,
creativity and being aesthetic. The self- actualization needs are never fully satiable. As
an individual grows psychologically, opportunities keep cropping up to continue
growing.

According to Maslow, individuals are motivated by unsatisfied needs. As each of these

needs is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped
the five needs into two categories - Higher-order needs and Lower-order needs. The
physiological and the safety needs constituted the lower-order needs. These lower-order
needs are mainly satisfied externally. The social, esteem, and self-actualization needs
constituted the higher-order needs. These higher-order needs are generally satisfied
internally, i.e., within an individual.

The managers must identify the need level at which the employee is existing and then those
needs can be utilized as push for motivation.
Limitations of Maslow’s Theory

 It is essential to note that not all employees are governed by same set of needs. Different
individuals may be driven by different needs at same point of time. It is always the most
powerful unsatisfied need that motivates an individual.
 The theory is not empirically supported.
 The theory is not applicable in case of starving artist as even if the artist’s basic needs are
not satisfied, he will still strive for recognition and achievement

Herzberg’s Two-Factor Theory of Motivation

In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the
motivator-hygiene theory. According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction. According to Herzberg,
the opposite of “Satisfaction” is “No satisfaction” and the opposite of “Dissatisfaction” is “No
Dissatisfaction”.

FIGURE: Herzberg’s view of satisfaction and dissatisfaction

Herzberg classified these job factors into two categories-

a. Hygiene factors- Hygiene factors are those job factors which are essential for existence
of motivation at workplace. These do not lead to positive satisfaction for long-term. But if
these factors are absent / if these factors are non-existent at workplace, then they lead
to dissatisfaction. Hygiene factors are also called as dissatisfiers or maintenance
factors as they are required to avoid dissatisfaction. The hygiene factors symbolized the
physiological needs which the individuals wanted and expected to be fulfilled. Hygiene
factors include:
 Pay
 Company Policies and administrative
 Fringe
 Status
 Interpersonal relations
 Job Security
 b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as
motivators. The motivational factors yield positive satisfaction. These factors motivate
the employees for a superior performance. These factors are called satisfiers. The
motivators symbolized the psychological needs that were perceived as an additional
benefit. Motivational factors include:
 Recognition
 Sense of achievement
 Growth and promotional opportunities
 Responsibility
 Meaningfulness of the work

Implications of Two-Factor Theory

The Two-Factor theory implies that the managers must stress upon guaranteeing the adequacy
of the hygiene factors to avoid employee dissatisfaction. Also, the managers must make sure
that the work is stimulating and rewarding so that the employees are motivated to work and
perform harder and better. This theory emphasizes upon job-enrichment so as to motivate the
employees. The job must utilize the employee’s skills and competencies to the maximum.
Focusing on the motivational factors can improve work-quality.

Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human
behaviour at work, or in other words, two different views of individuals (employees):

1. one of which is negative, called as Theory X and

2. the other is positive, so called as Theory Y

According to McGregor, the perception of managers on the nature of individuals is based on

various assumptions.

Assumptions of Theory X

 An average employee intrinsically does not like work and tries to escape it whenever
possible.
 Since the employee does not want to work, he must be persuaded, compelled, or warned
with punishment so as to achieve organizational goals. A close supervision is required on
part of managers. The managers adopt a more dictatorial style.
 Many employees rank job security on top, and they have little or no aspiration/ ambition.
 Employees generally dislike responsibilities.
 Employees resist change.
 An average employee needs formal direction.
Assumptions of Theory Y

 Employees can perceive their job as relaxing and normal. They exercise their physical
and mental efforts in an inherent manner in their jobs.
 Employees may not require only threat, external control and coercion to work, but they
can use self-direction and self-control if they are dedicated and sincere to achieve the
organizational objectives.
 If the job is rewarding and satisfying, then it will result in employees’ loyalty and
commitment to organization.
 An average employee can learn to admit and recognize the responsibility. In fact, he can
even learn to obtain responsibility.
 The employees have skills and capabilities. Their logical capabilities should be fully
utilized. In other words, the creativity, resourcefulness and innovative potentiality of the
employees can be utilized to solve organizational problems.

McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he
encouraged cordial team relations, responsible and stimulating jobs, and participation of all in
decision-making process.

Implications of Theory X and Theory Y

 Quite a few organizations use Theory X today. Theory X encourages use of tight control
and supervision. It implies that employees are reluctant to organizational changes. Thus,
it does not encourage innovation.
 Many organizations are using Theory Y techniques. Theory Y implies that the managers
should create and encourage a work environment which provides opportunities to
employees to take initiative and self-direction. Employees should be given opportunities
to contribute to organizational well-being.

Theory Y encourages decentralization of authority, teamwork and participative decision

making in an organization. Theory Y searches and discovers the ways in which an
employee can make significant contributions in an organization. It harmonizes and
matches employees’ needs and aspirations with organizational needs and aspirations.

Modern Theories of Motivation

We all are familiar with the classical theories of motivation, but they all are not empirically
supported. As far as contemporary theories of motivation are concerned, all are well supported
with evidences. Some of the contemporary / modern theories of motivation are explained below:

 McClelland’s Theory of Needs

 Goal Setting Theory
 Reinforcement Theory
 Equity Theory of Motivation
  Expectancy Theory of Motivation

McClelland’s Theory of Needs

David McClelland and his associates proposed McClelland’s theory of Needs/Achievement
Motivation Theory.

This theory states that human behaviour is affected by three needs:

1. Need for Power,

2. Need for Achievement, and
3. Need for Affiliation

Need for achievement is the urge to excel, to accomplish in relation to a set of

standards, to struggle to achieve success.

Need for power is the desire to influence other individual’s behaviour as per your wish.
In other words, it is the desire to have control over others and to be influential.

Need for affiliation is a need for open and sociable interpersonal relationships. In other
words, it is a desire for relationship based on co-operation and mutual understanding.

1. The individuals with high achievement needs are highly motivated by competing

and challenging work. They look for promotional opportunities in job. They have
a strong urge for feedback on their achievement. Such individuals try to get
satisfaction in performing things better. High achievement is directly related to
high performance.

Individuals who are better and above average performers are highly motivated.
They assume responsibility for solving the problems at work. McClelland called
such individuals as gamblers as they set challenging targets for themselves and
they take deliberate risk to achieve those set targets. Such individuals look for
innovative ways of performing job. They perceive achievement of goals as a
reward, and value it more than a financial reward.

2. The individuals who are motivated by power have a strong urge to be influential

and controlling. They want that their views and ideas should dominate and thus,
they want to lead. Such individuals are motivated by the need for reputation and
self-esteem.

Individuals with greater power and authority will perform better than those
possessing less power. Generally, managers with high need for power turn
out to be more efficient and successful managers. They are more determined
and loyal to the organization they work for. Need for power should not always be
taken negatively. It can be viewed as the need to have a positive effect on the
organization and to support the organization in achieving it’s goals.

3. The individuals who are motivated by affiliation have an urge for a friendly and
supportive environment. Such individuals are effective performers in a team.
These people want to be liked by others. The manager’s ability to make decisions
is hampered if they have a high affiliation need as they prefer to be accepted and
 liked by others, and this weakens their objectivity. Individuals having high
affiliation needs prefer working in an environment providing greater personal
interaction. Such people have a need to be on the good books of all. They
generally cannot be good leaders.

Reinforcement Theory of Motivation

Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that
individual’s behaviour is a function of its consequences. It is based on “law of effect”, i.e,
individual’s behaviour with positive consequences tends to be repeated, but individual’s
behaviour with negative consequences tends not to be repeated.

The managers use the following methods for controlling the behaviour of the employees:

Positive Reinforcement- This implies giving a positive response when an individual shows

positive and required behaviour.Positive reinforcement stimulates occurrence of a
behaviour. It must be noted that more spontaneous is the giving of reward, the greater
reinforcement value it has.

Negative Reinforcement- This implies rewarding an employee by removing negative /

undesirable consequences. Both positive and negative reinforcement can be used for
increasing desirable / required behaviour.

Punishment- It implies removing positive consequences so as to lower the probability of

repeating undesirable behaviour in future. In other words, punishment means applying
undesirable consequence for showing undesirable behaviour. For instance - Suspending an
employee for breaking the organizational rules. Punishment can be equalized by positive
reinforcement from alternative source.

Extinction- It implies absence of reinforcements. In other words, extinction implies lowering

the probability of undesired behaviour by removing reward for that kind of behaviour. For
instance - if an employee no longer receives praise and admiration for his good work, he
may feel that his behaviour is generating no fruitful consequence. Extinction may
unintentionally lower desirable behaviour.

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers who are
making attempt to motivate the employees must ensure that they do not reward all employees
simultaneously. They must tell the employees what they are not doing correct. They must tell the
employees how they can achieve positive reinforcement.
Learning in Organisational Behaviour

Learning is a term frequently used by a great number of people in a wide variety of

contexts. Learning can be defined as a relatively permanent change in behaviour or
potential behaviour as a result of direct or indirect experience. There are two primary
elements in this definition:

 The change must be relatively permanent. This means that after "learning"
our behaviour must be different, either better or worse as compared to our
 behavior prior to this learning experience. For example, you "learn" to drive
a car or have learned how to use a computer.
 This change must occur due to some kind of experience or practice. This
learning is not caused by biological maturation. For example, a child does
not learn to walk, it is a natural biological phenomenon. We do not learn to
eat or drink.
The important factors that determine learning are:

1.Motive:  Motives also called drives, prompt people to action. They are
primary energisers of behaviour. They are the ways of behaviour and
mainspring of action. They are largely subjective and represent the mental
feelings of human beings. They are cognitive variables. They arise
continuously and determine the general direction of an individual's
behaviour without motive learning cannot occur.
2.Stimuli:  Stimuli are objects that exist in the environment in which a person
lives. Stimuli increase the probability of eliciting a specific response from a
person.
3.Generalisation:  The principle of generalisation has important implications
for human learning. Generalisation takes place when the similar new
stimuli repeat in the environment. When two stimuli are exactly alike, they
will have probability of eliciting specific response. It makes possible for a
manager to predict human behavior when stimuli are exactly alike.
4.Discrimination:  What is not generalisation is discrimination. In case of
discrimination, responses vary to different stimuli. For example an MBA
student may learn to respond to video teaching but not to the oral lecturing
by his professor.
5.Responses:  The stimulus results in responses - be these in the physical form
or in terms of attitudes or perception or in other phenomena. However, the
responses need to be operationally defined and preferably physically
observable.
6.Reinforcement:  Reinforcement is a fundamental conditioning of learning.
Reinforcement can be defined as anything that both increases the strength
of response and tends to induce repetitions of behaviour that preceded the
reinforcement. No measurable modification of behaviour can take place
without reinforcement.
7.Retention:  Retention means remembrance of learned behaviour overtime.
Converse is forgetting. Learning which is forgotten over time is called
"extinction". When the response strength returns after extinction without
only intervening reinforcement it is called "spontaneous recovery".
Learning Theories in Organisational Behaviour
How do we learn? Four theories have been offered to explain the process by which we
acquire patterns of behaviour:

1.Classical conditioning theory;

2.Operant conditioning theory;
3.Cognitive learning theory; and
4.Social learning theory.
Classical Conditioning
Classical conditioning is one of the simplest forms of learning yet it has a powerful
effect on our attitudes, likes and dislikes, and emotional responses. We have all learned
to respond in specific ways to a variety of words and symbols. Our lives are profoundly
influenced by associations we learn through classical conditioning. Ivan Pavlov whose
research on the conditioned reflex in dogs revealed much of what we know about the
principles of classical conditioning.

Classical Conditioning Theory

The Elements and Processes in Classical Conditioning Reflex:  A reflex is an involuntary

response to a particular stimulus. There are two kinds of reflexes:
 i. Conditioned Reflex:  This is a "learned" reflex rather than a naturally
occurring one.
ii. Unconditioned Reflex:  This is a "unlearned" reflex. Example, Salivation in
response to food. Unconditioned reflex are built into the nervous system.
The Conditioned and Unconditioned Stimulus and Response: - Pavlov continued to
investigate the circumstances under which a conditioned reflex is formed. Dogs do not
need to be conditioned to salivate to food, so salivation of food is an unlearned or
unconditioned response (UR). Any stimulus (such as food) that without learning will
automatically elicit (bring forth) an unconditioned response is called an unconditioned
stimulus (US).

A reflex is made up of both a stimulus and response. Following is a list of some

common unconditioned reflexes, showing their two components - the unconditioned
stimulus and unconditioned response.

Unconditioned Reflexes

Operant Conditioning
Operant conditioning argues that behaviour is a function of its consequences. People
learn to behave to get something they want or avoid something they don't want. Operant
behaviour means voluntary or learned behaviour in contrast to reflexive or unlearned
behaviour. The tendency to repeat such behaviour is influenced by the reinforcement or
lack of reinforcement brought about by the consequences of the behaviour.
Reinforcement therefore strengthens behaviour and increases the likelihood it will be
repeated.

What Pavlov did for classical conditioning, the Harvard psychologist B.F. Skinner did for
operant conditioning.

Operant conditioning induces a voluntary change in behaviour and learning occurs as a

"consequence" of such change. It is also known as reinforcement theory and it suggests
that behaviour is a function of its consequences. It is based upon the premise that
behavior or job performance is not a function of inner thoughts, feelings, emotions or
perceptions but is keyed to the nature of the outcome of such behaviour. The
consequences of a given behaviour would determine whether the same behaviour is
likely to occur with future or not. Based upon this direct relationship between the
consequences and behaviour, the management can study and identify this relationship
and try to modify and control behaviour. Thus, the behaviour can be controlled by
manipulating its consequences. This relationship is built around two principles:

 The behaviour that results in positive rewards tend to be repeated and

behaviour with negative consequences tend not to be repeated.
 Based upon such consequences, the behaviour can be predicted and
controlled.
Hence, certain types of consequences can be used to increase the occurrence of a
desiredbehaviour and other types of consequences can be used to decrease the
occurrence of undesired behaviour. The onsequences of behaviour are used to
influence, or shape, behaviour through three strategies: reinforcement, punishment and
extinction.
Thus, operant conditioning is the process of modifying behaviour through the use of
positive or negative consequences following specific behaviours.
Social Learning
Albert Bandura contends that many behaviours or responses are acquired through
observational learning. Observational learning, sometimes called modelling results when
we observe the behaviours of others and note the consequences of that behaviour. The
person who demonstrates behaviour or whose behaviour is imitated is called models.

Parents, movie stars and sports personalities are often powerful models. The
effectiveness of a model is related to his or her status, competence and power. Other
important factors are the age, sex, attractiveness, and ethnicity of the model.

Whether learned behaviours are actually performed depends largely on whether the
person expects to be rewarded for the behaviour. Social learning integrates the cognitive
and operant approaches to learning. It recognises that learning does not take place only
because of environmental stimuli (classical and operant conditioning) or of individual
determinism (cognitive approach) but is a blend of both views. It also emphasises that
people acquire new behaviours by observing or imitating others in a social setting. In
addition, learning can also be gained by discipline and self-control and an inner desire to
acquire knowledge or skills irrespective of the external rewards or consequences. This
process of self-control is also partially a reflection of societal and cultural influences on
the development and growth of human beings.

Principles of Reinforcement in Learning

Reinforcement has played a central role in learning. Most learning experts agree that
reinforcement is the single most important principle of learning. Yet, there is much
controversy over its theoretical explanation. The first major theoretical treatment given
to reinforcement in learning is Thorn dike's classic law of effect. According to Thorndike,
"of several responses made to the same situation, those which are accompanied or
closely followed by satisfaction (reinforcement) will be more likely to recur; those which
are accompanied or closely followed by discomfort (punishment).
Will be less likely to occur". From a strictly empirical standpoint, most behavioural
scientists, generally accept the validity of this law. Therefore, reinforcement is the
attempt to develop or strengthen desirable behaviour by either bestowing positive
consequences or with holding negative consequences.

Reinforcement is the process by which certain types of behaviours are strengthened. It

is the attempt to develop or strengthen desirable behaviour by either bestowing positive
consequences or with holding negative consequences. Thus, a "reinforcer" is any
stimulus that causes certain behaviour to be repeated or inhibited. By introducing some
rein forcers, the organizations can maintain or increase the probability of such
behaviours as quality oriented performance, decision-making, high level of attendance
and punctuality and so on. There are four basic reinforcement strategies:

1.Positive reinforcement
2.Negative reinforcement
3.Extinction
4.Punishment
Positive Reinforcement
A positive reinforcement is a reward for a desired behaviour. The reward should be
sufficiently powerful and durable so that it increases the probability of occurrence of
desirable behaviour. Positive reinforcement results from the application of a positive
consequence following a desirable behaviour.

For example

i. Bonuses paid at the end of a successful business year are an example of

positive reinforcement
ii. Employees will work hard for a raise or a promotion
In these examples, the rises, promotions, awards, bonuses, good grades candy and ice
cream are positive reinforcers.

Negative Reinforcers:  Negative reinforcement also known as "escape conditioning" or

"avoidance learning" it is also a method of strengthening desired behaviour. Negative
reinforcement results from with holding a threatened negative consequence when a
desired behaviour occurs.
For example students study hard, write term papers and do their homework on time to
avoid the consequences of failure in the examination.

Extinction
(with holding reinforcers) - We have seen that responses followed by reinforcers tend to
be repeated and that responses no longer followed by reinforcers will occur less and
less frequently and eventually die out. In humans, extinction can lead to frustration or
even rage. Consider a child having a temper tantrum. If whining and loud demands do
not bring the reinforcer, the child may progress to kicking and screaming. It is what we
expect and don't get that makes us angry.

An alternative to punishing undesirable behaviour is extension - the attempt to weaken

behaviour by attaching no consequences (either positive or negative) to it. It is
equivalent to ignoring the behaviour. The rationale for using extinction is that a
behaviour not followed by any consequence is weakened. However, some patience and
time may be needed for it to be effective.

This type of reinforcement is applied to reduce undesirable behaviour, especially when

such behaviours were previously rewarded. This means that if rewards were removed
from behaviours that were previously reinforced, then such behaviours would become
less frequent and eventually die out. For example, if a student in the class is highly
mischievous and disturbs the class, he is probably asking for attention. If the attention is
given to him, he will continue to exhibit that behaviour. However, if he is continuously
ignored and not recognised, then such undesirable behaviour will vanish over a period of
time.

Punishment
Punishment is the opposite of reinforcement. Punishment tends to lower the probability
of a response by following it with an aversive or unpleasant consequence. And
punishment can be accomplished either adding an unpleasant stimulus or removing a
pleasant stimulus.

The added unpleasant stimulus might take the form of criticism, a scolding, a
disapproving 244 Principles of Management and Organisational Behaviour look, a fine,
or a prison sentence. The removal of a pleasant stimulus might consist of with holding
affection and attention, suspending a driver's license, or taking away a privilege such as
watching television.

We often confuse negative reinforcement and punishment. Unlike punishment, negative

reinforcement increases the probability of a desired response by removing an
unpleasant stimulus when the correct response is made.

Punishment is the attempt to eliminate or weaken undesirable behaviour. It is used in

two ways. One way to punish a person is through the application of a negative
consequence following an undesirable behaviour. The other way to punish a person is
through the with holding a positive consequence following an undesirable behaviour.

Punishment is the most controversial method of behaviour modification and involves

delivering an unpleasant consequence contingent upon the occurrence of an
undesirable behaviour.

The punishment process consists of "application" of an undesirable consequence or

"withdrawal" of a desirable consequence for an undesirable behaviour, which has never
been associated with reward before.

Reinforcement and Punishment Strategies

These four reinforcement strategies are illustrated below with the help of an example
when a superior advises his employee to come to work on time
Reinforcement Strategies
Perception involves the way we view the world around us. It adds, meaning to
information gathered via the five senses of touch, smell, hearing, vision and taste.
Perception is the primary vehicle through which we come to understand our
surroundings and ourselves.

Perception can be defined as a process by which individuals organize and interpret their
sensory impressions in order to give meaning to their environment

Factors influencing Perception in Organizational behaviour

A number of factors operate to shape and sometimes distort perception. These factors
are.

i. In the perceiver
ii. In the object or target being perceived or
iii. In the context of the situation in which the perception is made.

Characteristics of Perception in Organisational Behaviour

Characteristics of the Perceiver

Several characteristics of the perceiver can affect perception. When an individual looks
at a target and attempts to interpret what he or she, that interpretation is heavily
influenced by personal characteristics of individual perceiver. The major characteristics
of the perceiver influencing perception are:

A. Attitudes:  The perceiver's attitudes affect perception. For example,

suppose Mr. X is interviewing candidates for a very important position in
his organization –a position that requires negotiating contracts with
suppliers, most of whom are male. Mr X may feel that women are not
capable of holding their own in tough negotiations. This attitude will
doubtless affect his perceptions of the female candidates he interviews.
B. Moods:  Moods can have a strong influence on the way we perceive
someone. We think differently when we are happy than we do when we are
depressed. In addition, we remember information that is consistent with
our mood state better than information that is inconsistent with our mood
state. When in a positive mood, we form more positive impression of
others. When in a negative mood, we tend to evaluate others unfavourably.
 C. Motives:  Unsatisfied needs or motives stimulate individuals and may exert
a strong influence on their perceptions. For example, in an organizational
context, a boss who is insecure perceives a subordinate's efforts to do an
outstanding job as a threat to his or her own position. Personal insecurity
can be transferred into the perception that others are out to "get my job",
regardless of the intention of the subordinates.
D. Self-Concept:  Another factor that can affect social perception is the
perceivers' self-concept. An individual with a positive self-concept tends to
notice positive attributes in another person. In contrast, a negative self-
concept can lead a perceiver to pick out negative traits in another person.
Greater understanding of self allows us to have more accurate perceptions
of others.
E.Interest:  The focus of our attention appears to be influenced by our
interests. Because our individual interests differ considerably, what one
person notices in a situation can differ from what others perceive. For
example, the supervisor who has just been reprimanded by his boss for
coming late is more likely to notice his colleagues coming late tomorrow
than he did last week. If you are preoccupied with a personal problem, you
may find it hard to be attentive in class.
F.Cognitive Structure:  Cognitive structure, an individual's pattern of thinking,
also affects perception. Some people have a tendency to perceive physical
traits, such as height, weight, and appearance, more readily. Others tend to
focus more on central traits, or personality dispositions. Cognitive
complexity allows a person to perceive multiple characteristics of another
person rather than attending to just a few traits.
G. Expectations:  Finally, expectations can distort your perceptions in that you
will see what you expect to see. The research findings of the study
conducted by Sheldon S Salkind and Timothy W Costello on some specific
characteristics of the perceiver reveal.
 Knowing oneself makes it easier to see others accurately.
 One's own characteristics affect the characteristics one is likely to see
inothers.
 People who accept themselves are more likely to be able to see favourable
aspects of other people.
 Accuracy in perceiving others is not a single skill.

These four characteristics greatly influence how a person perceives others in the
environmental situation.

Characteristics of the Target

Characteristics in the target that is being observed can affect what is perceived.
Physical appearance plays a big role in our perception of others. Extremely attractive or
unattractive individuals are more likely to be noticed in a group than ordinary liking
individuals. Motion, sound, size and other attributes of a target shape the way we see it.

Physical appearance plays a big role in our perception of others. The perceiver will
notice the target's physical features like height, weight, estimated age, race and gender.

Perceivers tend to notice physical appearance characteristics that contrast with the
norm, that are intense, or that are new or unusual.

Verbal communication from targets also affects our perception of them. We listen to the
topics they speak about, their voice tone, and their accent and make judgements based
on this input.

Non-verbal communication conveys a great deal of information about the target. The
perceiver deciphers eye contact, facial expressions, body movements, and posture all in
an attempt to form an impression of the target.

The perceiver, who observes the target's behaviour, infers the intentions of the target.

For example, if our manager comes to our office door way, we think "oh no! he is going
to give me more work to do". Or we may perceive that his intention is to congratulate us
on a recent success. In any case, the perceiver's interpretation of the target's intentions
affects the way the perceiver views the target.

Targets are not looked at in isolation, the relationship of a target to its background
influences perception because of our tendency to group close things and similar things
together.

People, objects or events that are similar to each other also tend to be grouped together.
The greater the similarity, the greater the probability we will tend to perceive them as a
group.

Characteristics of the Situation

The situation in which the interaction between the perceiver and the target takes place
has an influence on the perceiver's impression of the target. For example, a professor
may not notice his 20-year-old female student in a bikini at the swimming pool. Yet the
professor will notice the same girl if she comes to his organizational behaviour class in
abikini. In the same way, meeting a manager in his or her office affects your impression
in a certain way that may contrast with the impression you would form had you met the
manager in a restaurant.

The strength of the situational cues also affects social perception. Some situations
provide strong cues as to appropriate behaviour. In these situations, we assume that the
individual's behaviour can be accounted for by the situation, and that it may not reflect
the individual's disposition. This is the discounting principle in social perception. For
example, you mayen counter an automobile sales person who has a warm and
personable manner, asks you about your work and hobbies, and seems genuinely
interested in your taste in cars. Can you assume that this behaviour reflects the sales
person's personality? You probably cannot, because of the influence of the situation.
This person is trying to sell you a car, and in this particular situation he probably treats
all customers in this manner.

Factor Influencing Perception

Factors that Influence Perception

Frequently Used Shortcuts in judging others:  Perceiving and interpreting what others do
is burdensome. As a result, individuals develop techniques for making the task more
manageable. These techniques are not fool proof. Several factors lead us to form
inaccurate impressions of others. These barriers to perception are inaccurate
impressions of others. These barriers to perception are

1.Selective Perception: 
We receive a vast amount of information. Therefore, it is impossible for us
to assimilate everything we see - on eye certain stimuli can be taken. That
is why their boss may reprimand some employees for doing something
that when done by another employee goes unnoticed. Since, we can't
observe everything going on about us, we engage in selective perception.
 Selective perception is also out tendency to choose information that supports
our view points; Individuals often ignore information that makes them feel
uncomfortable or threatens their view points.

Selective perception allows us to "speed-read" others, but not without the risk
of drawing an inaccurate picture. Because we see what we want to see, we
can draw unwarranted conclusions from an ambiguous, perception tends to
be influenced more by an individual's attitudes, interests, and background than
by the stimulus itself.

2.Stereotype: 
A stereotype is a generalization about a group of people. When we judge
someone on the basis of our perception of the group to which he or she
belongs, we are using the shortcut called stereo typing. Stereo types
reduce information about other people to a workable level, and they are
efficient for compiling and using information. It is a means of simplifying a
complex world and it permits us to maintain consistency. It is less difficult
to deal with an unmanageable number of stimuli if we use stereo types.
Stereo types can be accurate, and when they are accurate, they can be
useful perceptual guidelines. However, most of the times stereotypes are
inaccurate.

3.Halo Effect:
  The halo error in perception is very similar to stereo typing. Where as in
stereo typing the person is perceived according to a single category, under
the halo effect the person is perceived on the basis of one trait.
When we draw a general impression about an individual based on a single
characteristic, such as intelligence, sociability or appearance, a halo effect is
operating. The propensity for the halo effect to operate is not random.
Research suggests it is likely to be most extreme when the traits to be
perceived are ambiguous in behavioural terms, when the traits have moral
over tones, and when the perceiver is judging traits with which he or she has
 limited experience. Example of halo effect is the extremely attractive women
secretary who is perceived by her male boss as being an intelligent, good
performer, when, in fact, she is a poor typist.

4.First-impression error:  Individuals place a good deal of importance on first

impressions. First impressions are lasting impressions. We tend to
remember what we perceive first about a person, and some times we are
quite reluctant to change our initial impressions. First - impression error
means the tendency to form lasting opinions about an individual based on
initial perceptions. Primacy effects can be particularly dangerous in
interviews, given that we form first impressions quickly and that these
impressions may be the basis for long-term employment relationships.

5.Contrast Effect:  Stimuli that contrast with the surrounding environment are
more likely to be selected for attention than the stimuli that blends in. A
contrasting effect can be caused by colour, size or any other factor that is
unusual (any factor that distinguishes one stimulus from others at
present). For example, a man walking down the street with a pair of
crutches is more attention getting than a common man. A contrast effect
is the evaluation of a person's characteristics that are affected by
comparisons with other people recently encountered that rank higher or
lower on the same characteristics. The "contrast" principle essentially
states that external stimuli that stands out against the background or
which are not what are expecting well receive their attention. The contrast
effect also explains why a male students tands out in a crowd of female
students. There is nothing unusual about the male students but, when
surrounded by females, he stands out.

6.Projection:  It is easy to judge others if we assume they are similar to us.

This tendency to attribute one's own characteristics to other people is
called projection.
Projection can distort perceptions made about others. People who engage in
projection tend to perceive others. According to what they are like rather than
according to what the person being observed is really like. When managers
engage in projection, they compromise their ability to respond to individual
differences. They tend to see people as more homogeneous than they really
are.
 7.Implicit Personality Theories:  We tend to have our own mini-theories about
how people look and behave. These theories help us organize our
perceptions and take shortcuts instead of integrating new information all
the time. Implicit-personality theory is opinions formed about other people
that are based on our own mini theories about how people behave. For
example, we believe that girls dressed in fashionable clothes will like
modern music and girls dressed in traditional dress like saree will like
Indian classical music. These implicit personality theories are barriers
because they limit our ability to take in new information when it is
available.

8.Self-Fulfilling Prophecies:  Self-fulfilling prophecies are the situation in which

our expectations about people affect our interaction with them in such a
way that our expectations are fulfilled. Self -fulfilling prophecy is also
known as the Pygmalion effect, named after a sculptor in Greek mythology
who carved a statue of a girl that came to life when he prayed for this wish
and it was granted.
The Pygmalion effect has been observed in work organizations as well. A manager's
expectations of an individual affect both the manager's behaviour toward the individual
and the individual's response. For example, suppose a manager has an initial impression
of an employee as having the potential to move up within the organization. Chances are
that the manager will spend a great deal of time coaching and counselling the employee,
providing challenging assignments and grooming the individual for success.

Impression Management:  Most people want to make favourable impression on others.

Impression management is the process by which individuals try to control the
impression others have of them. This is particularly true in organizations, where
individuals compete for jobs, favourable performance evaluations and salary increases.
Some impression management techniques used in organizations are given below:
1.Name-dropping:  is a technique, which involves mentioning an association
with important people in the hopes of improving one's image.
2.Flattery:  is a common technique where by compliments are given to an
individual in order to win his or her approval. Favours are also used to gain
 the approval of others. Agreement with someone's opinion is a technique
often used to gain a positive impression.
3.Managing one's Appearance:  is another technique for impression
management.

What is Decision Making?

Decision-making is an integral part of modern management.

A decision can be defined as a course of action purposely chosen from a set of alternatives
to achieve organizational or managerial objectives or goals. Decision making process is
continuous and indispensable component of managing any organization or business activities.
Decisions are made to sustain the activities of all business activities and organizational
functioning.

Decisions are made at every level of management to ensure organizational or business goals are
achieved. Further, the decisions make up one of core functional values that every organization
adopts and implements to ensure optimum growth and drivability in terms of services and or
products offered.

“Decision-making involves the selection of a course of action from among two or more
possible alternatives in order to arrive at a solution for a given problem”.

Decision making process can be regarded as check and balance system that keeps the
organisation growing both in vertical and linear directions.

Decision cannot be taken abruptly. It should follow the steps such as

1. Defining the problem

2. Gathering information and collecting data
3. Developing and weighing the options
4. Choosing best possible option
5. Plan and execute
6. Take follow up action

Since decision making process follows the above sequential steps, a lot of time is spent in this
process. This is the case with every decision taken to solve management and administrative
problems in a business setting. Though the whole process is time consuming, the result of such
process in a professional organization is magnanimous.

The Process of Corporate Decision Making

Corporate decision making happens at various levels in organizations and can be top
down or bottom up. The difference between these two styles of decision making is that the top-
down decision making is done at the higher levels of the hierarchy and the decisions are passed
down the corporate ladder to be implemented. On the other hand, bottom-up decision making is
done by giving autonomy to the middle managers and the line managers to take decisions based
on the conditions and circumstances existing in their teams. In many organizations, what we see
is a top-down decision making in the realms of policy, strategic focus, direction in which the
organization has to proceed and bottom-up decision making about the day to day running of the
teams.

corporate decision making is successful as long as there is a “glue” to bind the

organization together in the form of charismatic leaders or an organizational culture that

values coherence and imposes stability.

The OODA Loop and Decision Making

An important concept in the field of decision making is the OODA Loop or the Observe-Orient-
Decide-Act loop. This refers to the strategic advantage that a decision maker gets over his or her
opponent when he or she observes the situation and orients themselves and then decides and
acts accordingly.
Conflict Resolution and Decision Making
Any decisions taken at any level have to take into account the conflicting needs of the
individuals who are affected by the decisions and hence conflict resolution is a part of the
decision-making process. How well the conflicts are resolved depends on the skill and
leadership traits of the decision maker.

Consensual decision making ensures that most concerns of the different groups are heard
and taken into account.

Volatility, Uncertainty, Complexity and Ambiguity (VUCA) Paradigm for Leadership

The Volatility, Uncertainty, Complexity and Ambiguity (VUCA) Paradigm

Business leaders in the 21st century operate in a vastly different terrain than those who led their
companies to success in the earlier decades. The landscape that confronts the business leaders
of today is characterized by what is known as the VUCA principle or the Volatility, Uncertainty,
Complexity, and Ambiguity characteristics.
Value and Ethics in Business - A Basic Understanding

Values and ethics in simple words mean principle or code of conduct that govern
transactions; in this case business transaction. These ethics are meant to analyse problems
that come up in day to day course of business operations. Apart from this it also applies to
individuals who work in organisations, their conduct and to the organisations as a whole.

Importance of Ethics

1. Satisfying Basic Human Needs

2. Creating Credibility
3. Uniting People and Leadership
4. Improving Decision Making
5. Long Term Gains
6. Securing the Society

Ethics tries to create a sense of right and wrong in the organizations and often when the law
fails, it is the ethics that may stop organizations from harming the society or environment.

Ethical Issues in HR

Of all the organisational issues or problems, ethical issues are the most difficult ones to handle
or deal with. Issues arise in employment, remuneration and benefits, industrial relations and
health and safety.
Diagrammatic representation of HR Ethical Issues

 Cash and Compensation Plans

 Race, gender and Disability
 Employment Issues
 Privacy Issues

Resolving an Ethical Dilemma

Though there are no golden rules to resolve ethical issues but managers can take a number of
initiatives to resolve ethical issues. A brief description is given below.

 Know the Principles

 Debate Moral Choices
 Balance Sheet Approach- In balance sheet approach, the manager writes down the
pros and cons of the decision. This helps arrive at a clear picture of things and by
organizing things in a better way.
 Engage People Up and Down the Hierarchy
 Integrating Ethical Decision Making into Strategic Management

Understanding Organization and Organization Culture

What is an organization?

An organization is nothing but a common platform where individuals from different

backgrounds come together and work as a collective unit to achieve certain objectives and
targets. The word organization derived from the Greek work “organon” is a set up where people
join hands to earn a living for themselves as well as earn profits for the company

The employees are the major assets of an organization and contribute effectively in its successful
functioning.

What is culture?

The attitude, traits and behavioral patterns which govern the way an individual interacts with
others is termed as culture. Culture is something which one inherits from his ancestors and it
helps in distinguishing one individual from the other.

What is organization culture?

Every human being has certain personality traits which help them stand apart from the crowd.
No two individuals behave in a similar way. In the same way organizations have certain values,
policies, rules and guidelines which help them create an image of their own.

Organization culture refers to the beliefs and principles of a particular organization. The culture
followed by the organization has a deep impact on the employees and their relationship
amongst themselves.

Every organization has a unique culture making it different from the other and giving it a sense
of direction. It is essential for the employees to understand the culture of their workplace to
adjust well.

No two organizations can have the same culture. The values or policies of a non-profit
organization would be different from that of a profit-making entity or employees working in a
restaurant would follow a different culture as compared to those associated with education
industry or a manufacturing industry.

Broadly there are two types of organization culture:

 Strong Organization Culture: Strong organizational culture refers to a situation where

the employees adjust well, respect the organization’s policies and adhere to the
guidelines. In such a culture people enjoy working and take every assignment as a new
learning and try to gain as much as they can. They accept their roles and responsibilities
willingly.
 Weak Organization Culture: In such a culture individuals accept their responsibilities
out of fear of superiors and harsh policies. The employees in such a situation do things
out of compulsion. They just treat their organization as a mere source of earning money
and never get attached to it.

Types of Organization Culture

The practices, principles, policies and values of an organization form its culture. The culture of an
organization decides the way employees behave amongst themselves as well as the people
outside the organization.

various types of organization culture:

 1. Normative Culture: In such a culture, the norms and procedures of the organization are
predefined and the rules and regulations are set as per the existing guidelines. The
employees behave in an ideal way and strictly adhere to the policies of the organization.
No employee dares to break the rules and sticks to the already laid policies.
2. Pragmatic Culture: In a pragmatic culture, more emphasis is placed on the clients and
the external parties. Customer satisfaction is the main motive of the employees in a
pragmatic culture. Such organizations treat their clients as Gods and do not follow any
set rules. Every employee strives hard to satisfy his clients to expect maximum business
from their side.
3. Academy Culture: Organizations following academy culture hire skilled individuals. The
roles and responsibilities are delegated according to the back ground, educational
qualification and work experience of the employees. The management makes sincere
efforts to upgrade the knowledge of the employees to improve their professional
competence. The employees in an academy culture stick to the organization for a longer
duration and also grow within it. Educational institutions, universities, hospitals practice
such a culture.
4. Baseball team Culture: A baseball team culture considers the employees as the most
treasured possession of the organization. The employees are the true assets of the
organization who have a major role in its successful functioning. In such a culture, the
individuals always have an upper edge and they do not bother much about their
organization. Advertising agencies, event management companies, financial institutions
follow such a culture.
5. Club Culture: Organizations following a club culture are very particular about the
employees they recruit. The individuals are hired as per their specialization, educational
qualification and interests. Each one does what he is best at. The high potential
employees are promoted suitably and appraisals are a regular feature of such a culture.
6. Fortress Culture: There are certain organizations where the employees are not very
sure about their career and longevity. Such organizations follow fortress culture. The
employees are terminated if the organization is not performing well. Individuals suffer
the most when the organization is at a loss. Stock broking industries follow such a
culture.
7. Tough Guy Culture: In a tough guy culture, feedbacks are essential. The performance of
the employees is reviewed from time to time and their work is thoroughly monitored.
Team managers are appointed to discuss queries with the team members and guide
them whenever required. The employees are under constant watch in such a culture.
8. Bet your company Culture: Organizations which follow bet your company culture take
decisions which involve a huge amount of risk and the consequences are also
unforeseen. The principles and policies of such an organization are formulated to
address sensitive issues and it takes time to get the results.
9. Process Culture: As the name suggests the employees in such a culture adhere to the
processes and procedures of the organization. Feedbacks and performance reviews do
not matter much in such organizations. The employees abide by the rules and
regulations and work according to the ideologies of the workplace. All government
organizations follow such a culture.

Importance of Organization Culture

A common platform where individuals work in unison to earn profits as well as a livelihood for
themselves is called an organization. A place where individuals realize the dream of making it big
is called an organization. The beliefs, ideologies, principles and values of an organization form its
culture. The culture of the workplace controls the way employees behave amongst themselves
as well as with people outside the organization.

 The culture decides the way employees interact at their workplace.

 The culture of the workplace also goes a long way in promoting healthy competition at
the workplace
 The culture of an organization represents certain predefined policies which guide the
employees and give them a sense of direction at the workplace
 The work culture goes a long way in creating the brand image of the organization.
 The organization culture brings all the employees on a common platform.
 The work culture unites the employees who are otherwise from different back grounds
 The work culture promotes healthy relationship amongst the employees
 It is the culture of the organization which extracts the best out of each team member

To adjust to the changing organization culture.

 Give time to adjust

 Be flexible
 Work with an open mind
 Never crib
 Look at the positive side
 Develop alternate plans
 Don’t get too attached to someone at the workplace


Open Door Policy - Meaning and its Advantages

Transparency is essential at all levels in the hierarchy to avoid conflicts and unnecessary
disagreements. No one should feel neglected at work. Problems arise when queries remain
unattended and bosses do not have time for their team members.

To avoid the above situation, organizations have introduced a policy named “Open Door
Policy”

What is Open Door Policy?

According to open door policy, the doors of the offices of superiors or the management
(including the CEO) must remain open for the employees to have an easy access in cases
of queries. The team members should have the liberty to walk up to their team leaders and
discuss issues with them on an open forum.

The role of the managing director, chief executive officer or the chairman is not just to sit in
locked cabins the entire day and shout on the employees; instead, they should act as a strong
pillar of support for them. A healthy interaction amongst the employees is essential for a positive
ambience at the workplace. The management must address the employees from time to time to
motivate them and expect the best out of them.

Advantages of an Open Door Policy

 Open door policy encourages effective communication between the employee and the
management.
  There is no room for confusion when the employees directly interact with their
superiors.
 Open door policy encourages healthy discussion at the workplace
 Gone are the days when people used to fear their bosses. The “Hitler approach” does not
work in the current scenario.
 The open door policy enables the employees to seek their boss’s help and freely discuss
things with them for better clarity.

Importance of Leadership
Leadership is an important function of management which helps to maximize efficiency and to
achieve organizational goals.

The following points justify the importance of leadership in a concern.

 1. Initiates action
2. Motivation
3. Providing guidance
4. Creating confidence
5. Building morale
6. Builds work environment
7. Co-ordination

Leadership and Management - Relationship & Differences

Leadership and management are the terms that are often considered synonymous. It is essential
to understand that leadership is an essential part of effective management.

Leadership is defined as the potential to influence and drive the group efforts towards the
accomplishment of goals. This influence may originate from formal sources, such as that provided
by acquisition of managerial position in an organization.

A manager must have traits of a leader, i.e., he/she must possess leadership qualities. Leaders
develop and begin strategies that build and sustain competitive advantage. Organizations
require robust leadership and robust management for optimal organizational efficiency.

Leadership Styles - Important Leadership Styles

The leadership style varies with the kind of people the leader interacts and deals with. A
perfect/standard leadership style is one which assists a leader in getting the best out of the
people who follow him.

Some of the important leadership styles are as follows:

1. Autocratic leadership style: In this style of leadership, a leader has complete command
and hold over their employees/team. The team cannot put forward their views even if
they are best for the team’s or organizational interests. They cannot criticize or question
the leader’s way of getting things done.

The leader himself/herself gets the things done. The advantage of this style is that it
leads to speedy decision-making and greater productivity under leader’s supervision.
Drawbacks of this leadership style are that it leads to greater employee absenteeism and
turnover.

This leadership style works only when the leader is the best in performing or when the
job is monotonous, unskilled and routine in nature or where the project is short-term
and risky.

2. The Laissez Faire Leadership Style: Here, the leader totally trusts their
employees/team to perform the job themselves. He just concentrates on the
intellectual/rational aspect of his work and does not focus on the management aspect of
his work.
 The team/employees are welcomed to share their views and provide suggestions which
are best for organizational interests. This leadership style works only when the
employees are skilled, loyal, experienced and intellectual.

3. Democratize/Participative leadership style: The leaders invite and encourage the

team members to play an important role in decision-making process, though the
ultimate decision-making power rests with the leader.

The leader guides the employees on what to perform and how to perform, while the
employees communicate to the leader their experience and the suggestions if any. The
advantages of this leadership style are that it leads to satisfied, motivated and more
skilled employees. It leads to an optimistic work environment and also encourages
creativity. This leadership style has the only drawback that it is time-consuming.

4. Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules

and policies. Also, they make sure that the employees/team also strictly follows the rules
and procedures. Promotions take place on the basis of employees’ ability to adhere to
organizational rules.

This leadership style gradually develops over time. This leadership style is more suitable
when safe work conditions and quality are required. But this leadership style discourages
creativity and does not make employees self-contented.

Trait Theory of Leadership

The trait model of leadership is based on the characteristics of many leaders - both successful
and unsuccessful - and is used to predict leadership effectiveness. The resulting lists of traits are
then compared to those of potential leaders to assess their likelihood of success or failure.

Scholars taking the trait approach attempted to identify physiological (appearance, height, and
weight), demographic (age, education and socioeconomic background), personality, self-
confidence, and aggressiveness), intellective (intelligence, decisiveness, judgment, and
knowledge), task-related (achievement drive, initiative, and persistence), and social
characteristics (sociability and cooperativeness) with leader emergence and leader effectiveness.

Successful leaders definitely have interests, abilities, and personality traits that are
different from those of the less effective leaders.

Leadership-Member Exchange (LMX) Theory

Informal observation of leadership behavior suggests that leader’s action is not the same
towards all subordinates. The importance of potential differences in this respect is brought into
sharp focus by Graen’s leader-member exchange model, also known as the vertical dyad linkage
theory. The quality of the relationship is reflected by the degree of mutual trust, loyalty, support,
respect, and obligation.

According to the theory, leaders form different kinds of relationships with various groups of
subordinates. One group, referred to as the in-group, is favoured by the leader. Members of in-
group receive considerably more attention from the leader and have more access to the
organizational resources. By contrast, other subordinates fall into the out-group. These
individuals are disfavoured by the leader. As such, they receive fewer valued resources from
their leaders.

Leaders distinguish between the in-group and out-group members on the basis of the perceived
similarity with respect to personal characteristics, such as age, gender, or personality. A follower
may also be granted an in-group status if the leader believes that person to be especially
competent at performing his or her job. The relationship between leaders and followers follows
three stages:

 Role taking: When a new member joins the organization, the leader assesses the talent
and abilities of the member and offers them opportunities to demonstrate their
capabilities.
 Role making: An informal and unstructured negotiation on work-related factors takes
place between the leader and the member. A member who is similar to the leader is
more likely to succeed. A betrayal by the member at this stage may result in him being
relegated to the out-group

Transformational Leadership Theory

Transformational leadership may be found at all levels of the organization: teams, departments,
divisions, and organization as a whole. Such leaders are visionary, inspiring, daring, risk-takers,
and thoughtful thinkers. They have a charismatic appeal. But charisma alone is insufficient for
changing the way an organization operates. For bringing major changes, transformational
leaders must exhibit the following four factors:
Figure 1: Model of Transformational Leadership

Inspirational Motivation:  Transformational leaders guide followers by providing them

with a sense of meaning and challenge. They work enthusiastically and optimistically to
foster the spirit of teamwork and commitment.

Intellectual Stimulation:  They encourage new ideas from their followers and never
criticize them publicly for the mistakes committed by them. The leaders focus on the “what”
in problems and do not focus on the blaming part of it.

Idealized Influence:  The leaders act as role models that followers seek to emulate. Such
leaders always win the trust and respect of their followers through their action. The use of
power by such leaders is aimed at influencing them to strive for the common goals of the
organization.

Individualized Consideration: Leaders act as mentors to their followers and reward them

for creativity and innovation. The followers are treated differently according to their talents
and knowledge. They are empowered to make decisions and are always provided with the
needed support to implement their decisions.

The common examples of transformational leaders are Mahatma Gandhi and Obama.

Transactional Leadership Theory

The transactional style of leadership was first described by Max Weber in 1947 and then
by Bernard Bass in 1981. This style is most often used by the managers.

Transactional leadership involves motivating and directing followers primarily through

appealing to their own self-interest. The power of transactional leaders comes from their
formal authority and responsibility in the organization.
The main goal of the follower is to obey the instructions of the leader. The style can also be
mentioned as a ‘telling style’.

The leader believes in motivating through a system of rewards and punishment.

Difference between Transactional and Transformational Leaders

Transactional leadership Transformational Leadership

Leadership is responsive Leadership is proactive

Works within the organizational culture Work to change the organizational culture by
implementing new ideas

Transactional leaders make employees Transformational leaders motivate and empower

achieve organizational objectives employees to achieve company’s objectives by
through rewards and punishment appealing to higher ideals and moral values

Motivates followers by appealing to their Motivates followers by encouraging them to

own self-interest transcend their own interests for those of the group
or unit

Why we Need more Emotionally Intelligent Leaders and Managers in Chaotic Times

Emotional Intelligence is defined as the art and science of managing one’s emotion and that of
the others.

Emotionally Intelligent individuals are those who are good at controlling their emotions and
learning to defer gratification till the work is done, empathise with others, and in general, be
more focused and deep thinking than those with lesser EQ or Emotional Quotient.
The term Emotional Intelligence was popularized by the eminent psychologist and expert, Daniel
Goleman, who used it to describe how emotionally intelligent leaders and managers succeed
better than others over the longer term.

In addition, the practice of emotionally intelligent leadership also leads to such individuals
having better interpersonal relations and managing others well so that the organization as a
whole benefit from their ability and skill as well as dexterity in managing themselves and
managing others.

Workplace Politics - Meaning and Reasons for Office Politics

What is workplace Politics?

Office politics arises when employees tend to misuse their power to gain undue attention
and popularity at the workplace.

Politics reduces the productivity of individuals and eventually the organization is at a loss. People
tend to spend their maximum time in pulling each other’s legs and playing nasty politics at work.

Reasons

 Employees aspiring to come in the limelight easily without much hard work depend on
politics.
  Politics arises when employees aspire to achieve something beyond their authority and
control in a short span of time.
 Lack of supervision and control at the workplace.
 Too much of gossip at work lead to politics.
 Arrogant superiors
 Jealous colleagues

Effects of politics on organization and employees:

1. Decrease in overall productivity

2. Affects Concentration
3. Spoils the Ambience
4. Changes the Attitude of employees
5. Demotivated employees
6. Increases Stress
7. Wrong Information

Management plays an important role in avoiding politics at the workplace:

 Roles and Responsibilities

 Control
 Transparency
 Regular Interactions
 Avoid Partiality
 Team Building Activities
 Set an Example

Improve Your Skills through Office Politics

Work Politics in certain cases can also develop inner skills of an individual.

 An individual indulges in politics when he is not secure about his job. Politics makes
you patient and nice. Don’t get irritated, instead lend a helping hand.
 An individual who has real talent would never play politics at workplace . Politics
makes you more forgiving. Individuals learn to forgive and move on.
 Politics makes you a good and a patient listener.
 One learns to deal with people more effectively.
 Politics helps individuals to look on the brighter sides of life.
 Politics motivates individuals to work hard and give their hundred percent
 Politics makes you more confident.
 Politics makes individuals internally strong
 Politics makes you realize your mistakes.
Conflict - Meaning and Phases of Conflict
Whenever two individuals opine in different ways, a conflict arises.

No two individuals can think alike and there is definitely a difference in their thought process as
well as their understanding. Disagreements among individuals lead to conflicts and fights.

Conflict arises whenever individuals have different values, opinions, needs, interests and
are unable to find a middle way.

Conflict is defined as a clash between individuals arising out of a difference in thought

process, attitudes, understanding, interests, requirements and even sometimes
perceptions

Phases of conflict

1. Prelude to conflict - It involves all the factors which possibly arise a conflict among
individuals. Lack of coordination, differences in interests, dissimilarity in cultural, religion,
educational background all are instrumental in arising a conflict.
2. Triggering Event - No conflict can arise on its own. There has to be an event which
triggers the conflict.
 3. Initiation Phase - Initiation phase is actually the phase when the conflict has already
begun. Heated arguments, abuses, verbal disagreements are all warning alarms which
indicate that the fight is already on.
4. Differentiation Phase - It is the phase when the individuals voice out their differences
against each other. The reasons for the conflict are raised in the differentiation phase.
5. Resolution Phase - A Conflict leads to nowhere. Individuals must try to compromise to
some extent and resolve the conflict soon. The resolution phase explores the various
options to resolve the conflict.

Conflicts can be of many types like verbal conflict, religious conflict, emotional conflict, social
conflict, personal conflict, organizational conflict, community conflict and so on.

How to avoid Conflict?

A difference in the opinions, values, understandings and thought processes of individuals lead to a
conflict. When individuals strongly oppose each other’s ideas and concepts, a conflict starts. It
has been observed that when people think in dissimilar ways and are not willing to compromise
at all, conflict arises.

Conflict can start anytime and at any place when individuals are not ready to accept the middle
path approach. A conflict results in verbal arguments, abuses, tensions and also spoils
relationships.

Before starting any conflict, one should take some time out to think, “How will this fight

benefit me?” “Is it going to provide me any solution?”

First learn to keep a control on your emotions.

Be a good and a patient listener.Never be rigid on any point, instead be flexible and try to
find out an alternative.

Learn to keep a control on your tongue.

Misunderstandings also lead to conflicts

Effective communication goes a long way in preventing conflicts

Don’t feel guilty if you have done anything wrong, instead admit it. Never hesitate to accept your
faults. Be the first one to apologize. A small sorry can work wonders and prevent conflicts
and unnecessary tensions.

No one wins in a fight and you gain nothing out of it. As they say “Prevention is better than
cure”, thus a conflict must be prevented at its early stages as it snatches one’s mental peace and
harmony.

conflict of interest arises when an individual in a particular employment has links with
another venture that is in the same line of business or has interests that intersect and
overlap with the interests of the former. For instance, if you are employed in a technology
company and at the same time spend your spare time developing technological applications that
you intend to sell in the market, then your current employment and the spare time venture are
conflicting with each other as both of them are targeting the same audience.

What is negotiation?

Negotiation is a technique of discussing issues among one self and reaching to a

conclusion benefiting all involved in the discussion. It is one of the most effective ways to
avoid conflicts and tensions.

Elements of Negotiation

Negotiation
↓
Process + Behaviour + Substance (Agenda)

 Process- The way individuals negotiate with each other is called the process of
negotiation. The process includes the various techniques and strategies employed to
negotiate and reach to a solution.
 Behaviour- How two parties behave with each other during the process of negotiation is
referred to as behaviour. The way they interact with each other, the way they
communicate with each other to make their points clear all come under behaviour.
 Substance- There has to be an agenda on which individuals negotiate. A topic is
important for negotiation. In the first situation, going for the late night movie was the
agenda on which you wanted to negotiate with your parents as well as your friends.

To conclude, negotiation is simply a technique, a discussion among individuals to reach to a

mutual agreement where everyone gains something or the other and conflicts are avoided.

Models of Negotiation

Let us go through various models of negotiation:

1. Win Win Model - In this model, each and every individual involved in negotiation wins.
Nobody is at loss in this model and everyone is benefited out of the negotiation. This is
the most accepted model of negotiation.
2. Win Lose Model - In this model one-party wins and the other party loses. In such a
model, after several rounds of discussions and negotiations, one party benefits while the
party remains dissatisfied.
3. Lose Lose Model - As the name suggests, in this model, the outcome of negotiation is
zero. No party is benefited out of this model.
4. RADPAC Model of Negotiation

RADPAC Model of Negotiation is a widely used model of negotiation incorporates.

Let us understand it in detail

Every alphabet in this model signifies something:

 R - Rapport
A - Analysis
D - Debate
P - Propose
A - Agreement
C - Close

R - Rapport: As the name suggests, it signifies the relation between parties involved in
negotiation. The parties involved in negotiation ideally should be comfortable with each
other and share a good rapport with each other.

A - Analysis: One party must understand the second party well. It is important that the
individual understand each other’s needs and interest. The shopkeeper must understand
the customer’s needs and pocket, in the same way the customer mustn’t ignore the
shopkeeper’s profits as well. People must listen to each other attentively.

D - Debate: Nothing can be achieved without discussions. This round includes discussing

issues among the parties involved in negotiation. The pros and cons of an idea are
evaluated in this round. People debate with each other and each one tries to convince
the other. One must not lose his temper in this round but remain calm and composed.

P - Propose: Each individual proposes his best idea in this round. Each one tries his level
best to come up with the best possible idea and reach to a conclusion acceptable by all.

A - Agreement: Individuals come to a conclusion at this stage and agree to the best

possible alternative.

C - Close: The negotiation is complete and individuals return back satisfied.

Types of Negotiation in Corporates

Negotiation takes place in various ways in corporates for increased output and better
relations among employees.

 Day to Day Negotiation at work place- Every day we negotiate something or the other
at the workplace either with our superiors or with our fellow workers for the smooth flow
of work. These are called day to day negotiations.
 Negotiation between employee and superior- At the work place, an employee has to
negotiate with his superiors so that he is assigned the responsibilities as per his interests
and specialization. Don’t accept anything you are not comfortable with. Sit with your boss
and discuss things with him.
 Negotiation between colleagues- Negotiation is essential among team members to
reduce the chances of disputes and conflicts. Any particular team member should not be
overburdened while the other member is relaxing. One should negotiate with his fellow
workers and accept only those responsibilities he feels he is best capable of doing. The
responsibility of achieving the targets should not rest on only one shoulder, but equally
divided among all.
 Commercial negotiations- Commercial negotiations are generally done in the form of
contract. Two parties sit face to face across the table, discuss issues between them and
 come to conditions acceptable to both the parties. In such cases; everything should be in
black and white. A contract is signed by both the parties and they both have to adhere to
its terms and conditions.

Commercial negotiation generally involves an external party and thus a contract is

essential so that no party backs out later.

 Legal Negotiation- Legal negotiation takes place between individual and the law where
the individual has to abide by the rules and regulations laid by the legal system and the
legal system also takes into account the needs and interest of the individual.

Negotiations are essential at workplace so that everyone is satisfied and nobody feels left out or
neglected. It also reduces conflicts and misunderstandings among fellow workers.
The first definition of HRM is that it is the process of managing people in organizations in
a structured and thorough manner. This covers the fields of staffing (hiring people), retention
of people, pay and perks setting and management, performance management, change
management and taking care of exits from the company to round off the activities. This is the
traditional definition of HRM which leads some experts to define it as a modern version of the
Personnel Management function that was used earlier.

The second definition of HRM encompasses the management of people in organizations

from a macro perspective i.e., managing people in the form of a collective relationship
between management and employees. This approach focuses on the objectives and outcomes of
the HRM function. What this means is that the HR function in contemporary organizations is
concerned with the notions of people enabling, people development and a focus on making the
“employment relationship” fulfilling for both the management and employees.

These definitions emphasize the difference between Personnel Management as defined in the
second paragraph and human resource management as described in the third paragraph. To
put it in one sentence, personnel management is essentially “workforce” centered whereas
human resource management is “resource” centered. The key difference is HRM in recent
times is about fulfilling management objectives of providing and deploying people and a greater
emphasis on planning, monitoring and control.

Importance of HRM

It is a fact that to thrive in the chaotic and turbulent business environment, firms need to
constantly innovate and be “ahead of the curve” in terms of business practices and strategies. It
is from this motivation to be at the top of the pack that HRM becomes a valuable tool for
management to ensure success.

Strategic Management and HRM

As discussed in the articles on modern day HRM practices, there is a need to align

organizational goals with that of the HR strategy to ensure that there is alignment of the
people policies with that of the management objectives. This means that the HR department can
no longer be viewed as an appendage of the firm but instead is a vital organ in ensuring
organizational success.

Scope of Human Resource Management

The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to define it
concisely. However, we may classify the same under following heads:

 HRM in Personnel Management: This is typically direct manpower management that

involves manpower planning, hiring (recruitment and selection), training and
development, induction and orientation, transfer, promotion, compensation, layoff and
retrenchment, employee productivity. The overall objective here is to ascertain individual
growth, development and effectiveness which indirectly contribute to organizational
development.
 HRM in Employee Welfare: This particular aspect of HRM deals with working conditions
and amenities at workplace. This includes a wide array of responsibilities and services
such as safety services, health services, welfare funds, social security and medical
services. It also covers appointment of safety officers, making the environment worth
working, eliminating workplace hazards, support by top management, job safety,
safeguarding machinery, cleanliness, proper ventilation and lighting, sanitation, medical
care, sickness benefits, employment injury benefits, personal injury benefits, maternity
benefits, unemployment benefits and family benefits.
  HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful
interactions with labor or employee unions, addressing their grievances and settling the
disputes effectively in order to maintain peace and harmony in the organization.

Processes in Human Resource Management

The following are the various HR processes:

1. Human resource planning (Recruitment, Selecting, Hiring, Training, Induction,

Orientation, Evaluation, Promotion and Layoff).
2. Employee remuneration and Benefits Administration.
3. Performance Management.
4. Employee Relations.

1. Human Resource Planning: Generally, we consider Human Resource Planning as the

process of people forecasting. Right but incomplete! It also involves the processes of
Evaluation, Promotion and Layoff.
 Recruitment: It aims at attracting applicants that match a certain Job criterion.
 Selection: The next level of filtration. Aims at short listing candidates who are the
nearest match in terms qualifications, expertise and potential for a certain job.
 Hiring: Deciding upon the final candidate who gets the job.
 Training and Development: Those processes that work on an employee
onboard for his skills and abilities upgradation.
2. Employee Remuneration and Benefits Administration: The process involves deciding
upon salaries and wages, Incentives, Fringe Benefits and Perquisites etc. Money is the
prime motivator in any job and therefore the importance of this process. Performing
employees seek raises, better salaries and bonuses.
3. Performance Management: It is meant to help the organization train, motivate and
reward workers. It is also meant to ensure that the organizational goals are met with
efficiency. The process not only includes the employees but can also be for a
department, product, service or customer process; all towards enhancing or adding
value to them.

Nowadays there is an automated performance management system (PMS) that carries

all the information to help managers evaluate the performance of the employees and
assess them accordingly on their training and development needs.

4. Employee Relations: Employee retention is a nuisance with organizations especially in

industries that are hugely competitive in nature. Though there are myriad factors that
motivate an individual to stick to or leave an organization, but certainly few are under
our control.

Employee relations include Labor Law and Relations, Working Environment, Employee
health and safety, Employee- Employee conflict management, Employee- Employee
Conflict Management, Quality of Work Life, Workers Compensation, Employee Wellness
and assistance programs, Counselling for occupational stress. All these are critical to
employee retention apart from the money which is only a hygiene factor.

All processes are integral to the survival and success of HR strategies and no single process can
work in isolation; there has to be a high level of conformity and cohesiveness between the same.
Strategic Human Resource Management
Strategic Human Resource Management is the practice of aligning business strategy with that of
HR practices to achieve the strategic goals of the organization. The aim of SHRM (Strategic
Human Resource Management) is to ensure that HR strategy is not a means but an end in itself
as far as business objectives are concerned. The idea behind SHRM is that companies must “fit”
their HR strategy within the framework of overall Business objectives and hence ensure that
there is alignment between the HR practices and the strategic objectives of the organization.

Evolution of SHRM

With the advent of new economy industries like IT and the mushrooming of the service sector,
organizations all over the world realized that human resources must be viewed as a source of
competitive advantage as opposed to treating it much the same way in access to technology or
capital is concerned. What this means is that the practice of HRM is being viewed as something
that promotes the business objectives of the firms and not merely another factor in the way the
firm is managed

Difference between Personnel Management & HRM

Many students of management and laypeople often hear the term HRM or Human Resource
Management and wonder about the difference between HRM and the traditional term Personnel
Management.

In earlier times, the Personnel Manager of a factory or firm was the person in charge of ensuring
employee welfare and interceding between the management and the employees. In recent
times, the term has been replaced with HR manager.

Personnel Management

Traditionally the term personnel management was used to refer to the set of activities
concerning the workforce which included staffing, payroll, contractual obligations and other
administrative tasks. In this respect, personnel management encompasses the range of activities
that are to do with managing the workforce rather than resources.

Personnel Management is more administrative in nature and the Personnel Manager’s main

job is to ensure that the needs of the workforce as they pertain to their immediate concerns are
taken care of. Further, personnel managers typically played the role of mediators between the
management and the employees and hence there was always the feeling that personnel
management was not in tune with the objectives of the management.

Human Resource Management

With the advent of resource centric organizations in recent decades, it has become imperative to
put “people first” as well as secure management objectives of maximizing the ROI (Return on
Investment) on the resources. This has led to the development of the modern HRM function
which is primarily concerned with ensuring the fulfilment of management objectives and at the
same time ensuring that the needs of the resources are taken care of. In this way, HRM differs
from personnel management not only in its broader scope but also in the way in which its
mission is defined.

HRM goes beyond the administrative tasks of personnel management and encompasses a

broad vision of how management would like the resources to contribute to the success of the
organization.

Many experts view Personnel Management as being workforce centered whereas HRM is
resource centered. In conclusion, the differences between these two terms have to be viewed
through the prism of people management through the times and in context of the industry that
is being studied.

Meaning and concept of HRP

A process by which an organization should move from its current manpower position to its
desired manpower position. Through planning management strives to have the right number
and right kind of people at the right places at the right time, doing things which result in both
the organization and the individual receiving maximum long-run benefit

It is an integrated approach to performing the planning aspects of the personnel function in

order to have a sufficient supply of adequately developed and motivated people to perform
the duties and tasks required to meet organizational objectives and satisfy the individual
needs and goals of organizational members.

Planning for substantive reasons, i.e. to have a practical effect –

 to optimize use of resources by making them more flexible;
 to acquire and grow skills which take time to develop;
 to identify potential problems;
 to minimize the chances of making a bad decision; and
 Planning because of the process benefits -
  to (re)gain corporate control over operating units;
 to understand the present in order to confront the future;
 to challenge assumptions/liberate thinking;

Need for HR Planning

 Economic Conditions
 Technological Conditions
 Government/Legal Conditions*
 Demographic Conditions
 Geographic Conditions
 Labor Turnover
 Expansion Plans
 Social conditions
 Employee replacement
 Succession planning

Managerial Functions of HRP

 Align human resource needs and organizational goals.
 Direct towards clear and well-defined objectives.
 Have the right number of people and the right kind at the right time doing work for
which they are economically most suitable.
 Take into account the principle of periodical reconsideration of new developments
and extend the plan to cover the changes during the given long period.
 Pave the way for an effective motivational process.
 Maintain adequate flexibility to suit the changing needs of the organization.
Objectives of HR Planning
 Assessing manpower needs for future and making plans for recruitment and selection.
 Assessing skill requirement in future for the organization.
 Determining training and the development needs of the organization.
 Anticipating surplus or shortage of staff and avoiding unnecessary detentions or dismissals.
 Controlling wage and salary costs.
 Ensuring optimum use of human resources in the organization.
 Helping the organization to cope with the technological development and modernization.
 Ensuring career planning of every employee of the organization and making succession
programs.
 Ensuring higher labor productivity.
What is Strategy?
Strategy is determination of the basic long-term goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying out these
goals.
It is the formulation of organizational objectives, competitive scopes and action plans for
gaining advantage.
 Logical incrementalism is the process of subtly redirecting strategy to accommodate
changes in the environment which involves moving, shifting and evolving as a
dynamic process as conditions warrant changes. This is also called emergent
strategy.
 Intended strategy is the one that was formulated at the beginning of the period.
 The realized strategy is what actually happened.

Triggering events to stimulate a change in

strategy
 New CEO
 Threat of change in ownership
 External intervention
 Performance gap
 Strategic inflection point
Theories of Strategic Management of HR
Stakeholders are groups of people who have an interest in the projects, policies, or outcomes of an
organization’s decisions. They are also called constituent groups. They affect strategy formulation.
HR Forecasting
 Human resource planning is analyzing organization’s human resource needs under
changing conditions and developing the activities necessary to satisfy these needs.
 HR forecasting is ascertaining the net recruitment of personnel by determining the
demand for and supply of human resources now and in the future.
 Training and development, career planning, recruitment and selection, and managerial
appraisal is all stimulated by HR forecasting process.

Outcomes of Forecasting
Prediction: It is a single numerical estimate of HR requirements associated with a specific
time horizon and set of assumptions.
Projection: Incorporates several HR estimates based on a variety of assumptions.
Envelope: An analogy in which one can easily visualize the corners of an envelope
containing the upper and lower limits, or “bounds,” of the various HR projections extending
into the future.
Scenario: A proposed sequence of events with its own set of assumptions and associated
program details associated with HR functions.
Contingency plans: They are implemented when severe, unanticipated changes to
organizational or environmental factors completely negate the usefulness of the existing HR
forecasting predictions or projections. These are like backup plans.

Determining Net HR Requirements

Determine HR demand
• Each organizational sub-unit has to submit its net personnel requirement to the corporate
forecasting unit.
• Planned future changes in organizational design or in restructuring, with their associated
increases or decreases in staffing levels must be incorporated into the equation to revise the
aggregate net departmental demand requirements.
• Consideration should be given to replacing non-productive paid time.
• All this will lead to net HR demand.
• Conduct a cost estimate or HR budget

Ascertain HR supply (includes internal supply and external supply) and skills
inventory-personal database record on each employee
• Internal supply refers to current members of the organizational workforce who can be
retrained, promoted, transferred, and so on to fill anticipated future work requirements.
• External supply refers to potential employees currently undergoing training, working for
competitors, members of unions or professional associations, or in a transitional stage,
between jobs, or unemployed.
• Most organizations use a mix of both sources.

Reasons for using external labor sources

• Need to increase the labor force without increasing labor efficiency to expand operations.
• External applicants introduce to the organization competitive insights and highly creative
novel operational techniques.
• Internal candidate may be more expensive than an external hire.
• Poaching the competitors (using head-hunters).
• Organizational objectives may require a shift in operating techniques, culture, and past
practices
Determine NET HR requirements
• External supply requirements = Replacement needs + Change supply components
• Replacement = Hiring to replace all normal losses
• Change supply = Increase (or decrease) in the overall staffing level
• External supply = Current workforce size (Replacement % per year + Change % per year)

Institute HR programs: HR shortage and HR surplus

• HR shortage = HR Demand > HR Internal supply
• HR surplus = HR Demand < HR Internal supply

In case of HR shortage, attract new employees (full-time, part-time, contract or freelance),

recall the employees who were laid off, retired employees, use temporary workers

In case of HR surplus, the options include -

• Job sharing occurs when two or more employees perform the duties of one full time
position, each sharing the work activities on a part-time basis.
• Work sharing is a program that aims to help organizations mitigate temporary layoffs
through redistribution of work, earnings and leisure time.
• Attrition is the process of reducing HR surplus by allowing the size of the workforce to
decline naturally due to the normal pattern of losses associated with retirements, deaths,
voluntary turnover, and so on.
• Hiring freeze is a prohibition on all external recruiting activities.

Job Analysis
Job is a group of related duties, tasks, and behaviors performed by one or more individuals,
viz., jobholders.
Positions are the number of individuals who are performing the duties, tasks, and
responsibilities of a specific job.

Departmentalization is the process of individual jobs being aggregated with others.

Departmentalization contributes to the performance of essential organizational tasks without
unnecessary duplication or redundancy.

Job Analysis is a systematic exploration, study and recording the responsibilities, duties,
skills, accountabilities, work environment and ability requirements of a specific job. It also
involves determining the relative importance of the duties, responsibilities and physical and
emotional skills for a given job. All these factors identify what a job demands and what an
employee must possess to perform a job productively.

Job description and job specification are the written outcomes of the job analysis process.
 Job description emphasizes the duties or tasks to be carried out on the job.
 Job specifications emphasize identifying the competencies the jobholder must possess to be a
successful performer in the specified job.

 Knowledge is the body of information, usually of a factual or procedural nature, that

allows an individual to perform a task successfully.
 Skill is the individual’s level of proficiency or competency in performing a specific task.
Level of competency is typically expressed in numerical terms.
 Ability is a more general, enduring trait or capability an individual possesses at the
time when he or she first begins to perform a task.
 Other attributes include work experience.
 Compensable factors are skills, efforts, responsibility and working conditions
Problems Associated with Job Analysis

1. Job analysis that is neither updated nor reviewed.

2. Job description or specification that is too vague.
3. Validity of content. Validity in psychological and employee testing is defined as the extent to
which a test instrument measures what it purports to measure.
Contamination and deficiency.
 Deficiency is an error of omission that occurs when a job description or specification fails
to incorporate important aspects of the job required for success.
 Contamination is an error that occurs when unimportant or invalid behaviors or attributes
are incorporated into a job description or specification.
5. Time and costs of job analysis.
Job evaluation, specifies the relative value or worth of each job in an organization.

A job evaluation is a systematic way of determining the value/worth of a job in relation to other
jobs in an organization. It tries to make a systematic comparison between jobs to assess their
relative worth for the purpose of establishing a rational pay structure.

An organization undertakes the task of job analysis and evaluation for one or many of the
following purposes:

 Designing new organization and roles/jobs

 Changing the organizational design or roles
 Aligning roles and pay to organizational changes
 Designing an effective organization
 Defining interdependencies among different jobs
 Clarifying accountabilities of jobs
 Managing succession in organization
 Reviewing the existing pay structure
 Auditing legal compliance of pay policies
 Implementing benchmark pay structures
 Setting value-based pay policies

The various methods by which an HR Consultant can obtain the information for job description
and job specification are:

 Observing the employee.

 Carrying out individual/group interviews.
 Having brainstorming sessions between groups of employees.
 Performing desk audit by carefully examining documents used and tasks executed by
employee.
 Using questionnaires.
 Asking employees to jot down all their tasks and duties as and when they perform them.
 Interviewing employees for any critical incidents that may have occurred.
 Keeping a video recording of employee on duty.
 Reviewing all the necessary documents present in organization.
 Referring to previous job analysis and evaluations done in organization.
Job evaluation is done by any of the following methods:

 Points rating - Different levels are accorded to the various elements of jobs and then
the points allocated to different levels are totalled to get point score of the jobs which
forms the basis of pay structure.
 Factor comparison - A comparison of various independent factors of jobs is done and
points are given to each factor rank of individual job. These points are then totalled to
rank the jobs.
 Job ranking - Job is not broken into factors or elements, rather it is evaluated as a whole
and is compared with other jobs to be ranked accordingly.
 Paired comparison - Jobs are compared with each other and allocated points depending
on being ‘greater, lesser or equal’. These points are added to create rank order of jobs.

The outputs of job analysis and evaluation are then aligned to the purpose of the project. This
requires the HR Consultants to interpret the changes required in the existing job/pay and
suggesting the improvements, as required. HR Consultants also advice on smooth incorporation
of these changes to enhance efficiency and effectiveness of the organization.

Job Design
Job design follows job analysis i.e., it is the next step after job analysis. It aims at outlining and
organising tasks, duties and responsibilities into a single unit of work for the achievement of
certain objectives. It also outlines the methods and relationships that are essential for the
success of a certain job. In simpler terms it refers to the what, how much, how many and the
order of the tasks for a job/s.

Job design essentially involves integrating job responsibilities or content and certain
qualifications that are required to perform the same. It outlines the job responsibilities very
clearly and also helps in attracting the right candidates to the right job. Further it also makes the
job look interesting and specialised.

There are various steps involved in job design that follow a logical sequence, those that
were mentioned earlier on. The sequence is as follows:

1. What tasks are required to e done or what tasks is part of the job?
2. How are the tasks performed?
3. What amount are tasks are required to be done?
4. What is the sequence of performing these tasks?

Job design is a continuous and ever evolving process that is aimed at helping employees make
adjustments with the changes in the workplace. The end goal is reducing dissatisfaction,
enhancing motivation and employee engagement at the workplace.
Job Redesign

Restructuring the elements including tasks, duties and responsibilities of a specific job in order
to make it more encouraging and inspiring for the employees or workers is known as job
redesigning. The process includes revising, analyzing, altering, reforming and reshuffling the job-
related content and dimensions to increase the variety of assignments and functions to motivate
employees and make them feel as an important asset of the organization. The main objective of
conducting job redesigning is to place the right person at the right job and get the maximum
output while increasing their level of satisfaction.

Advantages of Job Redesigning

Job Classification
Job classification is a scheme of classifying a job according to the current responsibilities and
duties associated with the job. It is different than job design in that the person assigned to the
job is not taken into consideration. Jobs are classified with the purpose of studying jobs in a
holistic perspective.

Job Rotation

Job Rotation is a management approach where employees are shifted between two or more
assignments or jobs at regular intervals of time in order to expose them to all verticals of an
organization. It is a pre-planned approach with an objective to test the employee skills and
competencies in order to place him or her at the right place. In addition to it, it reduces the
monotony of the job and gives them a wider experience and helps them gain more insights.

Job Enrichment
Organizations are increasingly facing the heat of attrition, which is not good to health of the
same. job enrichment is the process of making a job more interesting, challenging and satisfying
for the employees. It can either be in the form of up gradation of responsibilities, increase in the
range of influence and the challenges.

job enrichment involves combining various existing and new tasks into one large module
of work. The work is then handed over to an employee, which means there is an increase in
responsibilities and scope.
Job Enlargement
Job enlargement is a job design technique wherein there is an increase in the number of tasks
associated with a certain job. In other words, it means increasing the scope of one’s duties and
responsibilities. The increase in scope is quantitative in nature and not qualitative and at the
same level.

Job enlargement is a horizontal restructuring method that aims at increase in the workforce
flexibility and at the same time reducing monotony that may creep up over a period of time. It is
also known as horizontal loading in that the responsibilities increase at the same level and not
vertically.

Benefits of Job Enlargement

1. Reduced Monotony: Howsoever interesting the job may appear in the beginning,

sooner or later people complain of boredom and monotony. Job enlargement if planned
carefully can help reduce boredom and make it more satisfying and fulfilling for the
employees.
2. Increased Work Flexibility: There is an addition to the number of tasks an individual
performs. There is thus an increased scope of carrying out tasks that are versatile and
yet very similar in certain aspects.
3. No Skills Training Required: Since the individual has already been performing the task
in the past, there is no great requirement for imparting of new skills. However, people
and time management interventions may be required. The job thus gets more
motivational for the one performing it.

Job Enrichment and Job Enlargement

1. The difference between job enrichment and job enlargement is essentially of quantity
and quality. Whereas job enlargement means increasing the scope of job quantitatively
by adding up more tasks, job enrichment means improvement in the quality of job such
that employees are more satisfied and fulfilled.
2. Through job enrichment an employee finds satisfaction and contentment in his job and
through job enlargement employee feels more responsible and worthwhile in the
organization.
3. Job enrichment entails the functions of planning and organizing and enlargement
involves execution of the same. Both complement each other, in that job enrichment
empowers and enlargement executes.
4. Job enrichment depends upon job enlargement for success and the reverse in not true.
5. Job enrichment means a vertical expansion in duties and responsibilities and span of
control whereas in job enlargement the expansion is horizontal in nature.

Job enrichment has been found to have greater impact in terms of motivation when compared
to job enlargement. Since enrichment gives employee greater insights in managerial functioning
and a better work profile, it is looked upon as an indicator of growth and development. The
same is not true in case of job enlargement which is seen as an employer tactic to increase the
workload.
Talent Management
Talent Management, as the name itself suggests is managing the ability, competency and
power of employees within an organization. The concept is not restricted to recruiting the
right candidate at the right time but it extends to exploring the hidden and unusual qualities of
your employees and developing and nurturing them to get the desired results.

Talent Management in organizations is not just limited to attracting the best people from
the industry but it is a continuous process that involves sourcing, hiring, developing,
retaining and promoting them while meeting the organization’s requirements
simultaneously. Talent management is a full-fledged process that not only controls the entry of
an employee but also his or her exit.

Talent is the most important factor that drives an organization and takes it to a higher level, and
therefore, cannot be compromised at all. It won’t be exaggerating saying  talent management
as a never-ending war for talent!

There are more benefits that are wide ranged than the ones discussed above. The benefits are:

 Right Person in the right Job: Through a proper ascertainment of people skills and
strengths, people decisions gain a strategic agenda.
 Retaining the top talent: Despite changes in the global economy, attrition remains a
major concern of organizations. Retaining top talent is important to leadership and
growth in the marketplace. Organisations that fail to retain their top talent are at the risk
of losing out to competitors.
 Better Hiring: The quality of an organization is the quality of workforce it possesses. The
best way to have talent at the top is have talent at the bottom. No wonder then talent
management programs and trainings, hiring assessments have become an integral
aspect of HR processes nowadays.
 Understanding Employees Better: Employee assessments give deep insights to the
management about their employees. Their development needs, career aspirations,
strengths and weaknesses, abilities, likes and dislikes. It is easier therefore to determine
what motivates whom and this helps a lot Job enrichment process.
 Better professional development decisions: When an organization gets to know who
its high potential is, it becomes easier to invest in their professional development. Since
development calls for investment decisions towards learning, training and development
of the individual either for growth, succession planning, performance management etc,
an organization remains bothered where to make this investment and talent
management just make this easier for them.

If employees are positive about the talent management practices of the organization,
they are more likely to have confidence in the future of their organization. The resultant is
a workforce that is more committed and engaged determined to outperform their competitors
and ensure a leadership position in the market for their organization.
Talent Management Process

the stages included in talent management process:

 Understanding the Requirement: It is the preparatory stage and plays a crucial role in
success of the whole process. The main objective is to determine the requirement of
talent. The main activities of this stage are developing job description and job
specifications.
 Sourcing the Talent: This is the second stage of talent management process that
involves targeting the best talent of the industry. Searching for people according to the
requirement is the main activity.
 Attracting the Talent: it is important to attract the talented people to work with you as
the whole process revolves around this only. After all the main aim of talent
management process is to hire the best people from the industry.
 Recruiting the Talent: The actual process of hiring starts from here. This is the stage
when people are invited to join the organization.
 Selecting the Talent: This involves meeting with different people having same or
different qualifications and skill sets as mentioned in job description. Candidates who
qualify this round are invited to join the organization.
 Training and Development: After recruiting the best people, they are trained and
developed to get the desired output.
 Retention: Certainly, it is the sole purpose of talent management process. Hiring them
does not serve the purpose completely. Retention depends on various factors such as
pay package, job specification, challenges involved in a job, designation, personal
development of an employee, recognition, culture and the fit between job and talent.
 Promotion: No one can work in an organization at the same designation with same job
responsibilities. Job enrichment plays an important role.
 Competency Mapping: Assessing employees’ skills, development, ability and
competency is the next step. If required, also focus on behaviour, attitude, knowledge
and future possibilities of improvement. It gives you a brief idea if the person is fir for
promoting further.
 Performance Appraisal: Measuring the actual performance of an employee is necessary
to identify his or her true potential. It is to check whether the person can be loaded with
extra responsibilities or not.
 Career Planning: If the individual can handle the work pressure and extra
responsibilities well, the management needs to plan his or her career so that he or she
feels rewarded. It is good to recognize their efforts to retain them for a longer period of
time.
 Succession Planning: Succession planning is all about who will replace whom in near
future. The employee who has given his best to the organization and has been serving it
for a very long time definitely deserves to hold the top position. Management needs to
plan about when and how succession will take place.
 Exit: The process ends when an individual gets retired or is no more a part of the
organization.

Talent Management process is very complex and is therefore, very difficult to handle. The sole
purpose of the whole process is to place the right person at the right place at the right time. The
main issue of concern is to establish a right fit between the job and the individual.
Positive Aspects of Talent Management Consulting

Primarily organizations outsource their talent management because of underlying assumptions

like - the management will be effective, efficient and result oriented, HR people will be spared of
unnecessary engagement, employees can be focused in their respective domains and the like.

The following are some of the benefits or positive aspects of talent management

 Talent management consulting firms employ proven talent selection, career planning
and development, people orientation and retention tools after strategizing with the top
management. This is contrary to the common in-hose organizational practice which is
very unsystematic and does not make use of any tools.
 They are focused unlike in-house talent management team that has other things to take
care of.

Negative Aspects of Talent Management Consulting

The negative views are based on the fact that since it’s the employee data and the employees
themselves that the talent management consulting deals with, there is a potential risk of the
information getting leaked. However the negative aspects of talent management consulting are
summarized as follows:

 Talent management consulting/outsourcing demands access to your critical

organizational/people data. There is a potential risk of any consulting firm gaining
insights into organizational functioning.
 Since organizations do not have a great belief upon the effectiveness of the practice they
do not want to spend much on the same. There is a big cost attached to the outsourcing
thing.

Organizations world over have begun to realize the importance of talent management especially
after the economic downturn. Outsourced or otherwise, it is crucial for any organization that
wants not only to survive but also excel in their respective sphere. The decision is theirs!

Current Trends in Talent Management

 Developing employees.
 Redeploying employees.
 Retaining the best talent.
Talent Management System
Management systems are of strategic importance to organizations. HRMS and ERP systems are
used these days in the administration of basic human resource data such as payroll,
compensation, time management etc. Talent management systems are similarly used to offer
strategic gains to an organization in the achievement of long-term goals vis-à-vis the human
capital.

Talent management systems also referred to as applicant tracking system (ATS) can either
be a standalone application or embedded as part of the ERP and other HRMS system .
Whereas as applicant tracking system or ATS is software typically meant to handle the
recruitment needs, a talent management system or TMS may be a suite of various coherent or
disparate modules that covers diverse areas rather than just one. Both are an important feature
of a large number of organizations these days.

Applicant tracking system is a regular feature of all HRMS software of many large and small
organizations globally. The software allows for tracking recruitment needs. This may include the
database of CV’s received, shortlisted, reasons for rejection, list of interviewees, and finally those
selected. ATS thus acts as a central location and database for an organization’s recruitment
needs.

In organizations talent management system solutions typically take care of the following:

 Performance Management
 Goal Management
 Talent acquisition
 Learning management
 Succession planning
 Learning management
 Compensation management

Nowadays however its talent acquisition and performance management that seems to have
gained more weight in the talent management market. The focus is now more on developing
integrated talent management systems.

How to Build an Integrated Talent Management Strategy

The human resource professionals are the cornerstone of any organizations. They not only solve
business problems today but also participate in strategic aspects of the organization; talent
management is one of them.

Formulation of a talent management strategy is the responsibility of the HR function.

Some strategies in this direction could be:

 Aligning Business strategies with the HR strategies

 Performance Planning and Evaluation
  Strategic Manpower Planning
 Mapping your Talent: An ever-increasing emphasis is being laid on identifying the top
performing and talented employees to think of ways to develop, nurture and retain
them. Further organizations also like to keep skill inventories for contingencies. As
organizations realize the skills and abilities of individuals, they can then be more focused
on devising means and strategies to attract, develop and retain these people.

McKinsey was the first to coin this term ‘war for talent’ in the year 1997. They named this for
their research for talent management practices and beliefs. This became a phenomenon soon.

The talent market is more than competitive presently than it was and could be in the next
decades. In an economy that is knowledge driven the demand for highly skilled workers is
on the rise incessantly.

Organizations need to act, and act now! The following is the five-point solution suggested by
McKinsey

 Develop a talent mindset at all levels in the organization.

 Create a winning Employee Value Proposition.
 Recruit great talent continuously.
 Grow leaders
 Differentiate and affirm.

This means that a talent mindset is to be developed at levels in the organization preferably at the
top. An employee value proposition is to be developed for employees just like the one that is
created for its customers. Most important change the way you differentiate; make it on the basis
of how much you invest in your top and low performers.

Poaching is not unethical on the part of any organization. In fact, it showcases a flaw in
the organization’s retention strategy from where the person is being poached. It basically
means that there is fundamentally something wrong in the way the organization compensates
its employees. This is one of the biggest challenges to talent management. Consider the
following facts:

 The average cost of hiring a new manager in place of another who has left the job is 1.5
to 3 times the salary!
 Each managerial position vacant can cost an organization up to 60000 on an average. It
may shoot to six figures in some management positions.
 According to an estimate 1/3rd of business failures is due to poor hiring decision and
inability to attract and retain quality people.

This is the cost of poaching to both the organizations, the one that is getting people onboard and
the one that is losing people.
Excel Functions and formulae:
Performance management
 Performance management is a continuous process of identifying, measuring, and developing the
performance of individuals and teams and aligning performance with the strategic goals of the
organization. Let’s consider each of the definition’s two main components:

 Continuous process. Performance management is ongoing. It involves a never-ending process of

setting goals and objectives, observing performance, and giving and receiving ongoing coaching and
feedback.
 Alignment with strategic goals. Performance management requires that managers ensure that
employees’ activities and outputs are congruent with the organization’s goals and, consequently, help
the organization gain a competitive advantage. Performance management therefore creates a direct link
between employee performance and organizational goals and makes the employees’ contribution to the
organization explicit.

 Performance appraisal emphasizes the assessment of an employee’s strengths and weaknesses and does
not include strategic business considerations. Also, performance appraisal systems usually do not include
extensive and ongoing feedback that an employee can use to improve her performance in the future.
Finally, performance appraisal is a once-a-year event that is often driven by the HR department, whereas
performance management is a year-round way of managing business that is driven by managers.

 Performance: Degree of accomplishment of tasks. i.e., Effectiveness + efficiency

 Performance appraisal: Evaluating employee’s current and/or past performance relative to his or her
performance standards.
 Performance management - process through which companies ensure that employees are working
toward organizational goals

 Performance Appraisal:
Evaluating individual job performance as a basis for making objective personnel decisions.
Appraisal involves:
  Setting work standards
 Assessing actual performance relative to standards set
 Providing feedback
Goals of Performance Appraisal
The Organizational Goals:

 Serves two sets of goals:

 Evaluation Goals

 Coaching and Development Goals

 Important element in the information and control system of complex organizations

 To influence the behavior and work ethic of work force.

 For use in decisions about placement, promotion, firing, pay

1, Evaluation Goals:

 Provides feedback to subordinates so they know where they stand

 Develops valid data for pay & promotion decisions and to provide a means of communicating these
decisions
 Helps the company in making discharge and retention decisions, and provides warning to subordinates
about unsatisfactory performance
2, Coaching and Development Goals:

 To counsel and coach subordinates

 Develop commitment through discussion of career opportunities and career planning
 Motivation through recognition and respect
 Strengthen the supervisor-subordinate relation
 Diagnose individual and organizational problems

The Individual’s Goals:

o Helps them know ahead of time how & on what basis will they be appraised

o Provide an opportunity to see how well he/she is doing

o Helps know about one’s own strengths & weaknesses

o Help set new goals

Differences between evaluative & developmental functions of appraisal

Criteria Developmental Function Evaluative function

Performance improvement by Information for decisions like salary

Purpose advising employees what is adjustments, transfers, promotions
expected out of them etc.
 Basis for Predetermined standards of
Relative to other similar employee
comparison performance

Technique Result oriented approach Employee ranking

Role of supervisor Counselor Judge

Distribution of Employee, supervisor, personal

evaluation Employee & supervisor folders, others involved in
information administrative actions

Appraisal Process

Establish Performance Standards

Communicate performance expectations

Measure Actual Performance

Compare Actual with standards

Discuss the appraisal with the employee

Initiate corrective action

Appraisal Methods
Confidential Report & Essay Evaluation

 The assessor writes a brief essay providing an assessment of the strengths, weaknesses and potential of
the subject.
Critical Incident Method

 Supervisor keeps log of particularly good & poor examples of work behaviors

 A panel of judges evaluate the collection of potential critical incidents.

 Supervisor & subordinate discuss the latter’s performance, using incidents as examples.

 Used mainly as a diagnostic tool.

Checklist

 Evaluator uses a list of behavioral descriptions & checks off those that apply to employee or gives
‘Yes’/’No’ responses.

 Checklist scored according to the weights assigned.

 Rater and scorer are different

Forced Choice Rating

 Uses several sets of pair phrases, two of which may be positive & two negative.

 Rater needs to indicate which of the four phrases is the most & least descriptive of a particular worker.
  Items are grounded in such a way that the rater cannot easily judge which statements apply to the most
effective employee.
Graphic Rating

 Lists a number of traits and a range of performance values for each trait.

 Supervisor rates each subordinate by checking the score that best describes the subordinate’s
performance for each trait. Total the assigned values for the traits
Behaviorally Anchored Rating Scale (BARS)

 BARS combines the benefits of narrative critical incidents & quantitative ratings by anchoring a
quantified scale with specific narrative examples of good & poor performance.

 Five Steps of developing BARS

 Generate critical incidents

 Develop performance dimensions

 Reallocate incidents

 Scale the incidents

 Develop a final instrument

Ranking Method

 Group-order ranking

 Requires the evaluator to place employees into a particular classification such as “top one-
fifth” or “second one-fifth”

 Individual ranking approach

 Requires the evaluator merely to list the employees in order from highest to lowest
Alternation ranking

 Ranking employees from best to worst on a trait

 Alternates between highest and lowest until all employees to be rated have been addressed
Paired Comparison

 Each employee is compared with every other employee in the comparison group and rated as either the
superior (+) or weaker(-) member of the pair

 Each employee is assigned a summary ranking based on the number of superior scores achieved

Management by Objectives (MBO)

 Requires the manager to set specific measurable goals with each employee and then periodically
discuss progress toward these goals.

 Six Steps:

 Set the organization’s goals

 Set departmental goals

 Discuss departmental goals

  Define expected results

 Conduct performance reviews & measure results

 Provide feedback
360- degree Appraisal
Collecting performance information on an employee from subordinates, supervisors, peers, and internal and
external customers
Balanced Scorecard

 A method of measuring performance channelizes the efforts of people to achieve organizational goals.
Human Resource Accounting

 To measure (in financial terms) the effectiveness of HR activities & the use of people in the
organization.

 Shows the investments the company makes in it people and how the value of these people change over
time.

 Costs incurred on employees (in hiring, training, compensating, developing) are compared to the
contributions of employee to the company (labor productivity)

 An employee’s compensation, usually referred to as tangible returns, includes cash compensation (i.e.,
base pay, cost-of-living and merit pay, short-term incentives, and long-term incentives) and benefits (i.e.,
income protection, work/life focus, tuition reimbursement, and allowances). However, employees also
receive intangible returns, also referred to as relational returns, which include recognition and status,
employment security, challenging work, and learning opportunities. A reward system is the set of
mechanisms for distributing both tangible and intangible returns as part of an employment
relationship. Not all types of returns are directly related to performance management systems because
not all types of returns are allocated based on past performance.

Base Pay
Base pay is given to employees in exchange for work performed.
Cost-of-Living Adjustments and Contingent Pay
Cost-of-living adjustments (COLA) imply the same percentage increase for all employees regardless of their
individual performance. Cost-of-living adjustments are given to combat the effects of inflation in an attempt to
preserve the employees’ buying power.

Contingent pay, sometimes referred to as merit pay, is given as an addition to the base pay based on past
performance. In a nutshell, contingent pay means that the amount of additional compensation depends on an
employee’s level of performance.

Allowances
Benefits in some countries and organizations include allowances covering housing and transportation. These
kinds of allowances are typical for expatriate personnel and are popular for high-level managers throughout the
world

Characteristics of an Ideal Performance Management System

 Strategic congruence
 Context congruence
 Thoroughness
 Practicality
 Meaningfulness
 Specificity
 Identification of effective and ineffective performance
 Reliability
 Validity
 Acceptability and fairness
 Inclusiveness
 Openness
 Correctability
 Standardization
 Ethicality

1. Prerequisites:
There are two important prerequisites that are
required before a performance management
system is implemented:
(1) knowledge of the organization’s mission and
strategic goals and
(2) knowledge of the job in question

2. PERFORMANCE
PLANNING
Employees should have a thorough knowledge of the
performance management system. In fact, at the
beginning of each performance cycle, the supervisor
and the employee meet to discuss and agree upon
what needs to be done and how it should be done.
This performance planning discussion includes a
consideration of both results and behaviors as well
as a development plan.
 3. PERFORMANCE EXECUTION
Once the review cycle begins, the employee strives to produce the results and display the behaviors agreed upon
earlier as well as to work on developmental needs. The employee has primary responsibility and ownership of
this process.

4. PERFORMANCE ASSESSMENT
In the assessment phase, both the employee and the manager are responsible for evaluating the extent to which
the desired behaviors have been displayed, and whether the desired results have been achieved.

5. PERFORMANCE REVIEW
The performance review stage involves the meeting between the employee and the manager to review their
assessments. This meeting is usually called the appraisal meeting or discussion. The appraisal meeting is
important because it provides a formal setting in which the employee receives feedback on his or her
performance.

6. PERFORMANCE RENEWAL AND RECONTRACTING

The final stage in the performance process is renewal and recontracting. Essentially, this is identical to the
performance planning component. The main difference is that the renewal and recontracting stage uses the
insights and information gained from the other phases

Strategic planning is a process that involves describing the organization’s destination,

assessing barriers that stand in the way of that destination, and selecting approaches for
moving forward.

Strategic Plan: Purposes

 Helps define the organization’s identity
 Helps organizations prepare the future
 Enhances ability to adapt to environmental changes
 Provides focus and allows better allocation of resources
 Produces an organizational culture of cooperation
 Allows for the consideration of new options and opportunities
 Provides employees with information to direct daily activities
After external and internal issues have been considered, information is collected regarding opportunities, threats,
strengths, and weaknesses. This information is used to conduct a gap analysis, which analyzes the external
environment in relation to the internal environment. The pairing of external opportunities and threats with
internal strengths and weaknesses leads to the following situations

1. Opportunity + Strength = Leverage.

2. Opportunity + Weakness = Constraint
3. Threat + Strength = Vulnerability.
4. Threat + Weakness = Problem

Performance = Declarative Knowledge * Procedural Knowledge * Motivation

APPROACHES TO MEASURING PERFORMANCE

Behavior approach
A behavior approach emphasizes what employees do (i.e., how work is done).
This approach is most appropriate when
(1) the link between behaviors and results is not obvious,
(2) outcomes occur in the distant future, and/or
(3) poor results are due to causes beyond the employee’s control.

A behavior approach may not be the best choice if most of these conditions are not present. In most
situations, however, the inclusion of at least some behavior-based measures is beneficial.

Results approach
• A results approach emphasizes the outcomes and results produced by employees. This is basically a
bottom line approach that is not concerned with how the work is done as long as
certain specific results are obtained.
This approach is most appropriate when
(1) workers are skilled in the needed behaviors,
(2) behaviors and results are obviously related,
(3) results show consistent improvement over time, and/or
(4) there are many ways to do the job right.

Traits approach
• A traits approach emphasizes individual traits that remain fairly stable throughout an individual’s
life span (e.g., cognitive abilities or personality). This approach may be most appropriate when an
organization anticipates undertaking drastic structural changes. A major disadvantage of this approach
is that traits are not under the control of individuals, and even when individuals possess a specific
positive trait (e.g., high intelligence), this does not necessarily mean that the employee will engage in
productive behaviors that lead to desired results.

Major Components of Appraisal Forms

 Basic employee information
 Accountabilities, objectives, and standards
 Competencies and indicators
 Major achievements and contributions
 Developmental achievements (could be included in a separate form)
 Developmental needs, plans, and goals (could be included in a separate form)
 Stakeholder input
 Employee comments
 Signatures
Implementing a Performance Management System

PREPARATION: COMMUNICATION, APPEALS PROCESS, TRAINING PROGRAMS, AND PILOT

TESTING

Organizations often design a communication plan to ensure that information regarding the performance
management system. The main goal of the communication plan is to gain support for the system. Having more
and better knowledge of the performance management system leads to greater employee acceptance and
satisfaction.

three types of biases that affect the effectiveness of a communication plan

These are selective exposure, selective perception, and selective retention.

selection exposure is a tendency to expose our minds only to ideas with which we already agree.

selective perception is a tendency to perceive a piece of information as meaning what we would like it to mean
even though the information, as intended by the communicator, may mean the exact opposite.

selective retention is a tendency to remember only those pieces of information with which we already agree.

Considerations to Minimize the Effects of Communication Barriers

1. Involve employees
2. Understand employee needs
3. Strike first
4. Provide facts and consequences
5. Put it in writing
6. Use multiple channels of communication
7. Use credible communicators
8. Say it, and then say it again

Strike first. Create a positive attitude toward the new performance system before any negative attitudes and
rumours are created. Make communications realistic, and do not set up expectations

APPEALS PROCESS

The inclusion of an appeals process is important in gaining employee acceptance for the performance
management system because it allows employees to understand that if there is a disagreement regarding
performance ratings or any resulting decisions, then such disagreements can be resolved in an amicable and
nonretaliatory way. In addition, the inclusion of an appeals process increases perceptions of the system as fair.

TRAINING PROGRAMS FOR THE ACQUISITION OF REQUIRED SKILLS

Training the raters is another step necessary in preparing for the launching of the PMS. Training not only
provides participants in the PMS with needed skills and tools to do a good job implementing it but also helps
increase satisfaction with the system.

4.1 Rater Error Training

Many performance management systems are plagued with rater errors. The goal of RET is to increase rating
accuracy by making raters aware of the unintentional errors they are likely to make.
RET programs typically include definitions of the most typical errors and a description of possible causes for
those errors. Such programs also allow trainees to view examples of common errors and to review suggestions
on how to avoid making errors.

Unintentional Intentional
1) Similar to me 1) Leniency
2) Contrast 2) Severity
3) Halo 3) Central tendency
4) Primacy
5) Recency
6) Negativity
7) First impression
8) Spillover
9) Stereotype
10) Attribution

These errors include the following:

• Similar-to-me error. Similarity leads to attraction so that we tend to favour those who are similar to us.

• Contrast error. Contrast error occurs when, even if an absolute measurement system is in place,
supervisors compare individuals with one another instead of against predetermined standards.

• Leniency error. Leniency error occurs when raters assign high (lenient) ratings to most or all employees. In
other words, leniency involves artificial rating inflation.

• Severity error. Severity error occurs when raters assign low (severe) ratings to most or all employees. That is,
severity involves artificial rating deflation.

• Central tendency error. Central tendency error occurs when raters use only the middle points on the rating
scales and avoid using the extremes. The result is that most or all employees are rated as “average.”

• Halo error. Halo error occurs when raters fail to distinguish among the different aspects of performance being
rated. If an employee receives a high score on one dimension, she also receives a high score on all other
dimensions, even though performance may not be even across all dimensions.

• Primacy error. Primacy error occurs when performance evaluation is influenced mainly by information
collected during the initial phases of the review period.

• Recency error. Recency error occurs when performance evaluation is influenced mainly by information
gathered during the last portion of the review period.

• Negativity error. Negativity error occurs when raters place more weight on negative information than on
positive and neutral information.

• First impression error. First impression error occurs when raters make an initial favourable or unfavourable
judgment about an employee and then ignore subsequent information that does not support the initial
impression.

• Spillover error. Spillover error occurs when scores from previous review periods unjustly influence current
ratings.

• Stereotype error. Stereotype error occurs when a supervisor has an oversimplified view of individuals based
on group membership. That is, a supervisor may have a belief that certain groups of employees (e.g., women)
are unassertive in their communication style. This type of error can also lead to biased evaluations of
performance and result in consistently lower performance ratings for members of certain groups
• Attribution error. The attribution error takes place when a supervisor attribute poor performance to an
employee’s dispositional tendencies (e.g., personality, abilities) instead of features of the situation (e.g.,
malfunctioning equipment).

To minimize the intentional errors, we must focus on the rater’s motivation. In other words, we must
demonstrate to the raters that the benefits of providing accurate ratings outweigh the benefits of intentionally
distorting ratings by inflation, deflation, or central tendency.

To minimize unintentional errors, one possibility is the implementation of frame of reference training.

Frame of Reference Training

Frame of reference (FOR) training helps improve rater accuracy and the goal is to give raters skills so that they
can provide accurate ratings of each employee on each dimension by developing a common FOR.

Behavioral Observation Training

Behavioral observation (BO) training is another type of program implemented to minimize unintentional rating
errors. BO training focuses on how raters observe, store, recall, and use information about performance.
Fundamentally, this type of training improves raters’ skills at observing performance

Self-Leadership Training

The goal of self-leadership (SL) training is to improve a rater’s confidence in her ability to manage
performance. SL training techniques include positive self-talk, mental imagery, and positive beliefs and thought
patterns. The assumption is that if there is increased self-direction, self-motivation, and confidence, there will be
increased accuracy.

PILOT TESTING

Before the performance management system is implemented formally, testing the entire system is necessary so
that adjustments and revisions can be made as needed.
In the pilot test of the system, the system is implemented in its entirety from beginning to end, including all the
steps. In other words, meetings take place between supervisor and employee, performance data are gathered,
developmental plans are designed, and feedback is provided. The most important aspect of the pilot test is that
all participants maintain records noting any difficulties
they encountered, ranging from problems with the appraisal form and how performance is measured to the
feedback received.

ONGOING MONITORING AND EVALUATION

When the testing period is over and the performance management system has been implemented organization-
wide, it is important to use clear measurements to monitor and evaluate the system.
Evaluation data should include reactions to the system and assessments of the system’s operational and technical
requirements.

ONLINE IMPLEMENTATIONS

Taking advantage of online applications can help speed up processes, lower cost, and gather and disseminate
information faster and more effectively. Thus, online implementation of performance management can make a
good system even better. On the other hand, systems that are not implemented following best practices will not
necessarily improve by using online components. In fact, online implementation may lead to highly undesirable
outcomes: a more complicated system that is simply a big waste of time and resources for all those involved.

There are two key stakeholders in the developmental process: (1) the employees who are improving their own
performance, and (2) the managers who help guide the process of employee development for their staff and
support it so that it can successfully occur. Developmental planning is a joint activity entered into by both the
employee and the manager.

PERSONAL DEVELOPMENTAL PLANS

Developmental plans can be created for every job, ranging from entry level to the executive. Personal
developmental plans specify courses of action to be taken to improve performance. Such plans highlight an
employee’s strengths and the areas in need of development, and they provide an
action plan to improve in areas of weaknesses and further develop areas of strength. the identification of
employee strengths and weaknesses as part of the performance management system have important benefit of
the employees more likely to be satisfied with the system

List of Developmental Activities

 On-the-job training
 Courses
 Self-guided reading
 Mentoring
 Attending a conference
 Getting a degree
 Job rotation
 Temporary assignments
 Membership or leadership role in professional or trade organizations

• On-the-job training. Each employee is paired with a co-worker or supervisor who

designs a formal on-the-job training course.

• Mentoring. Many organizations have mentoring programs. Mentoring is a developmental process that consists
of a one-on-one relationship between a senior (mentor) and junior (protégé) employee. Mentors serve as role
models and teach protégés what it takes to succeed in the organization. mentors can help protégés gain targeted
skills.

TRADITIONAL AND CONTINGENT PAY PLANS

Traditional pay plans do not have a link with the performance management system. Instead, pay and other
rewards are allocated based on position and seniority.
contingent pay plans, also called pay for performance plans, allocate rewards wholly or partly based on job
performance. When rewards given in the context of contingent pay plans are not added to an employee’s base
pay, they are called variable pay.

REASONS FOR INTRODUCING CONTINGENT PAY PLANS

Contingent pay plans are increasingly popular because, when they are in place, performance
measurement and performance improvement are taken more seriously.
CP plans can help improve the motivation of employees when each of the following
conditions are present:

1. Employees see a clear link between their efforts and the resulting performance - Expectancy.
2. Employees see a clear link between their performance level and the rewards received Instrumentality.
3. Employees value the rewards available- Valence.
There is a multiplicative relationship among these three determinants of motivation so that

Motivation = Expectancy X Instrumentality X Valence

If the expectancy, instrumentality, or valence conditions are not met, the CP plan is not likely to improve
performance.

SELECTING A CONTINGENT PAY PLAN

Types of Contingent Plans:

1- Piece rate- Employees are paid based on the number of units produced or repaired. This system is usually
implemented in manufacturing environments.
2- Sales commissions- Employees are paid based on a percentage of sales. This system is usually implemented
in car dealerships.
3- Group incentives- Employees are paid based on extra group production based on result-oriented measures
(e.g., sales volume for the group). This system is implemented frequently in the retail industry
4- Profit sharing- Employees are paid based on the performance of a group (e.g., team or unit) and on whether
the group has exceeded a specific financial goal. This type of system is implemented in many large law firms.
5- Skill-based pay- Employees are paid based on whether they acquire new knowledge and skills that are
beneficial to the organization. This type of system is usually implemented in knowledge-based organizations
such as software development companies.

PAY STRUCTURES

Job Evaluation - Job evaluation is a process of data collection through which an organization
can understand the worth of various jobs and, as a result, create a pay structure.

Several job evaluation methods are available, but the most popular are ranking,
classification, and point.

 Ranking Method- This method is the fastest and simplest to implement. It consists of
two steps.
First- A job description is created for each job. A job description, which results from a job analysis, summarizes
the job duties; needed knowledge, skills, and abilities (KSAs); and working conditions for each job.
Second- Job descriptions are compared to each other in terms of how valuable each job is for the organization.
As a result of these comparisons, jobs are ranked from most to least valuable. The most valuable job will be
given the highest pay, followed by the second most valuable job, and so forth.

 Classification Method- This method also consists of two steps.

First- A series of classes or job families are created. Each job class, sometimes referred to as a “grade,” has a
unique label and includes a sufficiently detailed description of the work performed so that it will be easy to
classify all individual jobs within one class.
Second- A series of classes or job families are created. Each job class, sometimes referred to as a “grade,” has a
unique label and includes a sufficiently detailed description of the work performed so that it will be easy to
classify all individual jobs within one class.

 Point Method-
Point method is the most time-consuming of the three, but it is the one that provides the most accurate results in
terms of the pay scale for each job compared to all other jobs in the organization.

The first step includes identifying compensable factors, or those characteristics of jobs that add value to the
organization and for which the organization is willing to pay.

Second, factors are scaled. For example, a five-point scale may be used for each factor ranging from 1 (i.e.,
very little is needed for this position) to 5 (i.e., a great deal is needed for this position).

Broad Banding
In recent years, many organizations have chosen to collapse job classes into fewer categories, usually about five.
Each of these broader pay categories is called a band.
What is Competency?

Competency
 Competencies: Skills, Knowledge, Motives, Attitudes and Traits.
 Competence: the quality or state of being competent: such as. a : the quality or state of having
sufficient knowledge, judgment, skill, or strength.
 Competent: A competent person is not someone who simply has the competence to carry out
a particular task safely
Core competency: Core competency is an organization's defining strength, providing the foundation from
which the business will grow, seize upon new opportunities and deliver value to customers.
 Competency Mapping is a process of identifying key competencies for an organization, the jobs
and functions within it.
 It is done in a context
 Context: any information that can be used to characterize the situation of an entity
 Context categories: Individuality, activity, location, time, and relations
 Context elements examples
  Location, identity, time, temperature, noise, as well as the beliefs, desires,
commitments, and intentions of the human

A Competency Dictionary is a compilation of all the competencies required by the organization.

 Steps to create competency statement for the dictionary:
 Collect data
 Analyze data
 Write competencies
 Validate competencies

The three Strategic Framework

 Barney’s Resource Based View

 C. K. Prahalad and Gary Hamel’s Core Competencies
 Dave & Ulrich’s Model
C. K. Prahalad and Gary Hamel’s Core Competencies

  core competency forms the basis for strategic direction;

 it is something a company does well relative to other competitors.
 It provides potential access to a wide variety of markets
 It makes significant contribution to the perceived customer’s benefit of the end product
It is difficult for competitors to imitate
Dave Ulrich’s Model:

Developing competency model

Behavioral event interview (BEI) technique was developed by David C McClelland and is
derived from Flanagan's (1954) "Critical Incident Method".

The purpose of the BEI method is to get behind what people say they do, to find out what
they really do or what they have done. While conducting a BEI, the interviewer should play
the role of an investigative reporter, who continuously probes for facts.
The interviewer also probes for thoughts behind actions. Ask questions, which shift the
interviewee into discussing an actual situation & real past occurrence A BEI is largely based
on narrating the critical incidents or specific events -the highs & the lows. 

Competency assessment: the process of identifying to what extent individual employees,

and possibly their supervisors, rate on the extent that the employee possesses the individual
competencies of a job role.
Perception based assessment – self rating, peer rating, supervisor rating, subordinate rating,
customer rating, combination of 360 degrees. Assessment done through assessment centers

An assessment center consists of a standardized evaluation of behavior based on multiple

inputs. Multiple trained observers and techniques are used. Judgments about behaviors are
made, in major part, from specifically developed assessment simulations. These judgments
are pooled in a meeting among the assessors or by a statistical integration process.
(Guidelines and Ethical Considerations for Assessment Center Operations. Task Force on
Assessment Center Guidelines)

An assessment centre consists of a combination of selection tools.

“An assessment centre consists of a standardized evaluation of behaviour based on multiple

inputs. Several trained observers and techniques are used. Judgements about behaviour are
made by these specially trained observers. At the end of the assessment the assessors get
together to share their data which is scientifically recorded on a set of evaluation forms. They
come to a consensus on the assessments of each candidate. Most frequently the approach has
been applied to individuals being considered for selection, promotion, placement, or special
training and development in management
How Assessment Centers Work?

• A standardized evaluation of behavior

• Based on multiple inputs
• Multiple trained observers and techniques
• Judgments about behaviors are made from specifically developed assessment
simulations.
• Judgments are pooled in a meeting among the assessors or by a statistical integration
process.

Role of assessor
ORCE
• Observe
• Record
• Classify
• Evaluate
Common Job Simulations Used in Assessment Centres
i. In-basket exercises (host of memos, e-mails etc.).
ii. Group discussions (focus group).
iii. Interviews with “subordinates” or “clients”.
iv. Fact-finding exercises (limited information and a conversation partner to question from &
get facts).
v. Analysis / decision-making problems (scenario).
vi. Oral presentation exercises.
vii. Competency/behavior/structured-based interview (asked to recollect incidents).
viii. Written communication exercises.
ix. Business games (an educational tool for teaching business).
x. Paper-pen exercise.

A Development Centre is a process where the participants are actively involved in the
assessment of their behavioursas part of their professional (including personal) development.
• Participants:
–will be actively involved in getting assessed themselves,
–will be given detailed feedback on their results and what their scores mean for their future
development,
–will be expected to ‘own’ the development requirements as part of their continuous
professional or personal development.
Specific uses of assessment center

• Selection
• Career path
• Identify the potential
• Identification of talent
• Training and development
• Succession planning
• Development of candidate: Skill enhancement through simulations

Using assessment center information to improve business performance

• Competency gap management

• Self-diagnosis
• Enhancing strategic feedback and learning
• Benchmarking
• Oversight and compliance
• Risk management
• The business case
• Cross functional problem solving

• KPMG – e-tray exercise, written exercise (info), group exercise with group presenting
their findings, individual presentation to a partner with questions, classic interview
• Ernst & Young – Partner interview, GD, Case study, brief report and
presentation
• Rolls Royce – psychometric test, case study, technical interviews
Payroll defined:

Payroll is the human resources function of managing processing and distribution of

periodic pay checks to employees. Payroll typically involves payments of regular
salary and wages, commissions and bonuses
Compensation refers to all of the pay types and benefits that employers provide to
employees. Along with income, common benefits included in compensation are
health and dental insurance, disability insurance, life insurance, retirement and
some other niche insurances. Some employers pay entire premiums or costs for
each of these benefits. Others contribute partially or may not provide each one.
Retirement benefits typically involve funding from both employee income and
employer payments.

The Payment of Gratuity Act ,1972

Under the Gratuity Act, gratuity is payable even to an employee who resigns after completing at least “5 years”
of service. In case of uninterrupted service of “4 years & 240 days” also be consider for Gratuity Payment.
Time of Gratuity Payment:
Gratuity is payable to a person on (a) Resignation (b) Termination on account of disablement due to accident or
disease (c) Superannuation (d) Death. Normally, Gratuity is payable only after completion of 5 years of
Continuous Service. In case of Death and Disablement, the condition of minimum 5 years’ service is not
applicable {Section 4 (1)}

Amount of Gratuity Payable:

Gratuity is payable @ 15 days Basic Wages for every year of completed year of service. In the last year of
service, if the employee has completed more than 6months, it will be treated as full year for purpose of gratuity.
“In case of seasonal establishments, Gratuity is payable @7 days wages for each season.

Payment @ Gratuity: Last Drawn Wages (Basic + D.A) X 15 x Total Yrs. of Service
26 days
Maximum Gratuity: As per Section 4 (3) has been raised from “10 Lakhs to 20Lakhs”. Effective from 1st April
2016. This will give increase the privilege to both Private & Public Sector employees.

THE EMPLOYEE PROVIDENT FUND & MISCELLANEOUS PROVISIONS ACT, 1952

Benefits of Employee’s Provident Fund Scheme, 1952 :

Retirement, Medical Care, Housing, Family Obligations, Education of Children & Financing of Insurance
Policy.

Benefits of Employee Deposit Linked Insurance Scheme, 1976

It is basically “Life Insurance” for all covered employees under the Act. When an employ dies while in service,
his or her family will get some compensation based on deposit in EPF Account.
The Maximum benefit of life insurance set under EDLI is Rs.7 Lacs. It is based on employees last 12 Months
average (Max.15,000/-) salary multiplied by 35 times. Along with that Rs.1.5 Laks is also payable as bonus.

Claim Amount Calculations:

Average Salary: Rs.15,000 * 35 times = Rs.5,25,000/- + Rs.1,75,000/- = Rs.7,00,000/- (Max. Claim Amount)

Benefits of Employee’s Pension Scheme, 1995 :

Monthly Member’s Pension scheme, Widow & Children Pension, Orphan Pension, Reduced Pension &
Disablement Pension.