CHAPTER FIVE

STAFFING
1. Introduction
After jobs are identified, grouped, and the organization structure created, the next
managerial task is that of staffing. Staffing is the process of identifying human resource
needs, procuring the necessary employees, training, utilization, and separation of those
employees. It is a separate field by itself and known as human resource manger met.
Human resource refers to the sum total of all the inherent abilities, acquired knowledge,
and skills represented by the aptitudes, attitudes, and talents of an organizational work
force.

The major objective of the staffing function is enabling an organization to attract,

maintain, and utilize efficient and effective workforce. Major elements of the staffing
function can be categorized as follow:

 Procurement
 Training/development
 Maintenance and utilization
 Separation
In this chapter each of these major elements of the staffing function are discussed.
Chapter Objective
After completing this chapter you will be able to:
 Discuss the managerial function of staffing
 Describe the major elements of staffing
 Explain staffing techniques processes and principles.
1.1. The Procurement Function
The procurement function is concerned with determining and obtaining the proper kind of
personnel both in quality and quantity. It specifically deals with:
a. The determination of human resource requirements both in quality and quantity.
b. Their recruitment, selection, and placement.

Human Resource Planning

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Human resource planning is the process of translating overall organizational objectives,
plans and programs to achieve specific performance into workforce needs. The
systematic and continuing process of analyzing an organization’s human resources needs
under changing conditions and developing personnel policies, appropriate to the long –
term effectiveness of the organization. It is an integral part of corporate planning.
Scarcity of personnel in some specialized areas; high expenses involved in hiring,
developing and maintain in employees; and rapid technological changes which bring
about obsolescence and need for new skills and knowledge are among the reasons for
human resources planning.

The Process of Personnel Planning:

1. Analyzing organizational objectives and plans. As the primary use of human
resources planning is to provide the organization with the people needed to achieve
organizational objectives, the basis for personnel planning is such corporate plans.
All organization plans entail need for human resource.
2. Determining overall human resource needs. This is predicting the need for and
the availability of people with required qualities needed to perform the present and
future jobs. In order to determine such overall needs, it is necessary to determine
a. The job needs and
b. The volume of the job
The Demand and Supply Aspects of Human Resources Management
Demand: an organization’s future demand for employees is central t employment
planning. The demand for human resource is caused by external challenges that may
affect organizational operations 9economic, social, technological, competition); major
organizational/internal decisions such as strategic plans on growth, production,
marketing, etc.; work-force factors such as retirement, resignation, termination, and
death. Then demand forecasting is an essential part of the human resource planning
process. It is an attempt to predict an organization’s future demand for employees.
Supply/Sources: There Are Two Sources Of Supply-Internal And External.
a. The internal supply/source: consists of present employees who can be promoted
and/or transferred, to meet anticipated needs. Internal supply estimates are more
than merely counting the number of employees. There is a need to carry out human
resource audit/inventory that summarizes each employee’s skills and abilities.

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 b. External supply/source: it becomes important when there are no replacements or
when the opening is for an entry-level job. Labor market analysis is a very
important activity to estimate future supply of human resource.
3. Taking Inventory of Existing Personnel: it is important to take inventory of the
available personnel with their qualifications to know to what extent the
organization can meet its personnel needs from within. As the plan is for future,
this inventory has to take into consideration expected changes like promotions,
transfers, retirements, deaths, quits, resignation, and others.
4. Determining net new personnel requirements. This requires comparing overall
personnel requirement with personnel inventory where the difference is net new
requirement.
5. Developing action plans. Once the supply and demand of human resource are
estimated, adjustment may be needed. When the internal supply of workers
exceeds the firm’s demand, a human resource surplus exists. Most employers
respond to a surplus with a hiring freeze. If there are openings, no hire but
reassignment of existing employees is conducted. Voluntary departures may
reduce the surplus. If the surplus persists, leaves of absence are encouraged.
Layoffs, which are a temporary release of employees, are also used in the case of a
short – term surplus. Early retirement on a temporary basis is also encouraged.
Then, if still surplus, employees may be discharged, through outplacement and
other means.

When the internal supply cannot fulfill the organization’s needs, a human resource
shortage exists. In the short run, external sources will be sued, but in the long run staff
development efforts will serve to fill the vacancies. So, recruitment, retention, promotion,
transfer, training, downsizing, etc. can be part of the action plans.
1.1.1. Recruitment
Recruitment is the process concerned with the identification of sources from where the
personnel can be employed and motivating them to offer themselves for employment.
Weather and Davis have defined Recruitment as follows:
“Recruitment is the process of finding and attracting capable applicants for employment.
The process begins when new recruits are sought and ends when their applications are
submitted. The result is a pool of applicants from which new employees are selected.
Thus, recruitment process is concerned with the identification of possible sources of
human resource supply and tapping those sources. It is a “positive” and “continuing”
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function, which aims at constantly increasing the selection ratio i.e., the number of
applicants per job opening, so as to permit adequate selection of a capable and productive
work group.
In the total process of acquiring and placing human resources in the organization,
recruitment falls in between different sub processes as shown in figure given below.
Manpower
planning
Recruitment Selection Placement
Job analysis

1.1.2. Selection
Selection process comes after recruitment, selection can be explained in terms of either
choosing the fit candidates, or rejecting the unfit candidates, or a combination of both,
selection involves both because it picks up the fits and rejects the unfits.
The typical selection programmed tries to match the qualifications of the candidates with
the requirement of the job. It commences with manpower planning which determines
jobs to be filled and their requirements, progressing to recruitment, which attracts a group
of potential employees from which those capable of performing the job will be selected.
Selection can be defined as: -
“Selection is the process of differentiating between applicants in order to identify
(and hire) those with a greater likelihood of success in a job”.
Difference between recruitment and selection
Recruitment and selection both these terms are often used together or interchangeably.
But they are different from each other. They differ in terms of objective, process
technique and outcome, which are as follows: -
1. The basic objective of recruitment is to attract maximum number of candidates so that
more options are available. The basic objective of selection is to choose the best out
of the available candidates.
2. Recruitment differs from selection in terms of process. Recruitment adopts the
process of creating application pool as large as possible, so it is known as positive
process. Selection adopts the process through which more and more candidates are
rejected and fewer candidates are selected. There fore, it is known as negative process
or rejection process.

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3. Recruitment techniques are not very intensive, requiring high skills. As against this,
in selection process, highly specialized techniques are required. Therefore, in the
selection process, only personnel with specific skills like expertise in using selection
tests, conducting interviews, etc. are involved.
4. The outcome of recruitment is application pool, which becomes input for selection
process. The outcome of selection process is in the form of finalizing candidates who
will be offered jobs.
Sources of Manpower Supply
An organization can fill up its vacancies either through promotion of people available in
the organization or through the selection of people from outside. Thus, there are two
sources of supply of manpower - internal and external.
i) Internal Sources: -Internal sources refer to the present work force of an
organization. In the event of a vacancy, there are three methods by which
employees can be obtained internally. Those who are already on the payroll may
be upgraded or transferred as from a less desirable or rewarding job to a better job
or promoting an employee from a lower level position. Filling a job opening from
within the organization has the following advantages: -
a. It increases the general level of moral, as employees know they have the opportunity
to advance through the organization.
b. It reduces labour turnover, as employees do not find it necessary to leave the
organization in order to better their careers.
c. It simplifies the selection procedure, because it provides reliable information about
the employee’s suitability on the principle that a work test is best.
d. It is likely to induce employees to prepare themselves for transfers or promotions,
thereby making themselves better than those who might have been hired from outside.
Disadvantages
(a) When all senior posts are filled from within by employees, sometimes this may result
into mediocre performance due to non-infusion of new ideas and methods.
(b) The possibility of inadequate supply of personnel to cope with demand caused by
rapid expansion of the business of the firm.
(c) The organizations which are diversification oriented sometimes can not trust on their
existing people as they may not be fully equipped to handle new business.

Merits and Demerits of Recruiting ‘People from within’

Merits Demerits
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 Economical: The cost of recruiting Limited Choice: The organization is
internal candidates is minimal. No forced to select candidates from a
expenses are incurred on advertising limited pool. It may have to sacrifice
quality and settle down for less
qualified candidates.
Suitable: The organization can pick Inbreeding: It discourages entry for
the right – candidates having the talented people, available outside an
requisite skills. The candidates can organization. Existing employees
choose a right vacancy where their may fail to behave in innovative ways
talents can be fully utilized. and inject necessary dynamism to
enterprise activities.
Reliable: The organization has Inefficiency: Promotions based on
knowledge about the suitability of a length of service rather than merit,
candidature for a position. Known may prove to be a blessing for
devils are better than unknown inefficient candidates. They do not
angels. work hard and prove their worth.
Satisfying: A policy of preferring Bone of Contention: Recruitment
people from within offers regular from within may lead to infighting
promotional avenues for employees. among employees aspiring for
It motivates them to work hard and limited, higher level positions in an
earn promotions. They will work organization. As years roll by, the
with loyalty, commitment and race for premium positions may end
enthusiasm. up on a bitter note.

ii) External Sources: - The following external (outside) sources are utilized for
recruitment process.
1. Advertisement – is the most effective means to search potential employees from
outside the organization. Employment advertisement in Newspaper, Journals bulletins
are widely used as a method of attracting people. An advertisement contains brief
statement of the nature of jobs, the type of people required, and procedure for
applying for these jobs.
2. Employment Agencies– There are specialized agencies, which on receiving
requisitions from companies advertise position descriptions in leading newspapers
without disclosing the name of the client company. Usually, they provide
employment services particularly for selecting higher level and middle level
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 executives. Some of the employment agencies like ABC consultants, A.F. Fergusion
and company, S.B. Billimoria and company etc. are working actively in this field.
These agencies also undertake total functions of recruiting and selecting personnel on
behalf of various organizations.
3. On Campus Recruitment – In this method organizations conduct interviews at the
campuses of various institute, universities, and collages in search of prospective
employees. This source is quite useful for selecting people to the posts of
management trainees, technical supervisor or other entry-level positions.
4. Employee Recommendations – The idea behind employee recommendations as a
source of potential applicants is that the present employees may have specific
knowledge of the individuals who may be their friends, relatives, or acquaintances.
Employee recommendations are considered to employ personnel particularly at the
lower levels.
5. Labour Unions –In many organizations labour unions are used as source of
manpower supply though at the lower levels. The unions are asked to make
recommendations for employment of people as a matter of goodwill and cooperation.
6. Gate Hiring – some organizations rely upon the concept of gate hiring to select
people who approach on their own for employment in the organization. This method
is mostly used in case of unskilled and semi-skilled workers.

Merits and Demerits of External Sources of Recruitment

Merits
Wide Choice: the organization has
the freedom to select candidates from
a large pool. Persons with requisite
qualifications could be picked up.
Injection of fresh blood: People with
special skills and knowledge could
be hired to stir up the existing
employees and pave the way for
innovative ways of working
Motivational Force: It helps in
motivating internal employees to
work hard and complete with
external candidates while seeking
Demerits
Expensive: hiring costs could go up
substantially. Tapping multifarious
sources of recruitment is not an easy
task either.
Time Consuming: It takes time to
advertise screen, to test and to select
suitable employees, where suitable
ones are not available, the process has
to be repeated.
Demotivating: Existing employees
who have put in considerable service
may resist the process of filling up
vacancies from outside. The feeling
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 career growth. Such a competitive that their services have not been
atmosphere would help an employee recognized by the organization forces
to work to the best of his abilities. them to work with less enthusiasm
and motivation.
Long Term Benefits: Talented Uncertainty: There is no guarantee
people could join the ranks, new that the organization, ultimately, will
ideas could find meaningful be able to hire the services of suitable
expression, a competitive candidates. It may end up hiring
atmosphere would compel people to someone who does not ‘fit’ and who
give out their best and earn rewards, may not be able to adjust in the new
etc. set-up.

It is not necessary that a particular organization will utilize all sources to employ people
of all types. Some of the sources are more useful for a particular category of employees.
Advertisement and deputation are more useful for employing managerial personnel.
Similarly, labour unions and gate hiring are more suitable to employ labour and unskilled
personnel.
Selection
Selection refers to the process of offering jobs to one or more applicants from the
applications. Selection establishes a best fit between job requirements and qualifications.
Purpose of Scientific Selection
The purpose is to select/pick up the most suitable person who would match the
requirements of the job and the organization best. Indeed the optimal match between the
person and the job is seen as pivotal one in selection. Both the job as well as person is
important for any organization, as far as providing importance is concerned it’s
organizations prerogative of which one to be given importance.
Criteria of Selection
Selection decisions are usually based on how an applicant is rated in terms of the
likelihood of success on the job. The key job dimensions identified in job analysis and
job description provide the basis for determining relevant criteria. The educational
qualifications, technical skills and achievements are used frequently as the basis for
selection.

Selection Process

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Selection of personnel to match the organization is a crucial, complex and continuing
managerial function. The ability of an organization to achieve its goals, and to survive
and grow in a dynamic environment depends to a large extent on the effectiveness of its
selection process. Good selection is the basic requisition for employee’s productivity. If
good employees are hired, subsequent functions of personnel work and of supervision are
easier to be performed. The selection process tries to match the qualifications of the
candidate with the requirement of job.
The standard selection process has the following steps.
1. Screening of Applications
Prospective employees have to fill up some sort of application forms while
applying. These forms have variety of information about the applicants like his personal
bio-data, achievements, experience etc. This information’s are used to screen the
applicants who are found to be qualified for the consideration of employments. Based on
the screening of applications, only those candidates are called for further process of
selection, who is found to be suitable to meet the job standards of the organization.
2 Selection Tests
Selection tests are organized by the organizations to know more about the candidates or
to reject the candidates who cannot be called for interview, etc. Selection tests provide
information about the attitude, interest, and personality of the candidate, which cannot be
known by application forms. These selection tests have different objectives and measure
different attributes. These tests may be classified as follows: -
b. Achievement Test - It is also called performance test or trade test. Achievement
is concerned with what one has accomplished. The achievement tests are
conducted to measure how well the candidates know the things. Trade tests are
designed to measure an applicant’s knowledge of a specific trade and to measure
what the applicant can do currently. For example, a typing test may measure the
typing performance of a typist in terms of speed, accuracy and efficiency.
c. Intelligence Test - Intelligence test tries to measure the level of intelligence of a
candidate. This test generally includes verbal comprehension, word fluency,
memory, and inductive, reasoning, number facility. Intelligence test is designed on
the basis of age groups. Thus, each age group has different intelligence tests. The
basic idea behind intelligence test is to made available people with higher
intelligence to the organization, because intelligent employees learn faster than dull
employees.

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 d. Personality Test – dimensions of personality such as interpersonal competence,
dominance-submission, and extroversion. Introversion, self-confidence, leadership
ability, patience, ambition are measured through personality tests. The personality
test is conducted to predict performance success for jobs that require dealing with
people, or jobs that are essentially supervisory or managerial in character.
e. Aptitude Test – These tests are designed to assess the special aptitudes of the
applicants such as clerical aptitude, mechanical aptitude, mathematical aptitude
manual dexterity, abilities and skills. These tests used when the vacancy in
question requires the possession of a high degree of one or more particular
aptitudes for adequate job performance.
f. Interest Test – interest test is conducted to discover a person’s area of interest and
to identify the kind of jobs that will satisfy him. It is assumed that a person who is
interested in a job can do much better than the person who is not interested.
Interest test generally measures interest in outdoor activities, mechanical,
scientific, artistic, literary, musical, social service etc.
The different tests are used for different purposes. Each of them has the usefulness
and limitations in specified areas. Therefore, a combination of tests should be used for
selection purpose. These tests should also be related with the nature of posts to be filled
up.
Advantages of Selection Tests
1 Selection tests are standardized and unbiased method of soliciting information about
the prospective employees. The person who could not be selected on the basis of the
selection tests cannot argue for the partiality in selection process.
2 Selection tests can be used to weed out the large number of candidates who may not
be considered for employment in the organization.
3 The selection tests are able to cover the qualities and potentials of prospective
employees, which cannot be known by other methods including personal interview.
Limitations of Selection Tests
1. Selection tests cannot make a hundred percent prediction of an individual’s on the job
success. Selection test reveals that those who have scored above the cut-off point will be
more successful than those who have scored below the cut-off point.
2 These are suitable when there is large number of candidates for limited number of jobs
or potions. If the number of candidates is small, the use of tests is not economical.
b. Interview

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Selection tests are normally followed by personal interview of the candidates. Interview
is selection technique that enables the interviewer to view the total individual. It consists
of interaction between interviewer and applicant. This is the way of finding out overall
suitability of candidates for the job. Interview also provides opportunity to give relevant
information about the organization to the candidates. There can be several types of
interview. Preliminary interview, stress interview, patterned interview and depth
interview.
4. Checking of References
References are intended to investigate the candidate’s background and can be obtained
from the following sources-school and collage officials, previous employer or other
persons of prominence who may be aware of the candidate’s behaviour and ability.
Through references more information about the candidates can be solicited to select the
right type of a person for a job.
5. Medical Examination – medical examination is carried out to ascertain the physical
standard and fitness of prospective employees. The medical examination is designed to
match the applicant’s physical capabilities to job requirements. Medical examination
also serves the following purposes.
i. To reject those whose physical qualification are insufficient to meet the
requirements of the work they are being considered for.
ii. To obtain the record of the physical condition of the person at the time of hiring.
iii. To prevent the employment of those with communicable disease.
6. Approval by Appropriate Authority – on the basis of the above steps, suitable
candidates are recommended for selection by the selection committee or personal
department. Organizations may designate the various authorities for approval of final
selection of candidates for different categories of candidates. For top level managers,
Board of Directors may be approving authority, for lower levels, functional heads
concerned may be approving authority. When the approval is received, the candidates are
informed about their selection and asked to report for duty.
7. Placement – after the completion of all formalities, the candidates are placed on their
jobs initially on probation basis. The probation period may range from post to post and
organization to organization. During the probation period, employees are observed
keenly and when they complete this period successfully, they become the permanent
employees of the organization.
5.2. Training and Development
Training
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 Training is a learning process whereby people acquire skills, concepts, rules, and
attitudes to increase performance of employees and achieve organizational goals.
 Training is associated with short term improvement of employee competencies for
existing tasks.
 It provides employees with specific, identifiable knowledge and skills for use on their
present jobs.
 It is an investment in people in terms of time and money.
Need for Training
 An employee’s scope of activities and responsibilities become wider because of
changes in technology and work methods.
 Improving employee competence (ability, proficiency, or capability) is key for success
in this competitive era. As Henry Block stated organizations are forced to rely on
people, and that is why they put so much emphasis on training them, because the
organizations are highly dependent on their employees.

Purpose and Importance of Training

 Establishes comfortable relationship between worker and the work.
 Overcomes deficiencies of employees by imparting skills on the job.
 Prepares employees for future assignments and additional responsibilities.
 Improves efficiency by minimizing operational errors.
 Minimizes employee turnover and absenteeism.
 Improves he safety of work place and performance.
 Enhances employee morale and confidence.
 Improves the relationship between employees and their boss.
Training Methods/Approaches
Appropriate training approaches must be chosen from the many available.
a) On-the-job training
 Employees learn from experience while doing the job
 Is most commonly used because it is flexible and relevant to what the employee is
doing
 Employees are shown how to do the job and are allowed to do it under their
supervisor.
Advantages:
- relatively inexpensive
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 - trainees learn by producing
- no need for off-job facilities
Disadvantages: On-the-job training is often haphazardly done and:
- trainer may not have the necessary experience
- there is no time to redo it
- limited desire to participate
b) Vestibule training (Simulation)
 Not to disrupt normal operations, some organizations arrange separate areas or
vestibules with equipments very similar to that used on the job. This arrangement
allows transference, repetition, and participation.
 Training site must be identical to the real work site like in the case of pilot
trainings.
 Simulated training must be realistic to be effective.
c) Cooperative training
There are two widely used approaches:
i. Internship – is a form of on-the-job training that usually combines job training
with class room instructions. It is advantageous both for employees and trainees
known as interns. The interns get “real world” experience, exposure, and
chance to examine possible employer closely.
ii. Apprenticeships - provide the employee with on-the-job experience under the
guidance of a skilled and certified worker. Most often used to rain people for
jobs in skilled crafts such as carpentry, plumbing, and welding as common in
vocational training schools. Apprentices receive lower wages than the certified
individual.
d) Audiovisual techniques
 Uses recorded films and videos for demonstrations.
 Are more expensive that conventional lectures.
 Enable demonstrations and illustrations in areas like surgery.
e) Off-the-job training
 It includes any training except apprenticeships, vestibules, and on-the-job
training.
 It could be done in organization class rooms, vocational schools, or elsewhere.
 It could take the form of conference discussion approaches as in the cases of
workshops) or lecture methods.
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Management Development
Management Development focuses on developing the knowledge base, attitudes, basic
skills, interpersonal skills, and technical skills of the managerial cadre. Development is
important for all employees but especially so for managers. Unless managers are
appropriately developed, other resources including employees throughout the
organization may not be managed well. Management development should be seen as a
way of imparting knowledge and judgment needed by managers to meet the strategic
objectives of the organization. Among these skills are leading, dealing with change,
helping (coaching and advising) subordinates, controlling when necessary, and providing
feedback.
Experience is an important part of management development. Indeed, experience often
contribute more to the development of senior managers than classroom training does, but
much of that experience occurs informally on the job over time.
Approaches to Management Development
There are numerous management development approaches. Different levels of
management need different approaches to management development & appropriate
selection must be made in order to be effective. Broadly there are two classifications of
these approaches: Job-site methods & off-the –job methods.
Development Approaches: Job-site methods
1) Management coaching
 Combine s observation with suggestions
 Is a daily training and feedback given to employees by immediate supervisors
 Involves continual learning by doing
 In the context of management development, coaching is best accomplished when it
involves a relationship between two managers at different levels for a brief period of
time as they perform their jobs.
2) Managerial modeling
 A common adage in management development says managers tend to manage as they
were managed, i.e. managers learn by behavior modeling or copping someone else’s
behavior. This is not surprising because a great deal of human behavior is learned by
modeling.
 Management development effort can take advantage of this natural human behavior
by matching young or developing managers with appropriate models & then
reinforcing the desirable behaviors exhibited.
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 3) Mentoring
 Mentoring is the relationship in which managers at mid points in their careers aid
individuals in the first stages of their careers. Technical, interpersonal, and political
skills can be conveyed in such relationships from older to younger managers.
 The senior managers may be reluctant because of fear of loss of position.
4) Committee assignments
 Promising employees could be assigned to important committees and broaden their
experience.
5) “Assistant-to” Positions
 Is a staff position immediately under a manager
 Provides opportunities to learn from outstanding managers.
6) Job-rotation
 Helps to broaden job experiences.

Development Approaches: off-job site method

1) Case study method
 A case is a written description for a real decision-situation. Mangers are asked to
study the case to determine the problem, analyze the problem, propose solutions,
choose the best course of action, and implement it.
 It provides chances to study the application of management through analysis of
concepts.
2) Role playing
 The trainee is given a role or position in a given situation and acts out the
behaviors associated with that role like as in the case of training sales people.
3) Class room courses and degrees
 Helps to acquire technical skills and management
 Supervisors may be sent to management institutes.
4) Business games
 This is a development technique that requires the participant to analyze a
situation and decide the best course of action based on the data given.
5) Sabbaticals and leaves of absence
 A sabbatical leave is a paid time off-the-job to develop and rejuvenate oneself.
 It is popular in academic world like universities where professors take a year long
leave to sharpen their skills, and advance their education or conduct research.
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 6) Outdoor training
 Many organizations send executives and managers off to ordeals or unpleasant
experiences in the wildness, called outdoor training as a development tool. It
includes facing physical challenges like climbing big mountains, to increase their
self confidence and team work.

1.3. Maintenance And Utilization

Procured and trained/developed employees should be maintained and utilized utmost.
This requires adequate and equitable remuneration of personnel, the creation of
opportunities for progress, and a mechanism of evaluating their contribution.
Compensation and performance appraisal are at the heart of the maintenance and
utilization function of human resources management.
1.3.1. Compensation
Compensation is adequate and equitable remuneration of personnel for their contributions
to the achievement of organizational objectives. From n employee’s point of view, pay is
a necessity in life, it is the means by which employees provide for their own and their
families’ needs, it is a contributing factor to their efforts as what they are paid indicates
their worth, etc. for the employer, compensation constitutes the lion’s share of costs
(about 50%), is the major means of attracting and retaining employees, it can provide an
image to the organization, etc.
Pay can be determined relatively or absolutely. Pay for a particular position is set relative
to three groups: a) employees working on similar jobs in other a. employees working on
similar jobs in other enterprises (external equity), b) employees working on different jobs
with in the same enterprise (internal equity), c)employees working on the same job within
the same enterprise (employee equity).
Factors affecting compensation decisions
1. External factors.
a. The government through wage controls and guidelines, wage and hour
regulations, income protection legislations, etc.
b. Unions influence demanding for better pay and better working conditions
c. Economic conditions of the industry. Very productive and profitable industries
compared to others pay higher wages.
d. The labor market.
2. Internal factors

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 a. The size and age of the organization. It is argued that large and new
organizations tend to pay higher wages compared to small and old ones.
Method of payment Employees salaries can be computed based on
a. The time they worked, e.g. salaries,
b. The output they produced (piece rate system) or,
c. A combination of both
1.3.2. Fringe Benefits (Supplementary Compensation)
These are extra benefits give t an employee in addition to salary or wages. Wages and
salary payments represent only part of the total package of compensation. Fringe benefit
constitute a significant portion of the employee pay (sometimes up to 40% of payroll
expenses). Broadly classified these are two types a ) time-off pay – these are payments
for the time not worked and include, paid vacations, paid holidays, paid sick leave, and
others. B) non-pay benefits – these are not paid in cash but include expenditures on items
such as medical services, transportation, accommodation, insurance, cafeteria services,
education programs, child care facilities, and others.

1.3.3. Performance Appraisal

Performance appraisal can be defined as a human resource activity that is used to
determine the extent to which an employee is performing the job effectively.
Performance is said to be a result of employee’s effort, abilities, and role perception.
Objectives of performance appraisal include:
a) To provide information towards strengths an weaknesses of employees in their
job performance;
b) To provide data for management for judging future job assignments, promotions
and compensation;
c) To help better allocation of resources;
d) To provide information to help maintain an equitable and competitive pay
structure;
e) To supply general information on training needs for the organization or
department;
f) To improve motivation by increased understanding of goals, the means of
attaining those goals and the rewards associated with achievement;
g) To improve performance by developing strengths and dealing with weaknesses;
and others.

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Appraisal Method: there are different methods of carrying ou performance appraisal
which include
a) Forced distribution method,
b) The essay method
c) The critical incident method and
d) Graphic rating scale
Who does the appraisal? Although in the vast majority of the cases the immediate
supervisors do the appraisal, an organization can use different appraisers. This could be:
a. The immediate supervisor of the employee
b. Group appraisal
c. Peer appraisal
d. Self appraisal
Some problems in performance appraisal:- rater’s general lack of knowledge, experience
and skill, rating an employee based on an overall impression resulting from one or few
incidents, bad or good and without taking into consideration the whole performance
during the evaluation period, providing a rating of average or around the midpoint for all
qualities, rating influenced by the most recent behavior, allowing past performance
appraisal ratings to unjustly influence current ratings, rater’s ineffectiveness in observing
and documenting performance, and vagueness of the criteria and standards of
performance are some of the problems.

1.3.2. Employee Relations

An employee relation is one important area of human resource management. It is mainly
concerned with the relationships existing between employers and employees. The
contents of employee-employer relations are expressed in an employment contract which
may include elements such as amount and method of payment; hours of work; holidays
and holiday pay; provisions for sickness, injury, and entitlement to pay; terms and
conditions of pension rights; disciplinary rules and procedures; institutional rights of
unions and management; terms and conditions of termination of the contract;
enforcement and administration of the agreements; and others.
The three principal actors in employee relations are employees, employers and the
government. Generally, all these parties are represented by other bodies such as the
labour union, managers/employer association, and specialized government unit.
The three basic elements of the subject of employee relations are collective bargaining,
grievance handling, and disciplinary procedures.
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 a. Collective bargaining: this is a two-way negotiation process between employees
and employers to reach at an agreement on matters of employment. The end
result of a successful collective bargaining process is collective agreement that is
a binding document governing employee relations during a specified period of
time.
b. Grievance (complaint) handling: Employees should have established and known
method of processing grievances grievance procedure. The grievance procedure
consists of an orderly series of steps followed to resolve disputes. Employees
should know where they stand in matters pertaining to the justice or injustice of
their treatment.
c. Disciplinary action: disciplinary action refers to the application of penalties that
lead to an inhibition of undesired behavior. Among the penalties available are
oral reprimand, written reprimand, loss of privileges, fines, layoff, demotion,
suspension, and dismissal.
5.4. Separation
The final operative function of staffing is separation of the employee from the
organization in order to return him or her to society. The three main processes of
separation are; (1) the retirement of older employees (2) the layoff or release of qualified
younger employees no longer needed by the organization (3) the discharge of employees
who do not meet the organizations expectations. All of these are important and
sometimes traumatic events for both the employee and the management of the
organization.
In a simple way separation is a decision that individual and organization should
part. It may be initiated by employer or employee and motivated by disciplinary,
economic, business or personal reasons. The staffing must find the most satisfactory
method of conducting the separation in a way that minimizes the harm to the organization
and the individual.
In dealing with separation from the organization, the objective is not their total
Elimination. Some losses are functional to the firm in a sense that employees leaving can
be replaced with higher quality type of persons. Separation can produce values to the
organization in the form of new ideas entering the enterprise, possible higher quality of
personnel being added, and lowering of salaries paid when older, high-seniority persons
are replaced by lower paid entrants. Nevertheless, any movement in or out of the
organization produces the many cost which is to be incurred by the organization.

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Retirement; One of the important forms of separation s compulsory retirement at a fixed
age. It is beneficial to organizations in many ways. (a) It s simple to administer with no
complaints to prove that the older employee no longer meets job requirements. (b)
Openings are created to which younger employees can advance. (c) Human resource
planning is facilitated when retirement schedules are known. (d) Graceful exits are
provided for employees who are no longer qualified. (e) It stimulates employees to make
plans for retirement in advance of known date.
Retirement Benefits; Providing income for years in retirements becoming more and
more important with the gradual extension of life expectancy. Pension provides income
after retirement and until death based on the employee’s years of work and pay.
Effective retirement programmes reduces employee uncertainty, minimize worries
about health, and reduce the tendency to miss one’s job, enable a more satisfactory
arrangement of retirement income and increase the amount of social participation on the
part of the retiree.
Another form of retirement is voluntary retirement or early retirement. Voluntary
retirement plans encourage long service workers to retire before the age fixed by the
organisation. This can start a chain reaction of promotions for several layers of junior
workers. Senior workers tend to be the highest paid employees; when they resign, the
labour costs may decline.
Layoff:
In the free enterprise system, there are many occasions when employee will be released
from employment (layoff) because the organization no longer requires their service.
Layoff can be temporary as the firm adjusts to market demand for its products or for
other economic or business reasons. They can also be permanent as the firm goes out of
business or transfer to a distant location.
Layoff is needed to reduce costs or absorb recent merger or acquisition. It downsizes or
reduces the level of an organization. Layoff is a very difficult problem not only for the
employee but for the company and labour union as well. Since layoff involves the loss of
income, the employee and the union are prone to restrict the company freedom of
decision. The company typically wishes to take advantage of the layoff to retain its most
able employees, and let the more marginal ones go.
On the other hand, the employee and union try to regulate layoff decisions through
seniority systems. It is generally found n practice that seniority is a stronger factor in
layoff than it is in promotion decisions.

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Careful Human resource planning can minimize layoff. By projecting employment needs
several years into the future, the layoff can be avoided even during the work recession.
Discharge; The most stressful and distasteful method of separation is discharge. It
encompasses permanent separation from the organization for any reason. The reasons for
discharge include; incompetence, inability to get along with co-workers, dishonesty or
lying, negative attitude, lack of motivation and failure or refusal to follow instructions.
When people are discharged for business or economic reasons, it is commonly called a
layoff. Sometimes, the employer needs to separate some employees for business reasons
and also has no plans to retire them. Rather then being laid off, those people are simply
discharged.
Severance pay is money that is given to employees who are being permanently separated.
Many organizations give severance pay only to involuntary separations and only to
employees who have performed satisfactorily, e.g. closing a factory. It is unlikely that
someone who is being fined for poor performance or for disciplinary reasons will receive
severance pay. Security to workers, training and employee development are means of
reducing discharge for poor performance. Through effective training, new and long
serving employees can be taught how to do their jobs successfully.

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