Wa0009 PDF

ELECTIVE – II
HUMAN RESOURCE MANAGEMENT

SUBJECT CODE: 20UCOM323
SL No: UNITS PAGE No:
Unit I
Functions, Roll, Competencies of HR Manager, HR 02
01 Policies, Emerging Challenges, Work force diversity,
Diff between HRM & PM
Unit II
HRM Planning, Job Analysis, JD, Job Specification,
02 Job Evaluation, Meaning of Recruitment & Selection, 11
Process of Recruitment, sources of recruitment
internal/External, Meaning and process of selection,
selection test & interviews Placement
Unit III
03 Induction, Importance of Training & development, 31
Needs & training & development Methods, on the job
training, evaluating training effectiveness, Career
Development
Unit IV
Objectives & importance of Performance appraisal,
04 Methods & techniques of Performance appraisal, 54
Potential appraisal, Types of transfers and promotions,
Problems in performance appraisal, Essentials of
effective appraisal system, Termination of service.
Unit V
05 Compensation – Concepts & Policies, Wage & Salary,
Methods of wage payments & Incentives Plans, Fringe 68
Benefits, Performance linked compensation, Monetary
& Non-monetary benefits
06 Assignment – I 108
07 Assignment – II 109
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UNIT - I
INTRODUCTION TO HRM
Definition - Edwin Flippo defines HRM as “planning, organizing, directing,

controlling of procurement, development, compensation, integration , maintenance and
separation of human resources to the end that individual, organizational and social
objectives are achieved.”
Features of HRM or characteristics or nature

1. HRM involves management functions like planning, organizing, directing and
controlling
2. It involves procurement, development, maintenance of human resource
3. It helps to achieve individual, organizational and social objectives
4. HRM is a multidisciplinary subject. It includes the study of management
psychology communication, economics and sociology.
5. It involves team spirit and team work.
6. It is a continuous process.
Evolution of HRM
The evolution of HRM can be traced back to Kautilya’s Artha Shastra where he
recommends that government must take active interest in public and private enterprise.
He says that government must provide a proper procedure for regulating employee and
employee relation
In the medieval times there were examples of kings like Allaudin Khalji who regulated
the market and charged fixed prices and provided fixed salaries to their people. This
was done to fight inflation and provide a decent standard of living
During the pre-independence period of 1920 the trade union emerged. Many authors
who have given the history of HRM say that HRM started because of trade union and
the First World War.
The Royal commission in 1931 recommended the appointment of a labour welfare

officer to look into the grievances of workers. The factory act of 1942 made it
compulsory to appoint a labour welfare officer if the factory had 500 or more than 500
workers.
The international institute of personnel management and national institute of labour

management were set up to look into problems faced by workers to provide solutions
to them. The Second World War created awareness regarding workers rights and 1940’s
to 1960’s saw the introduction of new technology to help workers.
The 1960’s extended the scope of human resource beyond welfare. Now it was a
combination of welfare, industrial relation, administration together it was called
personnel management.
With the second 5 year plan, heavy industries started and professional management
became important. In the 70’s the focus was on efficiency of labour while in the 80’s
the focus was on new technology, making it necessary for new rules and regulations.
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In the 90’s the emphasis was on human values and development of people and with
liberalization and change in style of working people became more and more important
there by leading to HRM which is an advancement of personnel management.
Scope of HRM / Functions of HRM
The scope of HRM refers to all the activities that come under the banner of HRM. These
activities are as follows:
1. Human resources planning: -

Human resource planning or HRP refers to a process by which the company to identify
the number of jobs vacant, whether the company has excess staff or shortage of staff
and to deal with this excess or shortage.
2. Job analysis design: -

Another important area of HRM is job analysis. Job analysis gives a detailed
explanation about each and every job in the company. Based on this job analysis the
company prepares advertisements.
3. Recruitment and selection: -

Based on information collected from job analysis the company prepares advertisements
and publishes them in the news papers. This is recruitment. A number of applications
are received after the advertisement is published, interviews are conducted and the right
employee is selected thus recruitment and selection are yet another important area of
HRM.
4. Orientation and induction: -

Once the employees have been selected an induction or orientation program is
conducted. This is another important area of HRM. The employees are informed about
the background of the company, explain about the organizational culture and values
and work ethics and introduce to the other employees.
5. Training and development: -

Every employee goes under training program which helps him to put up a better
performance on the job. Training program is also conducted for existing staff that have
a lot of experience. This is called refresher training. Training and development is one
area were the company spends a huge amount.
6. Performance appraisal: -
Once the employee has put in around 1 year of service, performance appraisal is
conducted that is the HR department checks the performance of the employee. Based
on these appraisal future promotions, incentives, increments in salary are decided.
7. Compensation planning and remuneration: -

There are various rules regarding compensation and other benefits. It is the job of the
HR department to look into remuneration and compensation planning.
8. Motivation, welfare, health and safety: -

Motivation becomes important to sustain the number of employees in the company. It
is the job of the HR department to look into the different methods of motivation. Apart
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from this certain health and safety regulations have to be followed for the benefits of
the employees. This is also handled by the HR department.
9. Industrial relations: -
Another important area of HRM is maintaining co-ordinal relations with the union
members. This will help the organization to prevent strikes lockouts and ensure smooth
working in the company.
Work Force Diversity
Diversity is about what makes each of us unique and includes our backgrounds,
personality, life experiences and beliefs, all of the things that make us who we are. It is
a combination of our differences that shape our view of the world, our perspective and
our approach.
Workforce diversity is the collective mixture of employees' differences and

similarities (including individual characteristics, values, beliefs, experiences,
backgrounds, preferences and behaviors).
Diversity can help companies gain a competitive edge in global markets and when
targeting business segments that require input from diverse perspectives. HR expertise
is useful in evaluating where diverse candidates can be placed in the organization so
they can make the most valuable contributions.
Workforce diversity means similarities and differences among employees in terms of

age, cultural background, physical abilities and disabilities, race, religion, gender, and
sexual orientation.
A diverse workplace is an important asset, since it acknowledges the individual

strengths of each employee and the potential they bring. Valuing the differences of
others is what ultimately brings us all together and can be the secret to a successful,
thriving workplace and a fair work culture.
7 primary types of diversity we can see:

• Race and Ethnicity. ...
• Age and Generation. ...
• Gender and Gender Identity. ...
• Sexual Orientation. ...
• Religious and Spiritual Beliefs. ...
• Disability. ...
• Socioeconomic Status and Background.
Assess the organization's needs and opportunities. Develop a policy related to

diversity that includes the organization's recruitment and retention plan to enhance
diversity. Provide training for management regarding the company's diversity
initiative, including the business case for diversity.
These are types of diversity are part of an individual's core identity.

• Race. ...
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• Ethnicity. ...
• Gender. ...
• Physical/Mental Abilities. ...
• Age. ...
• Sexual Orientation. ...
• Geographic Location. ...
• Income.
Challenges before the HR manager/before modern personnel management
Personnel management which is know as human resource management has adapted

itself to the changing work environment, however these changes are still taking place
and will continue in the future therefore the challenges before the HR manager are
1. Retention of the employees: -

One of the most important challenge the HR manager faces is retention of labour force.
Many companies have a very high rate of labour turnover therefore HR manager are
required to take some action to reduce the turnover.
2. Multicultural work force: -

With the number of multi cultural companies are increasing operations in different
nations. The work force consists of people from different cultures. Dealing with each
of the needs which are different the challenge before the HR manager is integration of
multicultural labour work force.
3. Women in the work force: -

The number of women who have joined the work force has drastically increased over a
few years. Women employees face totally different problems. They also have
responsibility towards the family. The organization needs to consider this aspect also.
The challenge before the HR manager lies in creating gender sensitivity and in
providing a good working environment to the women employees.
4. Handicapped employees :-
This section of the population normally faces a lot of problems on the job, very few
organization have jobs and facilities specially designed for handicapped workers.
Therefore the challenge before the HR manager lies in creating atmosphere suitable for
such employees and encouraging them to work better.
5. Retrenchment for employees :-

In many places companies have reduced the work force due to changing economic
situations, labourers or workers who are displaced face severe problems. It also leads
to a negative atmosphere and attitude among the employees. There is fear and
increasing resentment against the management. The challenge before the HR manager
lies in implementing the retrenchment policy without hurting the sentiments of the
workers, without antagonizing the labour union and by creating positive attitude in the
existing employees.
6. Change in demand of government :-
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Most of the time government rules keep changing. While a lot of freedom is given to
companies some strict rules and regulations have also been passed. The government
has also undertaken the disinvestment in certain companies due to which there is fear
among the employees regarding their job. The challenge before the HR manager lies in
convincing employees that their interest will not be sacrificed.
7. Initiating the process of change :-

Changing the method of working, changing the attitude of people and changing the
perception and values of organization have become necessary today. Although the
company may want to change it is actually very difficult to make the workers accept
the change. The challenge before the HR manager is to make people accept change.
8. Employee discipline and grievance procedure:

The HR manager should be able to introduce disciplinary measures in the organization
in such a manner that he brings impartiality in the procedure and he should inform
employees about the grievance procedure of the organization so that any employee who
has a grievance knows what he needs to do and whom he has to approach. The
procedure should be implemented in the true spirit only then will the employees believe
and take interest in the working of the organization. Implementing the right procedure
and maintaining the right discipline is the challenge for the HR manager.
OBJECTIVES OF HRM
1. Individual objectives
2. Organizational objectives
3. Social objectives
Then explain all the points from the answer- functions of HRM
Advantages/benefits/Significance/importance/need of HRM
HRM becomes significant for business organization due to the following reasons.
1. Objective: -
HRM helps a company to achieve its objective from time to time by creating a positive
attitude among workers. Reducing wastage and making maximum use of resources etc.
2. Facilitates professional growth:-

Due to proper HR policies employees are trained well and this makes them ready for
future promotions. Their talent can be utilized not only in the company in which they
are currently working but also in other companies which the employees may join in the
future.
3. Better relations between union and management:-

Healthy HRM practices can help the organization to maintain co-ordinal relationship
with the unions. Union members start realizing that the company is also interested in
the workers and will not go against them therefore chances of going on strike are greatly
reduced.
4. Helps an individual to work in a team/group:-

Effective HR practices teach individuals team work and adjustment. The individuals
are now very comfortable while working in team thus team work improves.
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5. Identifies person for the future :-
Since employees are constantly trained, they are ready to meet the job requirements.
The company is also able to identify potential employees who can be promoted in the
future for the top level jobs. Thus one of the advantages of HRM is preparing people
for the future.
6. Allocating the jobs to the right person :-

If proper recruitment and selection methods are followed, the company will be able to
select the right people for the right job. When this happens the number of people leaving
the job will reduce as the will be satisfied with their job leading to decrease in labour
turnover.
7. Improves the economy :-

Effective HR practices lead to higher profits and better performance by companies due
to this the company achieves a chance to enter into new business and start new ventured
thus industrial development increases and the economy improves.
HUMAN RESOURCE POLICIES

A policy is a plan of action. It is the statement of intention committing the management
to a general course of action. When the management drafts a policy statement to cover
some features of its HR programmes, the statement may often contain an expression of
philosophy and principle as well.
Organization need to evolve HR policies as they ensure consistency and uniformity in

treating people. They help motivate and build loyalty. Policies become benchmarks to
compare and evaluate performance.
WHY ADOPT POLICIES?
Organizations should have personnel policies as they ensure the following benefits.
 The work involved in formulating personnel policies requires that the management give
deep thought to the basic needs of both the organization and the employees.
 Established policies ensure consistent treatment of all personnel throughout the
organization. Favoritism and discrimination are, thereby, minimized.
 Continuity of action is assured even though top-management personnel change
 A policy serves as a standard of performance. Actual results can be compared with the
policy to determine how well the members of the organization are living up to the
professed intentions.
 Sound policies help build employee motivation and loyalty
 Sound policies help resolve intrapersonal, interpersonal and intergroup conflicts
A few specific personnel policies are:

 Policy of hiring people
 Policy on terms and conditions of employment
 Policy with regard to medical assistance
 Policy regarding housing, transport, uniform and allowances.
 Policy regarding training and development
 Policy regarding Industrial Relations
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HOW TO FORMULATE POLICIES?
It involves five principal sources for determining the content and meaning of policies
1. Past practice in the organization
2. Prevailing practice in rival companies
3. Attitudes and philosophy of founders of the company has also its directors and the top
management
4. Attitudes and philosophy of middle and lower management.
5. The knowledge and experience gained from handling countless personnel problems on
a day-to-day basis.
If policy is a guide for managerial decisions and actions, principle is the fundamental
truth established by research, investigation and analysis. Principles are the universal
truths generally applicable to all organizations.
Some of the personnel principles are:

 Principle of individual development
 Principle of scientific selection
 Principle of free flow of communication
 Principle of participation
 Principle of fair remuneration
 Principle of incentive
 Principle of dignity of labour
 Principle of labour management co-operation.
 Principle of team spirit
 Principle of contribution to national prosperity.
DIFFERENCE BETWEEN PM & HRM
PM preceded HRM. HRM differs in scope and orientation – it views people as an

asset and aims at promoting mutuality – mutual goals and respect, gives rewards and
responsibility. It believes its policies will obtain commitment.
PM has limited scope and inverted orientation. Views labour as a tool which can be
manipulated for the benefit of the organization and replaced when it’s worn out. The
dept itself was not treated with respect and was treated as activity meant to hire new
employees and maintain records. It was never considered a strategic tool.
DIMENSION PM HRM
careful definition of aim to go beyond contract
Employment contract written contract
Rules devise clear rules impatient with rules
Guide to management Procedures business need
action
Managerial task Monitoring Nurturing
Speed of decision Slow Fast
Management role Transactional Transformational
Communication Indirect Direct
Pay job evaluation performance related
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Labour Management collective bargaining individual contract
contract
Job design division of labour team work
Training & Development controlled access to learning courses
courses
Shared interests interest of organization mutuality of interests
uppermost
Evolution precedes hrm latest in the Evolution
The word ‘AUDIT’ comes from the Latin verb ‘audire’ which means, to listen
“HR Audit is a tool which helps assess effectiveness of HR functions of an
organization.”
According to Dale Yoder, “Personnel audit is an investigate, analytical, comparative

process. It not only listens but looks for and discovers answers. It undertakes a
systematic search. It investigates formally, and in depth, as contrasted with day-to –day
informal impressions”.
NEED FOR HR AUDIT
1. Number of employees
2. Organizational structure
3. Communication and feedback
4. Location and dispersion
5. Status of an industrial relations manager
6. Administrative style
SCOPE OF HR AUDIT
Audit of human resource function

o Determine the objective of each activity
o Identify who is responsible for its performance
o Review the performance
o Develop an action plan to correct deviations, if any, between results and goals, and
o Follow up the action plan.
Audit of managerial compliance
Audit of the human resource climate
o Employee turnover
o Absenteeism
o Safety records
o Attitude surveys
Audit of corporate strategy
TYPES OF AUDIT
 Internal audit
The internal audit is conducted by the company’s own staff as a part of their control
activities.
 External audit
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The external audit is conducted by outsiders specifically employed for this purpose.
The advantage of the external audit is to get an unbiased by competent people of the
manpower management function.
UNIT II
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HUMAN RESOURCE PLANNING/MANPOWER PLANNING
Definition of human resource planning:

Human resource planning can be defined as the process of identifying the number of
people required by an organization in terms of quantity and quality. All human resource
management activities start with human resource planning. So, we can say that human
resource planning is the principle/primary activity of human resource management.
From human resource planning the organization identifies how many people it has
currently and how many people will be required in future. Based on this information
major human resource decisions are taken.
Process of HRP/MP/Steps in HRP/MP

management activities start with human resource planning. So, we can say that human
The process of HRP involves various steps they can be explained with the help of the
following diagram.
Human resource planning
Personal requirement Forecast Personal supply

forecast
Comparison
Differences
Yes No
Requirement =
supply
Personnel (100=125) Personnel (100=75)

Surplus Shortage
Layoff Overtime
Termination Recruitment/hiring
VRS Subcontracting
1. Personnel requirement forecast:-

This is the very first step in HRP process. Here the HRP department finds out
department wise requirements of people for the company. The requirement consists of
number of people required as well as qualification they must possess.
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2. Personnel supply forecast:-
In this step, HR department finds out how many people are actually available
in the departments of the company. The supply involves/includes number of
people along with their qualification.
3. Comparison:-
Based on the information collected in the 1st and 2nd step, the HR department
makes a comparison and finds out the difference. Two possibilities arise from
this comparison.
a. No difference :-
It is possible that personnel requirement = personnel supplied. In this case there is no
difference. Hence no change is required.
b. Yes, there is a difference :-
There may be difference between supply and requirement. The difference may be
i. Personnel surplus
ii. Personnel shortage
iii.
4. Personnel surplus :-
When the supply of personnel is more than the requirement, we have personnel
surplus. We require 100 people, but have 125 people. That is what we have a surplus
of 25 people. Since extra employees increase expenditure of company the company
must try to remove excess staff by methods of
i. Layoff
ii. Termination
iii. VRS/CRS
5. Personnel shortage :-
When supply is less than the requirement, we have personnel shortage. We
require 100 people; we have only 75 i.e. we are short of 25 people. In such
case the HR department can adopt methods like Overtime, Recruitment, Sub-
contracting to obtain new employee
Advantages of HRP/Need/Importance/Role/Benefits
management activities start with human resource planning. So we can say that human
The process of HRP plays a very important role in the organization. The importance of
HRP can be explained as follows.
1. Anticipating future requirement :-

Through this process of HRP, the company is able to find out how many people will
be required in future. Based on this requirement the company could take further actions.
This method also helps the company to identify the number of jobs which will become
vacant in the near future.
2. Recruitment and selection process :-
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The recruitment and selection process is a very costly affair for a company. Many
companies spend lakhs of rupees on this process. Therefore recruitment and selection
must be carried out only if it is extremely necessary. HRP process helps to identify
whether recruitment and selection are necessary or not.
3. Placement of personnel :-
Since the HRP process is conducted for the entire organization, we can identify the
requirements for each and every department. Based on the requirement, we can identify
existing employees and place them on those jobs which are vacant.
4. Performance appraisal :-
HRP make performance appraisal more meaningful. Since feedback is provided in
performance appraisal and employee is informed about his future chances in same
company, the employee is motivated to work better. Information for all this is collected
from HRP process.
5. Promotion opportunity :-
HRP identifies vacancies in the entire organization including all the branches of all the
company. Therefore when the company implements promotion policy it can undertake
its activities in a very smooth manner.
Limitations of Human Resource Planning

Although HRP is a very advantageous method it has some limitations which can be
explained as follows:
1. The future is uncertain :-
The future in any country is uncertain i.e. there are political, cultural, technological
changes taking place every day. This effects the employment situation. Accordingly
the company may have to appoint or remove people. Therefore HRP can only be a
guiding factor. We cannot rely too much on it and do every action according to it.
2. Conservative attitude of top management :-

Much top management adopts a conservative attitude and is not ready to make changes.
The process of HRP involves either appointing. Therefore it becomes very difficult to
implement HRP in organization because top management does not support the
decisions of other department.
3. Problem of surplus staff :-

HRP gives a clear out solution for excess staff i.e. Termination, layoff, VRS,. However
when certain employees are removed from company it mostly affects the psyche of the
existing employee, and they start feeling insecure, stressed out and do not believe in the
company. This is a limitation of HRP i.e. it does not provide alternative solution like
re-training so that employee need not be removed from the company.
4. Time consuming activity :-
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HRP collects information from all departments, regarding demand and supply of
personnel. This information is collected in detail and each and every job is considered.
Therefore the activity takes up a lot of time.
5. Expensive process :-
The solution provided by process of HRP incurs expense E.g. VRS, overtime, etc.
company has to spend a lot of money in carrying out the activity. Hence we can say the
process is expensive.
Reasons for increased importance for HRP/Factors affecting HRP in the organization.
1. Employment :-
HRP is affected by the employment situation in the country i.e. in countries where there
is greater unemployment; there may be more pressure on the company, from
government to appoint more people. Similarly some company may force shortage of
skilled labour and they may have to appoint people from other countries.
2. Technical changes in the society :-

Technology changes at a very fast speed and new people having the required knowledge
are required for the company. In some cases, company may retain existing employees
and teach them the new technology and in some cases, the company have to remove
existing people and appoint new people.
3. Organizational changes :-
Changes take place within the organization from time to time i.e. the company diversify
into new products or close down business in some areas etc. in such cases the HRP
process i.e. appointing or removing people will change according to situation.
4. Demographic changes :-
Demographic changes refer to things referring to age, population, composition of work
force etc. A number of people retire every year. A new batch of graduates with
specialization turns out every year. This can change the appointment or the removal in
the company.
5. Shortage of skill due to labour turnover :-

Industries having high labour turnover rate, the HRP will change constantly i.e. many
new appointments will take place. This also affects the way HRP is implemented.
6. Multicultural workforce:-
Workers from different countries travel to other countries in search of job. When a
company plans its HRP it needs to take into account this factor also.Pressure groups :-
Company has to keep in mind certain pleasure. Groups like human rights activist,
woman activist, media etc. as they are very capable for creating problems for the
company, when issues concerning these groups arise, appointment or retrenchment
becomes difficult.
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Definition of VRS
VRS refers to voluntary retirement scheme, when company faces the problem of surplus
labour, they have to remove the extra workers. This needs to be done to avoid increase
in cost. One of the methods used by the companies is the methods used by companies
is the VRS scheme. Under this scheme people have put in 20 or more number of years
of service are given an option to opt for early retirement benefits and some other amount
which is due to them are paid when they leave the company.
JOB ANALYSIS, JOB DESIGN, JOB EVALUATION
Define job analysis

A job is defined as a collection of duties and responsibilities which are given together
to an individual employee. Job analysis is the process of studying and collecting
information relating to operations and responsibilities of a specific job. It can be
explained with the help of the following diagram.
Job analysis
Job description Job specification
Job title/ name of the job Qualification

Working hours Qualities
Duties and responsibilities Experience
Working conditions Family background
Salary and incentives Training
Machines to be handled on the job Interpersonal skills
As mentioned in the above table job analysis is divided into 2 parts

a) Job description -where the details regarding the job are given.
b) Job specification -where we explain the qualities required by people applying for the
job.
Methods of job analysis

Def: - A job is defined as a collection of duties and responsibilities which are given
together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific job.
There are different methods used by organization to collect information and conduct
the job analysis.
These methods are:
1. Personal observation :-
In this method the observer actually observes the concerned worker. He makes a list of
all the duties performed by the worker and the qualities required to perform those duties
based on the information collected, job analysis is prepared.
2. Actual performance of the job :-

In this method the observer who is in charge of preparing the job analysis actually does
the work himself. This gives him an idea of the skill required, the difficulty level of the
job, the efforts required etc.
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3. Interview method :-
In this method an interview of the employee is conducted. A group of experts conduct
the interview. They ask questions about the job, skilled levels, and difficulty levels.
They question and cross question and collect information and based on this information
job analysis is prepared.
4. Critical incident method :-

In this method the employee is asked to write one or more critical incident that has
taken place on the job. The incident will give an idea about the problem, how it was
handled, qualities required and difficulty levels etc. critical incident method gives an
idea about the job and its importance. (a critical means important and incident means
anything which takes place in the job)
5. Questionnaire method :-
In this method a questionnaire is provided to the employee and they are asked to answer
the questions in it. The questions may be multiple choice questions or open ended
questions. The questions decide how exactly the job analysis will be done. The method
is effective because people would think twice before putting anything in writing.
6. Log records :-
Companies can ask employees to maintain log records and job analysis can be done on
the basis of information collected from the log record. A log record is a book in which
employees record /write all the activities performed by them on the job. The records
are extensive as well as exhausted in nature and provide a fair idea about the duties and
responsibilities in any job.
7. HRD records :-
Records of every employee are maintained by HR department. The record contain
details about educational qualification, name of the job, number of years of experience,
duties handled, any mistakes committed in the past and actions taken, number of
promotions received, area of work, core competency area, etc. based on these records
job analysis can be done.
Job Description
A job description is a useful, plain-language tool that explains the tasks, duties, function
and responsibilities of a position. It details who performs a specific type of work, how
that work is to be completed, and the frequency and the purpose of the work as it relates
to the organization's mission and goals.
The immediate supervisor or the employee can complete the job description, depending
on which person is more familiar with the position. If the incumbent is new to the job
or the position is new, the Manager may wish to complete the job description. If the
employee completes it, the Manager needs to validate it.
A job description summarizes the essential responsibilities, activities, qualifications

and skills for a role. Also known as a JD, this document describes the type of work
performed. A job description should include important company details — company
mission, culture and any benefits it provides to employees.
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Job Specification
A job specification is an official document which describes the duties, required

knowledge, skills and abilities, and minimum qualifications of State jobs.
The importance of job specification is how it provides essential indicators for

applicants, who'll understand if they have the relevant experience. Conversely, your job
description includes information about a role to catch the attention of candidates.
A job specification outlines specific traits a person needs to do the job. Typically, that
includes the qualifications, skills and personal traits you need to be successful. Usually,
the job specification follows the job description, which describes the job itself and how
that job fits within the company.
Need/importance/purpose/benefits of job analysis
Def: - A job is defined as a collection of duties and responsibilities which are given
together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific job.
The following are the benefits of job analysis.
1. Organizational structure and design :-
Job analysis helps the organization to make suitable changes in the organizational
structure, so that it matches the needs and requirements of the organization. Duties are
either added or deleted from the job.
2. Recruitment and Selection :-

Job analysis helps to plan for the future human resource. It helps to recruit and select
the right kind of people. It provides information necessary to select the right person.
3. Performance appraisal and training/development :-

Based on the job requirements identified in the job analysis, the company decides a
training program. Training is given in those areas which will help to improve the
performance on the job. Similarly when appraisal is conducted we check whether the
employee is able to work in a manner in which we require him to do the job.
4. Job evaluation :-
Job evaluation refers to studying in detail the job performance by all individual. The
difficulty levels, skills required and on that basis the salary is fixed. Information
regarding qualities required, skilled levels, difficulty levels are obtained from job
analysis.
5. Promotions and transfer :-

When we give a promotion to an employee we need to promote him on the basis of the
skill and talent required for the future job. Similarly when we transfer an employee to
another branch the job must be very similar to what he has done before. To take these
decisions we collect information from job analysis.
6. Career path planning :-

Many companies have not taken up career planning for their employees. This is done
to prevent the employee from leaving the company. When we plan the future career of
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the employee, information will be collected from job analysis. Hence job analysis
becomes important or advantageous.
7. Labour relations :-
When companies plan to add extra duties or delete certain duties from a job, they require
the help of job analysis, when this activity is systematically done using job analysis the
number of problems with union members reduce and labour relations improve.
8. Health and safety :-

Most companies prepare their own health and safety, plans and programs based on job
analysis. From the job analysis company identifies the risk factor on the job and based
on the risk factor safety equipments are provided.
9. Acceptance of job offer :-

When a person is given an offer/appointment letter the duties to be performed by him
are clearly mentioned in it, this information is collected from job analysis, which is why
job analysis becomes important.
Job design
Definitions:
Job design is the process of
a) Deciding the contents of the job.
b) Deciding methods to carry out the job.
c) Deciding the relationship which exists in the organization.
Job analysis helps to develop job design and job design matches the requirements of
the job with the human qualities required to do the job.
Factors affecting job design: - There are various factors which affect job design in the
company. They can be explained with the help of diagram.
Factors affecting job design
Organizational factors Behavioral factors Environmental factors
Task characteristics Feed back Employee availability and ability

Process or flow of work Autonomy Social and cultural expectations
Ergonomics Variety
Work practices
I] Organizational factors :-
Organizational factors to refer to factors inside the organization which affect job
design they are
a) Task characteristics :-
Task characteristics refer to features of the job that is depending on the type of job
and the duties involved in it the organization will decide, how the job design must be
done. Incase the company is not in a position to appoint many people; a single job
may have many duties and vice versa.
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b) The process or flow of work in the organization :-
There is a certain order in which jobs are performed in the company. Incase the
company wishes it could combine similar job and give it to one person this can be
done if all the jobs come one after the other in a sequence.
c) Ergonomics: -
Ergonomics refers to matching the job with physical ability and characteristics of the
individual and in providing an office environment which will help the person to
complete the jobs faster and in a comfortable manner.
d) Work practices :-
Every organization has different work practices. Although the job may be the same
the method of doing the job differs from company to company. This is called work
practice and it affects job design.
II] Environmental factors :-

Environmental factors which affect job design are as follows
a) Employee availability and ability :-
Certain countries face the problem of lack of skilled labour. They are not able to get
employees with specific education levels for jobs and have to depend on other
countries due to this job design gets affected.
b) Social and cultural expectations :-

The social and cultural conditions of every country is different so when an MNC
appoints an Indian it has to take into account like festivals, auspicious time,
inauspicious time, etc. to suit the Indian conditions. This applies to every country and
therefore job design will change accordingly.
III] Behavioral factors :-

Job design is affected by behavioral factors also. These factors are
a) Feedback :-
Job design is normally prepared on the basis of job analysis and job analysis requires
employee feedback based on this employee feedback all other activities take place.
Many employees are however not interested in providing a true feedback because of
fear and insecurity. This in turn affects job deign.
b) Autonomy :-
Every worker desires a certain level of freedom to his job effectively. This is called
autonomy. Thus when we prepare a job design we must see to it that certain amount
of autonomy is provided to the worker so that he carries his job effectively.
c) Variety :-
When the same job is repeated again and again it leads to burden and monotony. This
leads to lack of interest and carelessness on the job. Therefore, while preparing job
design certain amount of variety must be provided to keep the person interested in the
job.
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Methods of job design
There are various methods in which job design can be carried out. These methods
help to analysis the job, to design the contents of the and to decide how the job must
be carried out.
These methods are as follows :
I. Job rotation
II. Job enlargement
III. Job enrichment
Job Rotation :-
Job rotation involves shifting a person from one job to another, so that he is able to
understand and learn what each job involves. The company tracks his performance on
every job and decides whether he can perform the job in an ideal manner. Based on
this he is finally given a particular posting.
Job rotation is done to decide the final posting for the employee e.g. Mr. A is assigned
to the marketing department whole he learns all the jobs to be performed for
marketing at his level in the organization .after this he is shifted to the sales
department and to the finance department and so on. He is finally placed in the
department in which he shows the best performance
Job rotation gives an idea about the jobs to be performed at every level. Once a person
is able to understand this he is in a better understanding of the working of
organization
Advantages of job rotation

1. Avoids monopoly :-
Job rotation helps to avoid monopoly of job and enable the employee to learn new
things and therefore enjoy his job.
2. Provides an opportunity to broaden one’s knowledge :-

Due to job rotation the person is able to learn different job in the organization this
broadens his knowledge.
3. Avoiding fraudulent practice :-

In an organization like bank jobs rotation is undertaken to prevent employees from
doing any kind of fraud i.e. if a person is handling a particular job for a very long time
he will be able to find loopholes in the system and use them for his benefit and
indulge (participate) in fraudulent practices job rotation avoids this.
Disadvantages of Job Rotation

1. Frequent interruption :-
Job rotation results in frequent interruption of work. A person who is doing a particular
job and get it comfortable suddenly finds himself shifted to another job or
department. this interrupts the work in both the departments.
2. Reduces uniformity in quality:-

Quality of work done by a trained worker is different from that of a new worker.
when a new worker I shifted or rotated in the department, he takes time to learn the
new job, makes mistakes in the process and affects the quality of the job.
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3. Misunderstanding with the union member :-
Sometimes job rotation may lead to misunderstanding with members of the union. The
union might think that employees are being harassed and more work is being taken
from them. In reality this is not the case.
Job enlargement
There are various methods in which job design can be carried out. These methods help
to analysis the job, to design the contents of the and to decide how the job must be
carried out.
These methods are as follows
I. Job rotation
II. Job enlargement
III. Job enrichment
Job enlargement is another method of job design when any organization wishes to adopt
proper job design it can opt for job enlargement. Job enlargement involves combining
various activities at the same level in the organization and adding them to the existing
job. It increases the scope of the job. It is also called the horizontal expansion of job
activities.
Job enlargement can be explained with the help of the following example - If Mr. A is
working as an executive with a company and is currently performing 3 activities on his
job after job enlargement or through job enlargement we add 4 more activities to the
existing job so now Mr. A performs 7 activities on the job.
It must be noted that the new activities which have been added should belong to the
same hierarchy level in the organization. By job enlargement we provide a greater
variety of activities to the individual so that we are in a position to increase the interest
of the job and make maximum use of employee’s skill. Job enlargement is also essential
when policies like VRS are implemented in the company.
Advantages of job enlargement

1. Variety of skills :-
Job enlargement helps the organization to improve and increase the skills of the
employee due to organization as well as the individual benefit.
2. Improves earning capacity :-

Due to job enlargement the person learns many new activities. When such people
apply for jobs to other companies they can bargain for more salary.
3. Wide range of activities :-

Job enlargement provides wide range of activities for employees. Since a single
employee handles multiple activities the company can try and reduce the number of
employee’s. This reduces the salary bill for the company.
Disadvantages of job enlargement

1. Increases work burden :-
Job enlargement increases the work of the employee and not every company provides
incentives and extra salary for extra work. Therefore the efforts of the individual may
remain unrecognized.
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2. Increasing frustration of the employee :-
In many cases employees end up being frustrated because increased activities do not
result in increased salaries.
3. Problem with union members :-

Many union members may misunderstand job enlargement as exploitation of worker
and may take objection to it.
Job enrichment
There are various methods in which job design can be carried out. These methods help
to analysis the job, to design the contents of the and to decide how the job must be
carried out.
These methods are as follows:
I. Job rotation
II. Job enlargement
III. Job enrichment
Job enrichment is a term given by Fredric Herzberg. According to him a few motivators
are added to a job to make it more rewarding, challenging and interesting. According
to Herzberg the motivating factors enrich the job and improve performance. In other
words we can say that job enrichment is a method of adding some motivating factors to
an existing job to make it more interesting. The motivating factors can be
a) Giving more freedom.
b) Encouraging participation.
c) Giving employees the freedom to select the method of working.
d) Allowing employees to select the place at which they would like to work.
e) Allowing workers to select the tools that they require on the job.
f) Allowing workers to decide the layout of plant or office.
Job enrichment gives lot of freedom to the employee but at the same time increases the
responsibility. Some workers are power and responsibility hungry. Job enrichment
satisfies the needs of the employees.
Advantages of job enrichment

1. Interesting and challenging job :-
When a certain amount of power is given to employees it makes the job more
challenging for them, we can say that job enrichment is a method of employee
empowerment.
2. Improves decision making :-

Through job enrichment we can improve the decision making ability of the
employee by asking him to decide on factory layout, method and style of working.
3. Identifies future managerial caliber :-

When we provide decision making opportunities to employees, we can identify
which employee is better that other in decision making and mark employees for
future promotion.
4. Identifies higher order needs of employees :-
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This method identifies higher order needs of the employee. Abraham Maslow’s
theory of motivation speaks of these higher order needs e.g. ego and esteemed
needs, self actualization etc. These needs can be achieved through job enrichment.
5. Reduces work load of superiors :-

Job enrichment reduces the work load of senior staff. When decisions are taken by
juniors the seniors work load is reduced.
Disadvantages of job enrichment

1. Job enrichment is based on the assumptions that workers have complete knowledge
to take decisions and they have the right attitude. In reality this might not be the
case due to which there can be problems in working.
2. Job enrichment has negative implications ie. Along with usual work decision
making work is also given to the employees and not many may be comfortable with
this.
3. Superiors may feel that power is being taken away from them and given to the
junior’s. This might lead to ego problems.
4. This method will only work in certain situations. Some jobs already give a lot of
freedom and responsibility; this method will not work for such jobs.
5. Some people are internally dissatisfied with the organization. For such people no
amount of job enrichment can solve the problem.
JOB EVALUATION
Defn : Job evaluation is defined as “ a procedure for determining the worth of the job
and to determine the level of compensation for the job”
The objective of job evaluation is

1. To provide a standard procedure for fixing salary
Job evaluation aims to provide a standard procedure for fixing salary of employees
doing a particular job and belonging to a particular level in the organization . This
is required so that the employee is remunerated according to his capabilities and
therefore feels satisfied on the job.
2. To determine the rate of pay:

Job evaluation determines how much to pay the employee according to his efforts in
the organization . the rate of pay is decided by looking into various factors on the
job.
3. To ensure that wages and salaries are paid according to the qualification and work
Job evaluation recognizes the importance of qualification of the employee and the
efforts put in by him on the job and decides the salary based on these factors. This
efforts put in by him on the job and decides the salary based on these factors. This
ensures that the employees are judged on similar factors and there is no bias.
4. To decide salary using scientific methods of evaluation:
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The job evaluation methods are scientific in nature, i.e they have been decided after
looking into the issues concerned with a scientific approach. Thus it is obvious that
the results too will be very much appropriate. Job evaluation is not based on
personal bias or personal choice.
5. Involves a fair study of the job factors to avoid ambiguity

Job evaluation studies the job factors in a fair and just manner so that ambiguity
can be avoided and the factors for judging the job are very clear and accurate. This
gives more credibility to the entire job evaluation process
Advantages of Job Evaluation

1. Job evaluation is a very logical method which uses common factors to decide
the salary therefore there is no inequality
2. new jobs are adjusted in the existing structure. They are added to the old jobs
and evaluated on the same factors
3. There is greater simplification and uniformity in Job evaluation
Disadvantages of Job evaluation

1. The job factors fluctuate and evaluation on these factors does not reflect the true
value in future
2. Job evaluation creates doubts and fear in the minds of the employees. They feel
that their efforts may not be evaluated properly
3. Job evaluation program/procedures takes a long time to be installed. It requires
specialized study by technical personnel so that it is accurate. Any evaluation
for namesake will not do.
Methods/Types of Job evaluation:

There are various types of Job evaluation. They can be shown with the help of the
following diagram
JOB EVALUATION
Analytical methods non- analytical methods non- conventional methods
1. Point ranking method 1. Ranking method

2. factor comparison 2. job grading method
method
I NON- ANALYTICAL METHODS

These methods do not use detailed job factors. Every job is determined as a whole in
determining its relative ranking. This non-analytical methods includes two types
A] ranking method
B] job grading method
Ranking method: This is the most inexpensive and the simplest methods of evaluation.
The evaluation committee assess the worth of each job on the basis of its title or its
contents, if the contents are available. Each job is compared with others and its place is
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determined. The method has several drawbacks Job evaluation may be subjective as
the jobs are not broken into factors. It’s difficult to measure entire jobs.
Job-grading method: It is also called job classification method. Like the ranking
method this method also does not call for a detailed or quantitative analysis of job
factors. It is based on the entire job. The difference between the ranking method and
this method is that this method uses job classes or grades to decide the salary. The
number of grades is decided first and factors corresponding to the grades are decided
later. Facts and information about the job are collected and matched with the grades.
The advantages are – it is simple and inexpensive, the companies where the number
of jobs is small can use this method.
The disadvantages are – job description is not very clear, it becomes difficult to
convince an employee as to why a particular job is put in a particular grade, the same
schedule cannot be used for all jobs
II ANALYTICAL METHODS:
This includes the point ranking and the factor comparison method. These methods
can be explained as follows:
A] Point ranking method: This method starts with the selection of job factors,
construction of degrees for each factor and assignment of points to each degree.
Different factors are selected for different jobs and every job has different degrees and
different points.
The advantages are:

1. a job is split into a number of factors. The worth of each job is determined on the
basis of each factor
2. The procedure adopted is systematic and can be easily explained to the employee
3. the method is simple to understand and easy to administer
At least two defects are noted in this method:
1. Employees may not agree with the points allotted or the factors selected
2. serious doubts are expresses about the point system and how it is assigned to the
factors
B] factor comparison method: This method is yet another approach to job

evaluation. It is an analytical method. The method is started by selecting factors
usually 5 factors are selected
i] mental requirement
ii] skill requirement
iii] physical exertion
iv] responsibility
v] job condition
These factors are assumed to be constant for all jobs. Each factor is ranked
individually with the other jobs. For ex: A manager’s job will have more mental
requirement than physical exertion. So mental requirements will have a higher rank.
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The total point values are assigned to each factor. The worth of the job is obtained by
adding together the point value.
The advantages of this method is that jobs which are different in nature are evaluated
with the same set of factors but the method is complicated when applied on a large
scale.
RECRUITMENT
Definition: “Recruitment is the process of finding and attracting capable applicants for
a job to create a pool from which selection is to be made of the most suitable
candidates”.
The Process begins when new recruits are sought and ends when their applications are
submitted. Though theoretically recruitment process is said to end with the receipt of
applications, in practice, the activity extends to the screening of applications so as to
eliminate those who are not qualified for the job. The result is a pool of applicants from
which selections for new employees are made.”
PURPOSE AND IMPORTANCE

1. To broad base the applicant pool in order to get the right talent at the affordable cost.
2. Increase the pool of job candidates at minimum cost
3. Help increase success rate of selection process by reducing number of under-
qualified or over-qualified applications.
4. Meet legal and social obligations
5. Identify and prepare potential job applicants
FACTORS AFFECTING RECRUITMENT
External Factors:
1. Demand and Supply status of specific skills set.
2. Unemployment Rate (Area-wise)
3. Labour Market Conditions
4. Political and Legal Environment (Reservations, Labour laws)
5. Company’s Image
Internal Factors:
1. Recruitment Policy (Internal Hiring or External Hiring?)
2. Human Resource Planning (Planning of resources required)
3. Size of the Organization (Bigger the size lesser the recruitment problems)
4. Cost
5. Growth and Expansion Plans
RECRUITMENT PROCESS
1. Recruitment Strategy Development
(a) Trained or untrained (to be trained at company’s expense)
(b) Internal or external sourcing
Internal Recruitment (Source 1)

(i) Present employees
(ii) Employee referrals
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(iii) Transfers & Promotions
(iv) Former Employees
(v) Previous Applicants
External Recruitment (Source 2)

(i) Professionals or Trade Associations
(ii) Advertisements
(iii) Employment Exchanges
(iv) Campus Recruitment
(v) Walk-ins Interviews
(vi) Consultants
(vii) Contractors
(viii) Displaced Persons
(ix) Radio & Television
(x) Acquisitions & Mergers
(c) Competitors
(d) Technological tools to be used for advertising
(e) Where to look
(f) How to look
2. Recruitment Planning
(a) Number of applicants sought (Based on past experience)
(b) Types of applicants to be called (Qualification, category, area, etc)
3. Searching
(a) Source activation
(b) Selling
4. Screening of Applications
5. Evaluation and Cost Control

(a) Salary Cost
(b) Management & Professional Time spent
(c) Advertisement Cost
(d) Producing Supporting literature
(e) Recruitment Overheads and Expenses
(f) Cost of Overtime and Outsourcing
(g) Consultant’s fees
EVALUATION OF RECRUITMENT PROCESS

1. Return rate of each source of recruitment
2. Selection rate from each source
3. Retention and Performance of selected candidates
4. Recruitment Cost
5. Time lapsed data
6. Image projection
INTERNAL RECRUITMENT
Advantages Disadvantages
Less Costly Old concept of doing things
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Candidates already oriented towards It supports raid.ing
organization
Organizations have better knowledge Candidates current work may be
about internal candidates affected
Employee morale and motivation is Politics play greater roles
enhanced Morale problem for those not promoted.
EXTERNAL RECRUITMENT
Benefits of new skills, talents and Ideas
Better morale and motivation associated
with internal recruiting is denied
Benefits of new experiences It is costly method
Compliance with reservation policy Chances of creeping in false positive and
becomes easy false negative errors
Scope for resentment, jealousies, and Adjustment of new employees takes
heartburn are avoided. longer time.
SELECTION
MEANING OF SELECTION
Selection is the process of picking up individuals (out of the pool of job applicants)
with requisite qualifications and competence to fill jobs in the organization. A formal
definition of Selection is as under:
“Selection is the process of differentiating between applicants in order to identify and
hire those with a greater likelihood of success in a job.”
RECRUITMENT Vs SELECTION:
DIFFERENCE
Recruitment Selection
Recruitment refers to the process of Selection is concerned with picking up
identifying and encouraging people with the right candidates from a pool of
required qualifications to apply for job. applicants.
Recruitment is said to be positive in its Selection on the other hand is negative
approach as it seeks to attract as many in its application in as much as it seeks
candidates as possible. to eliminate as many unqualified
applicants as possible in order to
identify the right candidates.
PROCESS / STEPS IN SELECTION

1. Preliminary Interview: This is a short interview. The purpose of preliminary
interviews is to weed out the prima facie misfit applicants. It is also called courtesy
interview and is a good public relations exercise.
2. Selection Tests: Jobseekers who pass the preliminary interviews are called for tests.
There are various types of tests conducted depending upon nature of job and the
company. These tests can be Aptitude Tests, Personality Tests and Ability Tests and
are conducted to judge how well an individual can perform tasks related to the job.
Besides this, there are some other tests also like Interest Tests (activity preferences),
Graphology Test (Handwriting), Medical Tests, Psychometric Tests etc.
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3. Employment Interview: The next step in selection is employment interview. Here,
interview is a formal and in-depth conversation to assess applicant’s suitability. It is
considered to be an excellent selection device. Interview type and pattern can vary
greatly. Interviews can be One-to-One, Panel Interview, or Sequential Interviews.
Besides there can be Structured and Unstructured interviews, Behavioural Interviews,
Stress Interviews.
4. Reference & Background Checks: Reference checks and background checks are
conducted for provisionally identified candidates to verify the information provided by
them. Reference checks can be through formal letters or telephonic. However, it is more
of a formality and selections decisions are very seldom affected by it.
5. Selection Decision: After obtaining all the information, selection decision is made.
The final decision has to be made out of applicants who have been identified as suitable.
The views of line managers carry much weight at this stage because it is they who are
eventually responsible for the performance of the new employee. Considering the job
climate, often more than required number is selected to cater for any selected candidate
withdrawing at the job offer stage.
6. Physical Examination: After the selection decision is made, the candidate is

required to undergo a physical fitness test. A job offer is often contingent upon the
candidate passing the physical examination.
7. Job Offer: The next step in selection process is job offer to those applicants who have
successfully passed all tests. It is made by way of letter of appointment.
8. Contract of Employment: After the job offer is made and candidates accept the offer,
certain documents are needed to be executed by the employer and the candidate. A
formal contract of employment, containing written contractual terms of employment
etc. are signed by both sides.
GOOD SELECTION PRACTICE: ESSENTIALS

1. Detailed Job Descriptions and Job Specifications prepared in advance and endorsed
by personnel and line management should be available with Selection Board.
2. Train the selectors to assess the right attributes in applicants.
3. Determine aids to be used for selection process.
4. Check competence of recruitment consultants before hiring their services.
5. Involve line managers at all stages
6. Attempt to validate the procedure regularly
7. Help the appointed candidate to succeed by training and management development
BARRIERS TO EFFECTIVE SELECTION

1. Perception: We all perceive the world differently. Our limited perceptual ability is
obviously a stumbling block to the objective and rational assessment of people.
2. Fairness: Barriers of fairness includes discrimination against religion, region, caste,

race or gender, etc.
3. Plethora of Human Traits: Success in any job is more a function of attitude than
aptitude. The tests are validated over a period of time to differentiate between the
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employees who can perform well and those who will not. Yet, no test can claim 100%
success in finding the right employee.
4. Pressure: Pressure brought on selectors by management, politicians, bureaucrats,

relatives, friends and peers to select particular candidate are also barriers to effective
selection.
5. Time and Cost: Often the time and funds available to undertake selection process
are limited forcing the selectors to forego certain tests.
UNIT III
TRAINING AND DEVELOPMENT
INDUCTION & ORIENATION
Induction and Orientation are the procedure that a new employee has to go through in
the organization. Every employee starting from the lower most, say, from peon to CEO,
need orientation course when they join the organization. A new employee carries with
him a lot of apprehension about place, job, colleagues, organizational culture, and so
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on. On the day of reporting, he needs to know his office/work place, routine, amenities,
functional and reporting channels, etc.
Definition
Induction or orientation is an event where you introduce the job and your organization
to the new employee and vice versa. It's an important process for bringing new
employees into your business. The process will cover your rights as the employer, the
employee rights and the terms and conditions of employment.
Difference Between Induction and Orientation

Induction refers to formal training programs that an employee has to complete before
he is put on job. Like in Military, before a new recruit is sent to border, he is trained for
a few months in Drill/Parade, physical fitness, weapon handling, etc. This is called
Induction.
Orientation is the information given to the new employees to make him aware of the
comfort issues - where the facilities are, what time lunch is, who are the people he
would be working with and so forth.
Orientation conveys following information:

1. Organization’s geography/layout
2. Organizational set up (Structure)
3. Daily Work Routine
4. Organization Profile, History, Objectives, Products and Services, etc
5. Introduction to colleagues/immediate superiors and subordinates.
6. Importance of Jobs to the organization
7. Detailed Orientation Presentation covering policies, work rules and employee
benefits.
PURPOSE OF ORIENTATION
The idea of Orientation programme is to make the new employees feel “at home” in
new environment. Any employee while joining a new organisation is anxious about the
new set-up, new colleagues, his own performance vis a vis other more experienced
employees in the organisation, his work place, his exact responsibilities, etc. A
structured information and introduction system will make his transitory period short
and reduce his anxiety quickly. He will begin to perform to his potential quickly.
TYPES OF ORIENTATION PROGRAMS

1. Formal or Informal: In informal orientation, new employees are put on the jobs and
they are expected to acclimatise themselves with the work and the organisation. In
contrast, in formal orientation, an employee goes through a structured introduction
programme.
2. Individual or Collective: Another choice is to be made whether new employees are

to be inducted in group or individually.
3. Serial or Disjunctive: Orientation becomes serial when the person relinquishing the
post hands over the position to the new incumbent. It becomes disjunctive when the
new employee occupies a vacant position with no one to hand him over the position.
He learns the prevalent practices and history slowly from his subordinates and superiors
on gradual basis.
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4. Investiture or Divestiture: This is the final strategic choice which relates to decision
regarding allowing the new employees to affect the organisation with his
identity/ideas/functional methods or asking him to modify his identity to merge with
existing culture of the organisation. This is more applicable to high positions who may
have been hired with a view to bring in their experiences and methods of management
to the organisation.
How long should the induction process take?
It starts when the job ad is written, continues through the selection process and is not
complete until the new team member is comfortable as a full contributor to the
organization's goals.
The first hour on day one is a critical component - signing on, issuing keys and
passwords, explaining no go zones, emergency procedures, meeting the people that you
will interact with all have to be done immediately. Until they are done the newcomer
is on the payroll, but is not employed.
After that it is a matter of just in time training - expanding the content as new duties are
undertaken.
We only employ new people one at a time - how can we induct them?
There are some issues, which cannot wait - they vary according to your situation.
Perhaps a buddy system on the job may be the best way to deal with such situations.
(This is a system being followed by many US universities receiving lot of foreign
students. A local student is given a foreign student as buddy to help in all matters in the
initial days.) Other subjects may be incorporated with refresher training for current
staff, or handled as participant in an outside program. Perhaps some can wait until there
are groups of people who have started in the last few months.
This may take some creative thinking, but the answer is quite simple - until the new
people are integrated, they are less useful. The mathematics of Induction and
orientation is often amazingly simple - not investing time and money to train costs more
than training would.
Define training/development/managerial development/executive development

/mdp/edp:-
Training is defined by Wayne Cascio as “training consists of planed programs

undertaken to improve employee knowledge, skills, attitude, and social behavior so that
the performance of the organization improves considerably.”
Training is normally viewed as a short process. It is applied to technical staff, lower,
middle, senior level management. When applied to lower and middle management staff
it is called as training and for senior level it is called managerial development
program/executive development program/development program.
OBJECTIVES/PURPOSE/GOALS OF TRAINING AND DEVELOPMENT

The purpose of training and development can be explained as follows.
1. Improving quality of work force: -
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Training and development help companies to improve the quality of work done by their
employees. Training programs concentrate on specific areas. There by improving the
quality of work in that area.
2. Enhance employee growth: -

Every employee who takes development program becomes better at his job. Training
provides perfection and required practice, therefore employees are able to develop
them professionally.
3. Prevents obsolescence: -
Through training and development the employee is up to date with new technology and
does not fear when old technology is replaced with new technology and the fear of
being thrown out of the job is reduced.
4. Assisting new comers:-

Training and development programs greatly help new employees to get accustomed to
new methods of working, new technology, the work culture of the company etc. It helps
them to gain confidence in themselves.
5. Bridging the gap between planning and implementation :-

Plans made by companies expect people to achieve certain targets within certain time
limit with certain quality. For this employee performance has to be accurate and perfect.
Training helps in achieving accuracy and perfection.
6. Health and safety measures :

Training and development program clearly identifies and teaches employees about the
different risk involved in their job, the different problems that can arise and how to
prevent such problems. This helps to improve the health and safety measures in the
company.
IMPORTANCE OF TRAINING & DEVELOPMENT

1. Helps remove performance deficiencies in employees
2. Greater stability, flexibility and capacity for growth in an organization
3. Accidents, scraps and damages to machinery can be avoided
4. Serves as effective source of recruitment
5. It is an investment in HR with a promise of better returns in future
6. Reduces dissatisfaction, absenteeism, complaints and turnover of employees
IDENTIFICATION OF TRAINING NEEDS

Individual Training Needs Identification
1. Performance Appraisals
2. Interviews
3. Questionnaires
4. Attitude Surveys
5. Training Progress Feedback
6. Work Sampling
7. Rating Scales
Benefits of Training Needs Identification

1. Trainers can be informed about the broader needs in advance
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2. Trainers Perception Gaps can be reduced between employees and their supervisors
3. Trainers can design course inputs closer to the specific needs of the participants
4. Diagnosis of causes of performance deficiencies can be done
Group Level Training Needs Identification

1. Organizational Goals and Objectives
2. Personnel / Skills Inventories
3. Organizational Climate Indices
4. Efficiency Indices
5. Exit Interviews
6. MBO / Work Planning Systems
7. Quality Circles
8. Customer Satisfaction Survey
9. Analysis of Current and Anticipated Changes
MENTORING
CLASSIFICATION OF MENTORING PROGRAMS
PROCEDURAL CLASSIFACTION:
FORMAL MENTORING:
Formal mentoring relationships are typically assigned to one another by a program
coordinator on the basis of application forms submitted by the potential mentor and
protege. mentors are selected on the basis of their competency, but this judgement is
made by the program coordinator rather than the protege. Additionally, formed mentors
may view their protege as “at risk performance “who enter the program because they
needed remedial attentions. In many cases, the mentor and protege do not even meet
until after the match has been made. Thus, in contrast to an informal relationship,
identification, role modeling and interpersonal comfort do not play useful role in the
development of formal relationships.
INFORMAL MENTORING:
Informal mentoring relationships develop on the basis of mutual identification and the
fulfillment of career needs. Mentors select proteges who are viewed as younger versions
of themselves and the relationship provide mentors with a sense of generativity or
contribution to future generations. Protege select the mentor who viewed as a role
models. This mutual identification leads to the often-cited intensity of the informal
relationship and the parallel are drawn between mentor and parent-child relationship.
Informal mentoring relationship also develop on the basis of perceived competence and
interpersonal comfort.
PURPOSIVE CLASSIFICATIONS:
Another approach to classification of mentoring programs is based on the purpose for
which it is initiated like career mentoring (aimed at developing the career of the
protege) and psycho-social mentoring (aimed at providing psycho-social support to the
protege) which is called as purposive classification. They are classified as:
CAREER MENTORING:
Career-related mentoring and psycho-social mentoring differ in the magnitude of their
relationship to various outcomes. According to KRAM mentors can provide five
specific career development functions – namely sponsoring promotions and lateral
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moves, coaching the protege, protecting the protege from adverse forces, providing
challenging assignments, and increasing the protege exposure and visibility.
PSYCHO-SOCIAL MENTORING:
Psycho social mentoring centers on enhancing protege self-esteem, confidence and
identity. Given the more relational focus of psycho-social mentoring, it may relate to
effective outcomes such as career and job satisfaction than does career mentoring.
Protege self-esteem, confidence and identity are likely to be enhanced under this type
of mentoring. Behaviors associated with psycho-social mentoring such as role
modeling, acceptance and confirmation, counseling and friendship were more highly
related to satisfaction with the mentor than was with career mentoring.
OTHER CLASSIFICATION:
ONE TO ONE MENTORING
One to one mentoring place one mentor with one protege. At a minimum, the mentor
and protege should meet regularly at least four hours per months.
GROUP MENTORING:
Group mentoring involves one adult mentor mentoring a group of up to four protege.
The mentor assumes the role of leader and makes a commitment to meet regularly with
the group over a period of time.
TEAM MENTORING:
Team mentoring involves several mentors working with small groups of proteges, with
a mentor to protege ratio no greater than one to four.
PEER MENTORING:
Peer mentoring involves employees in the same grade/scale mentoring their colleagues.
E-MENTORING:
E-mentoring connects mentors and proteges who are located in different places through
communication technology.
Benefits of Mentoring
1) Benefits for the Mentee:
➢ Improved self-confidence and self-esteem
➢ Increased motivation
➢ Broadening horizons and experience
➢ Raised achievements and aspirations
2) Benefits for the Mentor:

➢ Immense satisfaction from helping another person grow
➢ Developing of interpersonal and communication skills
➢ Increased self-awareness
3) Benefits for Organisations:

➢ Development of staff skills
➢ Instilling a feel good factor in staff
➢ Positive publicity
➢ Shared learning
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Barriers to Mentoring
1) Contextual problems:
These problems arise due to organizational barriers and relate to issues of clarity of
purpose or to the degree of support provided by the organization for the program and
the mentor protege relationship.
2) Interpersonal Problems:
The reaction of people who are not included in the mentor-protege relationships may
result in interpersonal problems with mentoring programs.
3) Procedural Problems:
There problems relate to the manner in which the implementation of the program is
managed.
METHODS OF TRAINING
On the Job Trainings (OJT): When an employee learns the job in actual working site
in real life situation, and not simulated environment, it is called OJT. Employee learns
while working. Take the instance of roadside mechanics. Small boys working there as
helpers learn while helping the head mechanic. They do not learn the defect analysis
and engine repairing skills in any classroom on engine models.
Advantages of On-the-Job Training:

1. It is directly in the context of job
2. It is often informal
3. It is most effective because it is learning by experience
4. It is least expensive
5. Trainees are highly motivated
6. It is free from artificial classroom situations
Disadvantages of On-the-Job Training:

1. Trainer may not be experienced enough to train or he may not be so inclined.
2. It is not systematically organized
3. Poorly conducted programs may create safety hazards
“On the Job Training” Methods

1. Job Rotation:
2. Job Coaching: An experienced employee can give a verbal presentation to explain
the nitty-gritty’s of the job.
3. Job Instruction: It may consist of an instruction or directions to perform a particular
task or a function. It may be in the form of orders or steps to perform a task.
4. Apprenticeships: Generally fresh graduates are put under the experienced employee
to learn the functions of job.
5. Internships and Assistantships: Interns or assistants are recruited to perform specific
time-bound jobs or projects during their education.
Off the Job Training: Trainings conducted in simulated environments, classrooms,

seminars, etc. are called Off the Job Training.
Advantages of Off-the-Job Training
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1. Trainers are usually experienced enough to train
2. It is systematically organized
3. Efficiently created programs may add lot of value
Disadvantages of Off-the-Job Training:

1. It is not directly in the context of job
2. It is often formal
3. It may not be based on experience.
4. It is expensive.
5. Trainees may not be much motivated
6. It is artificial in nature
“Off the Job Training” Methods

1. Classroom Lectures: Advantage – It can be used for large groups. Cost per trainee
is low. Disadvantages – Low interest of employees. It is not learning by practice. It is
One-way communication. No authentic feedback mechanism. Likely to lead to
boredom for employees.
2. Audio-Visual: It can be done using Films, Televisions, Video, and Presentations etc.
Advantages – Wide range of realistic examples, quality control possible. Disadvantages
– One-way communication, No feedback mechanism. No flexibility for different
audience.
3. Simulation: Creating a real-life situation for decision-making and understanding the

actual job conditions give it. Ensures active participation of all trainees. Can be very
effective but needs good conductors.
4. Case Studies: It is a written description of an actual situation in the past in same

organization or somewhere else and trainees are supposed to analyze and give their
conclusions in writing. This is another excellent method to ensure full and whole
hearted participation of employees and generates good interest among them. Case is
later discussed by instructor with all the pros and cons of each option. It is an ideal
method to promote decision-making abilities within the constraints of limited data.
5. Role Plays: Here trainees assume the part of the specific personalities in a case study
and enact it in front of the audience. It is more emotional orientation and improves
interpersonal relationships. Attitudinal change is another result. These are generally
used in MDP.
6. Sensitivity Trainings: This is more from the point of view of behavioural assessment
as to how an individual will conduct himself and behave towards others under different
circumstances. There is no pre-planned agenda and it is instant. Advantages – increased
ability to empathize, listening skills, openness, tolerance, and conflict resolution skills.
Disadvantage – Participants may resort to their old habits after the training.
7. Programmed Instructions: Provided in the form of blocks either in book or a teaching

machine using questions and feedbacks without the intervention of trainer. Advantages
– Self paced, trainees can progress at their own speed, strong motivation for repeat
learning, material is structured and self-contained. Disadvantages – Scope for learning
is less; cost of books, manuals or machinery is expensive.
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8. Computer Aided Instructions: It is extension of PI method, by using computers.
Advantages – Provides accountabilities, modifiable to technological innovations,
flexible to time. Disadvantages – High cost.
9. Laboratory Training.
TRAINING AND DEVELOPMENT: DIFFERENCE

Training Development
Training is skills focused Development is creating learning
abilities
Training is presumed to have a formal Development is not education dependent
education
Training needs depend upon lack or Development depends on personal drive
deficiency in skills and ambition
Trainings are generally need based Development is voluntary
Training is a narrower concept focused Development is a broader concept
on job related skills focused on personality development
Training may not include development Development includes training wherever
necessary
Training is aimed at improving job Development aims at overall personal
related efficiency and performance effectiveness (including job efficiencies)
BARRIERS TO EFFECTIVE TRAINING

1. Lack of Management commitment
2. Inadequate Training budget
3. Large scale poaching of trained staff
4. Non-cooperation from workers
5. Unions influence
HOW TO MAKE TRAINING EFFECTIVE

1. Management Commitment
2. Integration of Training with Business Strategies
3. Comprehensive and Systematic Approach
4. Continuous and Ongoing approach
5. Promoting learning as fundamental value
6. Creations of effective training evaluation system
METHODS OF TRAINING OPERATING PERSONNEL/FACTORY

WORKERS

undertaken to improve employee knowledge, skills, attitude, and social behavior so
that the performance of the organization improves considerably.”
There are different methods of training for operating personnel (factory workers).
Training these workers becomes important because they handle equipment worth
crores of rupees. The different methods can be explained with the help of following
diagram.
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Methods of training operating personnel
On the job Apprenticeship Vestibule Job rotation Classroom

method method method method method
1. On the job training method :-

In this method workers who have to be trained are taken to the factory, divided into
groups and one superior is allotted to every group. This superior or supervisor first
demonstrates how the equipment must be handled, and then the worker is asked to
repeat whatever he has observed in the presence of the supervisor. This method makes
it easy for the employee to learn the details about specific equipment. Once the worker
studies the first equipment thoroughly the supervisor moves on to the next
equipment and so on.
2. Apprenticeship training :-
In this method both theory and practical session are conducted. The employee is paid a
stipend until he completes training. The theory sessions give theoretical information
about the plant layout, the different machines, their parts and safety measures etc. The
practical sessions give practical training in handling the equipment. The apprentice may
or may not be continued on the job after training.
3. Vestibule training :-
In this method of training an atmosphere which is very similar to the real job
atmosphere is created. The surroundings, equipment, noise level will be similar to the
real situation. When an employee is trained under such conditions he gets an idea about
what the real job situation will be like.
Similarly when he actually starts doing the job he will not feel out of place. This method
is used to train pilots and astronauts. In some places graphics are also used to create the
artificial surroundings. This method involves heavy investment.
4. Job rotation :-
In this method the person is transferred from one equipment to the other for a fixed
amount of time until he is comfortable with all the equipment’s. At the end of the
training the employee becomes comfortable with all the equipment. He is then
assigned a specific task.
5. Classroom method :-
In this method the training is given in the classroom. Video clippings, slides, charts,
diagrams and artificial models etc. are used to give training.
Methods of training for managers/ methods of development / managerial
development/executive development
undertaken to improve employee knowledge, skills, attitude, and social behavior so
that the performance of the organization improves considerably.”
Various methods are used to train personnel for managerial level jobs in the company.
These methods can be explained with the help of following diagram.
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Methods of training managers
On the job training Off the job training
Job rotation Classroom method

Planned progression Simulation
Coaching and counseling Business games
Under study Committees
Junior boards Conferences
Readings
In-basket training
ON THE JOB METHOD :-

On the job method refers to training given to personnel inside the company. There are
different methods of on the job training.
1. Job rotation
This method enables the company to train managerial personnel in departmental work.
They are taught everything about the department. Starting from the lowest level job in
the department to the highest level job. This helps when the person takes over as a
manager and is required to check whether his juniors are doing the job properly or not.
Every minute detail is studied.
2. Planned progression :-
In this method juniors are assigned a certain job of their senior in addition to their own
job. The method allows the employee to slowly learn the job of his senior so that when
he is promoted to his senior’s job it becomes very easy for him to adjust to the new
situation. It also provides a chance to learn higher level jobs.
3. Coaching and counseling :-

Coaching refers to actually teaching a job to a junior. The senior person who is the
coach actually teaches his junior regarding how the work must be handled and how
decisions must be taken, the different techniques that can be used on the job, how to
handle pressure. There is active participation from the senior.
Counseling refers to advising the junior employee as and when he faces problems. The
counselor superior plays an advisory role and does not actively teach employees.
4. Under study :-
In this method of training a junior is deputed to work under a senior. He takes orders
from the senior, observes the senior, attends meetings with him, learns about decision
making and handling of day to day problems. The method is used when the senior is
on the verge of retirement and the job will be taken over by the junior.
5. Junior board :-
In this method a group of junior level managers are identified and they work together
in a group called junior board. They function just like the board of directors. They
identify certain problems, they study the problem and provide suggestions. This method
improves team work and decision making ability. It gives an idea about the intensity of
problem faced by the company. Only promising and capable junior level
managers are selected for this method.
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OFF THE JOB TRAINING METHOD :-
Off the job training refers to method of training given outside the company. The
different methods adopted here are
1. Classroom method :-
The classroom method is used when a group of managers have to be trained in
theoretical aspects. The training involves using lectures, audio visuals, case study, role
play method, group discussions etc. The method is interactive and provides very good
results.
2. Simulation :-
Simulation involves creating an atmosphere which is very similar to the original
work environment. The method helps to train managers in handling stress, taking
immediate decisions, handling pressure on the jobs etc. An actual feel of the real job
environment is given here.
3. Business games :-
This method involves providing a market situation to the trainee manager and asking
him to provide solutions. If there are many people to be trained they can be divided
into groups and each group becomes a separate team and play against each other.
4. Committee :-
A committee refers to a group of people who are officially appointed to look into a
problem and provide solutions. Trainee managers are put in the committee to identify
and study a problem in the organization and to provide suggestions on how they will
solve the problem and to explain what they learnt from it.
5. Conference :-
Conferences are conducted by various companies to have elaborate discussions on
specific topics. The company which organizes the conference invites trainee managers
from different companies and calls for experts in different fields to give presentations
or lectures. The trainee managers can ask their doubts to these experts and understand
how problems can be solved on the job.
6. Readings :-
This method involves encouraging the trainee manager to increase his reading related
to his subject and then asking him to make a presentation on what he has learnt.
Information can be collected by trainee manager from books, magazines and internet
etc.
7. In basket training :-
The method is adopted from the ‘IN’ and ‘OUT’ baskets normally found in the
manager’s cabin. In this method the training is given to the manager to handle files
coming in and to finish his work and take decisions within a specified time limit. The
trainee manager is taught how to prioritize his work, the activities which are important
for his job and how to take decisions within limited time.
TRAINING PROCEDURE/PROCESS OF TRAINING :-

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Every company has a specific training procedure, depending upon its requirements. A
general training procedure is explained below along with diagram
PROCESS/PROCEDURE OF TRAINING
Determining training need of employee
Select a target group for training
Preparing trainers
Developing training packages
Presentation
Performance
Follow up
1. Determining training needs of employee :-

In the very 1st step of training procedure, the HR department, identifies the number of
people requiring training, specific area in which they need training, the age group of
employee, the level in organization etc. in some cases the employee may be totally new
to the organization. Here the general introduction training is required. Some employees
may have problems in specific areas; here the training must be specific. This entire
information is by HR department.
2. Selecting target group :-

Based on information collected in step 1 the HR department divides employee into
groups based on the following.
i. Age group of the employee to be trained
ii The area in which training is required
iii Level of the employee in the organization
iv The intensity of training etc.
3. Preparing trainers :-
Once the employees have been divided into groups, the HR department arranges for
trainers. Trainers can be in house trainers or specialized trainers from outside. The
trainers are given details by HR department, like number of people in the group, their
age, their level in organization, the result desired at the end of training, the area of
training, the number of days of training, the training budget, facilities available etc.
4. Preparing training packages :-

Based on the information provided by trainers, he prepares entire training schedule
i.e. number of days, number of sessions for each day, topics to be handled each day,
depth of which the subject should be covered, the methodology for each session, the
tests to be given foe each session, handout/printed material to be given in each session
etc.
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5. Presentation :-
On the first day of training program the trainer introduces himself and specifies the
need and objective of the program. This is done so that employees get the right idea
about the objectives. He then actually starts the program. The performance of each
employee is tracked by the trained and necessary feedback is provided.
6. Performance :-
At the end of training program the participants reports back to their office or branches.
They prepare report on the entire training program and what they have learned. They
the start using whatever they have learnt during their training. Their progress and
performance is constantly tracked and suitable incentives are given if the participant is
able to use whatever he has learnt in training.
7. Follow up :-
Based on the employee performance, after training, the HR department is able to
identify what is exactly wrong with training program and suitable correction is made
in the training programmes in the future.
EVALUATION OF TRAINING PROGRAM

Effectiveness of training programs are constantly evaluated by the company to find if
the money, they have invested has been spent properly or not.
Training programs can be evaluated by asking following questions.

a) Has change occurred after training?
b) Is the change due to training?
c) Is the change positive or negative?
d) Will the change continue with every training program?
A training program should give following resulting changes.

1. Reaction :-
Reaction refers to attitude of employee about the training, whether the employee
considers training to be positive or negative one. If reactions are positive then people
have accepted the program and changes will be possible.
2. Learning :-
Another method of judging effectiveness is to identify levels of learning i.e. how much
the people have learnt during the training. This can be found out by trainers mark sheet,
the report submitted by the employee, and actual performance.
3. Behavior :-
The HR department needs to understand behavior of the employees, to understand the
effectiveness of training. The behavioral change can be seen in how the person interacts
with juniors, peer groups and seniors. They mark change in behavior and inform the
HR department of the success of training program.
4. Result :-
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Results provided by employee in monetary terms also determines effectiveness of
training program i.e. employee success calculated in monetary terms on handling the
project after training, the group performance before and after training etc.
Effective training programs must give the following results:

i. Increase in efficiency of worker
ii. Reduction in labour turnover
iii. Increase in discipline
iv. Reduction in wastage and therefore cost of production
v. Proper care of tools and equipment’s
vi. Employee development in career terms
vii. Overall efficiency in the company
ADVANTAGES OF TRAINING PROGRAMME/ TRAINING

A training programme has the following advantages. They are
ADVANTAGES OF TRAINING
TO THE COMPANY TO THE EMPLOYEE
I ADVANTAGES TO THE COMPANY:
1. Increased efficiency of employees:

An effective training programme can make the employees of the company work in an
effective manner. With training people gain confidence and this confidence is seen in
the output and results.
2. Reduced supervision:
An employee needs to be supervised when he works. When the employee has got
sufficient training the amount of supervision required is less as mistakes are less. This
reduces the workload of the supervisor.
3. Less amount of wastage

The amount of wastage by an employee is reduced a lot due to training and therefore if
we take an account of the amount of wastage we find that the company has saved a lot
of money.
4. Reduced turnover:
Proper training improves chances of obtaining promotions and employees are happy
because they have better opportunities Due to this their chances of leaving their current
job reduces greatly thereby reducing labour turnover in the company.
5. Helps new employees in the organization:

Training always benefits employees whether old or new. In case of new employees,
training helps them a lot. This is because new employees may not be aware of the
functioning of the organization and training helps them to gain knowledge and insight
into the working of the company.
6. Better labour –management relations:
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Labour – management relations are very essential for any organization. When
companies introduce training programmes and prepare employees for future jobs and
promotions they send out a message to the unions that they are interested in employee
welfare. Due to this the unions also adopt a positive attitude and labour- management
relations improve.
II ADVANTAGES TO THE EMPLOYEE:
1. Self-confidence:
Training leads to increase in employee self-confidence. The person is able to adjust to
his work environment and doesn’t feel humiliated in front of his seniors. This
confidence leads to chances of better efforts in the future from the employees.
2. Increased motivation levels:

Training brings positive attitude among employees and increases the motivation levels
of the employees in the organization, thereby improving the results of the organization.
3. High rewards:
An effective training programme helps an employee to take the benefit of the rewards
systems and incentives available in the company. Thus the employee is able to get these
rewards, which in turn increases his motivation levels.
4. Group efforts:
An effective training programme not only teaches an employee how to do his work
but also trains him to work as a part of the group. Thus training programmes improve
group efforts.
5. Promotion:
Effective training programmes increase performance and increase the chances of
obtaining promotions. Many employees even opt for certain programmes so that they
can help the employee to improve his chances of promotions and obtaining higher
positions in the organization.
CAREER DEVELOPMENT
Career as a concept means a lifelong sequence of professional, educational and
developmental experiences that an individual goes through in his working life. It is a
sequence of positions occupied by a person during his life. Career planning is the
process of identifying an individual’s strengths, weaknesses, aptitudes, inclinations,
aspirations and attitudes and designing his job responsibilities to take maximum
advantages of positive traits and minimizing the effect negatives traits.
After identifying the personality traits of the individual begins the process of identifying
suitable job billets for him. It may also involve training at times to strengthen his weak
areas.
Career planning is a process of integrating the employees’ needs and aspirations with
organizational requirements.
A typical succession planning involves the following activities:
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i. Analysis of the demand for managers and professionals by company level, function
and skill.
ii. Audit of existing executives and projection of likely future supply from internal and
external sources.
iii. Planning of individual career paths based on objective estimates of future needs and
drawing on reliable performance appraisals and assessments of potential.
iv. Career counselling undertaken in the context of a realistic understanding of the future
needs of the firm as well as those of the individual.
v. Accelerated promotions with development targeted against the future needs of the
business.
vi. Performance related training and development to prepare individuals for future roles
as well as current responsibilities
vii. Planned strategic recruitment not only to fill short term needs but also to provide
people for development to meet future needs
viii. The actual activities by which openings are filled
CAREER MANAGEMENT
CAREER DEFINITION
Career can be defined as a general course of action a person chooses to pursue
throughout his or her working life
I. Career planning: Career planning is an ongoing process through which an individual
sets career goals and identifies the means to achieve them. The process by which
individuals plan their life’s work is referred to as career planning. Through career
planning, a person evaluates his or her own abilities and interests, considers alternative
career opportunities, establishes career goals, and plans practical developmental
activities. Usually, career planning programs are expected to achieve one or more of
the following objectives:
 More effective development of available talent.
 Self-appraisal opportunities for employees considering new or nontraditional career
path.
 More efficient development of human resources within and among divisions and/or
geographic locations.
 A demonstration of a tangible commitment to EEO and affirmative action.
 Satisfaction of employees’ personal development needs.
 Improvement of performance through on-the-job training experiences provided by
horizontal and vertical career moves.
 Increased employee loyalty and motivation, leading to decreased turnover.
 A method of determining training and development needs.
a. Individual career planning — Career planning begins with self-understanding.
Then, the person is in a position to establish realistic goals and determine what to do to
achieve the set goals. Learning about oneself is referred to as self-assessment. Some
useful tools include a strength/weakness balance sheet and a likes and dislikes survey.
 Strength/weakness balance sheet: A self-evaluation procedure assists people in
becoming aware of their strengths and weaknesses.
 Likes and dislikes survey: A procedure that assists individuals in recognizing
restrictions they place on themselves.
b. Career Assessment on the Web — The Web has numerous tests and assessments
sites available to assist job seekers.
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c. Organizational Career Planning — The process of establishing career paths within
a firm.
II. Career Paths

Career paths have historically focused on upward mobility within a particular
occupation. One of four types of career paths may be used: traditional, network, lateral,
and dual.
a. Traditional Career Path—An employee progresses vertically upward in the

organization from one specific job to the next.
b. Network Career Path—A method of career patching that contains both a vertical
sequence of jobs and a series of horizontal opportunities.
c. Lateral Skill Path—traditionally, a career path was viewed as moving upward to

higher levels of management in the organization. The availability of the previous two
options has diminished considerably in recent years. But this does not mean that an
individual has to remain in the same job for life. There are often lateral moves within
the firm that can be taken to allow an employee to become revitalized and find new
challenges.
d. Dual-Career Path— A career-path method, that recognizes that technical specialists
can and should be allowed to continue to contribute their expertise to a company
without having to become managers.
e. Adding Value to Retain Present Job—Regardless of the career path pursued,

today’s workers need to develop a plan whereby they are viewed as continually adding
value to the organization. If employees cannot add value, the company does not need
them, and much of the evolving work environments cannot use them either. Workers
must anticipate what tools will be needed for success in the future and obtain these
skills. These workers must look across company lines to other organizations to
determine what skills are transferable, and then go and get them. Essentially, today’s
workers must manage their own careers as never before.
f. Demotion—Demotions have long been associated with failure, but limited

promotional opportunities in the future and the fast pace of technological change may
make them more legitimate career options.
III. Career Development

A formal approach taken by an organization to help its people acquire the skills and
experiences needed toper form current and future jobs is termed as career development.
Company’s policies especially policies regarding promotion, counseling the
employees, opportunities to excel in future help employees to develop their career.
Career development consists of skills, education and experiences as well as behavioral
modification and refinement techniques that allow individuals to work better and add
value.
Career development is an ongoing organized and formalized effort that recognizes
people as a vital organizational resource. It differs from training in that it has a wider
focus, longer time frame, and broader scope. The goal of training is improvement in
performance; the goal of development is enrichment and more capable workers.
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Recently, career development has come to be seen as a means for meeting both
organization and employee needs, as opposed to solely meeting the needs of the
organization as it had done in the past. Now, organizations see career development as
a way of preventing job burnout, providing career information to employees, improving
the quality of work lives and meeting affirmative action goals. That is, career
development must be seen as a key business strategy if an organization wants to survive
in an increasingly competitive and global business environment.
IV. Career Planning and Development Methods

There are numerous methods for career planning and development. Some currently
utilized methods, most of which are used in various combinations, are discussed next.
a. Discussions with Knowledgeable Individuals: - In a formal discussion, the superior

and subordinate may jointly agree on what type of career planning and development
activities are best. In other instances, psychologists and guidance counselors provide
this service. In an academic setting, colleges and universities often provide career
planning and development information to students. Students often go to their professors
for career advice.
b. Company Material: - Some firms provide material specifically developed to assist

their workers in career planning and development. Such material is tailored to the firm’s
special needs. In addition, job descriptions provide valuable insight for individuals to
personally determine if a match exists with their strengths and weaknesses and specific
positions considered.
c. Performance Appraisal System: - The firm’s performance appraisal system can

also be a valuable tool in career planning and development. Noting and discussing an
employee’s strengths and weaknesses with his or her supervisor can uncover
developmental needs. If overcoming a particular weakness seems difficult or even
impossible, an alternate career path may be the solution.
d. Workshops: - Some organizations conduct workshops lasting two or three days for
the purpose of helping workers develop careers within the company. Employees define
and match their specific career objectives with the needs of the company. At other
times, workshops are available in the community that the company may send the worker
to or workers may initiate the visit themselves.
e. Personal Development Plans (PDP): - Many employers encourage employees to

write their own personal development plans. This is a summary of a person’s personal
development needs and an action plan to achieve them. Workers are encouraged to
analyze their strengths and weaknesses.
f. Software Packages: - Some software packages assist employees in navigating their

careers.
g. Career Planning Web Sites: - There are numerous Web sites available that provide
career planning and career counseling as well as career testing and assessment.
V. Challenges in Career Development
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While most business people today agree that their organizations should invest in career
development, it is not always clear exactly what form this investment should take.
Before putting a career development program in place, management needs to consider
three major challenges.
a. Who will be Responsible?

Many modern organizations have concluded that employees must take an active role in
planning and implementing their own personal development plans. Situations have led
companies to encourage their employees to take responsibility for their own
development; these may include mergers, acquisitions, downsizing, and employee
empowerment. However, employees need at least general guidance regarding the steps
they can take to develop their careers, both within and outside the company.
b. How Much Emphasis is Appropriate?

Too much emphasis on career enhancement can harm an organization's effectiveness.
Employees with extreme career orientation can become more concerned about their
image than their performance. Some warning signs a manager should be on the lookout
for include a heavy focus on advancement opportunities, managing impressions, and
socializing versus job performance.
Serious side effects of career development programs include employee dissatisfaction,
poor performance, and turnover in the event that it fosters unrealistic expectations for
advancement.
c. How Will the Needs of a Diverse Work Force be met?

Companies need to break down the barriers some employees face in achieving
advancement in order to meet the career development needs of today's diverse work
force. In 1991, a government study revealed that women and minorities are frequently
excluded from the informal career development activities like networking, mentoring,
and participation in policy-making committees.
Perhaps the best way a company can ensure that women and minorities have a fair
chance at managerial and executive positions is to design a broad-based approach to
employee development that is anchored in education and training.
Another employee group that may need special consideration consists of dual-career
couples. Common organizational approaches that are becoming increasingly popular in
dealing with the needs of dual career couples are flexible work schedules,
telecommuting, and the offering of child-care services. Some companies have also been
counseling couples in career management.
III. Meeting the Challenges of Effective Career Development

Creative decision making is a must in designing and implementing an effective
development program. The three phases of development often blend together in a real-
life program. These three phases include the assessment phase, the direction phase, and
the development phase.
a. The Assessment Phase

The assessment phase involves activities ranging from self-
assessment to organizationally provided assessment. The goal of both of these types of
assessment is to identify employees' strengths and weaknesses.
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b. The Direction Phase
This involves determining the type of career that employees want and the steps they
must take to make their career goals a reality. It involves:
 Information services
 The Development Phase
 Individual career counseling
The development phase is taking actions to create and increase skills to prepare for
future job opportunities and is meant to foster this growth and self-improvement. The
methods are
1. Mentoring & Coaching: It has become increasingly clear over the years that
employees who aspire to higher management levels in the organization often need the
assistance and advocacy of someone higher up in the organization. When senior
employee takes an active role in guiding another individual, we refer to this activity as
mentoring and coaching. This can occur at any level and can be most effective when
the two individuals do not have any type of reporting relationship.
2. Job Rotation: Involves moving employees from one job to another for the purpose
of providing them with broader experience.
3. Tuition Assistance Programs: To help individuals plan their careers, organizations

try to provide additional information in order to have better choice of the career.
❖ Self-Development: - When an employer does not routinely offer development
programs, it is essential that employees work out their own development plan. Planning
for your career should include a consideration of how you can demonstrate that you
make a difference to the organization.
❖ Development Suggestions: - Development suggestions focus on personal growth and

direction. These suggestions include statements such as "Create your own personal
mission statement."
❖ Advancement Suggestion: - Advancement suggestions focus on the steps that

employees can take to improve their chances of being considered for advancement.
These suggestions include statements such as "Remember that performance in your
function is important, but interpersonal performance is critical."
IV. Career-Impacted Life Stages

Each person’s career goes through stages that influence an individual’s knowledge of,
and preference for, various occupations. People change constantly and, thus, view their
careers differently at various stages of their lives. Some of these changes result from
the aging process and others from opportunities for growth and status. The main stages
of the career cycle include the growth, exploration, establishment, maintenance, and
decline.
a. Growth Stage: The growth stage is roughly from birth to age 14 and is a period
during which an individual develops a self-concept by identifying and interacting with
other people. Basically, during this stage an individual establishes his or her identity.
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b. Exploration Stage: The exploration stage is the period roughly from ages 15 to 24,
during which an individual seriously explores various occupational alternatives. The
person attempts to match these occupational alternatives with his or her own interests
and abilities resulting from education, leisure activities, and work.
c. Establishment Stage: The establishment stage is roughly from ages 25 to 44 and is

the primary part of most people’s work lives. Hopefully, during this period, a suitable
occupation is found and the person engages in those activities that help earn a
permanent career. During this period, the individual is continually testing personal
capabilities and ambitions against those of the initial occupational choice.
d. Maintenance Stage: Between the ages of 45 to 65, many people move from the
stabilization sub stage into the maintenance stage. During maintenance, the individual
has usually created a place in the work world, and most efforts are directed at
maintaining the career gains earned.
e. Decline Stage: As retirement becomes an inevitable reality, in the decline stage,

there is frequently a period of adjustment, where many begin to accept reduced levels
of power and responsibility.
Internal Barriers to Career Advancement

There can be following types of barrier that can influence the effectiveness of the career
advancement.
❖ Lack of time, budgets, and resources for employees to plan their careers and to
undertake training and development.
❖ Rigid job specifications, lack of leadership support for career management, and a short-
term focus.
❖ Lack of career opportunities and pathways within the organization for employees
Successful Career-Management Practices

Following steps can be helpful towards successful career management practices in the
organizations.
 Placing clear expectations on employees.
 Giving employees the opportunity for transfer.
 Providing a clear succession plan
 Encouraging performance through rewards and recognition.
 Encouraging employees to continually assess their skills and career direction.
 Giving employees the time and resources they need to consider short- and long-term
career goals.
 Individual and Organizational Perspectives on Career Planning:

Effective career planning, that is ensured with monitoring to record the failures and
successes, provides continuous chances and opportunities to employees towards career
development that will definitely produce more committed and effective workforce.
ROLES IN CAREER DEVELOPMENT
Career: It’s a progress of action of a person in some organization
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Career Management: It’s the process of employees to better understand and develop
their skills and interests & use them for the benefit of the organization
Roles: There are two parties are crucial development: Employee & Employer
Employers Role:
▪ Employers role should be proactive,
▪ The Manager should encourage and reward an employee in her career
advancement
Four roles:
 Coach: one who listen
 Appraiser: job responsibilities, One who gives feedback
 Adviser: one who gives advice, Helps to set goals
 Referral Agent: consults with the employee on action plans
Employees Role
• Employees are responsible for initiating and maintaining their own careers
• Its up to each individual to identify her own knowledge, skills, abilities, interests
and value and seek out information about career options in order to set goals & develop
career plans
HR Manager Role:
• Provide information about training & development opportunities
• Helps to prepare employees for job searches
Career Planning Workshop:

To guide employees individually through self-assessment of values, interest, abilities,
goals and personal development plans & match their specific career objectives with the
needs of the company.
Career counselling:
▪ Career counselling helps employees discuss their career goals in one -to-one
counseling sessions
▪ Its may be provided by the HR staff, Managers, Supervisors or Consultants
Career Workbooks:
These consists of questions and exercises to guide individuals to guide individuals to
figure out their weakness, job & career opportunities and necessary steps for
researching their goals
Information on career and job opportunities:

It includes places such as career center, newsletter, websites where employees can find
information about job openings & training programs.
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UNIT IV
PERFORMANCE APPRAISALS
The main objective of performance appraisals is to measure and improve the
performance of employees and increase their future potential and value to the company.
7 objectives of a performance appraisal

• Help employees set goals.
• Motivate high performing employees.
• Counsel underperforming employees.
• Support for raises and promotions.
• Plan for new hires.
• Determine overall training needs.
• Create a paper trail.
9 important Objectives of Performance Appraisal for Evaluating Employee

Development
1: Goal Setting is Integral to Systematic Evaluation
If you want to build a superior performance appraisal system, it's important to create a
baseline. Creating a baseline means noting down what goals you expect to achieve.
You do this so that later— after the appraisals are done— you can review the goals
and gauge if you managed to tick them off the list.
That is why goal-setting should be a non-negotiable part of your performance

evaluation process. Whatever you want to accomplish with your performance
appraisal system, goal setting is the first step.
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However, it's easier said than done. Most managers and supervisors tend to set over-
optimistic goals that become really hard to accomplish. Cue lower morale, higher
stress levels, and lingering tension between managers and employees.
That is why, when setting goals, keep the following pointers in mind:
• Clear Expectations: Setting goals makes it simpler to establish the expected

performance standards. However, employees need to understand what you're
expecting from them. You must be clear about the criteria used to evaluate job
performance when setting goals.
• Involve Your Employees While Setting Goals: Subsequently, allow employees to
have a say in the goal-setting process. Discuss how much time, resources, and
guidance the employee will need to achieve their set goals.
• Utilize A Goal-Setting Framework: The key to effective goal-setting is to
prioritize quality over quantity. Use a goal-setting framework such as SMART to
ensure that you are setting high-quality goals.
2: Provide Frequent Feedback for Increased Job Performance
There's no way to get better at something you only hear about once a year.
~ Daniel Pink
The performance review should, ideally, not be the first time an employee hears about
their job performance.
Throughout the year, employees should receive constructive feedback from their
manager on their performance and what they can do to improve. The annual review
should serve as a summary meeting in which the employee is judged on how well
they received and acted on feedback.
72% of respondents thought their performance would improve if their managers

provided corrective feedback.
Employees, both good and bad, require timely feedback to reach their full potential.
The amount and quality of feedback given vastly enhance the performance appraisal
process. With frequent and meaningful feedback, an employee:
• Receives regular updates on their work performances. Thus, the employee gets a
chance to look at and improve on their strengths and weaknesses.
• Positive feedback motivates employees to improve their performance.
• Regular feedback makes it easier to assess the data later during the performance
evaluation.
To get the most out of a feedback process, invest in something more meaningful than
the traditional feedback process.
29% of organizations that use peer review feedback reported it had the most positive
effect when it was ongoing rather than given just at certain times of the year.
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360-degree feedback is a more modern and systematic approach to feedback analysis.
Feedback is gathered not only from the manager but also from those who interact and
work with the employee. This ensures that the data received is more accurate and up-
to-date.
3: Simplify Promotion Awarding Decisions
A big part of performance appraisal is to give employees what they need the most.
And that happens to be career development.
Your employee expects at least something out of their annual reviews. For some, it's
to get promoted. For others, it's being given a pay raise. A select few also demand
extras like switching teams, changing job roles, or landing a managerial position.
The inability to give employees what they want can end up in employees leaving the
company.
47% of millennials started looking for a different job after receiving their performance
review.
As a manager, you definitely don't want that to happen.
You ought to be able to balance the company's and your employees' interests during
annual reviews. This is how to do it:
• Have regular 1:1 Discussion with the employee. Employees will not design new
expectations during the day of their performance review. Most likely, it is
something that they have already been thinking about. Holding informal
discussions with your employees allows you to understand where their demands
are coming from. So, when the day of the annual review dawns, you know what to
do.
• Lay the groundwork. A month before the official review, ask your employees to
jot down the points that they want to discuss during the review. Compare these
expectations with the notes you have kept of the employee over the year. If you
think employees' expectations are realistic, you can design a plan to fast-track the
decision. If not, you can look for other alternatives you can offer them during the
review.
4: Encourage Higher Levels of Work Quality and Quantity.

An effective performance appraisal system helps companies communicate
performance standards and what behaviors are reward-worthy. Here's how it's done:
An effective performance appraisal process establishes a clear standard for the level
of work expected of the employee. That, in turn, becomes a roadmap for employees to
follow.
For employees who want to further their career development, the performance
appraisal process motivates them to perform at the top of their game.
Employees gain insight into their strengths and weaknesses when they receive a
thorough report of their work performance.
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Performance reviews serve as a wake-up call for underachievers, motivating them to
step up and work harder towards their goals.
5: Counsel Poor Performing Employees

The harsh reality is that not everyone will meet your company's standards. However,
telling an underachiever that they did not meet the performance evaluation standards
is a hard task for the manager.
Most managers make a mistake here by focusing only on the negative aspects.
Discussing only the negatives of someone's work performance may make the
employee resent you.
Nearly half of millennials (47%)— after receiving their performance reviews— felt
like they couldn't do anything right.
Poor performers are often aware that their job performance is subpar. Instead of being
mocked (as they might expect), a manager should instead counsel the
underperformers.
Notice how I used the word "counsel" here. That's because you don't need to
reprimand your employees for making them see their shortcomings.
Counseling in itself is a two-way process. The manager needs to work with the
employee to understand the cause of the unsatisfactory quality and quantity of work.
Balancing strengths and weaknesses is the key to delivering an actionable

performance review for an underachiever.
6: Determining Training and Development Needs
Many managers and supervisors believe that once the review is done and dusted, they
don't have to worry about it for another year. Such a limiting mindset is not helping
your company or your employees in the long term.
An effective performance appraisal system doesn't stop at the review. It delivers an

action plan for what happens after the review.
Performance reviews are not just about praising the best workers or criticizing the
underachievers. The goal is to enable underperformers to overcome their weaknesses
while assisting top performers in capitalizing on their strengths.
Did you know that:
74% of millennials feel "in the dark" about their work performance and how they
could improve.
It shows how most employees are unaware of how to improve their performance, even
after a performance evaluation. That does kind of defeat the purpose, doesn't it?
That is why it is critical for managers to:
• Assess the training and development needs during the performance review.
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• Design a training and development program to help your people enhance their
skills and competencies.
After the performance evaluation, managers can better spot areas where employees
are falling behind. This, in turn, helps managers decide the type and frequency of
training required on a company-wide basis.
7: Creating A Plan to Improve the Performance of the Employees
A performance appraisal is a great base to start identifying the areas of strengths and
weaknesses of your workforce. These evaluations make it simpler for managers to
express their expectations clearly.
But don't just stop there.
The next step is to build an action plan that builds on your employees' strengths and
gets rid of their weaknesses.
However, for that to happen, the action plan needs to:
• Clearly state your expectations to the employees. Transparency is the key here.
Unless employees know what is expected of them, they will not be able to work
towards the relevant goals.
• Issue a deadline. A deadline makes it easier for employees to stay on track and
map their progress over time.
• Introduce a PMS (performance management software). Manually keeping track of
your employees' progress is unfeasible and confusing. Especially if you are
dealing with a large workforce. A PMS will solve all of these problems and more.
These action plans might include further training and development, additional
mentoring, or more efficient goal-setting. The manager should make sure that the
employee is kept in the loop with continuous feedback.
8: Impact-Driven and Meaningful Recognition
69% of employees say they would work harder if they felt their efforts were better
recognized.
It's incredible to be recognized. But it is especially powerful when you expect your
manager to share only negative reviews, i.e., performance reviews.
Appreciating your people during their annual reviews says:
I see what you've done over the years and believe you're an indispensable asset to the
company.
A formal performance appraisal process makes it easier for managers to reward and
recognize the company's top performers. Rewards can be in the form of bonuses,
salary hikes, or even monetary incentives.
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However, rewards can also be non-monetary compensation, such as company awards,
promotional opportunities, and more exciting projects. In the long term, you'll need
to modernize your process to make it more effective and productive for the company.
9: Transparency Behind How Performance is Evaluated
50% of employees were surprised by their ratings. Out of those, 87% were negatively
surprised.
Unless the performance appraisal process is completely transparent, your workforce

will be confused as to how their performance is being evaluated. An untransparent
review process also makes it easier for biases, favoritism, and discrimination to creep
in.
Here's what human resources managers can do to ensure that transparency is not an
afterthought but rather a pre-requisite to the performance evaluation process:
• Start during the onboarding process. Right during induction, make your new hires
aware of how the performance evaluation process works. It becomes much easier
for new hires to perform at a certain level when they know what to expect.
• Train your managers on how to be transparent while reviewing the employees.
• Have a performance review handbook. It should include a section for both
managers and employees on how to get the best of the performance reviews.
WHAT IS PERFORMANCE APPRAISAL?
Performance Appraisals is the assessment of individual’s performance in a systematic

way. It is a developmental tool used for all round development of the employee and the
organization. The performance is measured against a number of factors. These factors
can be divided into two groups.
(a) General personality such as initiative, leadership qualities, dependability, team

spirit, etc.
(b) Professional qualities like job knowledge, quality and quantity of output, versatility
and so on.
Factors vary from organization to organization and job to job. For a soldier, courage
and endurance are more important factors. But for the Army General, his tactical
abilities are more important. On the other side, a foreman in a factory would never be
assessed for his courage. Assessment is often not confined to past performance but
checks for potential performance also. The second definition brings in focus behaviour
because behaviour affects not only employee’s performance but even his peers’ and
subordinates’.
Definition 1: “It is a systematic evaluation of an individual with respect to present

performance on the job and his potential.”
Definition 2: “It is formal, structured system of measuring/evaluating job related

behaviours and outcomes to discover how an employee has performed on the job and
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how he can perform more effectively in future so that employee, organization and
society, all benefits.”
PERFORMANCE APPRAISALS AND JOB ANALYSIS RELATIONSHIP

Job Analysis Performance Standard Performance Appraisal
Describes the work and personnel requirement of a particular job

Translate job requirements into levels of acceptable or unacceptable performance
Describe the individual’s past performance, suitability and potential.
Objectives: Performance appraisals are used as a basis for following activities: -

1. Promotions
2. Confirmations
3. Training and Development program planning
4. Compensation reviews
5. Competency building
6. Evaluation of HR Programs
7. Feedback & Grievances
PERFORMANCE APPRAISAL PROCESS

1. Setting Objectives and Standards of performance
2. Design an appropriate appraisal program – Appraisal program for different levels of
employees would be different.
3. Performance Interviews
4. Appraise and record the performance
5. Use and store data for appropriate purposes
6. Identify opportunities variables
TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS

Numerous methods have been devised to measure the quantity and quality of
performance appraisals. Each of the methods is effective for a particular class of
employees in certain types of organization only.
Broadly all methods of appraisals can be divided into two different categories.
• Past Oriented Methods
• Future Oriented Methods
PAST ORIENTED METHODS

1. Rating Scales: This is simplest and most popular method. Rating scales consist of
grading an employee’s past performance on a scale of say 1 -10. Each of the selected
performance attribute is numerically marked and then totaled to arrive at the final
figure. Advantages – Adaptability, easy to use, low cost, every type of job can be
evaluated, large number of employees covered, no formal training required.
Disadvantages – Rater’s biases.
2. Checklist: Under this method, checklist of “Statements of Traits” of employee in

the form of Yes or No based questions is prepared. Here, the rater only does the
reporting or checking and HR department does the actual evaluation. Advantages –
economy, ease of administration, limited training required, standardization.
Disadvantages – Rater’s biases, use of improper weights by HR Dept, does not allow
rater to give relative ratings.
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3. Forced Choice Method: A series of statements arranged in the blocks of two or more
are given and the rater indicates which statement is true or false. The rater is forced to
make a choice. HR department does actual assessment. Advantages – Absence of
personal biases because of forced choice. Disadvantages – Statements may not be
correctly framed.
4. Forced Distribution Method: One of the problems faced in large organizations is

relative assessment tendencies of raters. Some are too lenient and others too severe.
This method overcomes that problem. It forces everyone to do a comparative rating of
all the employees on a predetermined distribution pattern of good to bad. Say 10%
employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade, 20% in
Below Average Grade and 10% in Unset grade. The real problem of this method occurs
in organizations where there is a tendency to pack certain key departments with all good
employees and some other departments with discards and laggards. Relatively good
employees of key departments get poor rating and relatively poor employees of
laggards’ departments get good rating.
10% 20% 40% 20% 10%
Unset Below Avg Average Good Excellent
5. Critical Incidents Method: It takes cognizance of abnormal incidences only, good

or bad. Supervisors record such incidents as and when they occur. Advantages –
Evaluations are based on actual job behaviours. Ratings are supported by
descriptions, thus favouritism is beaten. Feedback is easy and reduces recency
biases. Disadvantages – Negative incidents may get priority or incidences could be
forgotten.
6. Field Review Method: This method is useful only for senior positions in a large
organisation spread over cities and countries. Appraisal is done by someone outside
employees’ own department usually from corporate or HR department. Advantages –
Useful for managerial level promotions, when comparable information is needed, on
employees working at distant locations in different set of conditions. Disadvantages –
Outsider is generally not familiar with employees’ work environment, Observation of
actual behaviours not possible.
7. Performance Tests & Observations: This is based on the test of knowledge or skills.
The tests may be written or an actual presentation of skills. Tests must be reliable and
validated to be useful. Advantage – Tests only measure potential and not attitude.
Actual performance is more a function of attitude of person than potential.
Disadvantages – Sometimes costs of test development or administration are high.
8. Confidential Reports: Though popular with government departments, its application

in industry is not ruled out. Here the report is given in the form of Annual
Confidentiality Report (ACR). The system is highly secretive and confidential.
Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that
it is highly prone to biases and recency effect and ratings can be manipulated because
the evaluations are linked to future rewards like promotions, good postings, etc.
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9. Essay Method: In this method the rater writes down the employee description in
the form of an essay. Advantage – It is extremely useful in filing information gaps about
the employees that often occur in a better-structured checklist. Disadvantages – It its
highly dependent upon the writing skills of rater and most of them are not good writers.
Moreover, it is also time consuming and therefore affects full assessment. Also,
comparative or relative performance among employees is not clearly demarcated.
10. Cost Accounting Method: Here performance is evaluated from the monetary returns
yield to his or her organization. Cost to keep employee, and benefit the organization
derives is ascertained. Hence, it is more dependent upon cost and benefit analysis.
11. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers.
The usual techniques used may be ranking methods and paired comparison method.
• Ranking Method: Superior ranks his worker based on merit, from best to worst.
However how best and why best are not elaborated in this method. It is easy to
administer.
• Paired Comparison Method: In this method each employee is paired with every other
employee in the same cadre and then comparative rating done in pairs so formed. The
number of comparisons may be calculated with the help of a formula – N x (N-1) / 2.
The method is too tedious for large departments and often such exact details are not
available with rater.
FUTURE ORIENTED METHODS
1. Management by Objectives (MBO): Performance is rated against the

achievement of objectives mutually agreed by the employee and the management.
Advantage – It is direct and accurate and transparent.
Disadvantages – Applicable only to quantifiable jobs. Short-term goals given
preference at the cost of long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees

potential for future performance rather than the past one. It is done in the form of
in-depth interviews, psychological tests, and discussion with supervisors and
review of other evaluations. It is more focused on employees emotional,
intellectual, and motivational and other personal characteristics affecting his
performance. This approach is slow and costly and may be useful for bright young
members who may have considerable potential. However quality of these appraisals
largely depends upon the skills of psychologists who perform the evaluation.
3. Assessment Centres: This technique was first developed in USA and UK in 1943.
An assessment centre is a central location where managers may come together to
have their participation in job related exercises evaluated by trained observers. It is
more focused on observation of behaviours across a series of select exercises or
work samples. Assessees are requested to participate in in-basket exercises, work
groups, computer simulations, role playing and other similar activities which
require same attributes for successful performance in actual job.
Disadvantages – Concentrates on future performance potential. No assessment of past
performance. Costs of employees travelling and lodging, psychologists. Ratings
strongly influenced by assessee’s inter-personal skills. Solid performers may feel
suffocated in simulated situations.
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Advantages – Well-conducted assessment centre can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content
validity and predictive ability are said to be high in Assessment Centres. The tests also
make sure that the wrong people are not hired or promoted. Finally, it clearly defines
the criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique in which performance data/feedback/rating

is collected from all sections of people employee interacts in the course of his job
like immediate supervisors, team members, customers, peers, subordinates and self
with different weightage to each group of raters. This technique has been found to
be extremely useful and effective. It is especially useful to measure inter-personal
skills, customer satisfaction and team building skills. One of the biggest advantage
of this system is that assesses cannot afford to neglect any constituency and has to
show all-round performance. However, on the negative side, receiving feedback
from multiple sources can be intimidating, threatening, expensive and time
consuming.
Purpose of performance evaluation is to make sure that employee’s goals, employees
behaviour and feedback about performance are all linked to the corporate strategy.
ESSENTIALS OF A GOOD PERFORMANCE APPRAISAL SYSTEM:

1. Standardized Performance Appraisal System
2. Defined performance standards – Bench Marks
3. Uniformity of appraisals
4. Trained Raters
5. Use of relevant rating tools or methods
6. Should be based on job analysis
7. Use of objectively verifiable data
8. Avoid rating problems like halo effect, central tendency, leniency, severity etc.
9. Consistent Documentations maintained
10. No room for discrimination based on cast, creed, race, religion, region etc.
Problems of Rating:
1. Leniency & Severity – Either too lenient or too severe. All good or all bad.
2. Central Tendency – Majority is crowded around average.
3. Halo/Gholem Effect – Entire assessment is affected by one or few aspects.
4. Rater Effect – Favouritism, stereotyping, hostility, etc, kind of biases.
5. Primacy & Recency Effect – Early period or near end period behaviour effects.
6. Perceptual Sets – Effects of old beliefs about groups, regions, groups, etc
7. Spill-over Effects – Effects of previous appraisal affecting recent appraisal
8. Status Effect – High esteemed or low esteemed job bearing on the appraisal.
PROBLEMS IN PERFORMANCE APPRAISAL

Many performance appraisal methods have been severely criticized. Many of the
problems commonly mentioned are not inherent in the method but, rather, reflect
improper usage.
a. Lack of Objectivity: - A potential weakness of traditional methods of performance

appraisal is that they lack objectivity. Some subjectivity will always exist in
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appraisal methods. However, the use of job-related factors does increase
objectivity.
b. Halo Error: - Occurs when the evaluator perceives one factor as being of
paramount importance and gives a good or bad overall rating to an employee based
on this factor.
c. Leniency/Strictness: - The giving of undeserved high or low ratings.
d. Central Tendency: - Occurs when employees are incorrectly rated near the average
or middle of the scale.
e. Recent Behavior Bias: - It is only natural to remember recent behavior more clearly
than actions from the more distant past. However, performance appraisals generally
cover a specified period of time, and an individual’s performance should be considered
for the entire period.
f. Personal Bias: - Supervisors doing performance appraisals may have biases related
to their employees’ personal characteristics such as race, religion, gender, disability, or
age group.
g. Manipulating the Evaluation: - In some instances, supervisor’s control virtually

every aspect of the appraisal process and are therefore in a position to manipulate the
system.
Effects of promotion
Effects of promotion are as follows:

a. A promotion results in an employee taking on responsibility for managing or overseeing
the work of other employees.
b. A promotion is viewed as desirable by employees because of the impact a promotion
has on pay authority, responsibility, and the ability to influence broader organizational
decision-making.
c. A promotion is a form of recognition for employees who make significant and effective
work contributions.
d. An individual who receives a promotion normally receives additional financial rewards
and the ego boost associated with achievement and accomplishment.
Effects of demotions:
Effects of demotion are as follows:

a. A demotion sends a strong signal to the employees that his behavior is not acceptable
to the organization.
b. Demotion can also have a demoralizing effect on other employees who happen to work
with the demoted employee. It is a serve form of punishment.
c. Emotions may run when an individual is demoted. The demoted person may suffer loss
of respect form peers and feel betrayed, embarrassed, angry, and disappointed.
d. If demotion is chosen over termination, efforts must be made to preserve the self-esteem
of the individual.
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Effects of transfer: Transferring employees between businesses can affect staff
morale. The result is often discontentment, not just in those transferred but also in staff
left behind in the old business and workmates they join in the new business.
a. Feelings of displacement in the employees transferred.
b. Anxiety among their ex-workmates who feel they may be next.
c. Resentment among new workmates who distrust the reason the employees have been
introduced and may resent the fact that they have different terms and conditions.
d. A feeling of insecurity that may be common to all.
e. Disruptions may occur when the worker is transferred.
Effects of separation: Job separation is regarded as one of the stressful life events.
a. Separation disrupts routines of daily life, and accompanied by changes in social context,
b. It provokes feeling of anxiety, uncertainty, loss of control and challenge,
c. It can lead to various social and familial issues.
PROMOTION
Meaning and definition of promotion:
According to Paul Pigors and Charles A. Myers, “Promotion is advancement of an
employee to a better job better in terms of greater responsibility, more prestige or status,
greater skill and especially increased rate of pay / salary”.
According to Arun Monappa and Mirza S. Saiyadain, “Promotion is the upward

reassignment of an individual in an organizations hierarchy, accompanied by increased
responsibilities enhanced status and usually with increased income though not always
so”.
Types of promotion
a. Horizontal promotion: This type of promotion involves an increase in responsibility

and pay with the change in the designation. However the job classification remains the
same.
b. Vertical promotion: Most of the time when we refer the term promotion we refer in
this context. In vertical promotion, there is a change in the status responsibilities job
classification and pay. For example a production superintendent is promoted as
production manager.
c. Dry promotion: Dry promotion refers to increase in responsibilities and status without
any increase in pay or other financial benefits. For example a professor in a university
becomes head of the department. It is just an elevation of the professor without any
increase in financial benefits.
DEMOTION:
Definition:
According to dale Yoder, “demotion may be defined as a shift to a position in which
responsibilities are decreased. Promotion is an increase in rank and demotion is
decrease in rank”.
TRANSFERS
DEFINITION:
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According to Yoder and associates “transfer is a lateral shift causing movement of
individuals form one position to another usually involving any marked change in duties,
responsibilities, skills need or compensation”.
Purpose of transfer
1) To meet organizational requirements:

To satisfy such needs of an organization as may arise out of a change in the quantity of
production, fluctuations in work requirements, and changes in the organizational
structure.
2) To meet employees request:

To meet an employee own request when he feel uncomfortable on the job because of
his dislike of his boss, or his fellow workers, or because better opportunities for his
future advancement do not exist thereof because of family circumstance which may
compel him to change the place of his residence.
3) To increase productivity of employees:

To utilize properly the services of an employee when he is not performing satisfactorily
and adequately and when the management feels that he may be more suitable elsewhere,
where his capacities would be better utilized.
4) To make employees more versatile:

To increase the versatility of the employee, by shifting him from one job to another so
the he may have ample opportunities for gaining a varied and broader experience of
work.
5) Adjusting the work force:

To adjust the workforce of one plant with that another, particularly when one is closed
down for reasons beyond the control of the employer.
6) Penalizing employees:
To penalize the employees transfers are also done under which either a difficult trade
union activist or sea lawyer may be transferred to a remote branch or office where he
cannot continue his activities. In government organizations this practices widespread
and is also preferred by the employee to the grim alternative of disciplinary action.
Termination of Service
Termination of employment simply means the ending of employment in a particular

organization. Termination of employment is inevitable in any employment relationship
and it may happen either voluntarily or involuntarily. Voluntary termination may come
through resignation, retirement or death of the employee.
on 4 May, 1990. Section 2(oo) of the Act means termination of service of a workman
only by way of surplus labour ... reason whatsoever, the workmen contend that
"retrenchment" means termination of the service of a workman for any reason
whatsoever, other. Supreme Court of India. Cites 51 - Cited by 317
65
India's labor laws cite the following reasons that justify termination for cause—willful
insubordination or disobedience; theft, fraud, or dishonesty; willful damage to or loss
of employer's goods; partaking of bribes or any illegal gratification; absence without
leave for more than 10 days; habitual late attendance;
Process termination occurs when the last enclave in the process terminates. Process
termination deletes the structure that kept track of the enclaves within the process,
releases the process control block (PCB) and associated resources, and returns control
to the creator of the process.
The four types of Termination are:

1. Involuntary termination
2. Voluntary termination
3. Wrongful termination
4. End of a work contract or temporary employment
The Effect of Termination section makes clear that, once termination occurs, the
Agreement is void and no party is liable to the other except that the Termination and
Miscellaneous Articles survive termination, as does the Confidentiality provision, and
the parties remain on the hook for any willful violation of any
How can we prevent termination of services in the workplace?
1. Assess Fit. ...

2. Don't Forget Human-Interaction. ...
3. Address issues Early. ...
4. Simply Check-In. ...
5. Mentor Struggling Employees. ...
6. Address issues as they come up. ...
7. Give and Receive Feedback. ...
8. Utilize "Stay" Interviews
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UNIT – V
COMPENSATION
COMPENSATION SYSTEM
MEANING AND DEFINITION OF COMPENSATION

According to Cascio, “Compensation includes direct cash payments, indirect payments
in the form of employee benefits, and incentives to motivate employee to strive for
higher levels of popularity.
NATURE OF COMPENSATION
1. Maintaining equity in the distribution of wages and salaries in the organization.

2. Maintaining competitiveness in the wage market, in comparison to other players in the
industry.
3. Matching employee expectations.
4. Reinforcing positive employee behavior and contribution to the organization.
5. Eliminating any discrepancies in wage administration in the organization.
6. Devising a system that is the most efficient for the organization.
7. Optimization of management and employee interests.
8. Maintaining good industrial relations and harmony, with respect to compensation.
OBJECTIVES OF COMPENSATION
Objectives of compensation are shown below.

• Attracting and retaining personnel
 From organization’s point of view, the compensation management aims at attracting
and retaining right personnel in the organization. Not only they require persons who are
well qualified but they are also retained in the organization. In the present day context,
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managerial turnover is a big problem particularly in high knowledge-based
organizations.
• Motivating personnel
 Compensation management aims at motivating personnel for higher productivity.
• Optimizing cost of compensation

 Compensation management aims at optimizing cost of compensation by establishing
some kind of linkage with performance and compensation.
 It is not necessary that higher level of wages and salaries will bring higher performance
automatically but depends on the kind of linkage that is established between
performance and wages and salaries.
• Consistency in compensation
 Compensation management tries to achieve consistency – internal and external –
internal consistency involves payment on the basis of criticality of jobs and employees’
performance on jobs.
• External consistency involves similar compensation for a job in all organization.

Though there are many factors involved in determination of wage and salary structure
for a job in an organization which may result into some kind of disparity in the
compensation of a particular job as compared to other organizations, compensation
management tries to reduce this disparity.
OBJECTIVES OF COMPENSATION
1) ATTRACTING AND RETAINING PERSONNEL:

From organization point of view the compensation management aims at attracting and
retaining right personnel in the organization in the Indian corporate scene there is no
dirt of personnel at operative levels but the problems come at the managerial and
technical level particularly for growing companies. Not only require persons who are
well qualified but they are also retained in the organization in the present day context
managerial turnover is a big problem particularly in high knowledge based
organization.
2) MOTIVATING PERSONNEL:
Compensation management aims at motivating personnel for higher productivity.
3) OPTIMIZING COST OF COMPENSATION:

Compensation management aims at optimizing cost of compensation by establishing
some kind of linkage with performance and compensation. It is not necessary that
higher level of wages and salaries will bring higher performance automatically but
depends on the kind of linkage that is established between performance and wages and
salaries. Compensation management tries to attempt at this.
4) CONSISTANCY IN COMPENSATION:
Compensation management tries to achieve consistency both internal and external in
compensating employees. Internal consistency involves payment on the basis of
criticality of jobs and employees performance on jobs. Thus higher compensation is
attached to higher level jobs. Similarly higher compensation is attached to higher
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perform in the same job. External consistency involves similar compensation for a job
in all organization. Though there are many factors involved in the determination of
wage and salary structure for a job in an organization which may result into some kind
of disparity in the compensation of a particular job as compared to other organization,
compensation management tries to reduce this disparity.
IMPORTANCE OF COMPENSATION
Compensation plays a pivotal role in effective management of human resources, which

is crucial to the competitive advantage of organization.
❖ It is essential for integrating employee efforts with organizational goals and objectives.
❖ It is part sound people management framework for, recruiting, selecting, socializing,

performing, developing and maintaining a capable and motivated workforce.
❖ It has social implications as poorly paid employees are likely to indulge in social unrest
and undesirable activities.
❖ It is management tool for controlling and directing employee’s productive energies for
improving organizational competence and performance.
❖ It helps in generating a talent pool.
❖ It helps in creating better brand equity through increased employee communication with
customers, professionals, and society at large.
❖ It helps in maintaining compensation costs of an organizational efficiently.
❖ The shareholders, business analysts and stakeholders, are satisfied with compensation
levels and see the organization as a investment.
❖ It helps in making compliance of government regulations on compensation.
❖ It helps in improving work and organizational efficiency due to enhanced employee

commitment.
❖ It helps in providing job satisfaction to employees.
Pay:
Pay is a statement of an employee’s worth by an employer or Pay is a perception of
worth by an employee
HR Management Strategy Model: Human resource department uses different

strategies to manage the workforce so that the desired results can be attained. These
desired result as stated in earlier chapters as well, can be attained if organization is able
to attract, select, develop and retain workforce in successful manner in short, the
effective hiring and retaining workforce can be helpful in achieving organizational
goals. This purpose can be attained through fair and effective rewards systems in the
organization. Rewards are used as basic motivational tools in the organization so that
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performance of the employees can be influenced in desirable way. So to be more
successful organizations need attractive and fair compensation and reward systems to
be paid to the workforce.
A. Job Pricing
Job pricing means placing a dollar value on the worth of a job.
I. Pay Grades: - The grouping of similar jobs together to simplify the job pricing
process. Plotting jobs on a scatter diagram is often useful in determining the appropriate
number of pay grades.
II. Wage Curve: - The fitting of plotted points in order to create a smooth progression
between paygrades.
III. Pay Ranges: - Includes a minimum and maximum pay rate with enough variance
between the two to allow some significant pay difference.
IV. Broad Banding: - A technique that collapses many pay grades (salary grades) into
a few wide bands in order to improve organizational effectiveness.
V. Single-Rate System: - Pay ranges are not appropriate for some workplace
conditions. When single rates are used, everyone in the same job receives the same base
pay, regardless of seniority or productivity. This rate may correspond to the midpoint
of a range determined by a compensation survey.
VI. Adjusting Pay Rates: - when pay ranges have been determined and jobs assigned
to pay grades, it may become obvious that some jobs are overpaid and others underpaid.
Underpaid jobs normally are brought to the minimum of the pay range as soon as
possible.
B. Compensation: An Overview
 Compensation: - The total of all rewards provided employees in return for their
services.
 Direct Financial Compensation: - Consists of the pay that a person receives in the
form of wages, salaries, bonuses, and commissions.
 Indirect Financial Compensation: - All financial rewards that are not included in
direct compensation.
 Non-financial Compensation: - Consists of the satisfaction that a person receives from

the job itself or from the psychological and/or physical environment in which the person
works. All such rewards comprise a total compensation program.
I. Equity in financial compensation:

Organizations must attract, motivate, and retain competent employees. Because
achievement of these goals is largely accomplished through a firm’s compensation
system, organizations must strive for compensation equity.
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 Equity: - Workers’ perceptions that they are being treated fairly. Compensation must
be fair to all parties concerned and be perceived as fair.
 External Equity: -Exists when a firm’s employees are paid comparably to workers
who perform similar jobs in other firms.
 Internal Equity: - Exists when employees are paid according to the relative value of
their jobs within an organization.
 Employee Equity: - Exists when individuals performing similar jobs for the same firm
are paid according to factors unique to the employee, such as performance level or
seniority.
 Team Equity: - Achieved when more productive teams are rewarded more than less
productive teams.
II. Determinants of individual financial compensation:
Compensation theory has never been able to provide a completely satisfactory answer
to what an individual is worth for performing jobs.
 The Organization
 The Labor Market
 The Job
 The Employee
These all have an impact on job pricing and the ultimate determination of an
individual’s financial compensation.
The Organization as a Determinant of Financial Compensation:
 Compensation Policies: An organization often establishes—formally or informally—

compensation policies that determine whether it will be a pay leader, a pay follower, or
strive for an average position in the labor market.
 Pay Leaders: Those organizations that pay higher wages and salaries than competing
firms.
 Market Rate or Going Rate: The average pay that most employers provide for the
same job in particular area or industry.
 Pay Followers: Companies that choose to pay below the market rate because of poor
financial condition or a belief that they simply do not require highly capable employees.
 Organizational Politics: Political considerations may also enter into the equation. A
sound, objective compensation system can be destroyed by organizational politics.
Managers should become aware of this possibility and take appropriate action.
 Ability to Pay:
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o An organization’s assessment of its ability to pay is also an important factor in
determining pay levels.
o Financially successful firms tend to provide higher-than average compensation.
However, an organization’s financial strength establishes only the upper limit of what
it will pay.
b. The labor market as a determinant of financial compensation:

Potential employees located within the geographical area from which employees are
recruited comprise the labor market.
1. Compensation Surveys: - Large organizations routinely conduct compensation

surveys to determine prevailing pay rates within labor markets.
a. Compensation surveys: Provide information for establishing both direct and indirect
compensation.
 Benchmark job:- A job that is well known in the company and industry, one that
represents the entire job structure, and one in which a large percentage of the workforce
is employed.
 Cost of Living: - A pay increase must be roughly the equivalent to the cost of living
increase if a person is to maintain a previous level of real wages.
 Labor Unions: - When a union uses comparable pay as a standard for making
compensation demands, the employer must obtain accurate labor market data. When a
union emphasizes cost of living, management may be pressured to include a cost-of-
living allowance (COLA). This is an escalator clause in the labor agreement that
automatically increases wages as the U.S Bureau of Labor Statistics’ cost-of-living
index rises.
 Society: - Compensation paid to employees often affects a firm’s pricing of its goods
and/or services. Consumers may also be interested in compensation decisions.
 Economy: - In most cases, the cost of living will rise in an expanding economy. Thus,
the economy’s health exerts a major impact on pay decisions.
 Legislation: - The amount of compensation a person receives can also be affected by

certain federal and state legislation.
c. The job as a determinant of financial compensation:

Organizations pay for the value they attach to certain duties, responsibilities, and other
job-related factors. Techniques used to determine a job’s relative worth include job
analysis, job descriptions, and job evaluation.
 Job Analysis and Job Descriptions: - Before an organization can determine the
relative difficulty or value of its jobs, it must first define their content, which it normally
does by analyzing jobs. Job analysis is the systematic process of determining the skills
and knowledge required for performing jobs. The job description is the primary by-
product of job analysis, consisting of a written document that describes job duties and
responsibilities. Job descriptions are used for many different purposes, including job
evaluation.
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 Job Evaluation: - That part of a compensation system in which a firm determines the
relative value of one job compared with that of another.
d. The employee as a determinant of financial compensation:

In addition to the organization, the labor market, and the job, factors related to the
employee are also essential in determining pay and employee equity.
 Performance Based Pay: - PA data provide the input for such approaches as merit
pay, variable pay, skill-based pay and competency-based pay.
o Merit Pay: A pay increase given to employees based on their level of performance as
indicated in the appraisal.
o Bonus: The most common type of variable pays for performance and is a one-time
award that is not added to employees’ base pay.
o Skill-based Pay: A system that compensates employees on the basis of job-related

skills and knowledge they possess, not for their job titles.
o Competency-Based Pay: A compensation plan that rewards employees for their

demonstrated expertise.
 Seniority: - The length of time an employee has been associated with the company,
division, department, or job is referred to as seniority.
 Experience: - Regardless of the nature of the task, very few factors have a more
significant impact on performance than experience.
 Membership in the Organization: - Some components of individual financial

compensation are given to employees without regard to the particular job they perform
or their level of productivity.
 Potential: - Organizations do pay some individuals based on their potential.
 Political Influence: - Political influence is a factor that obviously should not be used
as a determinant of financial compensation. However, to deny that it exists would be
unrealistic.
 Luck: - The expression has often been stated, “It certainly helps to be in the right place
at the right time.” There is more than a little truth in this statement as it relates to the
determination of a person’s compensation.
 Special Employee Classes: - These include pay for executives, which are discussed in
a later section, and pay for professionals and sales employees.
III. Executive Compensation:

Executive skill largely determines whether a firm will prosper, survive, or fail.
Therefore, providing adequate compensation for these managers is vital. A critical
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factor in attracting and retaining the best managers is company’s program for
compensating executives.
Determining Executive Compensation: - In determining executive compensation,

firm typically prefer to relate salary growth for the highest-level managers to overall
corporate performance. In general, the higher the managerial position, the greater the
flexibility managers have in designing their jobs.
Types of Executive Compensation—Executive compensation often has five basic

elements: (1) Base Salary, (2) Short-Term Incentives or Bonuses, (3) Long-Term
Incentive sand Capital Appreciation Plans, (4) Executive Benefits, and (5) Perquisites.
The way an executive compensation package is designed is partially dependent on the
ever-changing tax legislation.
 Base Salary: Salary is obviously important. It is a factor in determining standard of

living. Salary also provides the basis for other forms of compensation.
 Short-Term Incentives or bonuses: Payment of bonuses reflects a managerial belief

in their incentive value. Today, virtually all top executives receive bonuses that are tied
to base salary.
 Long-Term Incentives and Capital Appreciation: The stock option is along-term

incentive designed to integrate further the interests of management with those of the
organization. The typical stock option plan gives the manager the option to buy a
specified amount of stock in the future at or below the current market price.
 Executive Benefits: Executive benefits are generally more generous than those
received by other employees because the benefits are tied to their higher salaries.
However, current legislation (ERISA) does restrict the value of executive benefits to a
certain level above those of other workers.
✓ Perquisites (Perks): Any special benefits provided by a firm to a small group of key
executives that are designed to give the executives something extra. A “golden
parachute” contract is a perquisite that protects executives in the event that their firm
is acquired by another.
IV. Compensation for professionals:

People in professional jobs are initially compensated primarily for the knowledge they
bring to the organization. Because of this, the administration of compensation programs
for professionals is somewhat different than for managers. Many professional
employees eventually become managers. For those who do not desire this form of
career progression, some organizations have created a dual track of compensation. The
dual track provides a separate pay structure for professionals, which may overlap a
portion of the managerial pay structure.
V. Sales Compensation:
Designing compensation programs for sales employees involves unique considerations.
For example, job content, relative job worth, and job market value should be
determined. The straight salary approach is at one extreme in sales compensation. In
this method, salespersons receive a fixed salary regardless of their sales levels. At the
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other extreme, the person whose pay is totally determined as a percentage of sales is on
straight commission. Between these extremes, there are endless part salary–part
commission combinations. The possibilities increase when various types of bonuses are
added to the basic compensation package. In addition to salary, commissions, and
bonuses, salespersons often receive other forms of compensation that are intended to
serve as added incentives.
Role of Line managers and HRM Department in Compensation:

Line managers perform the function of job evaluation that is base for the compensation
systems, according to the worth of the job negotiation regarding the salaries and other
benefits is negotiated with potential employees through line mangers. Basic
compensation packages are mostly recommended by the line managers in the
organizations. All these information is communicated to the employees by HRM
department beside communicating this information HRM department also facilitates
the departments in establishing rates of pay, monitoring in job evaluation process, and
Conducting salary surveys in order to establish procedures for administering pay plans,
and to ensure compliance with antidiscrimination laws.
B. Job Evaluation
Job evaluation means systematically determining relative worth of jobs to create job
structure. An attempt to identify inputs that are most valuable to the organization & to
develop job hierarchy based on which jobs have more or less of those dimensions
Job Evaluation Methods:

The essence of compensation administration is job evaluation and the establishment of
the pay structure. Let’s now turn our attention to the topic of job evaluation. By job
evaluation we mean using the information in job analysis to systematically determine
the value of each job in relation to all jobs within the organization. In short, job
evaluation seeks to rank all the jobs in the organization and place them in a hierarchy
that will reflect the relative worth of each. There are four general job evaluation
methods.
a. Ranking method: Raters examine the description of each job being evaluated and
arrange the jobs in order according to their value to the company. This method requires
a committee – typically composed of both management and employee representative –
to arrange job in a simple rank order from highest to lowest. No attempts are made to
break down the jobs by specific weighted criteria. The committee members merely
compare two jobs and judge which one is more important, or more difficult to perform.
Then they compare the other job with the first two, and so on until all the jobs have
been evaluated and ranked.
The most obvious limitation to the ranking method is its sheer inability to be
managed when there are a large number of jobs. Other drawbacks to be considered
are the subjectivity of the method- there are no definite or consistent standards by which
to justify the rankings- and the fact that because jobs are only ranked in terms of order,
we have no knowledge of the distance between the ranks.
b. Classification method: - A job evaluation method by which a number of classes or

grades are defined to describe a group of jobs is known as Classification method. The
classifications are created by identifying some common denominator skills, knowledge,
75
responsibilities –with the desired goal being the criterion of a number of distinct classes
or grades of jobs. Once the classifications are established, they are ranked in an overall
order of importance according to the criteria chosen, and each job is placed in its
appropriate classification. This later action is generally done by comparing each
position’s job description against the classification description and benchmarked jobs.
The classification method shares most of the disadvantages of the ranking approach,
plus the difficulty of writing classification descriptions, judging which jobs go where,
and dealing with jobs that appear to fall into more than one classification.
c. Factor comparison method: - Raters need not keep the entire job in mind as they
evaluate; instead, they make decisions on separate aspects, or factors, of the job. A basic
underlying assumption is that there are five universal job factors: (1) Mental
Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities, and (5)
Working Conditions. The committee first rank each of the selected benchmark jobs on
the relative degree of difficulty for each of the five factors. Then, the committee
allocates the total pay rates for each job to each factor based on the importance of the
respective factor to the job. A job comparison scale, reflecting rankings and money
allocations, is developed next. The raters compare each job, factor by factor, with those
appearing on the job comparison scale. Then, they place the jobs on the chart in an
appropriate position.
d. Point method: - Raters assign numerical values to specific job components, and the
sum of these values provides a quantitative assessment of a job’s relative worth. The
point method requires selection of job factors according to the nature of the specific
group of jobs being evaluated. After determining the group of jobs to be studied,
analysts conduct job analysis and write job descriptions. Next, the analysts select and
define the factors to be used in measuring job value and which become the standards
used for the evaluation of jobs.
Education, experience, job knowledge, mental effort, physical effort, responsibility,
and working conditions are examples of factors typically used. The committee
establishes factor weights according to their relative importance in the jobs being
evaluated, and then determines the total number of points to be used in the plan. A
distribution of the point values to job factor degrees is made, with the next step being
the preparation of a job evaluation manual.
Hay guide chart-profile method: A highly refined version of the point method that
uses the factors of know-how, problem solving, accountability, and, where appropriate,
working conditions.
BENEFITS
A. Total Compensation:- Total compensation constitutes of two types of the rewards
which are direct rewards and indirect rewards. Direct rewards include the salaries,
wages, commission, bonuses and gain sharing all of these rewards are directly paid to
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employees in monetary or financial terms, second type of the rewards are benefits
provided by organization. Benefits are not direct payments in financial terms.
B. Employee Benefits: - Benefits are all financial rewards that generally are not paid
directly to an employee. Benefits absorb social costs for health care and retirement and
can influence employee decisions about employers.
I. Benefits (Indirect Financial Compensation): -Most organizations recognize that

they have a responsibility to provide their employees with insurance and other programs
for their health, safety, security, and general welfare. These benefits include all
financial rewards that generally are not paid directly to the employee.
II. Mandated Benefits (Legally Required): - Although most employee benefits are
provided at the employer’s discretion, others are required by law. Legally required
benefits include Social Security, unemployment compensation, and workers’
compensation.
a) Social Security: -It is a system of retirement benefits that provides benefits like
disability insurance, survivor’s benefits, and, most recently, Medicare.
b) Unemployment Compensation: -An individual laid off by an organization

covered by the Social Security Act may receive unemployment compensation for
up to 26 weeks. Although the federal government provides certain guidelines,
unemployment compensation programs are administered by the states, and the
benefits vary state by state.
c) Workers’ Compensation: -Workers’ compensation benefits provide a degree of

financial protection for employees who incur expenses resulting from job-related
accidents or illnesses.
d) Family And Medical Leave Act Of 1993 (FMLA): -The Family and Medical
Leave Act applies to private employers with 50 or more employees and to all
governmental employers regardless of the number of employees. The act provides for
up to 12 workweeks of unpaid leave per year for absences due to the employee’s own
serious health condition or the need to care for a newborn or newly adopted child or a
seriously ill child, parent, or spouse.
III. Discretionary Benefits (Voluntary)

Organizations voluntarily provide numerous benefits. These benefits may be classified
as (1) payment for time not worked, (2) health and security benefits, (3) employee
services, and (4) premium pay. Generally speaking, such benefits are not legally
required.
a) Payment For Time Not Worked—In providing payment for time not worked,
employer recognize that employees need time away from the job for many purposes,
such as paid vacations, payment for holidays not worked, paid sick leave, jury duty,
national guard or other military reserve duty, voting time, and bereavement time.
Some payments are provided for time off taken during work hours, such as rest
periods, coffee breaks, lunch periods, cleanup time, and travel time.
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• Paid Vacations: Payment for time not worked serves important compensation goals.
Paid vacations provide workers with an opportunity to rest, become rejuvenated, and
hopefully, become more productive.
• Sick Leave: Each year many firms allocate, to each employee, a certain number of
days of sick leave, which they can use when ill.
b) Health Benefits—Health benefits are often included as part of an employee’s

indirect financial compensation. Specific areas include health, dental, and vision
care.
• Health care: Benefits for health care represent the most expensive and fastest-
growing cost in the area of indirect financial compensation. Many factors have
combined to create this situation: an aging population, a growing demand for medical
care, increasingly expensive medical technology, a lack of price controls, and
inefficient administrative processes. In addition to self-insurance and traditional
commercial insurers, employers may utilize one of several options. Health maintenance
organizations (HMOs) are one option in which all services are covered for a fixed fee;
however, employers control which doctors and health facilities may be used. Point-of-
service (POS) permits a member to select a provider within the network, or, for a lower
level of benefits, go outside the network. Preferred provider organizations (PPOs) are
a more flexible managed care system. Although incentives are provided to members to
use services within such a system, out-of-network providers may be utilized at greater
cost. Exclusive provider organizations (EPO) offer a smaller PPO provider network and
usually provide little, if any, benefits when an out-of-network provider is used.
• Capitation: Typically, the reimbursement method used by primary care physicians is

an approach to health care where providers negotiate a rate for health care for a covered
life over a period of time. It presumes that doctors have an incentive to keep patients
healthy and to avoid costly procedures when they are paid per patient rather than per
service.
• Defined: Contribution health care system: Companies give each employee a set
amount of money annually with which to purchase health care coverage.
• Utilization Review: A process that scrutinizes medical diagnoses, hospitalization,

surgery, and other medical treatment and care prescribed by doctors.
• The Health Insurance Portability and Accountability Act of 1996: Provides new
protections for approximately 25 million Americans who move from one job to another,
who are self-employed, or who have preexisting medical conditions.
• Dental and Vision Care: Relative newcomers to the list of potential health benefits.
Both types of plans are typically paid for entirely by the employers.
c) Security Benefits—Security benefits include retirement plans, disability insurance,

life insurance, and supplemental unemployment benefits.
• Retirement Plans: Private retirement plans provide income for employees who retire
after reaching a certain age or having served the firm for a specific period of time. In
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a defined benefit plan, the employer agrees to provide a specific level of retirement
income that is either a fixed dollar amount or a percentage of earnings. A defined
contribution plan is a retirement plan that requires specific contributions by an
employer to a retirement or savings fund established for the employee. A 401(k) plan is
a defined contribution plan in which employees may defer income up to a maximum
amount allowed. An employee stock ownership plan (ESOP) is a defined contribution
plan in which a firm makes a tax-deductible contribution of stock shares or cash to a
trust.
• Disability Protection: Workers’ compensation protects employees from job-related

accidents and illnesses. Some firms, however, provide additional protection that is more
comprehensive.
• Supplemental Unemployment Benefits (SUB): Supplemental unemployment

benefits are designed to provide additional income for employees receiving
unemployment benefits.
• Life Insurance: Group life insurance is a benefit commonly provided to protect the
employee’s family in the event of his or her death. Although the cost of group life
insurance is relatively low, some plans call for the employee to pay part of the premium.
d) Employee Services—Organizations offer a variety of benefits that can be termed
employee services. These benefits encompass a number of areas including
relocation benefits, child care, educational assistance, food services/ subsidized
cafeterias, and financial services.
• Relocation Benefits: Include shipment of household goods and temporary living

expenses, covering all or a portion of the real estate costs associated with buying a new
home and selling the previously occupied home.
• Child Care: Another benefit offered by some firms is subsidized child care. Here,
the firm may provide an on-site child care center, support an off-site center, or subsidize
the costs of child care.
• Educational Assistance: According to a recent benefits survey, 81 percent

have educational benefits that reimburse employees for college tuition and books.
• Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized
lunches feel that they get a high payback in terms of employee relations.
• Financial Services: One financial benefit that is growing in popularity permits

employees to purchase different types of insurance policies through payroll deduction.
• Unique Benefits: A tight labor market gives birth to creativity in providing benefits.
e) Premium Pay—Compensation paid to employees for working long periods of time

or working under dangerous or undesirable conditions.
• Hazard pay: Additional pay provided to employees who work under extremely
dangerous conditions.
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• Shift differentials: Paid to employees for the inconvenience of working undesirable
hours.
f) Benefits for Part-Time Employees— Recent studies indicate that employers are
offering this group more benefits than ever. Growth in the number of part-timers is due
to the aging of the workforce and also to an increased desire by more employees to
balance their lives between work and home.
IV. Other Benefit-Related Legislation
a) Employee Retirement Income Security Act Of 1974 (ERISA)—The Employee

Retirement Income Security Act of 1974 (ERISA) was passed to strengthen existing
and future retirement programs. Mismanagement of retirement funds was the
primary factor in the need for this legislation.
b) Older Workers Benefit Protection Act (OWBPA)—The Older Workers Benefit

Protection Act (OWBPA) is a 1990 amendment to the ADEA and extends its coverage
to all employee benefits. The act has an equal benefit or equal cost principle.
V. Communicating Information about the Benefits Package

Employee benefits can help a firm recruit and retain a quality workforce. Management
depends on an upward flow of information from employees in order to know when
benefit changes are needed, and, because employee awareness of benefits is often
severely limited, the program information must be communicated downward.
VI. Incentive Compensation

Compensation programs that relate pay to productivity.
a) Individual Incentive Plans—A specific form of performance-based pay is an

individual incentive plan called piecework. In such a plan, employees are paid for
each unit produced.
b) Team-Based Compensation Plans—Team performance consists of individual

efforts. Therefore, individual employees should be recognized and rewarded for
their contributions. However, if the team is to function effectively, a reward based
on the overall team performance should be provided as well.
c) Companywide Plans—Companywide plans offer a feasible alternative to the

incentive plans previously discussed. They may be based on the organization’s
productivity, cost savings, or profitability.
• Profit Sharing: A compensation plan that results in the distribution of a

predetermined percentage of the firm’s profits to employees. There are several
variations, but the three basic forms are current, deferred, and combination. Current
plans provide payment to employees in cash or stock as soon as profits have been
determined. Deferred plans involve placing company contributions in an irrevocable
trust to be credited to the account of individual employees. The funds are normally
invested in securities and become available to the employee (or his/her survivors) at
retirement, termination, or death. Combination plans permit employees to receive
payment of part of their share of profits on a current basis, whereas payment of part of
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their share is deferred. Profit sharing tends to tie employees to the economic success of
the firm.
• Employee Stock Option Plan (ESOP): A defined contribution plan in which a firm
contributes stock shares to a trust.
• Gain Sharing: Plans that are designed to bind employees to the firm’s performance
by providing an incentive payment based on improved company performance. The first
gain sharing plan was developed by Joseph Scanlon during the Great Depression, and
it continues to be a successful approach to group incentive, especially in smaller firms.
• Scanlon Plan: Provides a financial reward to employees for savings in labor costs
that result from their suggestions.
Vii. Non-financial Compensation

Compensation departments in organizations do not normally deal with non-financial
factors. However, non-financial compensation can be a very powerful factor in the
compensation equation.
Viii. The job

Some jobs can be so exciting that the incumbent can hardly wait to get to work each
day.
IX. The Job as a Total Compensation Factor

The job itself is a central issue in many theories of motivation, and it is also a vital
component of a total compensation program.
a) Skill Variety—The extent to which work requires a number of different activities

for successful completion.
b) Task Identity—The extent to which the job includes an identifiable unit of work
that is carried out from start to finish.
c) Task Significance—The impact that the job has on other people.
d) Autonomy—The extents of individual freedom and discretion employees have in

performing their jobs.
e) Feedback—The amount of information employees receive about how well they

have performed the job.
f) Cyber-work—A possibility of a never-ending workday created through the use of

technology.
X. The Job Environment as a Total Compensation Factor

Employees can draw satisfaction from their work through several non-financial factors.
a) Sound Policies—Human resource policies and practices reflecting management’s

concern for its employees can serve as positive rewards.
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b) Competent Employees—Successful organizations emphasize continuous
development and assure that competent managers and non-managers are employed.
c) Congenial Coworkers—Although the American culture has historically embraced

individualism, most people possess, in varying degrees, a desire to be accepted by
their work group.
d) Appropriate Status Symbols—Organizational rewards that take many forms such

as office size and location, desk size and quality, private secretaries, floor covering,
and title.
e) Working Conditions—The definition of working conditions has been broadened

considerably during the past decade.
XI. Workplace Flexibility

Flexible work arrangements do more than just assist new mothers’ return to full-time
work. They comprise an aspect of non-financial compensation that allows many
families to manage a stressful work/home juggling act.
a) Flextime—The practice of permitting employees to choose, with certain limitations,

their own working hours.
b) Compressed Workweek—Any arrangement of work hours that permits employees

to fulfill their work obligation in fewer days than the typical five-day workweek.
c) Job Sharing—An approach to work that is attractive to people who want to work
fewer than 40 hours per week.
d) Flexible Compensation (Cafeteria Compensation)—Plans that permit employees

to choose from among many alternatives in deciding how their financial compensation
will be allocated.
e) Telecommuting—Telecommuting is a work arrangement whereby employees are

able to remain at home, or otherwise away from the office, and perform their work over
telephone lines tied to a computer.
f) Part-Time Work—Use of part-time workers on a regular basis has begun to gain

momentum in the United States. This approach adds many highly qualified individuals
to the labor market by permitting both employment and family needs to be addressed.
g) Modified Retirement—An option that permits older employees to work fewer than
regular hours for a certain period of time proceeding retirement. This option allows an
employee to avoid an abrupt change in lifestyle and more gracefully move into
retirement.
XII. Other Compensation Issues

Several issues that relate to compensation deserve mention. These issues include
comparable worth, pay secrecy, and pay compression.
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a) Severance Pay—Although some firms are trimming the amount of severance pay
offered, typically, one to two weeks of severance pay is given for every year of service,
up to some predetermined maximum. Severance pay is generally shaped according to
the organizational level of the employee.
b) Comparable Worth—Requires the value for dissimilar jobs, such as company

nurse and welder, to be compared under some form of job evaluation and pay rates for
both jobs to be assigned according to their evaluated worth.
c) Pay Secrecy—Organizations tend to keep their pay rates secret for various reasons.
If a firm’s compensation plan is illogical, secrecy may indeed be appropriate because
only a well-designed system can stand careful scrutiny. An open system would almost
certainly require managers to explain the rationale for pay decisions to subordinates.
d) Pay Compression—Occurs when workers perceive that the pay differential between
their pay and that of employees in jobs above or below them is too small.
FACTORS INFLUENCING COMPENSATION

 Labor market: Demand and supply of labour influence wage and salary fixation. A
low wage may be fixed when the supply of labour exceeds the demand. A higher wage
will have to be paid when the demand exceed supply.
 Bargaining power: Wage rate also depend to a large extent on relative bargaining
power of the trade union or workers and employers. The wage will determine at the
higher level in comparison to other units.
 Cost of living: Progressive employers do not leave the wage to be determined by the
blind forces of demand and supply. Cost of living varies under inflationary and
deflationary pressures, where employers do not show enough awareness, labour unions.
 Condition product market: The wage level will influence by the degree of
competitions prevailing in the market for the product of the industry. If it is perfect
competitive market the wage level may be at par with the value. If it is imperfect
competitive market the wage level may not reach the value.
 Comparative wages: Wages paid by other firm in the same market for similar work
also influence the wage level. Wage rate must also be consistent with the wage paid by
other firm in the same industry. The comparative wages will increase the job
satisfaction among the workers.
 Ability to pay: Wage rate are influenced the ability of industry or firm to pay its
workers. Those firms which are earning huge profit may naturally afford much better
wage rate and more facilities to the workers in comparison.
 Productivity of labour: Productivity is concerned to be main basis of wage

determination. In firms, productivity of labour is high, higher wages are paid as
compared to other jobs which do not require the same degree of skill, responsibility or
risk.
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 Job requirement: A worker is compensated according to the job requirements. If a job
requires higher skill, greater responsibility and risk, the worker placed on that job will
naturally get higher wages in comparison to other jobs.
 Government policy: Since the bargaining power of the workers is not enough to ensure
fair wage in all industries, so government has to interfere in regulating wage rate to
guarantee minimum wage rate in order to cover the essentials of a decent living.
 Goodwill of the company: A few employers want to establish themselves as good

employers in the society and fix higher wages for their workers. It attracts qualified
employers.
WAGES AND SALARY

Meaning of wages:
A wage is the remuneration period, for the services of labor in production, periodically
to an employee/worker. Wages” usually refer to the hourly rate paid to such groups as
production and maintenance employee (“blue collar workers”).
Definitions:
According to Yoder and Henema, “Wages are the compensation of wage earners, the
numerous employees who use the tools and equipment’s for their employers to produce
goods and services that are sold by their employees”.
According to P.M. Stochank, “wage is the labor’s remuneration which creates the
utility”.
According to Benham, “Wages means the amount Paid to the labor for his services to
the employer”.
Meaning of salary: Salary is defined as a fixed compensation for services paid on a
regular basis, generally on a weekly, monthly, or annual basis. The term salary is
defined as the remuneration paid to the clerical and managerial personnel employed on
monthly/annual basis. In other words, it is the compensation paid to the indirect labor
in the form of cash.
According to Tapomoy Deb, “Salary is the monetary compensation paid by an

employer to his clerical and managerial employees for their work, expertise, skills and
contributions in attaining the goals and objectives of the organization”.
According to Random House Dictionary, “Salary is defined as fixed compensation

periodically paid to a person for regular work or services, especially work other than
that of a manual, mechanical or menial kind”.
NATURE OF WAGES AND SALARY
Nature of Wages are as follows:
1) It is Remuneration: Wages are capable of being expressed in terms of money.
2) Expressed in terms of Money: Wages are capable of being expressed in terms of

money.
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3) Basis: They are based on a time, task, piece or commission basis whatever fixed or
ascertained, or by other methods of calculating the wage.
4) Payable by an Employer: They are payable by an employer to an employee under

a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered.
5) Important component of labor costs: Wages are most important component of

labor costs, which also include non-wage costs such as employer’s social
contributions and taxes.
6) Important variable: Wages represent an important variable taken into account by

employers, their attempt to improve their competitive position in national and
international markets.
7) Fair and Remuneration: It include the fair and reasonable value, as may be
determined by the secretary of labor, of board, lodging or other facilities customarily
furnished by the employer to the employee.
SIGNIFICANCE OF WAGES AND SALARY
Wages and salaries are the important because of the following reasons:
1. Acts as Motivator: It acts as a motivator for the employee to perform his work in
a better way.
2. Helps in Employee Retention: It helps in retaining the present employees.
3. Provides satisfaction: It helps to satisfy workers to reduce the incidence of

quitting, grievances and friction.
4. Used to Attract Labor: Wages can be used to attract labor and is used frequently
in conditions of scare supply to draw labor to hazardous or unattractive jobs, or
where working conditions are poor.
5. Helps in collecting Information: Wages within labor cost helps in collecting

information on the different components of labor costs while identifying how far
they influence employers’ decision with regard to employment, investment, and
capital re-locations.
INCENTIVES
Incentives or payment by results are monetary benefits paid to workmen in recognition
of their outstanding performance. They are defined as “variables rewards granted
according to variations in the achievement of specific results”. Unlike wages and
salaries which are relatively fixed, incentives generally vary from individual, and from
period to period for the same individual.
DEFINITION OF INCENTIVES:
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According to Burrack and smith, “an incentive scheme is a plan or programmer to
motivate individual for good performance. An incentive is most frequently built on
monetary rewards, but may also include a variety of non monetary rewards or prizes.
CHARACTERSTICS OF INCENTIVES:
The characteristics of Incentive plan includes:
➢ An incentive plan may consist of both monetary and non monetary elements.
➢ Essentials are timing, accuracy and frequency of incentives.
➢ The incentive plan requires that should be properly communicated to the workers to
encourage individual performance, provide feedback and encourage redirection.
➢ Minimum wages are guaranteed to all workers.
ADVANDAGES OF INCENTIVE PAYMENTS:

Main advantages of incentive payments are as follows:
❖ MOTIVATION TO WORKERS: The primary advantage of incentives is the

inducement and motivation of workers for efficiency and greater output.
❖ INCREASE IN PRODUCTIVITY: There will be reduction in the total as well as unit

cost of production, through incentives; productivity would increase resulting in greater
number of units produced for given inputs. This would bring down the total and unit
cost of production.
❖ ATTRACTIVE PROPOSITION FOR MANAGEMENT: A part from the benefits

cited above, incentive packages are a very attractive proposition for management
because they do not affect employer’s contribution to the provident fund and other
employee retirement benefits.
❖ INCREASE IN EARNINGS OF EMPLOYEES: Earnings of employees would be

enhanced due to incentives. There are instances earnings exceed two or three time the
time-rated wages or salaries. Increased earnings would enable the employees to
improve their standard of living.
❖ OTHER ADVANTAGES: The other advantages of incentive payments are reduced

supervision, better utilization of equipment, reduced scrap, reduced lost time, reduced
absenteeism and turnover, and increased output.
MERIT PAY OR PERFORMANCE RELATED PAY

Performance-related pay, commonly known as PRP offers individual rewards in the
form of an increase in basic pay and/or cash bonuses, which are linked to an assessment
of their performance. Performance related pay is introduced because it appears to be an
effective motivator and conveys a clear message that high levels of performance are
expected and will be rewarded. Since the pay related to performance, a higher performer
should get more than the lower performer. Performance related pay is a method of
remuneration that links pay progression to an assessment of individual performance,
usually measured against pre-agreed objectives.
Advantages of PRP:
• It motivates the employees, gives them the right message, and ensures that rewards
are given to the real performers.
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• The achievements of the employees are recognized by the tangible means, i.e.,
rewards.
• Provides managers with the authority and accountability to reward individual
performance.
• Encourages managers and employees alike to participate in setting specific
measurable and relevant performance objectives.
• Aligns well with other Human Resource strategies.
Disadvantages of PRP:
There are several problems with performance related pay:
• Motivation cannot be guaranteed: The motivation cannot be guaranteed and
moreover, the performance assessment is on a rating scale and appraisal may be
unfairly subjective or inconsistent. Teamwork is not appreciated when individual
performance is rewarded.
• Dependency on performance management: Performance related pay may come in
the form of faster pay rise than performance making it cost-ineffective. The entire
process is dependent on performance management and thus may have its own
deficiencies. The performance should be measured against agreed targets and standards.
• Proper training is required: Proper training should also be imparted to managers so
that they may be able to make a fair and impartial assessment of employee performance.
The system is dependent on the availability of funds, profitability is the main criterion
for implementing this method of employee compensation.
• Disputes about Performance Measurement: There may be disputes about how
performance is measured and whether an employee has done enough to be rewarded. It
may encourage unhealthy rivalry between managers.
GAIN SHARING
Meaning:
Gainsharing matches an improvement (gain) in company performs to some distribution
(sharing) of the benefits with the employees. Usually, gain sharing is applied to a group
or all employees, rather than an individual.
Features of Gainsharing
Features of each gainsharing plan include:
Strategic Objectives: Most successful gainsharing programs utilize clearly
communicated objectives. Common objectives include: improving safety, reducing
operating cost, enhancing productivity and quality.
Employee involvement: involving employees should be an important consideration in

gainsharing plans. The Scanlon and Rucker plans utilize a multitier employee-
involvement program that consists of a suggestion system and one or more committees
to identify and solve operational problems.
Employees covered by Gainsharing Plans: There is a wide variability in the

employee groups covered by gainsharing plans. Some organizations have established
plans that cover all employees, while other plans have focused on production and
indirect labour. One of the most difficult decision to make is designating which
employee groups should be included in gainsharing.
Types of Gain Sharing Plans
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Types of Gainsharing plans are
Scanlon Plan: The most famous production sharing plan is that known as Scanlon
plan. The Scanlon plan provides a financial reward to employees for saving in labor
costs that result from their suggestion. Employee-management committees evaluate this
suggestion.
Scanlon plans are not only financial incentive systems, but also systems for
participative management.
The four basic principles emphasized are the following:

1. Identity: To focus on employee involvement, the firm’s mission or purpose must
be clearly articulated.
2. Competence: The Plan requires the highest standards of work behavior and a
continual commitment to excellence.
3. Participation: The plan provides a mechanism for using the ideas of
knowledgeable employees and translating these into productivity improvements.
4. Equity: It is achieved when three primary stakeholders – employees, customers,
and investors, share financially in the productivity increase resulting from the
program.
Advantage: It is easy to implement and maintain.
Disadvantage: Costs of other inputs like material, capital, etc., are ignored in bonus
calculation.
Rucker Plan: The Share-of-Production plan (SOP) or Rucker Plan, normally covers
just production workers but may be expanded to cover all employees. As with the
Scanlon plan, committees are formed to elicit and evaluate employee suggestions. The
Rucker plan, however, uses a far less elaborate participatory structure.
The financial incentive of the Rucker plan is based on the historical relationships
between the total earnings of hourly employees and the production value that
employees create.
Improshare: This technique is derived from consultative style of management. Here

employees do not have scope for participation or involvement, but managers in the
process of improving production and efficiency consult them. Employees are offered
bonus compensation if that organization making profit.
Helps companies achieve sustained Measures are narrower than
improvement in key performance organization-wide profit and therefore
measures gains may be paid even though profits
Rewards only performance may be down.
improvement Requires a participative management
Payouts are self-funded from savings style
generated by the plan Requires that management openly
Aligns employees to organization goals shares information related to
Fosters a culture of continuous performance measures
improvement
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Enhances employee focus and Employees may question or challenge
awareness management decisions that may
Increases the feeling of ownership and adversely impact a gain.
accountability Increases the level of organizational
Enhances the level of involvement, stress since everyone has more of a
teamwork and cooperation financial stake in the organization's
Supports other performance success
improvement efforts and helps promote Applies best to and a work environment
positive change that requires teamwork and
Promotes morale, pride, and more collaboration rather that individual
positive attitudes toward the entrepreneurship
organization Paid on the basis of group performance
rather than individual merit
PROFIT SHARING
Definition
“Profit sharing is an arrangement entered into by which the employee receives a
share, fixed in advance, of profit”
--- H.R. Stager
Nature and features of profit sharing
1. Such payment does not constitute a part of the total cost of company have been
calculated
2. Such payment is a reward of collective effort and efficiency and therefore, such shares
is given to all categories of employee.
3. The profits of the company are shared between employer and employees on the basis
of a predetermined agreement between two parties.
4. It is normally an annual feature.
5. The allocation of the share of such profit is generally on the basis of salary or salary
cum service basis.
6. Such payment is made to workers only when profit exceeds a certain amount.
ADVANTAGES OF PROFIT SHARING

STABILIZATION OF LABOR FORCE
Most of profit sharing schemes are applicable only to those workers who have stayed
and worked in the concern for a certain period. Besides, a worker who leaved the
concern during the course of the year loses his share of profit for the year. Thus, with
the scheme of profit sharing in operation, there is a positive incentive to the workers
to stick to their jobs.
REALIZATION OF SOCIAL JUSTICE

Profit sharing achieves some measure of social justice by relating workers, earning to
the financial position of the company and by affording them the place of equal
partners in an industrial enterprise. therefore it is a step between these two sections of
the society.
IMPROVED INDUSTRIAL RELATIONS

Profit sharing offers a solution to the problems of industrial unrest and strike. If profit
sharing is introduced the antagonism between the labor and capitalist classes will be
replaced by community of interest s. both workers and employees will then co-operate
for the maximization of profits .
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INCREASED EARNINGS FOR WORKERS
Profit sharing is also beneficial in its effects because it means additional earnings for
the workers. In this manner, it contributes towards the material welfare of workers
and will ensure greater economic security for the workers.
DISADVANTAGES OF PROFIT SHARING

Where the profits are not sufficiently large, the incentive may be absent and the
scheme is likely to fail.
This system has a tendency to break the solidarity of trade unions, as the worker
engaged in profit sharing groups beings to look upon his own group as unit to be
reckoned with and disregards his union. Unless the management is sufficiently
efficient, the fruits of the workers efforts towards larger profits may be destroyed
through managerial inefficiency and unless an arrangement is made for the calculation
of the profits at short intervals, the incentive elements gets diluted.
The Difference Between Gain sharing & Profit Sharing

Many people who confuse Profit Sharing and Gain sharing view them as being one
in the same. Employees have an opportunity to earn a bonus under both approaches,
but that is where the similarity ends. There are always exceptions, but the following
provides a general outline of the major differences.
Gain sharing Profit Sharing
Purpose To drive performance of an To share the financial success
organization by promoting of the total organization and
awareness, alignment, teamwork, encourage employee identity
communication and involvement. with company success.
Application The plan commonly applies to a The plan typically applies
single facility, site, or stand- organization-wide; companies
alone organization. with multiple sites typically
measure organization-wide
profitability rather than the
performance of a single site.
Measuremen Payout is based on operational Payout is based on a broad
t measures (productivity, quality, financial measure of the
spending, service), measures that organization’s profitability.
improve the “line of site” in
terms of what employees do and
how they are compensated.
Funding Gains and resulting payouts are Payouts are funded through
self-funded based on savings company profits.
generated by improved
performance.
Payment Payouts are made only when Payouts are typically made
Target performance has improved over a when there are profits;
historical standard or target. performance doesn’t necessary
have to show an improvement.
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Employee Typically all employees at a site Some employee groups may
Eligibility are eligible for plan payments. be excluded, such as hourly or
union employees.
Payout Payout is often monthly or Payout is typically annual.
Frequency quarterly. Many plans have a
year-end reserve fund to account
for deficit periods.
Form of Payment is cash rather than Historically profit plans were
Payment deferred compensation. Many primarily deferred
organizations pay via separate compensation plans;
check to increase visibility. organization used profit
sharing as a pension plan.
Today we see many more cash
plans.
Method of Typically employees receive the The bonus may be a larger %
Distribution same % payout or cents per hour of compensation for higher-
bonus. level employees. The % bonus
may be less for lower level
employees.
Plan Design Employees often are involved There is no employee
& with the design and involvement in the design
Development implementation process. process.
Communicati A supporting employee Since there is little linkage
on involvement and communication between “what employees do”
system is an integral element of and the “bonus,” there is an
Gain sharing and helps drive absence of accompanying
improvement initiatives. employee involvement
initiatives.
Pay for Gains are generated only by Profit sharing often is viewed
Performance improved performance over a as a entitlement or employee
Plan versus predetermined base level of benefit.
Entitlement performance. Therefore, Gain
sharing is viewed as a pay-for-
performance initiative.
Impact on Gain sharing reinforces Little impact on behaviors
Behaviors behaviors that promote improved since employees have
performance. Used as a tool to difficulty linking “what they
drive cultural and organization do” and their “bonus.” Many
change. variables outside of the typical
employee’s control determine
profitability and the bonus
amount.
Impact on Heightens the level of employee Influences the sense of
Attitudes awareness, helps develop the employee identity to the
feeling of self worth, builds a organization, particularly for
senses of ownership and identity smaller organizations.
to the organization.
Employee Stock Ownership Plan (ESOP)
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Meaning of ESOP:
ESOP is defined as contribution employee benefit plan that allows employee to become
owners of stock in the company. It is equity based compensation plan. Selling the
company to outside investors or to another company.
Advantage of ESOP:
• Capital Appreciation: Converts corporate & personal tax-free capital appreciation.
Alloys the owner to sell 100% of his or her company.
• Incentive-based Retirement: Provides a cost-effective plan to motivate employees.
• Tax advantage: Enables tax advantaged purchasing of stock of a retiring company
owner. Purpose a company owner may sell their shares to the ESOP & incur to taxable
gain on the sale.
• Company reduces its tax liability: A Company can reduce its corporate income taxes
and increase its cash flow and net worth.
Disadvantage of ESOP:
• Dilution: ESOP is used to finance the cash flow benefit must be weighed against the
rate of dilution.
• Fiduciary Liability: The committee members who administer the plan are deemed to
be fiduciaries can be held liable if they are improper transaction.
• Liquidity: The ESOP or the company may not have sufficient funds to re-purchase
stock.
• Stock performance: The value of the company does not increase; the employees may
feel that the ESOP is less attractive than a profit sharing plan.
FRINGE BENEFITS
Meaning:
Fringe benefits include such benefits which are provided to the employees either having
long-term impact like provident fund, gratuity, pension; or occurrence of certain events
like medical benefits, accident relief, health and life insurance; or facilitation in
performance of job like uniforms, canteens, recreation, etc.
Definition:
According to Balcher, “ Fringe benefits are any wage cost not directly connected with
the employees’ productive effort, performance, service or sacrifice.”
Objectives of Fringe Benefit:

1. To Supplement Direct Remuneration: Fringe benefits supplement regular pay of
employed. It raises the total earnings of an employee and provides better life and
welfare to him.
2. Employers Prefer Fringe Benefits: Employers prefer this indirect remuneration to
direct pay increase.
3. To Retain Competent Employees: Fringe benefits create satisfied labour force. In
addition, the management can attract and retain competent personnel in the
organization by offering liberal packet of fringe benefits. Hence, fringe benefits are
called golden hand-cuffs.
4. To Develop Good Corporate Image: It improves the organizational image in the
eyes of public with a view to improve its market position and bringing about product
acceptance by it.
5. To Raise Employee Morale: Liberal package of Fringe raises the morale of
employees.
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6. To Provide Protection to Employees: It is for the needs of employees and protects
them against certain hazards of life, particularly those which an individual cannot
himself provide for.
Types of Fringe Benefits
Payment for time not worked: This category includes:

i. Hours of work: Section 51 of the Factories Act, 1948 specifies that no adult worker
in a factory for more than 48 hours in any week. Section 54 of the Act restricts the
working hours to 9 in any day. In some organization, the number of working hours
is less than the legal requirements.
ii. Paid Holidays: According to the Factories Act, 1948, an adult worker shall have a
weekly paid holiday, preferably Sunday. When a worker is deprived of weekly
holidays, he is eligible for compensatory holidays of the same number in the same
month. Some organizations allow the workers to have two days as paid holidays in
a week.
iii. Shift Premium: Companies operating second and third shifts, pay a premium to
the workers who are required to work during the odd hours shift.
iv. Holiday pay: Generally organizations offer double the normal rate of the salary to
those workers, who work on paid holidays.
v. Paid Vacation: Workers in manufacturing, mining and plantations who worked

for 240 days during a calendar year are eligible for paid vacation at the rate of one
day for every 20 days worked in case of adult workers and at the rate of one day for
every 15 days worked in case of child workers.
vi. Employee Security: Physical and job security to the employee should also be
provided with a view to promoting security to the employee and his family
members. The benefits of confirmation of the employee on the job create a sense
of job security. Further a minimum and continuous wage or salary gives a sense of
security to the life. The Payment of wages Act, 1936, The Minimum Wages Act,
1948, The Payment of Bonus Act, 1965, provide income security to the employees.
vii. Retrenchment Compensation: The Industrial Disputes Act, 1947 provides for the
payment of compensation in case of lay-off and retrenchment. The non-seasonal
industrial establishments employing 50 or more workers have to give one month’s
notice or one month’s wages to all the workers who are retrenched after one year’s
continuous service. The compensation is paid at the rate of 15days wage for every
completed year of service with a maximum of 45days wage in a year. Workers are
eligible for compensation even in case of closing down of undertakings.
viii. Lay-off Compensation: In case of lay-off, employees are entitled to lay-off

compensation at the rate of 50% of the total of the basic wage and dearness
allowance for the period of their lay-off except for weekly holidays. Lay-off
compensation can normally be paid upto 45days in a year.
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ix. Safety and Health Provisions: Irrespective of legal provisions, every enlightened
management is concerned with the employees’ health and providing safety whilst
they are at work. It is really the duty of the personnel department, or the personnel
officer concerned, to ensure that provisions in this regard are properly observed.
Due compliance with such provisions are likely to promote good employee health
and safety which would result in greater employee efficiency and productivity as
well as boost the employee morale and loyalty.
In India, legislation such as the Factories Act, 1948 and the Shops and Establishment
Acts have made legal provisions with regard to employees’ safety, health, working
conditions, including matters such as sanitation, cleanliness, lighting, drinking water
and rest rooms. In the Factories Act these are detailed under the following headings:
Health provisions: The Factories Act provides that every factory must be kept clean
and free from effluvia arising from any drain, privy or other nuisance. It gives particular
mention to aspects such as cleaning the floor of every workman at least one in every
week by washing, using disinfectant, where necessary; providing for adequate
sweeping of floors, benches of workrooms, staircases and passages; and repainting and
re-varnishing of walls, partitions and ceilings. These provisions are a result of the fact
that in a large number of factories huge amounts of dust are disseminated by the
manufacturing processes and the arrangements made by them for elimination of these
are frequently defective. The Factories Act also provides for maintaining effective
arrangement for disposal of waste and effluents due to the manufacturing process
carried on in a factory.
Provision is also made for securing and maintaining in every workroom, adequate
ventilation by circulation of fresh air and a temperature which will secure to the workers
reasonable conditions of comfort and prevent injuries to health (Section 13). This
provision would not only ensure better health of the workers but would obviously
prevent early fatigue and thereby increase their productivity.
Similarly, provisions are made for prevention of dust, fume or impurity likely to be
injurious or offensive to the workers employed in a factory (Section 14). Where the
humidity of the air is artificially increased, the State Government is given the right to
prescribe standard of humidification and methods to be adopted for securing adequate
ventilation and cooling of the air in the workrooms.
Sufficient latrine and urinal accommodation must be provided in every factory. These
must be suitably enclosed separately and provided for both the male and female
workers. Such accommodation must be kept clean and in sanitary condition at all times.
Finally, the health provisions also provided for avoidance of over-crowding, which is
likely to be injurious to the health of the workers employed therein.
Safety Provisions: The Factories Act provides for fencing of machinery to generate
safety of the worker. Provision is also made for having specially trained adult male
worker wearing tight fitting clothing for an operation which involves examining any
part of machinery whilst the machinery is in motion. Women and children are
prohibited from working on moving parts (Section 22).
The English Law goes a step further and prohibits the firm working on even stationary
parts while any other pat is in motion.
No young person is allowed to work on a machine without being instructed as to the
dangers involved unless he has received sufficient training in work at the machine or is
under adequate supervision by a person possessing knowledge and experience of the
machine (Section 23). Similarly, provisions are made for casing of new machinery
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(Section 26); safeguards regarding hoists and lifts (Section 28); and other measures to
provide safety of the worker whilst on the job. Every factory must provide adequate
precautions in case of fire (Section 38). A part from these provisions, the State
Government is given the power to make rules to supplement them for providing further
devices for securing the safety of persons employed in any factory.
Welfare Provisions: The Factories Act makes it obligatory for a factory to provide
suitable washing facilities for the workers; facilities for storing and drying cloths
(Section 43); and arrangements for sitting for workers obliged to work in a standing
position, so that may take advantage of any opportunities for rest which occur in the
course of their work (Section 44). Proper first-aid appliances must be provided and
maintained so that they are readily accessible during all working hours (Section 45). In
case of factories where more than 250 workers are ordinarily employed, the State
Government is authorized to make rules requiring provision of a canteen or canteens
for the use the workers (Section 46). Where more than 150 workers are ordinarily
employed, adequate and suitable shelters or rests rooms and a suitable lunch room with
provisions for drinking water must also be provided for the use of the workers (Section
47).
For women workers, facilities are provided in case of factories where there are more
than 50 women workers ordinarily employed by requiring such factories to provide and
maintain crèches or suitable room or rooms for the use of the children under the age of
six years of such women. A part form must be maintained in a clean and sanitary
condition. The rooms are to be under charge of women trained in the care of children
and infants (Section 48). This is a great boon to women workers whose children can
be looked after whilst the women are working.
The Factories Act also provides for appointment of Welfare Officer as may be
prescribed for every factory which ordinarily employs 500 or more workers. The
duties, qualifications and conditions of service of such officers are prescribed by the
State Government.
Working Hours and Other Welfare Provisions: The question of working hours, weekly
holidays, etc., has already been discussed. In addition to that, provision is so made for
intervals for rest. In case 0f adult workers in a factory, the periods of work must be so
fixed each day that no period shall exceed 5 hours. No worker must be allowed to work
for more than 5 hours before he has had an interval for rest of at least half an hour.
Besides, the period of work for rest for an adult worker in a factory must be so arranged
that inclusive of his intervals for rest they shall not spread-over more than ten and a half
hours in any day.
Welfare and Recreational Facilities: Welfare and recreational benefits include:

➢ Canteens: perhaps no employee benefits have received as much attention in recent
years as that canteens. Some organizations have statutory obligation to provide
such facilities employing more than 250 workers. Others have provided such
facilities voluntarily. Foodstuffs are supplied at subsidized prices in these canteens.
Some companies provide lunch rooms when canteen facilities are not available.
➢ Consumer Societies: Most of the large organizations located far from the towns
and which provide housing facilities near the organization set-up the consumer store
in the employees’ colonies and supply all the necessary goods at fair prices.
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➢ Credit Societies: The objective of setting-up of these societies is to encourage thrift
and provide loan employees to form co-operative credit societies with a view to
fostering self-help rather than depending upon moneylenders, whereas some
organizations provide loans to employees directly.
Housing: Of all the requirements of the workers, decent and cheap hosing
accommodation is of great significance. The problem of housing is one of the main
causes for fatigue and worry among employees and this comes in the way of
discharging their duties effectively. Most of the organizations are located very far from
towns where housing facilities are not available. Hence, most of the organizations built
quarters nearer to factory and provided cheap and decent housing facilities to their
employees, whilst a few organizations provide and/or arrange for housing loans to
employees and encourage them to construct houses.
Legal Aid: Organizations also provide assistance or aid regarding legal matters to
employee as and when necessary through company lawyers or other lawyers.
Employee Counseling: Organizations provide counselling service to the employee

regarding their personal problems through professional counsellors. Employee
counselling reduces absenteeism, turnover, tardiness, etc.
Welfare Organizations and Welfare Officers: Some large organizations set-up welfare
organizations with a view to provide all types of welfare facilities at one centre and
appointed welfare officers to provide the welfare benefits continuously and effectively
to all employee fairly.
Holiday Homes: As a measure of staff welfare and in pursuance of government’s

policy, a few large organizations established holiday homes at a number of hill stations,
health resorts and other centres with low charges of accommodation, so as to encourage
employee use this facility for rest and recuperation in pleasant environment.
Educational Facilities: Organizations provide educational facilities not only to the

employees but also to their family members. Educational facilities include
reimbursement of fee, setting-up of schools, colleges, hostels, providing grants-in-aid
to the other schools where a considerable number of students are from the children of
employees. Further, the organizations provide reading rooms and libraries for the
benefit of employees.
Transportation: Companies provide conveyance facilities to their employees from the

place of their residence to the place of work as most of the industries are located outside
town and all employees may not get quarter facility.
Parties and Picnics: Companies provide these facilities with a view to inculcating a
sense of associations, belongingness, openness, and freedom among employees. These
activities help employees to understand others better.
Miscellaneous: Organizations provide other benefits like organizing games, sports with
awards, setting-up of clubs, community services activities, Christmas gifts, Deewali,
Pongal and pooja gifts, birthday gifts, leave travel concession and awards,
productivity/performance awards, etc.,
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Old Age and Retirement Benefits: As regards provisions for old age and retirement
benefits, it has, in a larger or smaller measure, existed in many organizations for
sometime past. Good or enlightened managements provided some forms of retirement
benefits – often in the form of a scheme of gratuity and in some cases even in the form
of pension schemes with the obvious intention of enabling the worker or employee to
pass his retired life peacefully and face the hazard of a sudden void of earning on
retirement from the company where employed. However, such schemes were more an
exception rather than a rule. Therefore, the question of providing for the future of
employees on their normal retirement or for their dependents in the event of their
premature death engaged the attention of the Central Government for a long time.
The Employees’ Provident Funds Act was passed in 1952. Initially applying to
workers/employees in six major industries whose monthly pay did not excess Rs.300,
the Act applied to employee in as many as 172 industries/classes of establishments at
the end of 1981 whose pay did not exceed rs 1,000. The Employees Provided Fund and
Miscellaneous Provisions Act, as it stands today, provides for institutions of Provided
Fund, Family Pension Fund (since 1971) and Deposit-Linked Insurance Fund (since
1976). Accordingly, three schemes have been framed under the Act, viz., EPF scheme,
Family Pension Scheme and Employees’ Deposit-Linked Insurance Schemes. All these
schemes are administered by the Central Board of Trustees consisting of nominees of
the Central and State Governments and organizations of workers and employers. The
C.P.F. Commissioner is the Chief Executive Officer of the EPF organization
functioning as Secretary to the Board. There are various regional and sub-regional
offices for administering these schemes.
An employees’ eligibility to membership of the Fund, which was previously one year’s
continuous service or 240 days of actual work in a factory or establishment, has been
reduced to half w.e.f 1st July 1974. The rate of contribution for employees as well as
employers has been 61/4 per cent of basic wages, dearness allowance (including cash
value of any food concession) and retaining allowance, if any. Employees, if they so
desire, may contribute up to 81/3 per cent of their emoluments. Since January 1, 1963,
the statutory rate of contribution has been raised to 8per cent in about 100
industries/classes of establishments. Advances from the Fund are allowed for specified
purposes such as payment towards a life insurance policy, serious prolonged illness of
member himself or a member of his family, purchase, construction or acquisition of a
house, etc. A subscriber is entitled to receive in full the employer’s contribution with
interest thereon on attaining 15 year’s membership; 85% of the employer’s contribution
where period of membership is 10 years or more; 75% where it is 5years or more; 50%
where it is 3years or more and 25% where it is less than three years.
The Employees’ Family Pension Scheme, 1971 provides for;
i) Family Pension to the family of a deceased Fund member at the rate of;
a) 12% of pay subject to a maximum of rs 150 per month to the family of a member
whose pay (on which contribution to EPF is received) is rs 800 and above;
b) 15% of pay subject to maximum of rs 96 and a minimum of 60 p.m. to the family
of the member whose pay is rs 200 p.m. and above but below rs 800; and
c) 30% of pay subject to a minimum of rs 60 p.m. to the family of member whose
pay is rs 200 p.m.
ii) Retirement Benefits in the form of a lump sum amount subject to a maximum of rs
4000 payable to member on his normal retirement subject to certain conditions;
iii) Life Insurance Benefits in the form of a lump sum amount to a subject to a maximum
of Rs. 2000 payable in the event of death of a member; and
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iv)Withdrawal Benefits in the form of a lump sum amount payable when a member
leaves services before attaining the age of normal retirement (e.g., 60 years) subject to
certain conditions.
Under The Employees’ Deposit-Linked Insurance Scheme, 1976, on the death of an
employee (while in service) who is a member of the EPF, the person entitled to receive
the P.F accumulations will be paid an additional amount, equal to the average balance
in the P.F account of the deceased during the preceding 3 years, if such average balance
was not below was not below Rs.1000 at any time during the said period. The
maximum amount of benefit payable under the scheme is Rs.10, 000.
There is a similar statutory Provident Fund Scheme along with ‘Group Insurance’ and
Pensionary benefits in addition to provident fund to workers in Assam Tea Plantations.
A special feature of this scheme is the decentralized way in which it is administered at
the garden level. A Primary Committee with two representatives of employees and
workers with the Garden Superintendent or Manager as Chairman in each tea estate is
empowered to sanction and disburse loans and advances to the members and settle their
accounts.
Of late, the demand for gratuity, as an additional benefit other than provisions such as
provident fund, pensions, etc., has been made by employees and industrial tribunals
have generally considered it favorably. Apart from such demands, enlightened
managements in many companies have arrangements for gratuity by way of agreement
with the unions or even as a result of the management introducing this benefit of its
own.
PERQUISITES
Meaning of Perquisites
Perquisites are the benefits or amenities in cash or in kind, or in money or money’s
worth and also amenities which are not convertible into money, provided by the
employer to the employee whether free of cost or at a concessional rate.
PURPOSE OF PERQUISITES
Perquisites serve two purposes:
i. These benefits recognize executives’ attained status. Membership in an exclusive
country club reinforces executives’ attained social status.
ii. Executives use perks for personal comfort or as a business tools.
ADVANTAGES OF PERQUISITES
1. Employer :
▪ Easy to establish
▪ Can be provided to select group.
▪ Can be customized to individual executive.
▪ Costs are relatively small
2. Executive :
▪ Allows executive to feel a part of a select group.
▪ Provides benefits that can be enjoyed by family members as well.
▪ Allows executive to stay focused on the job.
DISADVANTAGES OF PERQUISITES
1. Employer:
a. Once established are difficult to eliminate
b. Can create a culture of “haves and have not’s”.
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2. Executive
a. May be income imputed to value of benefit for which taxes will be due.
b. Typically not all offerings provided to all executives.
DIFFERENCE BETWEEN FRINGE BENEFITS AND PERQUISITES

FRINGE BENEFITS PERQUISITES
Expense done by employer on the Free education facility provided to
entertainment facilities of employee employee’s children came under
counts under fringe benefits perquisites
Fringe benefits are not clubbed with the The perquisites are clubbed under the
salary and the tax on the same is paid by head income from salary and tax
the employer accordingly to employee
Fringe benefits are taxed in the hands of The perquisites are in the hands of
employer employee himself.
REWARD
Meaning
Reward is something which is offered or given to the employees, in return for some
service or attainment. It not only creates opportunities for fulfillment of motivational
needs, but also enhances the intensity of motivation.
There are two types of reward, which are:
1. Monetary rewards: These are paid by any negotiable instrument – cash, cheque, money
order, and direct deposit. It can also be any item that can be readily converted to cash
such as savings bond or gift – cards/ certificates.
2. Non- monetary rewards: These can be in the form of meals, trips, plaques, trophies,
desk items, cups and mugs, personal items and clothing such as caps, shirts and
sweatshirts, and other items such as tools, electronics, radios, and sports equipment’s
OBJECTIVES OF REWARD
 To improve individual and organizational performance.
 To encourage value-added performance
 To support the management of the organization
 To achieve integration
 To support managers
 To empower individuals and teams
 To compete in the labor market
 To motivate
 To increase commitment
 To achieve fairness and equity
 To support new development
 To enhance quality
 To promote teamwork
 To encourage flexibility
MOTIVATION
A. Motivation
Motivation is the inner drive that directs a person’s behavior toward goals. Motivation
can be defined as a process which energizes, directs and sustains human behavior. In
HRM the term refers to person’s desire to do the best possible job or to exert the
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maximum effort to perform assigned tasks. An important feature of motivation is that
it is behavior directed towards goal.
DEFINITION:
According to S.P.ROBBINS,
“Motivation is the willingness to exert high levels of effort towards organizational
goals, conditioned by the effort and ability to satisfy some individual need.”
According to DALTON E. MCFARLAND,

“Motivation refers to the way in which urges, drives, desires, aspirations and strivings
or needs direct, control or explain the behavior of human beings.”
CHARACTERISTICS OF MOTIVATION:
Characteristics of motivation are given below,
▪ MOTIVATION IS A PSYCHOLOGICAL PHENOMENON

o The person’s activation depends upon the felt needs &expectations. The process of
motivation, which is mainly concerned with needs, desires, expectations, confidence
and
o Satisfaction is a psychological phenomenon. The psychology of every individual is
different from others and hence it is really different to ascertain in practice what devices
and incentives will motivate a person towards desired goals.
▪ MOTIVATION IS DYNAMIC & SITUATIONAL

o The motives, behavior & goals all are dynamic in nature. What drive a person today
may not drive him tomorrow. His needs, drives, expectation, value judgment remain
changing and hence the process of motivation is highly dynamic.
o Motivation is also situational. In a set of organizational climate, structure, physical
facilities and nature of work, one may be highly motivated, but any change in them may
have an adverse effect on his motivation.
▪ MOTIVATION IS NOT EASILY OBSERVED PHENOMENON

o We can observe the actives of a person and then we try to interpret the actions which
constitute his behavior in terms of his underlying motives and satisfaction. In this
interpretation, there can be a wide error of judgment.
▪ MOTIVATION IS A GOAL ORIENTED PROCESS

o The motives of a person drive him to achieve goal to relieve his tension. So it clears
that motivation is goal oriented process.
▪ MOTIVATION IS INFLUENCED BY SOCIAL AND CULTURAL NORMS

o Social and cultural values, customs and attributes play important role in motivation. If
society attaches, respect, recognition and acceptance to a job or organization, the
individual is motivated to that job or organization.
▪ MOTIVATION IS A CONTINUOUS PROCESS

o As we have studied in economics, human wants are unlimited. It is said that “EVEN
“god can not satisfy all human wants. With the satisfaction of one want, another want
preferably of the higher order is created .thus; new wants emerge when the present
wants are satisfied. Further, all the wants cannot be satisfied at the same time. Wants
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are to be satisfied one after another continuously. Hence, motivation is also a
continuous and an unending process
Why is motivation important?

Motivation is important in getting and retaining people. Motivation tools act as the glue
that links individuals to organizational goals, In addition, make individuals go beyond
the job and be creative.
I. The Motivation Process

In its simplest form, the motivation process begins with a need, an individual’s
perception of a deficiency. For instance, an employee might feel the need for more
challenging work, for higher pay, for time off, or for the respect and admiration of
colleagues. These needs lead to thought processes that guide an employee’s decision to
satisfy them and to follow a particular course of action. If an employee’s chosen course
of action results in the anticipated out come and reward, that person is likely to be
motivated by the prospect of a similar reward to act the same way in the future.
However, if the employee’s action does not result in the expected reward, he or she is
unlikely to repeat the behavior. Thus, the reward acts as feedback mechanism to help
the individual evaluate the consequences of the behavior when considering futures
action.
II. Core Phases of the Motivational Process:

5. Need Identification: First phase of motivation process is need identification where
the employee feels his/her some unsatisfied need. The motivation process begins
with an unsatisfied need, which creates tension and drives an individual to search
for goals that, if attained, will satisfy the need and reduce the tension.
6. Searching Ways to satisfy needs: Second phase is finding the different

alternatives that can be used to satisfy the needs, which were felt in first stage. These
needs lead to thought processes that guide an employee’s decision to satisfy them
and to follow a particular course of action.
3. Selecting Goals: Once if the need is assessed and employee is able to find out the
way to satisfy the need than next phase is selection of goals to be performed.
4. Employee Performance: These needs lead to thought processes that guide an

employee’s decision to satisfy them and to follow a particular course of action in form
of performance.
5. Consequences of performance Reward/punishments: If an employee’s chosen

course of action results in the anticipated out come and reward, that person is likely to
be motivated by the prospect of a similar reward to act the same way in the future.
However, if the employee’s action does not result in the expected reward, he or she is
unlikely to repeat the behavior
6. Reassessment of Need deficiencies: Once felt need is satisfied through certain

rewards in response to performance than employee reassesses any deficiencies and
entire process is repeated again.
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III. Motivational Theories
Motivation theories seek to explain why employees are motivated by and satisfied with
one type of work than another. It is essential that mangers have a basic understanding
of work motivation because highly motivated employees are more likely to produce a
superior quality product or service than employee who lack motivation.
a. Maslow’s Need Hierarchy

Abraham Maslow organized five major types of human needs into a hierarchy, as
shown in Figure. The need hierarchy illustrates Maslow’s conception of people
satisfying their needs in a specified order, from bottom to top.
The needs, in ascending order, are:

1. Physiological (food, water, and shelter.)
2. Safety or security (protection against threat and deprivation)
3. Social (friendship, affection, belonging, and love)
4. Ego (independence, achievement, freedom, status, recognition, and self-esteem)
5. Self-actualization (realizing one’s full potential; becoming everything one is
capable of being.)
According to Maslow, people are motivated to satisfy the lower needs before they try
to satisfy the higher need. Also, once a need is satisfied it is no longer a powerful
motivator. Maslow’s hierarchy, however, is a simplistic and not altogether accurate
theory of human motivation. For example, not everyone progresses through the five
needs in hierarchical order. But Maslow makes three important contributions. First, he
identifies important need categories, which can help managers create effective positive
rein forcers. Second, it is helpful to think of two general levels of needs, in which lower-
level needs must be satisfied before higher-level needs become important. Third,
Maslow sensitized managers to the importance of personal growth and self-
actualization.
Self-actualization is the best-known concept arising from this theory. According to
Maslow, the average person is only 10 percent self-actualized. In other words, most of
us are living our lives and working at our lives and working at our jobs with a large
untapped reservoir of potential. The implication is clear: Create a work environment
that provides training, resources, gives people a chance to use their skills and abilities
in creative ways and allows them to use their skills and abilities kin creative ways and
allows them to achieve more of their full potential.
b. Existence Relatedness Growth (ERG) Theory

Alderfer focuses on three needs: existence, relatedness, and growth. Existence needs
are similar to Maslow’s physiological needs, and to the physical components of
Maslow’s security needs. Relatedness needs are those that require interpersonal
interaction to satisfy the needs for things like prestige and esteem from others. Growth
needs are similar to Maslow’s needs for self-esteem and self-actualization.
c. McGregor’s Theory-X and Theory-Y

McGregor’s Theory-X represented the traditional management view that employees
are lazy, was uninterested in work, and needed to be prodded to perform. In contrast his
Theory Y viewed employees as creative, complex, and mature individuals interested
in meaningful work. McGregor believed that under the right circumstances, employees
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would willingly contribute their ingenuity and their talents for the benefits of the
organization. He suggested that the mangers motivate employees by giving them the
opportunity to develop their talents more fully and by giving them the freedom to
choose the methods they would use to achieve organizational goals. In McGregor’s
view the mangers role was not to manipulate employees but to align their needs with
needs of the organization so that employees would regulate their own actions and
performance. These insights lead researches to investigate the origins and processes of
motivation more closely.
d. Expectancy Theory
Expectancy theory states that a person’s motivation to exert a certain level of effort is
a function of three things: expectancy (E), instrumentality (I), and valance (V).
Motivation = E x I x V. “E” is the person’s expectancy that his or her effort will lead to
performance, “I” represents the perceived relationship between successful performance
and obtaining the reward, and “V” refers to the perceived value the person attaches to
the reward.
e. Reinforcement Theory
In 1911, psychologist Edward Thorndike formulated the law effect: Behavior that is
followed by positive consequences probably will be repeated. This powerful law of
behavior laid the foundation for country investigations into the effects of the positive
consequences, called rein forcers that motivate behavior.
Organizational behavior modification attempts to people’s actions.

Four key consequences of behavior either encourage or discourage people’s
behavior
1. Positive Reinforcement applying a valued consequence that increases the likelihood

that the person will repeat the behavior that led to it. Examples of positive rein forcers
include compliments, letters of commendation, favorable performance evaluations, and
pay raises. Equally important, jobs can be positively reinforcing. Performing well on
interesting, challenging, or enriched jobs (discussed later in this chapter) is much more
reinforcing, and therefore motivating, then performing well on jobs that are routine and
monotonous.
2. Negative Reinforcement removing or withholding an undesirable consequence. For

example, a manager takes an employee (or a school takes a student) off probation
because of improved performance. Frequent threatening memos admonished people to
achieve every one of their many performance goals.
3. Punishment administering an aversive consequence. Examples include criticizing

or shouting at an employee, assigning an unappealing task, and sending a worker home
without pay. Negative reinforcement can involve the threat of punishment, but not
delivering it when employees perform satisfactorily. Punishment is the actual delivery
of the aversive consequence.
4. Extinction withdrawing or failing or failing to provide a reinforcing consequence.

When this occurs motivation is reduced and the behavior is extinguished, or eliminated.
Examples include not giving a compliment for a job well done, forgetting to say thanks
for a favor, or setting impossible performance goals so that the person never
103
experiences success. The first two consequences, positive and negative reinforcement,
are positive for the person receiving them: The person either gains something or avoids
something negative. Therefore, the person who experiences these consequences will be
motivated to behave in the ways that led to the reinforcement. The last two
consequences, punishment and extinction, are negative outcomes for the person
receiving them: Motivation to repeat the behavior that led to the undesirable results will
be reduced.
Thus, effective managers give positive reinforcement to their high-performing people
and negative reinforcement to low performance. They also punish or extinguish poor
performance and other unwanted behavior.
f. Herzberg’s Two-Factor Approach

Herzberg Two-Factor theory divides Maslow’s Hierarchy into a lower-level and a
higher-level set of needs, and suggests that the best way to provide motivation for an
employee is to offer to satisfy the person’s higher-order needs, ego and self-
actualization. Herzberg said that lower-order needs, or hygiene factors, are different
from higher-order needs, or motivators. He maintains that adding more hygiene factors
to the job is a very bad way to motivate because lower-order needs are quickly satisfied.
g. McClelland (Needs for Affiliation, Power, and Achievement) Theory

McClelland agrees with Herzberg that higher-level needs are most important at work.
He believes the needs for affiliation, power, and achievement are most important. He
and his associates use the Thematic Apperception Test to identify a person’s needs for
achievement, power, and affiliation. People with a high need for achievement strive for
success, are highly motivated to accomplish a challenging task or goal, prefer tasks that
have a reasonable chance for success, and avoid tasks that are either too easy or too
difficult. People with a high need for power enjoy roles requiring persuasion. People
with a strong need for affiliations are highly motivated to maintain strong, warm
relationships.
h. Adam’s Equity Theory

Adams’s equity theory assumes that people have a need for fairness at work, and
therefore, value and seek it. People are motivated to maintain a balance between what
they perceive as their inputs or contributions and their rewards as compared to others.
This theory seems to work when people feel they are under paid, but inequity due to
overpayment does not seem to have the positive effects on either quantity or quality
that Adams’s equity theory would predict.
IV. Methods for Motivating Employees for Employee Satisfaction

a. Rewards: People behave in ways that they believe are in their best interest, they
constantly look for payoffs for their efforts. They expect good job performance to lead
to organizational goal attainment, which in turn leads to satisfying their individual goals
or needs. Organization, then, use rewards to motivate people.
b. Challenging Jobs: Job design refers to the number and nature of activities in a job.
The key issue is whether jobs should be more specialized or more enriched and non-
routine. Job design has been implemented in several ways. Job enlargement assigns
workers to additional same-level tasks to increase the number of tasks they have to
perform. Job rotation systematically moves workers from job to job. Job enrichment
means building motivators like opportunities for achievement into the job by making it
104
more interesting and challenging. Forming natural work groups, combining tasks,
establishing client relationships, vertically loading the job, and having open feedback
channels may implement Job enrichment.
c. Using Merit Pay: A merit raise is a salary increase, usually permanent, that is based
on the employee’s individual performance. It is a continuing increment rather than a
single payment like a bonus. Relying heavily on merit rewards can be a problem
because the reinforcement benefits of it pay is usually only determined once per year.
d. Using Spot Awards: A spot award is one given to an employee as soon as the
laudable performance is observed. These awards are consistent with principles of
motivation because they are contingent on good performance and are awarded
immediately.
e. Using Skill-Based Pay: With skill-based pay, employees are paid for the range,
depth, and types of skills and knowledge they are capable of using rather than for the
job they currently hold. Skill base pay is consistent with motivation theory because
people have a self-concept in which they seek to fulfill their potential. The system also
appeals to the employee’s sense of self-efficacy because the reward is a formal and
concrete recognition that the person can do the more challenging job well.
f. Using Recognition: Some employees highly value day-to-day recognition from their
supervisors, peers and team members because it is important for their work to be
appreciated by others. Recognition helps satisfy the need people have to achieve and
be recognized for their achievement.
g. Using Job Redesign: Job design refers to the number and nature of activities in a
job. The key issue is whether jobs should be more specialized or more enriched and
non-routine. Job design has been implemented in several ways. Job enlargement assigns
workers to additional same-level tasks to increase the number of tasks they have to
perform. Job rotation systematically moves workers from job to job. Job enrichment
means building motivators like opportunities for achievement into the job by making it
more interesting and challenging. Job enrichment may be implemented by forming
natural work groups, combining tasks, establishing client relationships, vertically
loading the job, and having open feedback channels.
h. Using Empowerment: Empowerment means giving employees the authority, tools,

and information they need to do their jobs with greater autonomy, as well as the self-
confidence to perform new jobs effectively. Empowerment boosts employees’ feelings
of self-efficacy and enables them to use their potential more fully.
i. Using Goal-Setting Methods: People are strongly motivated to achieve goals they
consciously set. Setting goals with employees can be a very effective way of motivating
them. Goals should be clear and specific, measurable and verifiable, challenging but
realistic, and set with participation.
j. Using Positive Reinforcement: Positive reinforcement programs rely on operant

conditioning principles to supply positive reinforcement and change behavior. Experts
claim it is better to focus on improving desirable behaviors rather than on decreasing
undesirable ones. There are a variety of consequences including social consequences
(e.g., peer approval or praise from the boss),intrinsic consequences (e.g., the enjoyment
105
the person gets from accomplishing challenging tasks),or tangible consequences (e.g.,
bonuses or merit raises).
k. Using Lifelong Learning: Lifelong learning can be used to deal with problems of
down sizing and employee commitment, and to counterbalance their negative effects.
It provides extensive continuing training and education, from basic remedial skills to
advanced decision-making techniques, throughout the employees’ careers, which
provide employees the opportunity to boost their self-efficacy and self-actualization.
V. Challenges of motivating employees:

Motivation is not a simple subject; no two people respond to precisely the same set of
motivators. Mangers face several pressing issues that complicate the challenges of
motivating their employees.
a. Workforce Diversity: The composition of the workforce becoming less
homogeneous. This diversity complicates the task of motivating employees because
mangers must consider so many more motivational variables
b. Organizational Restructuring: The wave of mergers and acquisitions is followed
by massive layoffs that represent another challenge. Employees who have been let go
for reason unrelated to their performance may question whether initiative and creativity
are now less important than political survival skills. Moreover, employees who have
seen colleagues’ loss their jobs may concentrate on keeping their own jobs and may
stop taking risks –risk that might lead to new products, new markets, or other advances.
c. Fewer Entry-level Employees: The labor force is growing at half the rate of the
previous decade; the number of qualified candidates for most entry-level positions is
decreasing. In such a tight labor market, mangers face new challenges in attracting;
retaining and motivating qualified entry-level employees. Managers must also
determine how to motivate under qualified candidates to upgrade their skills and
education so that they can handle the entry-level tasks.
d. An oversupply of managers: In the middle and top ranks of management, quite
different phenomenon is causing organizational headaches. The number of senior
management positions is far fewer than the number of deserving candidates, and the
trend toward flatter organizations only makes matters worse for people who want to
climb the hierarch ladder.
As managers in organizations come to grips with these increasingly urgent challenges,
they must understate the forces that derive employees' actions, how employees channel
their actions towards goals, and how high performance behavior can be sustained.
*************************
106
Elective – II
Human Resource Management
(Read the instructions mentioned below)
Assignment -I
Part - A
1. Define HRM.
2. What is HRP?
3. What is HR Policy?
4. Define HRA.
5. Write HR Audit?
6. What is selection?
7. Define Recruitment
8. Explain the term Interview
9. Difference between HRM and Personnel Management?
10. What is employee forecasting?
Part -B
11. Define socialization. Explain the Evolution of HRM?

12. Explain in detail Human Resource audit?
13. Briefly explain Human Resource Accounting?
14. Explain selection and selection process with diagram?
15. Explain interview and interview techniques
16. Explain Recruitment and recruitment techniques?
Note: Part – A each answer should be minimum 6 lines

Part – B each answer should be minimum 3 pages
Assignment I have to be submitted on or before 31-01-2023

Use A4 paper with stick file
Assignment should be written in his/her own HAND WRITING
If Assignment not submitted on the above date, the whole

Assignment has to be written 3 times
******************
107
Elective – II
Human Resource Management
Assignment - II
Part - A
1.xxxxxxxxxxxx
2.xxxxxxxxxxxxxxxxxyyyyyyy
3.yyyyyyyyyyyyyyyyy
4.yyyyyyyyyyyyyy
5.
6.
7.
8.
9.
10.
Part – B
11.xxxxxxxxxxxxxxxxx
12.yyyyyyyyyyyyyyyyyyy
13.
14.
15.
16.
Note: Part – A each answer should be minimum 6 lines

Part – B each answer should be minimum 3 pages
Assignment I have to be submitted on or before 31-01-2023

Use A4 paper with stick file
Assignment should be written in his/her own HAND WRITING
If Assignment not submitted on the above date, the whole

Assignment has to be written 3 times
******************
108
109

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ELECTIVE – II

HUMAN RESOURCE MANAGEMENT

Definition - Edwin Flippo defines HRM as “planning, organizing, directing,

Features of HRM or characteristics or nature

The Royal commission in 1931 recommended the appointment of a labour welfare

The international institute of personnel management and national institute of labour

Scope of HRM / Functions of HRM

1. Human resources planning: -

2. Job analysis design: -

3. Recruitment and selection: -

4. Orientation and induction: -

5. Training and development: -

7. Compensation planning and remuneration: -

8. Motivation, welfare, health and safety: -

Work Force Diversity

Workforce diversity is the collective mixture of employees' differences and

Workforce diversity means similarities and differences among employees in terms of

A diverse workplace is an important asset, since it acknowledges the individual

7 primary types of diversity we can see:

Assess the organization's needs and opportunities. Develop a policy related to

These are types of diversity are part of an individual's core identity.

Challenges before the HR manager/before modern personnel management

Personnel management which is know as human resource management has adapted

1. Retention of the employees: -

2. Multicultural work force: -

3. Women in the work force: -

5. Retrenchment for employees :-

6. Change in demand of government :-

7. Initiating the process of change :-

8. Employee discipline and grievance procedure:

2. Facilitates professional growth:-

3. Better relations between union and management:-

4. Helps an individual to work in a team/group:-

6. Allocating the jobs to the right person :-

7. Improves the economy :-

HUMAN RESOURCE POLICIES

Organization need to evolve HR policies as they ensure consistency and uniformity in

WHY ADOPT POLICIES?

A few specific personnel policies are:

Some of the personnel principles are:

DIFFERENCE BETWEEN PM & HRM

PM preceded HRM. HRM differs in scope and orientation – it views people as an

According to Dale Yoder, “Personnel audit is an investigate, analytical, comparative

NEED FOR HR AUDIT

Audit of human resource function

Definition of human resource planning:

Process of HRP/MP/Steps in HRP/MP

Human resource planning

Personal requirement Forecast Personal supply

Personnel (100=125) Personnel (100=75)

1. Personnel requirement forecast:-

1. Anticipating future requirement :-

2. Recruitment and selection process :-

Limitations of Human Resource Planning

2. Conservative attitude of top management :-

3. Problem of surplus staff :-

4. Time consuming activity :-

2. Technical changes in the society :-

5. Shortage of skill due to labour turnover :-

JOB ANALYSIS, JOB DESIGN, JOB EVALUATION

Define job analysis

Job description Job specification

Job title/ name of the job Qualification