Module 3: Employment Administration

(Part 2)
Human Resource Management
Course Code: XBB2002
 Module Highlights
• Discipline & Grievance Handling
• Promotion, Transfer and Demotion – Meaning and Importance
• Employee Separation-Exit Policy
• VRS
• Lifetime employment without guarantee
• Lay-off, Employee Retrenchment
 Employee Discipline Management

• Discipline is the orderly conduct by an employee in an expected manner.

• It is the force or fear of a force that deters an individual or a group from doing
things that are detrimental to the accomplishment of group objectives.
• In other words, discipline is the orderly conduct by the members of an
organization who adhere to its rules and regulations because they desire to
cooperate harmoniously in forwarding the end which the group has in view.
 Employee Discipline Management

• There are two concepts of discipline-positive concepts and negative concepts.

• Positive discipline means a sense of duty to observe the rules and
regulations. It can be achieved when management applies the principles of
positive motivation along with appropriate leadership. It is also known as
cooperative disciplines or determinative discipline.
• Negative discipline is known as punitive or corrective discipline. Under it
penalties or punishments are used to force workers to obey rules and
regulations. The objective is to ensure that employees do not violate the rules
and regulations. Negative disciplinary action involves techniques such as
fines, reprimand, demotion, layoff, transfer etc.
• Self-discipline implies that a person brings the discipline in himself with a
determination to achieve the goals that he has set for himself in life.
 Employee Discipline Management
• Progressive Discipline: The concept of progressive discipline states that penalties
must be appropriate to the violation. If inappropriate behaviour is minor in nature
and has not previously occurred, an oral warning may be sufficient. If the violation
requires a written warning, it must be done according to a procedure. After written
warnings, if the conduct of the employee is still not along desired lines, serious
punitive steps could be initiated.

• The Red Hot Stove Rule: Without the continual support of the subordinates, no
manager can get things done. But, disciplinary action against a delinquent
employee is painful and generates resentment on his part. Hence, a question arises
as to how to impose discipline without generating resentment? This is possible
through what Douglas McGregor called the “Red Hot Stove Rule”, which draws an
analogy between touching a hot stove and undergoing discipline.
 Positive Discipline

• It involves creation of an atmosphere in the organizations whereby

employees willingly can form to the established rules and regulations.
• According to Spriegel, “positive discipline does not replace reason but applies
reason to the achievement of a common objective.
• Positive discipline does not restrict the individual, but enables him to have a
greater freedom in that he enjoys a greater degree of self-expression in
striving to achieve the group objective, which he identifies as his own.”
 Negative Discipline

• Negative discipline requires regular monitoring causing wastage of valuable

time. In the negative concept of discipline, disciplinary action implies
punishment
• Also punishment causes resentment and hostility.
• Satisfactory results cannot be obtained, however if discipline is perceived only
in terms of control and punishment.
 Characteristic Features of Employee Discipline Measures

• Immediate- Just as when you touch a red hot stove, the burn is immediate, similarly the
penalty for violation should be immediate/ immediate disciplinary action must be taken
for violation of rules.
• Consistent- Just as a red hot stove burns everyone in same manner; likewise, there should
be high consistency in a sound disciplinary system.
• Impersonal- Just as a person is burned because he touches the red hot stove and not
because of any personal feelings, likewise, impersonality should be maintained by
refraining from personal or subjective feelings.
• Prior warning and notice- Just as an individual has a warning when he moves closer to the
stove that he would be burned on touching it, likewise, a sound disciplinary system should
give advance warning to the employees as to the implications of not conforming to the
standards of behaviour/code of conduct in an organization.
•
 Objectives of Discipline Management

• To obtain a willing acceptance of the rules and regulations or procedures of an

organization so that organizational goals may be attained.
• To develop among the employee a spirit of tolerance and a desire to make adjustments.
• To give direction or responsibility.
• To increase the working efficiency or morale of the employees so that their productivity is
stepped up and the cost of production brought down and the quality of production im-
proved.
• To create an atmosphere of respect for the human personality or human relations.
 Disciplinary actions
• Verbal Counseling: This is generally the first step of the disciplinary actions taken against an erring
employee. An employee might receive several verbal warnings before progressing to the next step
of the disciplinary procedure. However, for a serious problem, managers might skip this step.
Verbal warnings should always be done calmly, objectively and privately.

• Show Cause: The management may ask the employee to give a statement of the misconduct or
misbehavior through a show-cause

• Enquiry Committee Report: Many organizations depute enquiry committee to investigate the
cause of indiscipline and submit a prescriptive report

• Written Warning: This step is generally preceded by a verbal warning. The manager or supervisor
should meet with the employee and his representative (if applicable) as in a verbal counseling
session, but the employee should be given and allowed to review a formal written warning. As with
verbal counseling, a second manager can be present as a witness.
 Disciplinary actions

• Suspension: This may range from one day to two weeks or more, depending upon the
circumstances, and is almost always unpaid. In unusual circumstances, some employers
will place employees on one day of paid “decision-making” leave, as a way of encouraging
the employee to think about the future of his employment.

• Termination: Before terminating an employee, a manager should review the personnel file
and all relevant documents in order to determine if the termination is appropriate — and
defensible in a subsequent lawsuit — given the facts and circumstances. In addition, he
should also ensure that similarly situated employees have been treated similarly in the
past. Some behaviour warrants automatic dismissal.
 Grievance Handling
• Grievance handling is the management of employee dissatisfaction or
complaints (e.g. favoritism, workplace harassment, or wage cuts).
• By establishing formal grievance handling procedures, organizations provide a
safe environment for the employees to raise their concerns.
• As per opinion of Flippo, “the grievance is usually more formal in character
than a complaint. It can be valid or ridiculous, and must grow out of
something connected with company operations or policy. It must involve an
interpretation or application of the provisions of the labour contract.”
 Grievance Handling

• International Labour Organisation (ILO) defines grievances as “a complaint of

one or more workers in respect of wages, allowances, conditions of work and
interpretation of service stipulations, covering such areas as overtime, leave,
transfer, promotion, seniority, job assignment and termination of service.”
• Grievance is a feeling of an employee that an injustice has been done to him.
• The feeling may be valid and legitimate, or untrue; and may arise out of
something connected with the work or the organization.
• When employees have grievances and these are not redressed properly, these
result in frustration, discontent, and indifference to work, poor morale, and low
productivity.
• Accumulated grievances among employees may lead to turmoil in the
organization
 Nature of Grievance Management

• Grievances are symptoms of conflicts in the enterprise. So they should be handled very
promptly and efficiently.
• Coping with grievances forms an important part of any manager’s job. The manner in
which he deals with grievances determines his efficiency of dealing with subordinates.
• A manager is successful if he able to build a team of satisfied workers removing their
grievances.
• While dealing with grievances of subordinates, it is necessary to understand the nature of
grievances
• Expressed or Implied Grievance: Expressed grievances are comparatively easy to recognize
and are manifested in several ways, e.g., gossiping, jealousy, active criticism,
argumentation, increased labor turnover, carelessness in the use of tools and materials,
untidy housekeeping, poor workmanship, etc.
 Nature of Grievance Management

• Valid Legitimate and Rational or Untrue and Irrational or Completely

Ludicrous Grievance: When a grievance of an employee comes to the notice
of the management it cannot usually dismiss it as irrational or untrue.
• Such grievances also have to be attended to by the management in the same
way as rational grievances.
 Forms of Grievances: Factual, Imaginary and Disguised

• Factual: Factual grievances arise when legitimate needs of employees remain

unfulfilled, e.g., wage hike has been agreed but not implemented.
• Imaginary: When an employee’s grievance is because of wrong perception,
wrong attitude or wrong information. Though it is not the fault of
management, the responsibility for their redressal still rents with the
management.
• Disguised: An employee may have dissatisfaction for reasons that are
unknown to himself. If he or she is under pressure from family, friends,
relatives, neighbors, he or she may reach the work spot with a heavy heart.
 Causes of Grievances in industrial organizations
Grievances Resulting from Personal Maladjustment:
• (a) Over-ambition
• (b) Excessive self-esteem
• (c) Impractical attitude to life.
Grievances Arising from Management Policy:
• (a) Wage payment
• (b) Job rates
• (c) Leave and overtime
• (d) Seniority and promotion
• (e) Role ambiguity
• (f) Disciplinary action
• (g) Absence of employee development plan
• (h) Transfer.
 Causes of Grievances in industrial organizations

Grievances Resulting from Working Conditions:

• (a) Strained employer-employee relationship.
• (b) Unfavorable physical conditions such as excessive heat, low temperature,
excessive humidity etc.
• (c) Tight production standards.,
• (d) Non-availability of proper tools, machines and equipment for doing the
job.
• (e) Changes in schedules or procedures.
• (f) Mismatch between the job and the worker.
 Methods of addressing grievances

• Exit Interview: Information collected from the exiting employee on various aspects
of working conditions forcing him to quit is supposed to be more credible than
those expressed by the existing workers.
• Gripe Box System: Employees may be encouraged to drop anonymous complaints
as they may fear that their identity may invite victimization especially when they
complain against the management. This method is more appropriate when there is
lack of trust and understanding between employees and their supervisors.
• Opinion Survey: Various surveys line morale survey, attitude survey, job satisfaction
survey, grievance survey or comprehensive survey comprising all the above aspects,
reveal vital inputs about the negative aspects of functioning of the organization
 Methods of addressing grievances

• Meetings: Group meeting, periodical interviews, collective bargaining

sessions, informal get-togethers may be used to collect information about
grievances.
• Open-Door Policy: Under this policy any employee can lodge complaint or file
his grievance with the manager designated for this purpose. The very
objective of this policy is to encourage upward communication.
Approach for Grievance Handling

21
PROMOTION, TRANSFER AND DEMOTION – MEANING AND
IMPORTANCE
 Promotion

• Employee Promotion means the ascension of an employee to higher ranks. It

involves an increase in salary, position, responsibilities, status, and benefits.
• This aspect of the job drives employees the most—the ultimate reward for
dedication and loyalty towards an organization.
• Horizontal Promotion: This kind of promotion rewards an employee with a
pay increase but little to no change in responsibilities. It is also regarded as an
up-gradation of an employee. In the educational sector, an example of this is
the move from lecturer to senior lecturer.
• Vertical Promotion: This refers to an upward movement of employees with a
change in skills and experience. It brings a change in salary, responsibility,
status, benefits, etc. In the marketing industry, this can be the promotion of a
marketing supervisor to the marketing manager.
 Promotion

• Dry Promotion: A Promotion that employees aren’t particularly fond of. This
promotion refers to an increase in responsibilities and status without the
benefits. It means no increase in pay or any financial benefits for that matter.
• Open and Closed Promotion: Open Promotion is a situation wherein every
individual of an organization is eligible for the position. Closed Promotion is a
situation wherein only selected team members are eligible for a promotion.
 Importance of Promotion

• Expectation: Employee Promotion is one of the main goals of employees working hard.
Thus, it turns into their expectation. When employers don’t fulfill these expectations, they
end up losing employees.
• Reduce Attrition: Employee Promotion often includes a pay raise which acts as a huge
motivation. This, in return, further reduces attrition.
• Motivation & Productivity: As stated above, employee promotion is a big tool for career
advancement and employee retention. It is because when employees get a chance to
grow, they stick with a company. This motivation ultimately correlates to higher
productivity.
• Cost-Efficient: Internal employee promotion involves less cost than hiring new ones. This is
a fact that is shown in a study published by The Wall Street Journal. It was found that
companies pay 20% more in onboarding a new hire instead of internally promoting one.
This harms the desired cost-cutting measures of a company.
 Importance of Promotion

• Career Growth: Employee promotion facilitates the critical career path and
growth of an individual. Recent research showed that lack of career
development is one of the key reasons for attrition. Even in this day and age,
it is bound to be one of the main concerns of employees.
• Need to Manage: Employee Promotion often brings new responsibilities that
initiate a sense of management. This sense of management is a key factor in
employee satisfaction as it helps them grow. In a recent study, it was found
that 45% of millennials are keen on managing others.
• Rewards and Recognition: Employee promotion is a crucial element of an
organization’s rewards and recognition program.
 Transfer
• Employee transfer is a form of internal mobility, in which the employee is
shifted from one job to another usually at a different location, department, or
unit.
• Transfer can either be temporary or permanent depending on the decision of
the organization, and it is initiated by any of the two, i.e. employer or
employee.
• Transfer also includes promotion, demotion or even no change in the status
and responsibility.
 Reasons for Employee Transfer
• Some positions require distinctive skills, competency, and expertise from the
transferred employees.
• The transfer is also affected when there is a shortage of employees in one
department of the organization due to high demand, and there are surplus
employees in another department. So, the workers are shifted from one
department to another.
• It is also initiated when there are some clashes between the superior and
subordinate or between two workers.
• To break the monotony of the work, employees are transferred, as the employee
productivity of an employee decreases by doing the same job again and again.
• An employee may request the human resource department, to transfer him to
another location, due to health issues because the climate is not suitable for his/her
health.
 Types of Transfer
• Production Transfer‍: Production transfer is usually practiced to prevent lay-off that
is to say when there is a surplus of the workforce in the factory, excess workers are
laid off. But, if they are transferred to another factory or plant, where there is a
shortage of labor, the massive layoff can be.
• ‍Replacement Transfer‍: This form of transfer also helps in preventing lay-off of
senior employees by replacing a junior employee. The organization opts for this
transfer when there is a continuous decrease in the operations, and the
organization wants to retain an employee who has been.
• Versatility Transfer‍: To make the employees competent and versatile, these
transfers are initiated. It is also called job rotation which can be commonly seen in
banks where employees working at clerical levels has to work at different profiles.
• ‍Shift Transfer‍: In general, industrial establishments operates on rotational shifts,
and the workers usually request a transfer to the shift of their choice.
 Types of Transfer

• Remedial Transfer‍: When the initial placement of an employee is faulty, or

the worker is not comfortable with the superior or with the coworkers, or
there are some health issues, then these transfers are affected as a remedy to
the situation. As the transfer is requested by the employee himself, it is also
called s a personal transfer.
 Importance of Transfer

• Facilitate employee productivity

• Boost employee motivation & morale
• Reduce workplace monotony and boredom
• Facilitate variety and diversity in the work-teams
• Reduce conflicts, power plays and politics at workplaces
• Transfer may also be used as disciplinary measures to manage
employee behavior and attitude
 Demotion
• Employee demotion is a permanent reassignment to a lower position than
the employee previously held.
• The position will typically have less responsibility or required skill, as well as a
lower pay grade than the previous position.
• Demotions can be voluntary or involuntary, and they can occur as a result of
poor employee performance, position elimination, disciplinary actions, or
organizational restructuring.
• A demotion allows a company to keep a valuable employee by returning him
or her to his or her previous position.
 Importance of Demotion

• Application as a disciplinary or punitive measure

• Managing employee behavior and attitude towards work
• Managing employee below standard performance
 Employee Separation-Exit Policy
• Employee separation” or “separation of employment” refers to the process of
managing the end of the employment cycle.
• There are many different types of separations which include both voluntary and
involuntary.
• An employee may be separated as consequence of resignation, removal, death,
permanent incapacity, discharge or retirement.
• The employee may also be separated due to the expiration of an employment
contract or as part of downsizing of the workforce.
• Each organization must have comprehensive separation policies and procedures to
treat the departing employees equitably and ensure smooth transition for them.
Employee Separation
 Employee Exit Policy

• Employee Exit policy shows the handling of the full and final settlement
of employees when they leave the organization.
• When the employee resigns, retires, or is being terminated from work,
the necessary paperwork and formalities associated with employee exit
need to be done via a systematic process.
• An exit policy governs the activities that take place when an employee
voluntarily chooses to resign or is terminated by the company.
• This policy is beneficial to all the parties in interest to avoid any
misunderstandings during separation. This also helps in eliminating any
friction between the two parties resulting from separation.
 Exit Interview

• An exit interview is a survey of employees who are leaving a company.

• Employers conduct these interviews to learn about why an employee is
leaving and what their thoughts are on the organization
• It is a survey conducted with an individual who is separating from an
organization or relationship. Most commonly, this occurs between an
employee and an organization
• During an exit interview, an employee may be asked why they are
leaving, their personal impression of the company, and what
suggestions they may have for improvements.
 Voluntary Retirement Scheme (VRS)
• VRS stands for voluntary retirement scheme, whereby an employee is offered
to voluntarily retire from services before the retirement date.
• The scheme allows companies to reduce the strength of employees. It can be
implemented by both the public and private sectors.
• VRS is also known as 'Golden Handshake'
• VRS applies to employees who have completed 10 years of service or are
above the age of 40 years.
• It applies to workers, executives of companies and/or to an authority of a co-
operative society (except company/co-operative society directors).
 Why VRS?
• Technological reasons - less manpower, different types of skills
• Strategic reasons – mergers, relocation, closure of part processes, change in
business
• Organisational reasons – job restructuring and redesign
 Procedure of VRS
•Design the Scheme – prepare alternative scenarios and
tentative approval of mgmt.
•Approval of union
•Make formal announcement
•Acceptance of requests for retirement
•Communicating approval
•Calculating dues as per scheme
•Timely Release of dues
 Lifetime employment without guarantee

• Lifetime employment is a distinctive characteristic of Japan’s postwar labor

system, although it never applied to many workers in the labor force and is
now declining.
• This is how the system works: Large companies hire regular employees right
out of school and keep them until retirement.
• The employee in turn will not quit his job at this company but tend to
continue working there until he reaches his retirement age
• New employees are chosen for their general potential, not because of any
special skills or training.
 Employee Layoff

• Employee layoff is the elimination of a position due to a lack of work, a

lack of funds and/or because of a reorganization.
• Reducing a professional staff position's percent time or months worked
per year are not subject to the layoff process.
• According to Business Today, there are five reasons why companies are
laying off employees: over-hiring during the COVID-19 pandemic;
investors are pushing the company management to counter slowdown
in growth in the firms; negative cash flows and dismal earnings;
companies are anticipating a recession; and the technological
advancement with business analytics, AI & machine Learning changing
oprganizations
 Employee Retrenchment

• Retrenchment is terminating an employee due to the surplus of labor or

incapacity of employees to match the performance standards of the
company.
• Retrenchment is one of the ways companies use to terminate employees
when the company is forced to downsize its number of employees.
• Subsidiary companies of Multinational Corporations often resort to
retrenchment in labour law to deal with their expenditure on human
resources.
• However, companies often fail to consider the legal requirements to be
carried out before retrenching their employees.
 Employment Retrenchment

Employee retrenchment can occur by:

• Voluntary retirement of a workman
• Retirement of workmen on reaching the age of superannuation if the
employment agreement contains a provision regarding superannuation
• Termination of service of a workman due to the non-renewal of employment
agreement
• Termination on grounds of continued ill-health