Bba G III Unit-IV Hrm-205 E-Notes

Chanderprabhu Jain College of Higher Studies
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School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University & Approved by Bar Council of India)
E-Notes
Class : BBA (G) Semester-III
Paper Code : BBA (G)-205
Subject : Human Resource Management
Faculty Name : Ms. Jyoti
Unit-IV
PERFORMANCE APPRAISAL
“Performance appraisal” refers to the regular review of an employee’s job
performance and overall contribution to a company. Also known as an annual
review, performance review or evaluation, or employee appraisal, a performance
appraisal evaluates an employee’s skills, achievements, and growth.
DEFINITION
It is the process of evaluating the performance and qualifications of the employees
in terms of the requirements of the job for which he is employed, for purposes of
administration including placement, selection for promotions, providing financial
rewards and other actions which require differential treatment among the members
of a group as distinguished from actions affecting all members equally.
Performance appraisal includes all formal procedures used to evaluated
personalities and contributions and potentials of group members in a working
organization. It is a continuous process to secure information necessary for
making correct and objective decisions on employees.
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“Performance appraisal from employee point of view - "A performance appraisal

is meant to help employees realize their strengths and shortcomings and receive
compensation accordingly.
Performance appraisal is a formal, structured system of measuring and evaluating
an employee’s job, related behavior and outcomes to discover how and why the
employee is presently performing on the job and how the employee can perform
more effectively in the future so that the employee, organization, and society all
benefit.
Companies use performance appraisals to give employees big-picture feedback on

their work and to justify pay increases and bonuses, as well as termination
decisions.
They can be conducted at any given time but tend to be annual, semiannual, or
quarterly.
Companies use performance appraisals to determine which employees have
contributed the most to the company’s growth, review progress, and reward high-
achieving workers.
Employees who believe that the evaluation’s construction isn’t reflective of their
company’s culture may feel dissatisfied with the appraisal process.
Performance appraisals also help employees and their managers create a plan for
employee development through additional training and increased responsibilities,
as well as to identify ways that the employee can improve and move forward in
their career.
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OBJECTIVES OF PERFORMANCE APPRAISAL

Performance Appraisal can be done with following objectives in mind:
 To maintain records in order to determine compensation packages, wage
structure, salaries raises, etc.
 To identify the strengths and weaknesses of employees to place right men
on right job.
 To maintain and assess the potential in a person for growth and
development.
 To provide a feedback to employees regarding their performance and
related status.
 It serves as a basis for influencing working habits of the employees.
 To review and retain the promotional and other training programmes
ADVANTAGES OF PERFORMANCE APPRAISAL

1) Promotion: Performance Appraisal helps the supervisors to chalk out the
promotion programmes for efficient employees. In this regards, inefficient
workers can be dismissed or demoted in case.
2) Compensation: Performance Appraisal helps in chalking out compensation
packages for employees. Merit rating is possible through performance
appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra
benefits, allowances and pre-requisites are dependent on performance
appraisal. The criteria should be merit rather than seniority.
3) Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and programmes.
It helps to analyze strengths and weaknesses of employees so that new jobs
can be designed for efficient employees.
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It also helps in framing future development programmes.

4) Selection Validation: Performance Appraisal helps the supervisors to
understand the validity and importance of the selection procedure. The
supervisors come to know the validity and thereby the strengths and
weaknesses of selection procedure. Future changes in selection methods can
be made in this regard.
5) Communication: For an organization, effective communication between
employees and employers is very important. Through performance
appraisal, communication can be sought for in the following ways:
 Through performance appraisal, the employers can understand and accept
skills of subordinates.
 The subordinates can also understand and create a trust and confidence in
superiors.
 It also helps in maintaining cordial and congenial labour management
relationship.
 It develops the spirit of work and boosts the morale of employees.
6) Motivation: Performance appraisal serves as a motivation tool. Through

evaluating performance of employees, a person’s efficiency can be
determined if the targets are achieved. This very well motivates a person for
better job and helps him to improve his performance in the future.
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METHODS/TOOLS AND TECHNIQUES OF PERFORMANCE

APPRAISAL
RANKING METHOD
The ranking system requires the rater to rank his subordinates on overall
performance. This consists in simply putting a man in a rank order.
Under this method, the ranking of an employee in a work group is done against
that of another employee. The relative position of each employee is tested in terms
of his numerical rank. It may also be done by ranking a person on his job
performance against another member of the competitive group.
Advantages of Ranking Method: Employees are ranked according to their

performance levels. It is easier to rank the best and the worst employee.
Limitations of Ranking Method: The “whole man” is compared with another

“whole man” in this method. In practice, it is very difficult to compare individuals
possessing various individual traits. This methods speaks only of the position
where an employee stands in his group. It does not test anything about how much
better or how much worse an employee is when compared to another employee.
When a large number of employees are working, ranking of individuals become a
difficult issue.
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FORCED DISTRIBUTION METHOD

This is a ranking technique where raters are required to allocate a certain
percentage of rates to certain categories (eg: superior, above average, average) or
percentiles (eg: top 10 percent, bottom 20 percent etc). Both the number of
categories and percentage of employees to be allotted to each category are a
function of performance appraisal design and format.
The workers of outstanding merit may be placed at top 10 percent of the scale, the
rest may be placed as 20% good, 40% outstanding, 20% fair and 10% fair.
Advantages of Forced Distribution: This method tends to eliminate raters bias.

By forcing the distribution according to pre-determined percentages, the problem
of making use of different raters with different scales is avoided.
Limitations of Forced Distribution: The limitation of using this method in
salary administration, however, is that it may lead low morale, low productivity
and high absenteeism. Employees who feel that they are productive, but find
themselves in lower grade (than expected) feel frustrated and exhibit over a period
of time reluctance to work.
CRITICAL INCIDENT TECHNIQUES

Under this method, the manager prepares lists of statements of very effective and
ineffective behaviour of an employee. These critical incidents or events represent
the outstanding or poor behaviour of employees or the job.
The manager maintains logs of each employee, whereby he periodically records
critical incidents of the workers behaviour. At the end of the rating period, these
recorded critical incidents are used in the evaluation of the worker’s performance.
Example of a good critical incident of a Customer Relations Officer is : The
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Officer patiently attended to a customer’s complaint. He was very polite and

prompts in attending the customers problem.
CHECKLISTS AND WEIGHTED CHECKLISTS

In this system, a large number of statements that describe a specific job are given.
Each statement has a weight or scale value attached to it. While rating an
employee the supervisor checks all those statements that most closely describe the
behavior of the individual under assessment. The rating sheet is then scored by
averaging the weights of all the statements checked by the rater.
A checklist is constructed for each job by having persons who are quite familiar
with the jobs. These statements are then categorized by the judges and weights are
assigned to the statements in accordance with the value attached by the judges.
360 DEGREE FEEDBACK

The feedback form is in a questionnaire format, which contains questions that are
significant to both individual as well as organization from performance aspect. It
is filled by anonymous people. The number of people from whom feedback is
taken can range from 6 - 20. The individual’s own feedback is also taken, i.e., he
self-rates himself and then his rating is compared with other individuals ratings.
Self ratings compel the individual to sit down and think about his own strengths
and weaknesses.
The primary aim of a 360 degree feedback is to assist an individual to identify his
strengths and build upon them, to recognize priority fields of improvement, to
encourage communication and people’s participation at all levels in an
organization, to examine the acceptance of any change by the employees in an
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organization and to promote self-development in an individual. It must be noted

that the assessment of individual by other people is subjective.
A 360-degree feedback is challenging, promoting and analytical. It should not be
regarded as ultimate and concluding. It is a beginning point. Self-assessment is an
ongoing process.
360 degree feedback provides a comprehensive view of the skills and
competencies of the individual as a manager or as a leader. The individual gets a
feedback on how other people perceive and assess him as an employee 360 degree
feedback is beneficial to both an individual as well as organization. It leads to
pooling of information between individual and other organizational members. It
encourages teamwork as there is full involvement of all the top managers and
other individuals in the organization. It stresses upon internal customer
satisfaction. It develops an environment of continuous learning in an organization.
Based on a 360 degree feedback, the individual goals and the group goals can be
correlated to the organizational strategy, i.e., the individual and the group can
synchronize their goals with the organizational goals.360 degree feedback is also
known as multi-rater feedback or multi-dimensional feedback or multi-source
feedback. It is a very good means of improving an individual’s effectiveness (as a
leader and as a manager). It is a system by which an individual gets
comprehensive/collective feedback from his superiors, subordinates, peers/co-
workers, customers and various other members with whom he interacts.
PERFORMANCE APPRAISAL PROCESS

1. Establishing performance standard
The first step in the process of performance appraisal is the setting up of the
standards which will be used to as the base to compare the actual performance of
the employees.
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This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the
organizational goals and objectives. The standards set should be clear, easily
understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care should be
taken to describe the standards.
2. Communicating the standards

Once set, it is the responsibility of the management to communicate the standards
to all the employees of the organization. The employees should be informed and
the standards should be clearly explained to the employees. This will help them to
understand their roles and to know what exactly is expected from them. The
standards should also be communicated to the appraisers or the evaluators and if
required, the standards can also be modified at this stage itself according to the
relevant feedback from the employees or the evaluators.
3. Measuring the actual performance

The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees
during the specified period of time. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the careful
selection of the appropriate techniques of measurement, taking care that personal
bias does not affect the outcome of the process and providing assistance rather
than interfering in an employees work.
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4. Comparing actual performance with desired performance

The actual performance is compared with the desired or the standard performance.
The comparison tells the deviations in the performance of the employees from the
standards set. The result can show the actual performance being more than the
desired performance or, the actual performance being less than the desired
performance depicting a negative deviation in the organizational performance. It
includes recalling, evaluating and analysis of data related to the employees’
performance.
5. Discussing results [Feedback]

The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on communication and listening.
The results, the problems and the possible solutions are discussed with the aim of
problem solving and reaching consensus. The feedback should be given with a
positive attitude as this can have an effect on the employees’ future performance.
Performance appraisal feedback by managers should be in such way helpful to
correct mistakes done by the employees and help them to motivate for better
performance but not to demotivate. Performance feedback task should be handled
very carefully as it may leads to emotional outburst if it is not handing properly.
Sometimes employees should be prepared before giving them feedback as it may
be received positively or negatively depending upon the nature and attitude of
employees.
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EMPLOYEE COUNSELING
Employee Counseling is the most important tool of a supervisor who wants to
improve the performance and behavior of employee. If performance problems
persist even after feedback and coaching which are other two important tools with
a manager, one may need to proceed to counseling.
Counseling focuses on the problem, not the employee, and is positive and
constructive. Counseling is a formal straight, face-to-face conversation between a
supervisor and an employee concerning conduct, and performance. It is an
efficient means for a supervisor to have a positive effect on employee
performance.
Employee counseling takes place in the context of a helping relationship in which
both the counselor and the employee work together to resolve a problem, change
behavior or foster personal growth and awareness. The counseling relationship is
confidential and not reciprocal. The focus of a counselor is to offer support and
encouragement to the employee.
Counseling is described as the help provided by the supervisor to the subordinates

in analyzing their performance and other behaviors on the job, in order to improve
their performance. Counseling is also used sometimes in the sense of coaching
and reviewing one’s performance. Such a review identifies not only the potential
for development but also the training needs for further improvements.
Employee counseling is a method of understanding and helping individuals who
have technical, personal and emotional adjustment problems interfering with their
work performance.
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Counseling is a two-way process in which a counselor provides help to the

workers by way of advice and guidance. There are many occasions in work
situations when a worker feels the need for guidance and counseling. The term
‘counseling’ refers to the help given by a superior to his subordinate in improving
the latter’s performance.
It is a process of helping the employees to achieve better adjustment with his work
environment to behave as a psychologically mature individual, and help in
achieving a better under-standing with others so that his dealings with them can be
effective and purposeful. Thus, the basic objective of counseling is overall
development of the employee.
OBJECTIVES OF COUNSELING COULD BE STATED AS FOLLOWS:

(i) Counseling is an exchange of ideas and feelings between two persons.
(ii) It is concerned with both personal and work problems.
(iii) Counseling may be performed by both professionals and non-professionals.
(iv) Counseling is usually confidential so as to have free talk and discussion.
(v) It tries to improve organizational performance by helping the employees to
cope with their problems.
i. Helping employees to realize their potential.
ii. Helping employees to understand their strengths and weaknesses.
iii. Providing employees an opportunity to acquire more insight into their
behaviour and analyse the dynamics of such behaviour.
iv. Helping employees to have a better understanding of the environment.
v. Increasing personal and interpersonal effectiveness through effective
feedback.
vi. Encouraging employees to set goals for further improvement; and
vii. Providing employees an atmosphere for sharing and discussing their
tension, conflicts, concerns, and problems.
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THREE BASIC INGREDIENTS OF THE PROCESS ARE:

i. Communication
ii. Empowering, and
iii. Helping
Communication involves receiving messages (listening), giving messages
(responding), and giving feedback. The counselor or the mentor does all these.
The process of empowering enables the other person to exercise more autonomy,
providing positive reinforcement so that the desirable behavior is further
strengthened and creates conditions in which the person is able to learn from the
behavior of the mentor.
Finally, helping primarily involves identification of the developmental needs of
the person being counseled so that he/she may be able to develop and increase
his/her effectiveness.
COUNSELLING PROCESS HAS THREE IMPORTANT PHASES:

(1) Rapport building
(2) Exploration, and
(3) Action planning
1. Rapport Building:
Rapport building is essential for any effective counseling outcome. In this phase, a
good counselor attempts to establish a climate of acceptance, warmth, support,
openness, and mutuality. He/she does this by listening to the employees’ problems
and feeling, by communicating his/her understanding to the employees, and by
expressing a genuineness of interest in them.
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2. Exploration:
In the exploration phase, besides accepting the employees, listening to them, and
establishing a climate of openness, the counselor attempts to understand as well as
help the employees understand their own situational strengths, weaknesses,
problems, and needs. Counseling skills lie in this.
3. Action Planning:
In the action planning stage, the counsellor and the employee jointly workout or
plan specific action steps for the development of the employee.
JOB CHANGE
Change Job business process is meant to make a variety of changes to an
employee, from transferring to a new position, reclassifying the employee,
changing the employee's location, or even modifying the employee's FTE. This
business process will launch a guided step-by-step approach to making employee
changes.
PROMOTION
Promotion is the advancement of an employee to a better job, better in terms of
greater responsibility, more prestige or status, greater skill and specially increased
rate of pay or salary” -Pigou and Myers
“A promotion is the transfer of an employee to a job which pays more money or
one that carries some preferred status”.
 To boost morale of employees
 To develop a competitive spirit among employees for acquiring knowledge
and skills required by higher level jobs
 To retain skilled and talented employees
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 To utilize more effectively the knowledge and skill of employees

Inefficient persons will feel demoralized when efficient people are rewarded with
promotions. So the company can get rid of undesirable employee
TRANSFER
Reassignments to similar positions in other parts of the firm  Usually involves
no change in grade / salary, Can be initiated by the employee / employer Transfer
is defined as “ a lateral shift causing movement of individuals from one position to
another usually without involving any marked changes in duties, responsibilities,
skill needed or compensation ’’. Transfer refers to a horizontal or lateral
movement of an employee from one job to another job in same organization
without any significant change in status and pay.
PURPOSE OF TRANSFERS
1) Satisfy organisational Needs
2) To satisfy employee needs
3) To better utilise employees
4) To make employee more versatile
5) To adjust the work force
6) To maintain tenure system
7) To punish employee
Every organization should have a just and impartial policy concerning transfer of
employee. Such a policy will help to avoid an adhoc and arbitrary approach to
transfer. Transfers should not be made frequently or without justified reasons.
Instead of deciding each case separately, a policy should be formulated to govern
all types of employee transfers.
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COMPENSATION AND BENEFITS

Compensation and Benefits in HRM refer to the salary, monetary, and as well as
non-monetary privileges provided to the employees at the workplace by the
organization. It is a primary tool of the Human Resource Managers to bring out
the best potential of the employees in their work. It works in a way – ‘Better is the
compensation & benefits, better is the performances and retention’. From internal
motivation to the higher level of productivity, Compensation and Benefits does it
all!
Companies with better Compensation and Benefits plans are on the verge of
stealing your employees because workers always look to switch to the
organization’s having better salary structures, compensation, and other benefits
like health insurance. Everything related to the company’s work culture and
benefit plans can be easily found online, especially Glassdoor. Each experience
faced by employees from monetary to non-monetary terms is present in online
reviews about the company.
Compensation and benefits refers to the compensation/salary and other monetary
and non-monetary benefits passed on by a firm to its employees. Compensation
and benefits is an important aspect of HRM as it helps to keep the workforce
motivated. It helps give benefits to employees based on their performance and
actions and brings the best out the employees at workplace.
Employee compensation and benefits are divided into four basic categories
 Guaranteed pay
 The Variable pay
 Benefits
 Equity-based compensation
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OBJECTIVES
1. Control the incurring costs of the organization.
2. Follow the labor laws or wage system by acknowledging the legal provisions
3. To bring an easy understanding of salary structure and other benefits by the
staff of the company.
4. To enhance the overall motivation of an employee.
5. To improve the comprehensive company’s ranking on social platforms in terms
of employee motivation and satisfaction.
6. Competent compensation for reinforcing the reward winning behavior Balance
in pay structure also helps in attracting the right and creative talent.
7. Long Term Retention of the employee.
8. Payment must meet the employees’ overall needs and expectations in return for
the work done.
TYPES OF COMPENSATION:
Base compensation: it involves monetary benefit to the employees in the form of
wages and salaries. It is giving the remuneration to the workers for doing the
work. Wages are generally given to the workers based on hourly, daily, weekly or
monthly basis. But salary is the compensation given to the office employees.
Wages may be based on the number of units produced i.e. piece wage system or
the time wage system i.e. the time spent on the job. But salary is always based on
the time spent on the job. When it is difficult to judge the production of the
company then the compensation is paid in form of salary.
Supplementary compensation: now days the organizations use supplementary
compensation over and above the base compensation. It helps in satisfying the
employees as well as retaining them for long time. It can be given in form of
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various services like housing, medical, educational facility. Supplementary

compensation is also called fringe benefit as well as hidden payroll. The basic
purpose of fringe benefit is to maintain efficient human resources in the
organization and to motivate the employees.
INDIVIDUAL INCENTIVE PLANS:

Under individual incentive plan, individual employee is paid incentive on the
basis of individual performance or output. The employers are liable to pay
incentives to those employees who are producing more than the standard output.
Individual incentive plans can be either time based or production based. In case of
time based incentive plans, a standard time is determined for doing a job and this
standard time served as a basis for giving incentive. A worker is considered as
efficient, if he completes his job in less than standard time. The worker is awarded
for his efficiency by giving incentive under some incentive plans. Individual
incentive plans are based on meeting work-related performance standards, such as
quality, productivity, customer satisfaction, safety, or attendance. They are most
appropriate when:
 Performance can be measured objectively
 Employees have control over the outcomes
 Plan does not create unhealthy competition
 Individual incentive plans require monitoring, and it is important to
remember that the incentive scheme is not a substitute for good
management.
Spot bonuses can also be used for individuals to show appreciation or give
recognition for a job well done. This can be a reward for developing new skills,
contributing new ideas, obtaining licenses, or finishing projects early. Typically, a
spot bonus is given as a one-time discretionary payment. These are most prevalent
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among non-executives.
GROUP INCENTIVE PLAN

Team or group incentive plans are a reward for collective performance. These are
most effective when all group members have some impact on goals. The rewards
can be equal or different for each member, but this requires an understanding of
team dynamics. Be sure to avoid contrasting motivational forces. A group
incentive plan scheme is designed to promote effective teamwork, as the bonus is
dependent on the performance and output of the team as a whole. Under group
incentive plan, each employee is paid incentive on the basis of collective
performance of his group to which he belongs. Within the group, each employee
gets an equal share of the incentive.
EMPLOYEE STOCK OPTION PLAN: Employee Stock Option Plan or ESOP

is an opportunity for employees to own equity shares of their organization, and
own a part of the company for which they are working. By providing the
employees with a portion of the company shares, the employers aim to motivate
and inspire the employees to give their 100% for the company’s growth. The logic
is simple: When the employees own a part of the company via equity shares, then
they will be more engaged, focused, and keen to make the company succeed. In
case ESOPs are provided to the employees, then the company’s success literally
becomes their success. Generally, one of the critical terms for granting ESOPs to
employees is fulfilling a condition: say, X number of sales, or launch of a major
product. In case that condition is fulfilled, employees are provided with ESOP,
and thus, they own a part of the company.
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FRINGE BENEFITS
Fringe benefits are supplementary compensation made in addition to wages, the
object being to stimulate the interest of the workers and to make the job more
attractive and conducive. They are, as a matter of fact, indirect benefits. As to
their nature, we can say, they are neither mere “fringes” nor peripheral “wage
trimmings” but a substantial part of the wage and salary structure. these benefits
are “any wage cost not directly connected with employee’s productive effort,
performance, service or sacrifice”. Webster defines “fringe” as “an ornamental
border, an edging, trimming or a margin”. However, these benefits are aimed at
attracting and retaining efficient and contented workforce through boosting up of
their real earnings.
Fringe benefits afford better living standard to the employees and offer
opportunities to the employer to have more productivity and production. So, they
are relevant and useful for an organization provided it can afford to extend fringe
benefits.
Examples of fringe benefit:
(A) Statutory benefits – The Employees Provident Fund Scheme, Gratuity or
Pension Schemes and Employees State Insurance Scheme.
(b) Non-statutory benefits – Payments towards Employees Provident Fund
Scheme, Gratuity and Pension Fund contribution, medical facilities, canteens,
uniform and recreational facilities.
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FRINGE BENEFITS ARE CLASSIFIED UNDER FIVE HEADS AS GIVEN

HERE:
1. Employment Security:
Benefits under this head include unemployment, insurance, technological
adjustment pay, leave travel pay, overtime pay, level for negotiation, leave for
maternity, leave for grievances, holidays, cost of living bonus, call-back pay, lay-
off, retiring rooms, jobs to the sons/daughters of the employees and the like.
2. Health Protection:
Benefits under this head include accident insurance, disability insurance, health
insurance, hospitalization, life insurance, medical care, sick benefits, sick leave,
etc.
3. Old Age and Retirement:
Benefits under this category include deferred income plans, pension, gratuity,
provident fund, old age assistance, old age counseling, and medical benefits for
retired employees, traveling concession to retired employees, jobs to
sons/daughters of the deceased employee and the like.
4. Personnel Identification, Participation and Stimulation:

This category covers the benefits like anniversary awards, attendance bonus,
canteen, cooperative credit societies, educational facilities, beauty parlor services,
housing, income tax aid, counseling, quality bonus, recreational programs, stress
counseling, safety measures, etc.
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HR AUDIT:
Human Resource Audit is a comprehensive method of objective and systematic
verification of current practices, documentation, policies and procedures prevalent
in the HR system of the organization. An effective HR audit helps in identifying
the need for improvement and enhancement of the HR function. It also guides the
organization in maintaining compliance with ever-changing rules and regulations.
HR audit, thus, helps in analyzing the gap between ‘what is the current HR
function’ and ‘what should be/could be the best possible HR function’ in the
organization. It is necessary for the top management to establish the terms and
scope of the audit clearly before the external firm to make the audit successful.
This includes defining the exact purpose of audit, viz. examining compliance with
legal requirements and organization’s policies, identifying problem areas to avoid
crisis situation with appropriate planning, analyzing ways to better serve the needs
of relevant parties – employees, partners or society, measuring the work
processes, seeking HR related opportunities available within the organization,
dealing with situation of merger and acquisitions, etc.
Primary components of the HR system which are generally audited include –
documentation, job descriptions, personnel policies, legal policies, recruitment
and selection, training and development, compensation and employee benefit
system, career management, employee relations, performance measurement and
evaluation process, termination, key performance indicators, and HR Information
Systems (HRIS).
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PROCESS OF HR AUDIT : The process of HR auditing is broadly segmented

in following phases pre-audit information, on-site review, records review, and
audit report.
The first three phases involve extensive collection of quantitative as well as
qualitative information. The method for collection of information depends upon
the size of the target audience, availability of time and type of data to be collected.
The pre-audit information phase includes a review of the organization’s policies,
HR manuals, employee handbooks, reports, etc. which form the basis of working
in the organization.
The next phase of on-site review involves questionnaires, interviews, observation,
informal discussions, surveys, or a combination of such methods to get the
necessary inputs from the members of the organization.
The records review phase requires detailed scanning of current HR records,
employees’ files, employee absenteeism and turnover statistics, notices,
compensation claims, performance assessments, etc.
Utilizing the data so collected, the HR checklist is completed which is the widely
used method for carrying out HR audit. In the checklist method, a list of all the
system particulars under audit, viz. the policies, procedures, or practices, is
created in a sequential manner. Against each particular item, the actual practice as
followed by the organization is mentioned. The defined practice and the actual
practice are then compared to determine compliance between the two as well as
analyzing the deviation from compliance. On the basis of this analysis, the final
audit report is complied with appropriate conclusions and recommendations
highlighting the strengths and weaknesses of the HR function along with the
necessary improvements as required.
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HR audit, thus, contributes towards the best possible use of internal resources and
maximizing the effectiveness of human capital in the organization. At the same
time, it is useful in streamlining the HR processes and practices with the industry
best practices and standards.
PAY BAND COMPENSATION SYSTEM:

A pay band is a range of salaries assigned to a specific job or group of jobs. Pay
bands are generally used by employers as a way to simplify their compensation
structure and create salary ranges that are based on market rates. Pay bands can
also help employers control labor costs, since they can be designed to limit the
amount of money that an employee can earn. Pay bands offer employees a range
of possible salaries for their position, rather than a set salary. This provides
employees with the opportunity to earn more money as they gain experience and
skills in their position. Pay bands also offer employers some flexibility in setting
salaries, as they can adjust the band based on business needs or the market rate for
similar positions. Pay Band is a pay scale according to the pay grades. It is a part
of the salary process as it is used to rank different jobs by education,
responsibility, location, and other multiple factors. ‘Pay’ in the pay band means
the pay drawn in the running pay bands. The pay band structure is based on
multiple factors and assigned pay grades should correlate with the salary range for
the position with a minimum and maximum.
Pay Band is used to define the compensation range for certain job profiles for
example in the government sector, different pay grades are depending on the work
profiles and positions.
24
&
School of Law
A pay band is a salary range within which an organization pays its employees. Pay
bands are often used in conjunction with a job grading system, and they can be
helpful for employers in a number of ways.
For example, pay bands can help to:

Attract and retain talent: By grouping together jobs with similar levels of
responsibility, skills and experience, pay bands can help to attract and retain
employees who may otherwise be tempted to leave for roles with more
competitive salaries.
Facilitate succession planning: Pay bands can make it easier for employers to
identify potential successors for key roles within the organization.
25

Bba G III Unit-IV Hrm-205 E-Notes

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Chanderprabhu Jain College of Higher Studies

Class : BBA (G) Semester-III

Paper Code : BBA (G)-205

Subject : Human Resource Management

Faculty Name : Ms. Jyoti

“Performance appraisal from employee point of view - "A performance appraisal

Companies use performance appraisals to give employees big-picture feedback on

OBJECTIVES OF PERFORMANCE APPRAISAL

ADVANTAGES OF PERFORMANCE APPRAISAL

It also helps in framing future development programmes.

6) Motivation: Performance appraisal serves as a motivation tool. Through

METHODS/TOOLS AND TECHNIQUES OF PERFORMANCE

Advantages of Ranking Method: Employees are ranked according to their

Limitations of Ranking Method: The “whole man” is compared with another

FORCED DISTRIBUTION METHOD

Advantages of Forced Distribution: This method tends to eliminate raters bias.

CRITICAL INCIDENT TECHNIQUES

Officer patiently attended to a customer’s complaint. He was very polite and

CHECKLISTS AND WEIGHTED CHECKLISTS

360 DEGREE FEEDBACK

organization and to promote self-development in an individual. It must be noted

PERFORMANCE APPRAISAL PROCESS

2. Communicating the standards

3. Measuring the actual performance

4. Comparing actual performance with desired performance

5. Discussing results [Feedback]

Counseling is described as the help provided by the supervisor to the subordinates

Counseling is a two-way process in which a counselor provides help to the

OBJECTIVES OF COUNSELING COULD BE STATED AS FOLLOWS:

THREE BASIC INGREDIENTS OF THE PROCESS ARE:

COUNSELLING PROCESS HAS THREE IMPORTANT PHASES:

 To utilize more effectively the knowledge and skill of employees

COMPENSATION AND BENEFITS

various services like housing, medical, educational facility. Supplementary

INDIVIDUAL INCENTIVE PLANS:

GROUP INCENTIVE PLAN

EMPLOYEE STOCK OPTION PLAN: Employee Stock Option Plan or ESOP

FRINGE BENEFITS ARE CLASSIFIED UNDER FIVE HEADS AS GIVEN

4. Personnel Identification, Participation and Stimulation:

PROCESS OF HR AUDIT : The process of HR auditing is broadly segmented

PAY BAND COMPENSATION SYSTEM:

For example, pay bands can help to:

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