MHR Unit4 2014

BMG 511/03:
Managing Human
Resource
MHR Ver-1, 2014 All Rights Reserved

Unit
Unit 44
Implementing
Compensation and
Security

Unit
Unit Objective
Objective
Upon completion of Unit 4 you should be able to:
1. Describe the basic concepts of performance appraisal, the role they play in
management and how they are carried out.
2. Discuss and apply the concepts and methods of job evaluation.
3. Apply the concepts and principles of compensation and employee benefit.
4. Articulate the concept of discipline in an organization and describe the employee
behaviour types that are most likely to have interactions with disciplinary
systems.
5. Describe the interests served by employee safety, health and welfare at the work
place.
6. Explain and apply the legal framework within which health protective methods
are enforced.
7. Describe the processes of communication and negotiation called Industrial or
Labour Relations.
8. Put in place effective communication processes in your organization
9. Comment on labour relation issues with references to its historical background.
10. Correctly use the vocabulary of collective bargaining and demonstrate realistic
expectations of its outcomes and processes.

Rewarding employees:
Performance appraisal, job
evaluation and compensation

Performance Appraisal
Performance appraisal (PA) can be defined as a formal and
structured system by which management measures, evaluates
and assesses an employee’s job-related attributes, behaviours and
outcomes. It is undertaken to discover how productive the
employee is and whether the employee can continue to perform in
future to help achieve the organisation’s goals.
• to identify an individual’s current level of job performance

• to identify employee strengths and weaknesses
• to enable employees to improve their performance
• to provide a basis for rewarding employees (their contribution)
• to motivate individuals
• to identify training and development needs Most likely reason:
• to identify potential performance 1. Reward people fairly
2. Promotion
• to provide information for succession planning

Performance Appraisal and Productivity
Performance appraisal
needs to be done
periodically and
feedback immediately
made available to the
employee. It has to be
timely and constructive.

The Process of PA
The appraisee (the subject)

usually plays a passive role
The appraiser (manager, when the appraiser is observing
immediate supervisor) is a key his or her performance.
element in the process.

ethods of PA
Written Essays Critical Incidents Graphic Rating Scales
A set of performance standard
These are written narrative Appraiser focusses attention on criteria is developed. These
describing an employee’s those key factors within the standards are usually related to
strengths, weaknesses, past whole array of factors that such factors as quantity and
performance, future potential/ renders the performance quality of work, extent of
suggestions for improvement. effective or ineffective. knowledge related to job tasks,
attendance, initiative, honesty
and loyalty. .
Behaviourally Anchored Individual Ranking, Paired Comparison& Group

Rating Scale Order Ranking
1. Individual ranking approach - individual employees are ranked
Combination of both the
(best to worst).
critical incident and GRS
methods 2. Paired comparisons - each employee is compared with another
3. Group order ranking - employees are categorised after e
evaluation into groups.

Reasons for PA malfunction
There is room for any system or function, including performance appraisals, to
malfunction at some point in time. Generally, the problems are concerned with
system design and operation, the appraiser, and the employee.
Poor design can be the cause of some

performance appraisal systems failing or
malfunctioning. The design can be blamed
if the criteria for appraisal are poor, the
technique used is cumbersome, or the
system is more form than substance. The Halo Effect
Standards of Appraisal
Problems can arise if the appraisers Appraisal standards
(usually supervisors) are not cooperative Central Tendency
Recent-behaviour Bias
and well trained.
Personal Biases
For the appraisal system to work well, the

employees must understand it. If the system
is not explained to the employees so that they
understand it, they will not work well.

Job Evaluation
Job evaluation is the formal process by which the relative worth of
various jobs in the organisation is determined for pay purposes.
Essentially, it attempts to relate the amount of the employee’s pay to
the extent that her or his job contributes to organisational
effectiveness (Glueck, 1978).
Job Evaluation Methods

The four most frequently used job evaluation methods are:
1. job ranking
2. factor comparison
3. classification
4. the point system
10

Compensation
Compensation is the monetary reward paid by an enterprise for the work
done by an employee.
Objectives of Compensation
The compensation should be:
– Adequate
– Equitable
– Balanced
– Cost effective
– Secure
– Incentive providing
– Acceptable to the employee
11

Methods of Payment
Payment for the time worked

Incentive plans
Individual incentives
- Piecework, production bonus & commission
Group incentives
Enterprise incentive schemes
- Suggestion systems, company group incentive
plans, profit sharing plans, stock ownership plans
Executive compensation*
- Executive pay, executive perks, bonuses
12

Employee Benefits
Employee benefits and services are a part of the rewards (including pay and promotion)
that reinforce loyal service to the employer. This definition is a bit vague because the term
‘benefits and services’ is applied to hundreds of programmes.
Company cars • Subsidised meals • Holiday entitlements

• Opportunities for foreign travel • Telephone costs •
Discounted, or the provision of, insurance. • Private
Basic Types health care, dental treatment and eye tests.• Crèches •
of Benefit Office accommodation & facilities • Sabbaticals •
Sports/social facilities • Discount and company purchase
plans • Assistance with housing • Help with educational
courses • Pension schemes
13

Grievances
14

Grievance Handling
Introduction
It is an inevitable fact that, from time to time, employees will feel
dissatisfied about various aspects of their working lives. This may
be due to the attitude of managers, the operation of a company
policy, the behaviour of work colleagues, thwarted ambitions and a
whole lot of other reasons. Therefore, for the sake of justice to the
individual and smooth functioning of the whole organisation, it is
important for the management to get at the root of employee
dissatisfaction and to take corrective action wherever possible.
15

Dissatisfaction, Complaint, and Grievance
Dissatisfaction: anything that disturbs an employee,
whether or not the unrest is expressed in words.
Complaint: a spoken or written dissatisfaction brought to
the attention of the supervisor or the shop steward.
Grievance: a complaint that has been formally presented to
a management representative or to a union official.
Note: A grievance is a formal and a relatively drastic step,

compared to dissatisfactions and complaints
16

Effect of Complaints & Grievances
Discontent and demotivation
• Poor performance
• Reduced productivity
• Disciplinary issues
• Increased labour turnover
• Withdrawal of goodwill
• Industrial action (in unionised environment)
• Employment tribunal applications
• Damage to the organisation’s reputation
• Resistance to change
17

Types of Grievances
Grievances arise from various issues. Different authors take
different approaches in describing the types of grievances.
Customs and Practice

Rule Violations
Insubordination
Absenteeism
Dishonesty
Substance Abuse
18

Handling Grievances Formally
The Benefits of a Grievance Handling Procedure
According to Jackson (2000, p.10), the benefits will accrue to both the
employer and employees are:
Encourages employees to raise concerns without fear of reprisal.
Provides a fair and speedy means of dealing with complaints.
Prevents minor disagreements developing into more serious
disputes.
Its saves employers time and money as solutions are found for
workplace problems.
Its helps to build an organisational climate based on openness
and trust.
19

Steps in Grievance Handling
Procedure
Initiation
Due Attention
Head / Manager
Arbitration
20

Discipline
21

Why Discipline?
It is to encourage employees to meet established standards of job
performance and to behave sensibly and safely at work. Discipline is
essential to all organised group action.
urpose and Objectives of Disciplinary Action

• To enforce rules and regulations
• To punish the offender
• To serve as an example to others to strictly follow rules
• To ensure the smooth running of the organisation.
• To increase working efficiency
• To maintain industrial peace
• To improve working relations and tolerance
• To develop a working culture which improves performance
22

Categories of difficult employees
Those whose quality or quantity of work is unsatisfactory, as
a result of to lack of abilities, training or job motivation (i.e.,
the ineffective employee).
Those whose personal problems off the job begin to affect

their productivity on the job. These problems can include
alcoholism, drugs or family relationships. (Examples are the
alcoholic and the drug addict or the substance abusing
employee).
Those who violate laws while on the job by such behaviour
as stealing from the organisation or its employees or physical
abuse of employees or property. (i.e., participants in theft,
crime, and other illegal acts)
Those who consistently break company rules and do not
respond to supervisory reactions. (These are not involved in
criminal or illegal acts but are violators of organisational rules
and are called rules vialators.
23

Possible causes of difficult job behavior
Miner (1975) suggested a possible causes checklist:
• Problems of intelligence and job knowledge

• Emotional problems
• Motivational problems
• Physical problems
• Family related problems
• Problems caused in the work group
• Problems originating in the company policies & higher level decisions
• Problems stemming from society and values
• Problems growing out of the work context and the work itself
24

Disciplinary Process
Disciplinary actions are increasingly subject to legal scrutiny for implications of

prejudice or discrimination. For such action to measure up to the test of just cause,
two criteria must be met:
• Prior notification of what constitutes unacceptable behaviour.
• Prior notification of what the penalties for this behaviour will be.
25

Discipline Methods
Four Guidelines
1. Corrective and not punitive (only when corrective interventions prove ineffective
should punitive measures be considered)
2. Progressive action and punishments (Increase severity step by step)
3. Natural justice (principles of natural justice)

4. Hot stove rule (Immediacy – advanced warming – consistency – impersonality)
How do managers put these guidelines into action?
If the aforesaid measures do not help, the next step is:

Disciplinary lay-off
De-hiring
Discharge
26

Employee Safety,
Health and Welfare
27

Factors important to health and safety
Nature of the Task (Some jobs are more likely to cause injury than others: the very
nature of the job is hazardous)
Employee Attitudes (If employees are committed to the idea of safety and cooperate
with safety initiatives, then safety measures become more effective)
Government (Government (federal, state or provincial) legislates to improve H & S

factors)
Trade Unions (The objectives of H & S initiatives and trade unions both improve the
quality of working life of employees)
Management’s Goal (Attitudes of management to H & S will determine the

significance of such programmes to an organisation)
Economic Conditions (Although work is being done to determine the dangers and
to prevent or mitigate the consequences of such work, the costs of some of these preventive
programmes are so high that it would not be economically viable to adopt them)
28

Some Definitions
za rdse Safety
a n v i ro n
ty h s o
ment tha Hazards ar
fe metim t have e
Sa loss o es violent h the po those aspec
fh arm to tent
ial ts o ft
bruise earing, eyes an em of immedia he work
s, brok i ployee te
en bon ght, or body ; for ex and
a
es; bu p
rns an arts; cuts, s mple,
d el ec
tric sh prains,
ock.
c t s o f work
e
th o s e asp latively (and
re mu
H a z ards a wly and cu ration of an
Health ent that slo t o deterio , poisoning
Hea m a d er
lth h environ versibly) le xample: canc es include
azar irre h; for e Ty pical cau xic and
s
often h e a lt
ds ee’s es . to
employ iratory diseas al hazards, d stressful
sp c n
and re a n d biologi h e mi c al s a
l d c
physica nic dusts an
ge
carcino onditions.
c
working
Figure 3–9
29

Organisational Responses to Health and
Safety Challenges
Safety committees in organisations prove very effective if everyone in the
organisation gets involved in the work of the committee. This work covers
the organisation’s entire programme, i.e., inspection, design, record
keeping, training and motivation.
Approaches to safety committees for improving the safety

of working conditions:
Organisational Auditing
Safety Design and Safety Safety
Preventive Programmes and Programmes
Approaches the Manager
Inspection, Health
Reporting and Safety Training Programmes for
Accident and Motivation Employees
Research Approaches
30

Occupational Diseases and Accidents
In spite of various measures to ensure that employees are not subjected to any
hazards, some are inevitably afflicted with diseases or accidents caused by their
working condition or environment.
• Proper effluent disposal systems

Protection against Diseases/ Accidents and/or treatment plants
• Pre-employment medical exams
• Periodic post-employment medical exams • Careful design and selection of
handling equipment
• Removal of hazardous material/processes
• Ergonomic design of work spaces
• Surveillance of employees exposed to health hazards
and tools
• Emergency treatment in case of accidents
• Proper design of job to remove
• Availability of first-aid equipment monotony and fatigue
• Training employees in first-aid • Proper schedule of work with
• Education of employees in health and hygiene adequate rest periods
• Special surveillance of the health of those more susceptible to
disease
• Proper layout of factory and proper illumination
• Proper design of buildings with adequate ventilation
31

Types of Accidents
1. Industrial injury – This is a personal injury to an employee which has been caused
by an accident or an occupational disease and which arises out of or in the
course of employment and which would entitle such employee to
compensation under the laws of the land.
2. Disablement – This is a loss of capacity to work or move due to an accident
resulting in loss of reduction of earning capacity; it could be total, partial or
temporary.
3. Total disablement – This is a disablement whether of a temporary or permanent
nature which incapacitates a worker for all work that he was capable of
performing at the time of the accident.
4. Partial disablement – This is a disablement that may be of a temporary or
permanent nature, which reduces the earning capacity of a worker as a result
of an accident.
Causes of Accidents
The causes of workplace accidents fall into four categories:
Intrinsic causes (nature of the work)
Extrinsic causes (Environmental)
Personal Causes
Exogenous Causes (“act of God”)
32

Work Stress
Definition: Stress can be defined as a person’s physical, chemical
and mental reactions to stressors or stimuli in the
environment.
Stress affects
• Society – and brings pressure on public services
• Individuals – and brings on illness and behavioural problems
• Industry – and causes industrial accidents and inefficiency.
33

Sources and Causes of Stress
Sources and causes of stress in three
broad categories:
Environmental factors
Organisational factors
Individual factors
Socio-economic, ‘religio-cultural’,
Physical aspects
political factors. For example, Extrinsic (E) and intrinsic (I) factors.
poverty, unhygienic living Physiological aspects
E - Supervision and leadership,
conditions, number of dependents, Psychological aspects
organisational structure,
maternity, recession, and fiscal Consequences of Stress
policies are socio-economic factors organisational culture.
Physical problems
that cause the ‘uncertainty’ that I - The task structure , the work
Behavioural problems
leads to stress. situation and role perception
34

BOSS & ROSS
Burn-out Stress Syndrome (BOSS) - A

consequence of a high level of job stress, personal frustration and
inadequate coping skills have major personal, organisational and
social costs. All these costs are probably increasing.
Rust-out Stress Syndrome (ROSS) - This

stress is brought about by a situation where an executive has an
inadequate load of work. It could happen where he/she is
sidelined or where he is under-employed.
35

H ealth & wellness programmes
The choice to implement a workplace wellness program lies in the hands of the employer,
as long as they are fulfilling their occupational health and safety obligations. Wellness is
an issue that cuts across the entire organisation. One key to successful planning lies in
surveying workers to identify health risks and the types of programmes that appeal to all
employees
Health promotion is a four- step process:

Employees are educated on health risk factors.
Each employee’s specific health risk factors are identified
Employees are helped to eliminated or reduce their risks
through healthier lifestyles and habits
Employees are helped to maintain their ‘new’ healthier life
styles through self monitoring and evaluation.
36

Industrial and
Labour Relations
37

Objectives of industrial relations (IR)
The development of healthy employer – employee relations

The maintenance of industrial peace and high productivity
The development and growth of industrial democracy.
Improvement of economic conditions of workers
State control on industries for regulating production and
promoting harmonious industrial relations.
Socialisation or rationalisation of industries by making State
itself a major employer.
Vesting of the proprietory interest of the workers in the
industries in which they are employed.
38

Labour Legislation
Four broad areas of labour legislation:
Working conditions
Wages
IR
Social security
39

Nature of Conflicts
The definition includes three different possible sets of
antagonists in industrial conflict. However, the present discussion
is confined to disputes arising between management and workers.
Disputes arise from a variety of sources for a variety of reasons.
Some are innocent misunderstandings of regulations or policies but
others are much more complicated, sometimes with malicious
intent. In some cases, the cause lies with the individual manager or
employee but others are due to management union intent.
Conflict Caused by Unions Conflict Caused by Management

• Non-cooperation • Layoffs
• Arguments and quarrelsome behaviour • Lock out
• Hostility and irritations • Termination
• Stress, strain and anxiety
• Unwillingness to negotiate or participate in discussions
• Resentment or withdrawal
• Absenteeism, alcoholism or a high incidence of accidents
• ‘Work to rule’ or ‘go slow’ tactics
• Demonstrations
• Strikes
40

Trade Unionism
Trade Unionism has its roots in Marxist dogma. A more recent and non-
legislative definition of a union is:
‘An organisation of workers acting collectively who seek to protect and
promote their mutual interests through collective bargaining.’
‘Unity is strength’
‘Equal pay for equal work’
‘Security of employment’
41

Classification of trade unions
nions are of various types and various purposes:
Classification Based on Trade

Many unions have memberships and jurisdictions based
on the trades they represent.
Classification Based on Agreement

Based on the degree to which membership in the union
is a condition of employment
Classification Based on Membership

This type of classification exists mostly in India especially
in the states of Maharashtra & Gujarat.
42

Collective Bargaining
efinition:
A method of determining terms and conditions of employment and
regulating the employment relationship which utilises the process of
negotiation between representatives of management and employees intended
to result in an agreement which may be applied across a group of
employees.
There is more to collective bargaining than the mere getting together of two
bodies to review and agree upon certain terms of employment. Formally, collective
bargaining involves the following:
• Statutory support by legislative measures
• The existence of employee representatives, i.e., the union
• The recognition of the union by the employer as the bargaining agent
• The existence of an industrial dispute
• The threat of economic force in the form of a ‘lock out’ or ‘strike’ to settle an
industrial dispute
• Negotiation
• Finalisation of an agreement
43

Collective Bargaining
44

The Process of Collective Bargaining
As noted, collective bargaining is governed and informed by a
range laws, rules, regulations and protocols. Accordingly, the
process encompasses the following major phases:
1. A charter of demands by the bargaining

agent
2. Preparation for negotiation
3. Bargaining
4. Collective Agreement
5. Contract administration
45

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BMG 511/03:

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

• to identify an individual’s current level of job performance

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

The appraisee (the subject)

MHR Ver-1, 2014 All Rights Reserved

Behaviourally Anchored Individual Ranking, Paired Comparison& Group

MHR Ver-1, 2014 All Rights Reserved

Poor design can be the cause of some

For the appraisal system to work well, the

MHR Ver-1, 2014 All Rights Reserved

Job Evaluation Methods

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Payment for the time worked

MHR Ver-1, 2014 All Rights Reserved

Company cars • Subsidised meals • Holiday entitlements

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Note: A grievance is a formal and a relatively drastic step,

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Customs and Practice

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

urpose and Objectives of Disciplinary Action

MHR Ver-1, 2014 All Rights Reserved

Those whose personal problems off the job begin to affect

MHR Ver-1, 2014 All Rights Reserved

Miner (1975) suggested a possible causes checklist:

• Problems of intelligence and job knowledge

MHR Ver-1, 2014 All Rights Reserved

Disciplinary actions are increasingly subject to legal scrutiny for implications of

MHR Ver-1, 2014 All Rights Reserved

3. Natural justice (principles of natural justice)

How do managers put these guidelines into action?

If the aforesaid measures do not help, the next step is:

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Government (Government (federal, state or provincial) legislates to improve H & S

Management’s Goal (Attitudes of management to H & S will determine the

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Approaches to safety committees for improving the safety

MHR Ver-1, 2014 All Rights Reserved

• Proper effluent disposal systems

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved

Burn-out Stress Syndrome (BOSS) - A

Rust-out Stress Syndrome (ROSS) - This

MHR Ver-1, 2014 All Rights Reserved

Health promotion is a four- step process:

MHR Ver-1, 2014 All Rights Reserved

MHR Ver-1, 2014 All Rights Reserved