IM module-II

IGIT SARANG INDUSTRIAL MANAGEMENT
Personnel management
Personnel management can be defined as obtaining, using and maintaining a satisfied
workforce. It is a significant part of management concerned with employees at work and with
their relationship within the organization.
According to Flippo, “Personnel management is the planning, organizing, compensation,

integration and maintainance of people for the purpose of contributing to organizational,
individual and societal goals.”
According to Brech, “Personnel Management is that part which is primarily concerned with
human resource of organization.”
Nature of Personnel Management
1. Personnel management includes the function of employment, development and

compensation- These functions are performed primarily by the personnel
management in consultation with other departments.
2. Personnel management is an extension to general management. It is concerned with
promoting and stimulating competent work force to make their fullest contribution to
the concern.
3. Personnel management exist to advise and assist the line managers in personnel
matters. Therefore, personnel department is a staff department of an organization.
4. Personnel management lays emphasize on action rather than making lengthy
schedules, plans, and work methods. The problems and grievances of people at work
can be solved more effectively through rationale personnel policies.
5. It is based on human orientation. It tries to help the workers to develop their potential
fully to the concern.
6. It also motivates the employees through its effective incentive plans so that the
employees provide fullest co-operation.
7. Personnel management deals with human resources of a concern. In context to
human resources, it manages both individual as well as blue- collar workers.
Role of Personnel Manager
Personnel manager is the head of personnel department. He/She performs both managerial
and operative functions of management. His role can be summarized as:
1. Personnel manager provides assistance to top management- The top management are
the people who decide and frame the primary policies of the concern. All kinds of
policies related to personnel or workforce can be framed out effectively by the
personnel manager.
2. He/She advices the line manager as a staff specialist- Personnel manager acts like a
staff advisor and assists the line managers in dealing with various personnel matters.
3. As a counsellor, As a counsellor, personnel manager attends problems and grievances
of employees and guides them. He/She tries to solve them in best of his capacity.
4. Personnel manager acts as a mediator- He is a linking pin between management and
workers.
BY: DEEPAK SUNA DEPT. OF PRODUCTION ENGINERING

5. He/She acts as a spokesman- Since he is in direct contact with the employees, he is

required to act as representative of organization in committees appointed by
government. He represents company in training programmes.
Functions of Personnel Management

Following are the four functions of Personnel Management:
1. Manpower Planning
2. Recruitment
3. Selection
4. Training and Development
Elements of Personnel Management
Following are the elements of Personnel Management:
1. Organization- Organization is said to be the framework of many activities taking place

in view of goals available in a concern. An organization can be called as a physical
framework of various interrelated activities. Right from manpower planning to
employees’ maintenance, all activities take place within this framework. The nature
of the organization is dependent upon its goal. The business concern goal being profit-
making. Clubs, hospitals, schools, etc. their goal being service. The objective of
consultancy being providing sound advice. Therefore, it is organizational structure on
which the achievement of goals of an enterprise depends upon. In personnel
management, a manager has therefore to understand the importance of
organizational structure.
2. Job- The second element, i.e., jobs tell us the activities to be performed in the
organization. It is said that the goals of an enterprise can be achieved only through the
functional department in it. Therefore, seeing the size of organization today, the
nature of activities are changing. In addition to the three primary departments,
personnel and research department are new additions. Various types of jobs available
are :
a. Physical jobs
b. Creative jobs
c. Proficiency jobs
d. Intellectual jobs
e. Consultancy jobs
f. Technical jobs
3. People- The last and foremost element in personnel management is people. In a
organizational structure, where the main aim is to achieve the goals, the presence of
manpower becomes vital. Therefore, in order to achieve departmental goals, different
kinds of people with different skills are appointed. People form the most important
element because :
a. The organizational structure is meaningless without it.
b. It helps to achieve the goals of the enterprise.
c. It helps in manning the functional areas.
d. It helps in achieving the functional departmental goals.
e. They make a concern operational.

f. They give life to a physical organization.
The different types of people which are generally required in a concern are:
g. Physically fit people

h. Creative people
i. Intellectuals
j. Technical people
k. Proficient and skilled people
In personnel management, a personnel manager has to understand the relationship of the
three elements and their importance in organization. He has to understand basically three
relationships:-
i. Relationship between organization and job

ii. Relationship between job and people
iii. Relationship between people and organization.
Relationship between organization and job helps making a job effective and significant.
Relationship between job and people makes the job itself important. Relationship between
people and organization gives due importance to organizational structure and the role of
people in it.
Recruitment Definition:
Recruitment is defined as a process of discovering reliable sources of contacting desirable
employees which meets the staffing requirements of the organization. Through recruitment
process the organization can attract the adequate number of manpower to facilitate the
effective selection process and joining of efficient work force.
To define the actual meaning of word ‘recruit’ is to make a person join a group or a
corporation. For example: to recruit members for painting group or to recruit people for army.
Recruitment is the process of finding and hiring candidates for a specific job role. The
recruitment definition includes the entire hiring process, from the first stage to the recruit's
integration into the business, is covered by the term recruitment. Recruitment is a positive
process of searching for employees and stimulating them to apply for the jobs in the
organization. There will be opportunity to hire better candidates when more people apply for
employment.
Types of Recruitment
There are majorly two types of recruitment adopted and often used by the organizations in
their recruitment process i.e., internal and external recruitment.
Internal recruitment
This type of recruitment refers to hiring the employees within the organization internally.
Various internal sources of recruitment are:
o Promotion

o Transfer
o Recruiting former employees
o Job posting / job advertisement
o Employee referrals
o Previous applicants
External recruitment
External recruitment refers to hiring employees outside the organization. Various types of
external recruitment are:
o Direct recruitment
o Employment exchange
o Employment agencies
o Advertisements
o Professional association
o Campus hiring
o Advertisement through word of mouth
Steps of Recruitment
The process of recruitment consists of three Major Steps or phases -
a. Before posting job advertisement
b. Selection process
c. Formalities after selection of the candidate.
The common steps of recruiting followed by the Human Resource department of various
organizations:
1) Preparation- It is step in which the HRM department prepare a frame of ideal candidate
for the vacant position. The skills and competencies required to perform the job are
identified, also a qualification and level of experience required execute the job responsibilities
is determined. Once the framework is ready, the HR identifies the proper communication
channel through which the information about job vacancy can be conveyed to the suitable
candidates.
2) Receive applications- Once the advertisement about the job vacancy is posted through
internal and external source of recruitment, the HR department starts receiving the
applications for the job opening. Most of the time the HR department confirms the candidate
that their application is received by the organization and the further sorting process is going

on. Many companies used application tracking system (ATS) which helps to automatically
communicate with the applicant that their job application is received and is in process.
3) Selection stage 1: Cancel out unqualified applicants
Here the selection process begins- In this stage the application which are not suitable for the
job are cancel out by the HRM department. The application can be weed out based on the
un-matching qualification or experience of the candidate.
4) Selection stage 2: Arrangement of candidates

The applicants who are matching to the requirement of the job vacancy are then rated based
on their on-paper experience and qualification. The ratings convey how well the applicant is
fit of the vacant job profile. It is time consuming process and many times excel sheets are
used to sort out the application and rank them based on their suitability to the job profile.
5) Selection stage 3: Interview rounds
The ranked and selected candidates can called for the interview round. There are several
interview rounds which can vary from 2-6 based on the selection process adopted by the
organization. Mostly the HR round includes the background verification, personality check
and behavioural suitability of the candidate. The manager interview round is often used to
check the actual work suitability of the candidate.
6) Selection stage 4: Future work situation

This is considered as a last round of selection in which a simulated work exercise is given to
the candidate. It includes the question or tasks related to the area of expertise of the
candidate. It provides actual result about the ability of the candidate to perform as a future
employee of the organization.
7) Offer and Joining formalities

Generally 2-3 top selected candidates gets joining offer from the organization. The joining
formalities include the submission of relevant papers and signing the work contract with the
organization. After the documentation formalities the joining date of the employee is decided
and a new recruit joins the organization.
Importance of Recruitment

The following points will help to understand the importance of Recruiting:
1. The process is important to encourage and attract candidates and get ample amount
of application for the job vacancies.
2. It is an effective way to create information pool about the prospective candidates who
are suitable for the talent needs of the organization.
3. It is very important step of planning and analysis about the present and future
manpower requirement of the organization.
4. It bridges the gap between employers and their future employee.
5. It is a less expensive way of gathering information about the talented manpower in
the industry.
6. It helps to improve the selection process by proper sorting of suitable candidate for
the job.
7. It reduces the turnover of employees due to correct matching of candidate
expectations and the rewards offered by the organization.
8. It also helps the organization to meet the social and legal obligation of maintaining the
manpower composition.
9. It determines the appropriate candidates through the different channels of
recruitment.
10. It helps the organization to create different sources of attracting the right candidate
for the job profile.
Selection
Selection is a managerial decision-making process to predict which job applicants will be

successful if hired.
According to Thomas H. Stone, Selection is the process of differentiating between applicants
in order to identify (and hire) those with a greater likelihood of success in a job
Difference between recruitment and selection
S.No. Recruitment Selection
The process of recruitment begins with The process of selection ends with the
1. the creation of an applicant pool from selection of the number of candidates for
different sources. the job.
The main aim of recruitment is gathering It attempts to eliminate applicants in

2. as many applicants as possible for jobs in various stages and ends up with a smaller
an organisation. number of required candidates.

3. It is a positive activity. It is a negative activity.
It is a difficult activity as the selection of a

It is comparatively easy as the creation of
suitable candidate requires specialised
4. an applicant pool does not demand any
knowledge and skills for choosing the best
special skills.
possible candidate.
It is a searching function wherein

It is a screening function as it checks the
prospective candidates are searched for
5. suitability of the candidates for the jobs
the jobs which are offered in the
offered.
organisation.
Selection Process:
The selection process of the organisation depends on the various jobs and their nature and
requirements. A good selection process should be able to distinguish applicants who are most
suitable from those who are not suitable. The following are the steps in a selection process:
1. Employment Application Form, Blanks

2. Selection Test
3. Selection Interview
4. Reference Checks
5. Physical Examination
6. Job Offer
Employment Application Form, Blanks
An organisation collects application forms from applicants to collect extremely useful

information from them in a very short span of time. It is useful in determining the suitability
of the applicants and helps in predicting their job performance if they are chosen. The
application form should be prepared with careful consideration and should be reviewed
regularly.
Generally, an application form collects basic information such as name, father’s name, date
of birth, age, gender, marital status etc. It also collects information about the educational
qualifications, courses completed, major subjects, year of passing, percentage, rank and name
of an educational institution.
It may also collect information about work experience and previous positions held by the
candidate, the nature and benefits of the job and the reason for leaving it. Through the
application form, the organisation may also collect details about participation in
extracurricular activities. Further, names and addresses of a few references that have
knowledge about the candidate can also be collected.

Selection Test
As there are differences in the abilities, aptitudes, interests and traits of candidates, it is
important that these differences are measured for selecting the most suitable candidate. For
this, various types of selection tests are used. According to Cronbach, “A test is a systematic
procedure for comparing the behaviour of two or more persons.” One of the most common
methods to test the candidate is by using the psychological test.
Psychological tests help the Human Resource Managers to select and place employees and
determine the most suitable career plan for them. They also help them to assess their job
performance as well as act as an aid in counselling employees in conflicting situations.
The following are the major types of psychological tests:
1. Ability Test
2. Intelligence Test
3. Aptitude Test
4. Achievement Test
5. Personality Tests
6. Interest Test
7. Honesty and Integrity Test
Selection Interview
A selection interview is conducted to collect information that has not been collected during
the other stages of the selection process. Depending upon the nature of the job, one or more
interviews may be conducted. In simple terms, an interview is an activity where thorough face
to face conversation and information are collected to determine whether the candidate is
suitable for the job or not.
The following are the main objectives of the interview:
1. It is a way in which gaps in information are filled that are left during the previous stages
of the selection process.
2. It establishes direct and personal contact with the applicant so that information
obtained could be verified.
3. It creates two-way communication as there is a mutual exchange of information
between the candidate and the organisation.
4. It provides a platform for the organisation to create goodwill in the labour market by
offering good hospitality, courtesy and personal care to applicants.
Types of Interviews
The following are the major types of interviews:
1. Structured Interview
2. Unstructured Interview or Open-ended interview
3. In-depth Interview
4. Stress Interview
5. Panel Interview

Reference Checks
When the candidates fill out the application forms, the candidates are requested to fill in the
names of at least two references who can be contacted by the organisation to cross-check
the information provided by the candidate. Normally, these names are of the people who
know the candidate.
They may be friends, relatives, previous employees, faculty of the institute where the
candidate has studied or any other prominent persons who are familiar with the candidate.
Physical Examination
Physical examination is undertaken with the aim of ensuring that the selected candidates
meet the physical requirements of the job. It also safeguards the organisation from hiring
people with pre-existing ailments. But this step depends on the general organisation practices
as some organisations in India insist on comprehensive medical tests while others do not insist
on such tests.
Job Offer
It is the last step in the process of selection. Here the candidate is informed about their
provisional selection. A job offer that specifies the terms and conditions of employment is
issued to the candidates who have successfully cleared the interview and the physical
examination.
Once a positive response is received from the candidate, the process of integrating the
candidate into the organisation is initiated and his conversion from a possible candidate to an
employee begins. The acceptance or rejection of a job offer is influenced by the following
factors:
1. Alternative job opportunities are available.

2. Nature and extent of supervision, work schedule and nature of the co-workers.
3. Pay and benefits, opportunities for advancement in career, the reputation of the
company as a workplace.
4. Recruitment activities, such as how the candidate is recruited and how information is
conveyed to the candidate.
Training
Training implies enhancing the skills and knowledge of the employees for performing a
specific job. Training tries to improve employees’ performance in current job and prepares
them for future job. The crucial consequence of training is learning.
Objectives of Employee Training Programmes
1. To prepare employees to meet the varying and challenging needs of the job and
organization.
2. To provide knowledge and skills to new entrants and to help them to perform their
role and job well.
3. To coach employees for more complex and higher level jobs.
4. To educate employees new and innovative ways and techniques of performing job

Benefits of Trained Employees

Training is a significant tool for employee development. Training has assumed great
importance because of exceptional rate of change in the internal and external organizational
environment. The importance/benefits of trained personnel towards organizational
development are as follows-
a. Trained employees do not require tight control and supervision as they are well aware
of how to perform a job.
b. Trained employees can show higher performance by making optimum and best
utilization of the materials, tools, equipment and other resources provided to them.
c. Trained employees minimize wastages of resources in the organization and work both
efficiently and effectively.
d. Training makes employees more committed to an organization as the employees are
provided with growth, advancement and learning opportunities.
e. Training develops a line of proficient and skilled managers as it prepares employees
for complex and higher level tasks.
f. Trained employees adjust to the job better and there are fewer rates of absenteeism
and turnover.
g. Trained employees produce quality and quantity output.
h. Trained employees enable the organization to face competition from rival firms.
i. Trained employees can respond and adapt to the changing technology well.
j. Trained employees become more proficient and, thus, their earning potential
increase.
Steps in Employee Training Programme
Training programme involves the following steps:
1. Identifying the training needs- The training needs of each employee should be
identified. Programmes should be developed that are best suited to their needs.
2. Prepare the trainer- The trainer must do his homework well. Trainer should know
both what to teach and how to teach. Time management is required by the trainer.
Training should be delivered in such a manner that the trainee should not loose the
interest in the job.
3. Prepare the trainee- The trainee should remain active during training. Trainee should
know that why is he being trained. He should put across the trainer questions and
doubts. The trainee should be put at ease during the training programme.
4. Explain and demonstrate the operations- The trainer should explain the logical
sequence of the job. The trainee should perform the job systematically and explain
the complete job he is performing. His mistakes should be rectified and the complex

step should be done for him once. When the trainee demonstrates that he can do the
job in right manner, he is left to himself. Through repetitive practices, the trainee
acquires more skill.
5. Follow up and feedback- The trainee should be given feedback on how well he
performed the job. He should be asked to give a feedback on the effectiveness of
training programme
Training Methods
Induction Training - Induction training is often given to new employees to make them feel a
part of the organization. How do you think an individual can perform if he/she is not familiar
with the policies and rules and regulations of the organization? You can’t expect an individual
to deliver results on the first day itself. You need to welcome your employees well for them
to feel motivated and comfortable. Induction programs need to be designed sensibly. Too
much of information on the day of joining will frighten the new employee and believe me,
he/she will not come from the next day onwards. Induction programs help new employees to
get acquainted with the work culture and fellow workers. Induction programs need to be
short, crisp but informative.
Refresher Training - Refresher trainings are designed for existing employees to refresh them
and also help them acquire new skills and technologies to keep pace with the changing times.
Such training programs prepare employees for more responsible positions.
On the Job Trainings - On the job trainings are given to employees at the workplace itself by
their superiors and Bosses. Managers ought to sit with their team members on a regular basis,
train them on new technologies, skill sets to help them cope with the changes. On the job
trainings are given to employees along with their jobs itself and make them capable to handle
bigger responsibilities.
On the Job trainings are imparted by any of the following methods:
a. Coaching - Coaching is also defined as learning by doing and handling various ongoing
projects. In this method of training, team manager assigns certain job responsibilities
to team members, monitors their performance, points out their mistakes, provides
them feedbacks and also suggestions for improvement.
b. Job Rotation - In this type of training, employees move from one position to another,
thus acquiring new skills and learnings. Job rotation acquaints individuals with newer
roles and challenges and makes them capable of performing any type of task.
Employees need to be encouraged to go through various online learning sites which would
help them in their current job responsibilities. One needs to be aware of the latest
developments in his/her domain. Reading helps a lot.
Off the job Training - Off the job trainings are given outside the workplace. Off the job
trainings can be provided by any of the following methods:

a. Seminars/Conferences - Seminars and conferences are effective when training needs

to be given to a larger audience. Relevant information, latest developments, new
technologies and case studies are discussed on a common platform to acquaint
employees with new skill sets.
b. Simulation Exercise - Simulation exercises train the employees in an artificial
environment which closely resembles the employee’s actual working conditions.
c. Vestibule Trainings - In vestibule trainings, employees practice work on the
instrument/equipment which they would be using in future when they would be
actually working.
Management Games and Role Plays train employees to deal with critical problems and teach
them to find innovative solutions.
Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to
understand the abilities of a person for further growth and development. Performance
appraisal is generally done in systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.
Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:
1. To maintain records in order to determine compensation packages, wage structure,
salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right
job.
3. To maintain and assess the potential in a person for growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. It serves as a basis for influencing working habits of the employees.

6. To review and retain the promotional and other training programmes.
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be justified
by following advantages:
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.

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.
Employees Development: The systematic procedure of performance appraisal helps the
supervisors to frame training policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for efficient employees. It also
helps in framing future development programmes.
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.
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.

All the above factors ensure effective communication.
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.
Performance Appraisal Tools and Techniques
Following are the tools used by the organizations for Performance Appraisals of their
employees.
1. Ranking 8. Graphic Rating Scale
2. Paired Comparison 9. BARS
3. Forced Distribution 10. Forced Choice Method
4. Confidential Report 11. MBO
5. Essay Evaluation 12. Field Review Technique
6. Critical Incident 13. Performance Test
7. Checklists

1. 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
i. Employees are ranked according to their performance levels.
ii. It is easier to rank the best and the worst employee.
Limitations of Ranking Method

iii. 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.
iv. This method 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.
v. When a large number of employees are working, ranking of individuals become
a difficult issue.
vi. There is no systematic procedure for ranking individuals in the organization.
The ranking system does not eliminate the possibility of snap judgements.
2. 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
i. This method tends to eliminate raters bias
ii. 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
iii. 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.
3. 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: March 12 - The Officer
patiently attended to a customer’s complaint. He was very polite and prompt in attending the
customer problem.
Advantages of Critical Incident techniques
i. This method provides an objective basis for conducting a thorough discussion
of an employee performance.
ii. This method avoids recency bias (most recent incidents are too much
emphasized)
Limitations of Critical Incident techniques
iii. Negative incidents may be more noticeable than positive incidents.

iv. The supervisors have a tendency to unload a series of complaints about the
incidents during an annual performance review sessions.
v. It results in very close supervision which may not be liked by an employee.
vi. The recording of incidents may be a chore for the manager concerned, who
may be too busy or may forget to do it.
4. 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 behaviour 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.
Advantages of Checklists and Weighted Checklists
i. Most frequently used method in evaluation of the employee performance.

Limitations of Checklists and Weighted Checklists

ii. This method is very expensive and time consuming
iii. Rater may be biased in distinguishing the positive and negative questions.
iv. It becomes difficult for the manager to assemble, analyse and weigh a number
of statements about the employee characteristics, contributions and
behaviours.
JOB EVALUATION
Definition:-
Job evaluation is the process of comparing jobs with other jobs in terms of wages a worker
should be paid for performing the task. Thus, it is a rating of job. It can also be defined as “the
procedure to determine the relative values of the job in a plant and to determine the basic
wages for the job”.
Objectives:-
1. Its main object is to estimate the correct wages for the work performed.
2. It is means to reduce wage imbalance in the factories.
3. It can be used to resolve wage disputes.
4. It helps in standardization.
5. It helps to establish a method for future promotion of workers
Procedure of Job Evaluation:-

1. Identify the jobs to be evaluated.
2. Describe and analyze the requirements of the job. Write down the skill statement and the
responsibilities involved.
3. Compare the job with the pre-identified key jobs and decide its level or value (with respect
to key jobs).
4. Use the information supplied by (3) above to arrive at a suitable wage structure for the job.
Methods for Job Evaluation:-

There are non-analytical and analytical job evaluation methods that are employed by the
organizations to realize the worth of a set of jobs.

Non-analytical Job Evaluation Methods:

1. Ranking Method:
The different jobs, depending upon their requirements, responsibilities, involved and their
importance to the organization, are ranked, graded or placed from top to bottom. It is very
simple method and results can be obtained very quickly. But this method does not give actual
information that how much one job differs from other.
2. Classification or grading Method:
Jobs are classified or graded in groups or levels of equal skill, difficulty, responsibility,
importance and other requirements. It may be a production job, a sales job or an office job;
each job family can be broken into a number of grades. For example, office job may be
classified into six grades from grade A to grade F. Grade A involves simple tasks like sorting
whereas grade F deals with those tasks which require high responsibility and judgment.
This method is simple and can be easily mastered and administered. But it is not useful for
large organization. It is cumbersome and time consumable
Analytical Job Evaluation Methods:

1. Factor comparison Method:
Under this method, the job is evaluated, and the ranks are given on the basis of a series of
factors Viz. Mental effort, physical effort, skills required supervisory responsibilities, working
conditions, and other relevant factors. These factors are assumed to be constant for each set
of jobs. Thus, each job is compared against each other on this basis and is ranked accordingly.
The advantage of this method is that it is consistent and less subjective, thus appreciable by
all. But however it is the most complex and an expensive method.
2. Point-Ranking Method:
Under this method, each job’s key factor is identified and then the sub factors are determined.
These sub-factors are then assigned the points by its importance. For example, the key factor
to perform a job is skills, and then it can be further classified into sub-factors such as training
required, communication skills, social skills, persuasion skills, etc.
The point ranking method is less subjective and is an error free as the rater sees the job from
all the perspectives. But however it is a complex method and is time-consuming since the
points and wage scale has to be decided for each factor and the sub factors.
MERIT RATING
Definition:-
Merit Rating is a systematic and orderly approach to assess the relative worth of an employee
working in an organization in terms of his job performance, integrity, leadership, intelligence,
behaviour, etc. Merit Rating is commonly referred to as Employee Rating, Employee Appraisal
or Staff Reporting.
Objectives:-
1. It is commonly used to justify wage increases.
2. This is one of the method for deciding whether employees engaged on production are to
be confirmed or not.
3. It helps the supervisor in deciding, which person is to be given which task.
4. It helps in deciding that which employee deserves promotion.
5. It can be used as a scale by the selection office to judge whether their selection are
successful.

6. It protects the employee from discrimination, favouritisms etc.
Methods for Merit Rating:-

1. Straight Ranking Method:
In this method each worker is ranked in his group against each other. Comparison between
employees is made, ranking them from poorest to best one.
2. Description or Essay Type Merit Rating:
Generally this type of merit rating is used for the person of supervisory cadre. In this, in-charge
writes an essay on his subordinates. The essay must cover the following factors.
(a) Relation with subordinates and fellow persons.
(b) Job knowledge and capacity to understand.
(c) Knowledge about industrial engineering aspects.
(d) Knowledge about safety precautions and first aid.
(e) Organizations and planning ability.
(f) Explanation power
(g) Physical aptitude.
3. Forced Choice Method:
In this method characteristics are printed on a sheet of paper and in-charge is asked to tick
them. The marks for the rating can be given on the basis of these characteristics.
4. Graphic Rating Plan:
In this system points in numerical values are given (generally rating from 1.0 for the poorest
to 12.0 for the best worker) for various characteristics. The total of these points in them is
used to compare the workers. The important characteristics generally considered for the
rating of workers are:
(a) Accuracy of work
(b) Quantity of work
(c) Co-ordination and cooperation
(d) Safety
(e) Initiative and effort
(f) Responsibility
(g) Care and use of equipment, tools and material
(h) Attendance and punctuality
(i) Dependability
(j) Integrity
DIFFERENCE BETWEEN JOB EVALUATION AND MERIT RATING:

1. Job evaluation evaluates the job, merit rating the job-holder.
2. Job evaluation determines the relative worth of the job, whereas the merit rating
determines the relative worth of the worker.
3. Job evaluation is made before selection procedure, whereas merit rating is done after
placement.
4. Main objective of job evaluation is to establish equitable wage rate, whereas that of merit
rating is the development of each worker.

Wage Policy and incentives

Wage incentive refers to performance linked compensation paid to improve motivation and
productivity. It is the monetary inducements offered to employees to make them perform
beyond the acceptance standards.
According to the National Commission of Labour “wage incentives are extra financial
motivation. They are designed to stimulate human effort by rewarding the person over and
above the time rated remuneration, for improvements in the present or targeted results”.
Objectives of Wage Incentive Schemes:
(i) To use wage incentives as a useful tool for securing a better utilisation of manpower, better
productivity scheduling and performance control, and a more effective personnel policy.
(ii) To improve the profit of a firm through a reduction in the unit costs of labour and materials
or both.
(iii) To increase a worker’s earning without dragging the firm into a higher wage rate structure
regardless of productivity.
(iv) To avoid additional capital investment for the expansions of production capacity.
Principles of a Good Wage and Salary Administration:
a) Simple and easy to understand.
b) Union management agreement.
c) Time standard must be fixed.
d) Reward must be proportional to the effort.
e) Complaints and grievances must be properly attended to.
f) The plans should not change frequently and must be tried out continuously
for some length of time.
g) Equity and fairness.
h) Workers must be made to understand the plan.
i) Method study must precede time standard.
j) There must be a min guaranteed payment.
Types of Wage Incentive Plans:

Following are the types of wage incentive plans.
1. Straight Piece Rate Plan:

Under the straight piece rate plan workers are paid based on their output. For
example, if the piece rate is Rs. 4 per piece of the product, then a worker who turns
out 40 pieces/day earns Rs. 160 (Rs. 4 x 40) as his wage for that day. Whereas another
employee who produces 32 pieces/ day earns Rs. 128 (Rs. 4 x 32 pieces). Hence a fast
worker earns more compared to the slow worker.

Advantages:
i. Motivates the workers to increase their output.
ii. Simple and easy to understand.
iii. Improve productivity.
Disadvantages:
i. No guaranteed minimum wage. This makes workers insecure.
ii. Great disparity of earning between slow and fast workers.
iii. Wastage might increase.
iv. Quality of production may suffer as the workers concentrate on quantity.
v. Interpersonal relationship suffers due to jealousy and competition to earn more.
vi. Enforced idleness like electricity failure or machine breakdown, adversely affect
earning of workers
2. Standard Piece Rate with Guaranteed Minimum Wage:
Here the minimum guaranteed wage is fixed on hourly basis. A worker gets the minimum
fixed wage/day plus the incentive for the number of pieces produced. To illustrate this,
assume that there is 8 hour’s shift the piece rate is Rs 4 and a minimum fixed wage of Rs 16/
hours (Rs 16 x 8 hours = Rs. 128 per day). The standard time/piece is 15 min.
Now, there are two workers A and B. (If worker A produces 25 prices/day then he earns: Rs.
128 (min. guaranteed wage) + Rs. 100 (Rs. 4 x 25 pcs) = Rs. 228/ day
If worker B produces 40 pieces / day then he earns Rs. 128 (min. guaranteed wage) + Rs. 160
(40 pieces x Rs. 4) = Rs. 228/ day)
Advantages:
i. Min. guarantee improves sense of security.
ii. Disparity between slow and faster workers is reduced.
Disadvantages:
i. Demotivate faster worker.
ii. Slow workers get higher piece rate viz Rs. 5.12 (128/ 25).
Differential Piece Rates:
The shortcoming of the above mentioned incentive plans have given way Differential piece
rates. The differential piece rates are classified under two heads viz. Individual incentive plans
and Group incentive plans.
Individual Incentive Plans:

The different plans are discussed below:
(a) Halsey Plan:

The features of this plan are:

a. Min. wage is guaranteed.
b. Additional bonus is provided to workers who
Wage and Salary Administration 147 complete the job in less than the “standard time”. Bonus
is a certain proportion to the time saved. This proportion is fixed at 50% in this plan.
The total wage is calculated as:
T x R + 50% (S – J) x R
Where J – time taken, R – Rate of wage, S – Standard time, 50% – The bonus percentage.
Illustration:
S = 10 hours, J = 8 hours; R = Rs. 5 / Hr; Bonus = 50%
Φ = 8 x 5+(50/100) x (10 – 8) x 5 = Rs. 45.
Advantages:
i. Guaranteed min. wage exists.
ii. Simple and easy.
iii. Dispensed with time consuming and costly process of work study.
iv. Management share a part of bonus on time saved.
Disadvantages:
i. Workers get only half of the benefit of their efficiency.
ii. If the worker’s rush through the job to save time, the quality may suffer.
iii. Workers object management in sharing bonus on time saved.
iv. Sufficient incentive is not provided to fast workers.
(b) Rowan Plan:
This is a modified form of Hasley Plan, developed by James Rowen of England. The Rowan
Plan pays more than the Halsey Plan. This is possible if a worker completes the task in half the
standard time of the task. If more than 50% time is saved then the bonus he earns decreases.
Therefore, Total wage = J x R + [J x R x (Time saved/std. time)]
Illustration:
S = 10 hours; J = 8 hours; R = Rs. 5 / hrs.
Φ =8 x 5 + [8 x 5+ (2/10)]
Φ = Rs. 48
Advantages:
i. Minimum guaranteed wage exists.
ii. Both the employees and the workers share the benefits of time saved.
iii. The efficient workers get bonus at diminishing rate if they save more than 50% of
the standard time. This checks over-speeding.
Disadvantages:

i. Incentive provided for fast worker is not sufficient.

ii. Workers dislike management sharing bonus of time saved.
(c) Gantt plan:
This plan was developed by Henry L. Gantt. Here standard time for every task is fixed through
time and motion study. Minimum time wage is guaranteed to all workers.
A worker who fails to complete the task within the standard time receives wages for actual
time spent at the specified rate. Workers who achieve or exceed the standard get extra bonus
varying between 20% to 50% of the hourly rate for the time allowed for the task.
Illustration:
(S) Suppose the standard time fixed for the job is 8 hours and (T) time rate is Rs. 10 hours and
the rate of bonus is 25%, then a worker who completes the job in 10 hours will be paid Rs. 10
x 8 = Rs. 80. On the other hand the worker who completes the job in 6 hours will be paid Rs
100 (Rs. 80 + 25% of Rs. 80).
Advantages:
i. Minimum guarantee exists.

ii. Fast worker is paid bonus at higher rate proportional to their output.
iii. Standard worker is paid 20% bonus.
iv. Part of bonus is shared by the organisation.
Disadvantages:
i. Sharing of bonus by organisation is resentment.

ii. Disunity among the slow and the fast workers.
(d) Bedeaux Plan:
This plan is developed by Charles E. Bedeaux in 1911. Here the minimum time wage is
guaranteed to all workers. The workers who complete the job within or more than the
standard time are paid at the normal time rate.
Workers who complete the job in less than the standard time are paid bonus, generally 75%
of the wage for the time saved and 25% to the foreman.
The wage rate is calculated as:

S x R + 75% of R (S – T)
Illustration:
S = 10 hrs; R = Rs. 5 / hrs; T = 8 hrs.
Then: Φ = 10 x 5+ 75% (5) x (10-8) = 50 + (3.75 x 2) = 50 + 7.50
Φ = Rs. 57.50

Advantages:
i. Min. wage is guaranteed to all the workers.

ii. The foreman is motivated to the productivity as 25% of time saved is paid to him.
iii. This plan is suitable in factories wherein a worker is expected to perform different
types of jobs.
Disadvantages:
i. Workers may resent sharing the bonus with foreman.

ii. Workers may find it difficult to understand the complete calculation involved in
this method.
(e) Emerson’s Efficiency Plan:
This plan was developed by Harrington Emerson. Here minimum wage is guaranteed. Workers
are paid different bonus rates as per their efficiency level. Bonus is given at an increasing
percentage beyond the prescribed level of efficiency (usually 66.67%). Efficiency is measured
by comparing the actual time taken with the standard time.
Illustration:
S = 10 hrs, T = 8 hrs, R = Rs. 5 / hr.
Bonus = 10% upto 75 % efficiency
20% for 75%- 100%
30% beyond 100%
Φ = (T x R) + (percentage of bonus x T x R)
In this case, the efficiency level in (10/8) x 100 = 125% and, Bonus at 30% is payable.
Total wage = 8 x 5 + (30/100) (8 x 5) = 40+12 = Rs. 52.
If worker A takes 16 hrs, then his bonus is nil.
If worker B takes 14 hrs, his bonus is (1/10) x 14 x 5.
If worker C takes 10 hrs, his bonus is (2/10) x 10 x 5.
If worker D takes 8 hrs, his bonus is (3/10) x 8 x 5.
Advantages:
i. Guaranteed time wage provides a sense of security to all the workers.

ii. It encourages healthy competition among workers.

iii. Bonus begins at 66.67% efficiency which is within the reach of many workers.
Disadvantages:
i. There is little incentive after 100% efficiency level.

ii. The plan is not very flexible or selective.
iii. Employer may fix the standard time at a low level making it impossible for most of
the workers to earn bonus.
Group Incentive Plan:
In some cases like an assembly line production it is not possible to determine the performance
of an individual worker as several workers jointly perform a single operation. In such cases it
is desirable to introduce a group incentive scheme. Here the bonus is calculated for a group
of workers and the total amount is distributed among the group members in proportion to
the wage earned by each.
(a) The Scalar Plan:
This is a group plan where the productivity of the entire work force is taken into account. In
this plan bonus is paid at the rate of 1 % for every 1% rise in productivity. Workers are not
paid the full amount of bonus earned by them in the same month.
A certain percentage is set aside as a “Resource Fund” to take care of fluctuation. At the end
of the year, the balance remaining in the “Reserve Fund” is also distributed.
(b) Priest Man Bonus Plan:
Here a committee of workers and management set the standard of performance. A minimum
wage is guaranteed to each worker. The group gets bonus when actual output exceeds the
standard. The group supervisor also gets a share on the group bonus. This plan promotes
team spirit among employees.
Other Forms of Incentives:
Apart from the above mentioned incentive plans; there are also other forms of incentives,
especially for the white collared workers. They are briefly discussed below.
Employee Stock Option Plan:
This is popularly known as ESOP. This is a form of incentive where the employees are allotted
the company share at a price below the market price. When the company achieve better
results, the market price of its shares and the value of the employees’ shareholding rise.
This form of incentive plan is relatively new in India and is becoming popular of late. IT is
motivating to the employee, as (it enhances a sense of belongingness to the organisation)
shareholders are the owners of the organisation.

Profit Sharing:
Prof. Seager defines profit sharing as “an arrangement by which employees receive a share,
fixed in advance of the profits”. Profit sharing usually involves the determination of an
organisation profits at the end of the fiscal, year and the distribution of a percentage of the
profits to the workers qualified to share in the earnings. The main objectives of profits sharing
are to create unity of interest and the spirit of co-operation.
The theory behind profit sharing is that management should feel its workers will fulfill their
responsibilities more diligently if they realize that their efforts may result in higher profits
which will be returned to the workers through profit sharing.
In India this incentive scheme is not well received by both the management and the workers.
Committee appointed by the Govt. of India suggested profit sharing as a method of ensuring
industrial peace and a step towards workers’ participation in management and also suggested
that 50% of the profit be shared among the workers.
Both the employers and the trade unions rejected this. The trade unions prefer bonus to
profits sharing as bonus is payable irrespective of profit or loss under the Bonus Act 1965.
Fringe Benefits:
ILO describes fringe benefits as wages are often augmented by special cash benefits, by the
provision of medical and other services or by payment in kind that form part of the cost for
expenditure on the goods in services.
In addition workers commonly receive such benefits as holidays with pay low cost meals, low
rent housing etc. such additions to the wage proper are sometimes referred to as fringe
benefits.
Fringe benefits involve a labour cost for the employer and are not meant directly to improve
efficiency. These add to the workers standard of living. Hence benefits may be statutory or
voluntary.
They improve motivation and morale of workers by satisfying their needs and develops a
sense of belonging and loyalty among workers. They also improve the public image of the
organisation.

Group Dynamics
The social process by which people interact and behave in a group environment is called
group dynamics. Group dynamics involves the influence of personality, power, and behaviour
on the group process. Is the relationship between individuals conducive to achieving the
group goals? Is the structure and size of the group an asset in pursuing both the task and
maintenance functions of the group? How is formal and informal power used to build
consensus or reach decisions? Does the combination of individuals produce the right culture?
How these individuals, cultures, and internal forces interact allows us to analyse and better
understand group effectiveness.
There are two types of groups: 1) formal groups who are structured to pursue a specific task,
and 2) informal groups who emerge naturally in response to organizational or member
interests. These interests may include anything from a research group charged with the
responsibility to develop a new product to a group of workers who spontaneously come
together to improve social or member activities. While we can learn a lot from informal
groups in terms of leadership and motivation, we will concentrate mostly on formal groups,
characterized by member appointment and delegated authority and responsibility.
Group Structure and Size

Effective group performance depends to a large extent, on the size and composition of the
group. A group may consist of as few as two people (giving credibility to the statement that
“two heads are better than one”), or as many as three or four hundred. In order to be
effective, group size should be kept to a minimum without jeopardizing workload and goal
achievement. Larger groups increase the possibility of conflict due to the variety of
viewpoints, few opportunities for the development of social relationships, a decrease in
participation levels, and lack of opportunity for individual recognition.
Individual skills and performance must be a consideration in forming a group. How many
people will be required to ensure that all the skill sets necessary for the performance of the
task are included? Will the task be slowed by a poor performer as may happen with assembly
line production? Does the group contain the combination of leaders and followers that will
lessen the potential for member rivalries and conflicts?
Diversification is a factor in both group development and skill requirement. A group of
predominately white males may develop more quickly than an ethnically and racially diverse
group of men and women. But while the former group may be better able to communicate,
set standards and grow as a cohesive unit, it may not be diverse enough to meet all the
community or organizational needs. A more diverse group may take longer to reach peak
performance due to the number of cultures, language differences, and interpretation of the
task to be completed, but once they do develop, diverse groups are equally productive and
may even be more creative in problem-solving because members have access to a broader
base of ideas for solutions.
Group Development
The appointment of individuals to a group based on their compatibility, diversity, or expertise
does not assure effectiveness in achieving group goals. A group is initially a collection of
personalities with different characteristics, needs, and influences. To be effective, these
individuals must spend time acclimatizing themselves to their environment, the task, and to
each other. Organizational experts and practitioners have observed that new groups go

through a number of stages before they achieve maximum performance. Each stage presents
the members with different challenges that must be overcome before they can move on to
the next stage. These stages have been identified as forming, storming, norming, performing,
and adjourning.
1. Forming: At this first stage of development, members are preoccupied with

familiarizing themselves with the task and to other members of the group. This is
sometimes referred to as the dependent stage, as members tend to depend on
outside expertise for guidance, job definition, and task analysis.
2. Storming: At this stage, the group encounters conflict as members confront and
criticize each other and the approach the group is taking to their task. Issues that arise
include identification of roles and responsibilities, operational rules and procedures,
and the individual need for recognition of his or her skills and abilities. This stage is
also referred to as the counter dependent stage where members tend to “flex their
muscles” in search of identity. In some cases, the group may have problems getting
through this stage. This may occur if the group encounters difficulty clarifying their
task, agreeing on their mission or mandate, or deciding how they will proceed. Lack of
skills, ability or aptitude can also contribute to their inability to get beyond this stage.
3. Norming: At this point, members start to resolve the issues that are creating the
conflict and begin to develop their social agreements. The members begin to
recognize their inter dependence, develop cohesion, and agree on the group norms
that will help them function effectively in the future.
4. Performing: When the group has sorted out its social structure and understands its
goals and individual roles, it will move toward accomplishing its task. Mutual
assistance and creativity become prominent themes at this stage. The group, sensing
its growth and maturity, becomes independent, relying on its own resources.
5. Adjourning: During this phase, the group will resort to some form of closure that
includes rites and rituals suitable to the event. These may include socials and parties,
or ceremonies that exhibit emotional support or celebration of their success.

Group Functions
Three functions that influence the effectiveness and productivity of groups are task functions,
maintenance functions, and self-interest functions.
Task Functions
This is the primary reason for the establishment of a group. To achieve the task, they must
have members that fulfill some or all of the following roles:
a) Initiating: by proposing tasks or goals, defining problems and suggesting procedures
for a solution;
b) Information seeking: by requesting facts, seeking relevant information, and asking for
suggestions or ideas;
c) Information giving: by offering facts, providing information, stating beliefs, and giving
suggestions or ideas;
d) Clarifying ideas: by interpreting and clarifying input, indicating alternatives and giving
examples;
e) Bringing closure: by summarizing, restating, and offering solutions;
f) Consensus testing: by checking for agreements and sending up ‘trial balloons’.
Maintenance Behaviour
Each group needs social-emotional support to be effective. Some members of the group will
take the lead in providing this support which consists of the following:
a) Encouraging: by showing regard for other members and providing positive response
to their contributions;
b) Improving group by expressing group feelings, sensing moods and relationships,
atmosphere: and sharing feelings;
c) Harmonizing: by reconciling differences and reducing group tension;
d) Compromising: by admitting errors and looking for alternatives;
e) Gate-keeping: by attempting to keep communications flowing, facilitating the
participation of others, and suggesting procedures for sharing discussion;
f) Standard setting: by reminding members of group norms, rules, and roles.
Self-interest Behaviour
This third function displayed by some individuals, members generally takes away from group
performance and affects task achievement at the expense of the group. Activities that identify
self-interest behaviour are as follows:
a) Dominating and controlling: by displaying lack of respect for others, cutting them off,
not listening, and restating other members’ suggestions with a different meaning;
a) Blocking: by stifling a line of thought, and changing the topic either away from the
point of view or back to his or her own interest;
b) Manipulating: by providing self-serving information, or a single point of view designed
to achieve a decision that is consistent with their position;
c) Belittling: through put-downs, sneering at other’s point of view, or making jokes about
another member’s contribution;
d) Splitting hairs: by nit-picking, searching for insignificant details that delay a solution,
or undermining another person’s point of view.

Group Norms
Norms – Generally agreed on informal rules that guide group member’s behaviour.
These are set of beliefs, feelings & attitudes commonly shared by group members
PRESCRIPTIVE NORMS: Expectations within the group regarding what is supposed to be

done
PROSCRIPTIVE NORMS: Expectations within the group regarding behaviours which

members are NOT supposed to engage
ETHNOCENTRISM: A bias toward one’s own subgroup and against other sub groups.
ETHNO RELATIVISTIC THINKING: Taking the perspective of another group and

understanding how they see the world.
SNOWBALL EFFECT: The tendency for people to share informal information with others
with whom they come into contact.
GRAPEVINE: An organization’s informal channels of communication, based mainly on

friendship
FRAMING: The tendency for people to make different decisions based on how the
problem is presented to them
PIPE DREAMS: Types of rumor that expresses people’s wishes
SAY-DO MATRIX: A way of differentiating systematically with respect to consistencies and

inconsistencies in what people say and what people do.
HURIER MODEL: Listening has 6 components (Hearing, Understanding, Remembering,

Interpreting, Evaluating, Responding)
GATE KEEPERS: People responsible for controlling the flow of information to others to
keep them from becoming overloaded
BROWN BAG MEETINGS: Informal get-togethers over meals in which people discuss
what’s going on the company
HYPER VIGILANCE: The state in which an individual frantically searches for quick solutions
to problems & goes from one idea to another out of a sense of desperation
SOCIAL LOAFING (Ringlemann Effect): People may not tend to work as hard in groups as
they would individually do because their contribution is less noticeable in groups hence
they like to see others carry their workload.
RISKY SHIFTS: Entire group taking a risk is of high risk

Job satisfaction and Morale

Job Satisfaction
Job satisfaction displays the amount the gratification that employees have when they’re
in the workplace and plays a crucial role in employee productivity. An emphasis on
employee job satisfaction can lead to their talent maximizing their potential, creative
abilities and the strengths that give your business a competitive advantage.
During an annual performance review, an employee may be asked how they feel about
the working they’re doing and evaluate their environment. This question gives the
employee a chance to answer the question directly about whether the job is fitting in with
their career goals.
Strategies for improving job satisfaction:
Measure satisfaction
Hold individual meetings with employees periodically to gauge the motivation they have
to work their current position. When a response from the employee, have a better idea
what their motivations are and how to build on them. Performance reviews also can give
the employee an avenue to express their opinions in writing about additional comments
they may have about their current role.
Receive feedback from employees regularly
Have a direct communication line with employees that extends beyond one manager. It’s
important to have the manager’s evaluation of the employees, but establishing an open-
door policy allows for free flowing conversation and opens up the silo between upper and
lower-level employees.
Give personal recognition
Create an Employee of the Month initiative at business to spotlight an employee’s
performance. Once the employee of the month is announced, have a meeting with staff
to congratulate them and their contributions to the team.
Another method is you can implement is to create a cash- or event-based incentive for
employees that celebrates their performance from the past week. The more creative an
approach is, their higher likelihood an employee will be engaged.
Develop workers skills and potential
Align training and education methods to employee’s career goals to help them be more
productive and inventive in the workplace. Introduce personalized training initiatives for
team and gear it towards a particular skill.
Employee morale
Employee morale is a description of the emotions, attitudes and feelings of employees
within their workplace environment. Employees that are happy and show a positive
attitude at work are known to have high morale, but employees who don’t favor their
work environment have low morale.
A few aspects of a workplace that can influence an employee’s morale include working
conditions, support from management and job security. For example, If Jane sits down
with her manager and she is communicated that she is on task with her work, then she’ll
have a higher likelihood of feeling emotionally at ease and feel less pressure because of
receiving a vote of confidence from management.

Strategies for improving workforce’s morale:

Create a cordial work environment
The success of an organization can be determined based on how the workforce
communicates with one another. Therefore, fostering positive behaviour within the
workplace is crucial to ensure workplace can manage projects they’re working on and
interact with clients in a friendly way.
Evaluate managerial support and behaviour
Employees who work with clients on a day-to-day basis are brand ambassadors for the
organization. Whether if it’s sales, marketing or another department, employees may not
receive direct feedback from clients about their performance. If the manager receive
feedback from the client about an employee, present the feedback in an honest manner,
but ensure that you’re making them feel like they’re doing well and are taking the
necessary steps to better their performance when necessary.
Involve employees in decision-making
Another method of fostering an all-inclusive workplace is to elicit feedback from team
members as to areas of growth on a specific strategy or tactic. Giving employees more
autonomy when it comes to resource allocation, setting priorities and alignment or
organizational and client goals is conducive to the success of the strategy. Also, it
empowers employees to execute their tactics with clarity as they were in the same room
as their team members who are working towards a common goal.
Note opportunities for training and advancement
It’s manager responsibility to ensure that workers are receiving the training necessary to
perform their tasks. Communicate with team members individually to see if these tasks
are aligned with their career goals and express interest in advancing up the ranks of the
organization. Their response should be an indicator of their project status on various tasks
besides finding out where they see themselves.

MATERIALS MANAGEMENT
INTRODUCTION Materials management is a function, which aims for integrated approach

towards the management of materials in an industrial undertaking. Its main objective is
cost reduction and efficient handling of materials at all stages and in all sections of the
undertaking. Its function includes several important aspects connected with material,
such as, purchasing, storage, inventory control, material handling, standardisation etc.
MATERIALS MANAGEMENT ORGANIZATION The major resources in any organization to

manage are the materials out of seven main resources required to run any organization.
They are management, materials, money, man power, machines, methods and matrix or
facilities which include systems, plants, location and buildings etc. The purpose of
materials management organization in any industry is to plan the materials requirements
for the production of goods and services. The structure of the organization must be such
so as to have the efficient management of materials controlling its flow, conservation and
utilization. Its objective is to use judiciously and economically. The product must be
produced from the available materials purchased at the economic price and bring
together under one organizational component sharing responsibilities of all the aspects
affecting flow, conservation, utilization, quality and cost of materials. Materials
management include inventory management, purchase management, value analysis,
store keeping, maintenance and upkeep of the inventories in hand and in process.
Fig 1. STRUCTURE OF MATERIALS MANAGEMENT DEPARTMENT

Fig 2. ORGANIZATION STRUCTURE WITH FUNCTIONAL ACTIVITIES
Fig 3. MATERIAL MANAGEMENT ACTIVITIES IN AN ORGANISATION

The organization of materials management must be such as to efficiently integrate the

activities concerned with materials and regulate its use as per requirements in the production
so as to have stability. The structural development and authority within the hierarchy of the
system must be harmonious and integrative for proper decision making and achieving goals
of the organization through proper information supply system.
FUNCTIONS OF MATERIALS MANAGEMENT

Materials management is defined as ―the function responsible for the coordination of
planning, sourcing, purchasing, moving, storing and controlling materials in an
optimum manner so as to provide a pre-decided service to the customer at a minimum
cost.
Scope of Material Management
Materia Purchasing Stores Inventory Other related

l Management Manageme Functions
Plannin
nt
g and a).Standardisation
Control b). Simplification
c). Specification
d). Value Analysis
e). Ergonomics
f). Just-In-Time
The functions of materials management can be categorized in the following ways:
 Material Planning and Control

 Purchasing
 Stores Management
 Inventory Control or Management
 Standardization
 Simplification
 Value Analysis
 Ergonomics
 Just-in-Time (JIT)

PURCHASING MANAGEMENT
Purchasing is an important function of materials management. In any industry purchase
means buying of equipment, materials, tools, parts etc. required for industry. The importance
of the purchase function varies with nature and size of industry. In small industry, this function
is performed by works manager and in large manufacturing concern; this function is done by
a separate department. The moment a buyer places an order he commits a substantial
portion of the finance of the corporation which affects the working capital and cash flow
position. He is a highly responsible person who meets various salesmen and thus can be
considered to have been contributing to the public relations efforts of the company. Thus,
the buyer can make or mar the company‘s image by his excellent or poor relations with the
vendors.
DEFINITION:
The purchasing can be defined as the process of buying and procuring the materials, parts,
components, equipment, spare parts, tools and supporting items required by industries or
any organization to deliver its products as per customer requirements at the competitive
rates and of good quality.
OBJECTIVES OF PURCHASING
The basic objective of the purchasing function is to ensure continuity of supply of raw
materials, sub- contracted items and spare parts and to reduce the ultimate cost of the
finished goods. In other words, the objective is not only to procure the raw materials at the
lowest price but to reduce the cost of the final product. The objectives of the purchasing
department can be outlined as under:
 To avail the materials, suppliers and equipments at the minimum possible costs:
These are the inputs in the manufacturing operations. The minimization of the input cost
increases the productivity and resultantly the profitability of the operations.
 To ensure the continuous flow of production through continuous supply of raw
materials, components, tools etc. with repair and maintenance service.
 To increase the asset turnover: The investment in the inventories should be kept
minimum in relation to the volume of sales. This will increase the turnover of the
assets and thus the profitability of the company.
 To develop an alternative source of supply: Exploration of alternative sources of
supply of materials increases the bargaining ability of the buyer, minimization of
cost of materials and increases the ability to meet the emergencies.
 To establish and maintain the good relations with the suppliers: Maintenance of
good relations with the supplier helps in evolving a favorable image in the business
circles. Such relations are beneficial to the buyer in terms of changing the
reasonable price, preferential allocation of material in case of material shortages,
etc.

 To achieve maximum integration with other department of the company: The

purchase function is related with production department for specifications and
flow of material, engineering department for the purchase of tools, equipment
and machines, marketing department for the forecasts of sales and its impact
on procurement of materials, financial department for the purpose of
maintaining levels of materials and estimating the working capital required,
personnel department for the purpose of manning and developing the
personnel of purchase department and maintaining good vendor relationship.
 To train and develop the personnel: Purchasing department is manned with
varied types of personnel. The company should try to build the imaginative
employee force through training and development.
 Efficient record keeping and management reporting: Paper processing is
inherent in the purchase function. Such paper processing should be
standardised so that record keeping can be facilitated. Periodic reporting to
the management
PURCHASING POLICY AND PROCEDURES:
Purchasing Policy: Every organization sets the purchasing policy. In order to

accomplish the aims and objectives of the organization, the directives and instructions
issued to purchase the materials are called the policy of purchasing. Policy means the
set of principles, purposes and rules of action framed written or otherwise applied to
fulfill the goals of organization.
Advantages and Disadvantages of Policies
Advantages
 Policies define and clarify top management objectives.

 The written instructions communicate views of management.
 It provides guidance to the person to adopt the working method of same type.
 It provides framework for decision-making.
Disadvantages
 In large size organization it is difficult to communicate the policy and

particularly the changes, which are made quite often.

 All the employees may not be aware of the purpose of policy.
 Greater the number of policies it is more difficult to create awareness.
PROCEDURES OF PURCHASING :
The policy statements are guidelines and they should be difficult to understand.
Lengthy and too many policies have to be avoided. The purchasing policy provides
the guidelines and direction in the following categories. It defines:
(a) Rules of purchasing
(b) Conduct of purchasing personnel
(c) Social and minority business objectives
(d) Operational issues
PURCHASING PROCEDURE
The procedure describes the sequence of steps leading to the completion of an identified
specific task. The purchasing procedure comprises the following steps as indicated in Fig.
1. Recognition of the need: The initiation of procedure starts with the recognition of the need
by the needy section. The demand is lodged with the purchase department in the
prescribed Purchase Requisition Form forwarded by the authorized person either directly
or through the Stores Department. The purchase requisition clearly specifies the details,
such as, specification of materials, quality and quantity, suggested supplier, etc. Generally,
the low value sundries and items of common use are purchased for stock while costlier and

special items are purchased according the production programmes. Generally, the
corporate level executives are authorized signatories to such demands. Such purchases are
approved by the Board of Directors. The reference of the approval is made on requisition
and a copy of the requisition is sent to the secretary for the purpose of overall planning
and budgeting.
2. The Selection of the supplier: The process of selection of supplier involves two basic
aspects: searching for all possible sources and short listing out of the identified sources.
The complete information about the supplier is available from various sources, such as,
trade directories, advertisement in trade journals, direct mailing by the suppliers, interview
with suppliers, salesmen, ssuggestions from business associates, visit to trade fair,
participation in industries convention, etc. Identification of more and more sources helps
in selecting better and economical supplier. It should be noted that the low bidder is not
always the best bidder. When everything except price is equal, the low bidder will be
selected. The important considerations in the selection are the price, ability to supply the
required quantity, maintenance of quality standards, financial standing etc. It should be
noted that it is not necessary to go for this process for all types of purchases. For the
repetitive orders and for the purchases of low-value, small lot items, generally the previous
suppliers with good records are preferred.
3. Placing the order: Once the supplier is selected the next step is to place the purchase order.
Purchase order is a letter sent to the supplier asking to supply the said material. At least six
copies of purchase order are prepared by the purchase section and each copy is separately
signed by the purchase officer. Out these copies, one copy each is sent to store-keeper,
supplier, accounts section, inspection department and to the department placing the
requisition and one copy is retained by the purchase department for record
4. Follow-up of the order: Follow-up procedure should be employed wherever the costs and
risks resulting from the delayed deliveries of materials are greater than the cost of follow-
up procedure, the follow-up procedure tries to see that the purchase order is confirmed
by the supplier and the delivery is promised. It is also necessary to review the outstanding
orders at regular intervals and to communicate with the supplier in case of need. Generally,
a routine urge is made to the supplier by sending a printed post card or a circular letter
asking him to confirm that the delivery is on the way or will be made as per agreement. In
absence of any reply or unsatisfactory reply, the supplier may be contact through personal
letter, phone, telegram and/or even personal visit.
5. Receiving and inspection of the materials: The receiving department receives the
materials supplied by the vendor. The quantity are verified and tallied with the purchase
order. The receipt of the materials is recorded on the specially designed receiving slips or
forms which also specify the name of the vendor and the purchase order number. It also
records any discrepancy, damaged condition of the consignment or inferiority of the
materials. The purchase department is informed immediately about the receipt of the
materials. Usually a copy of the receiving slip is sent to the purchase department.

6. Payment of the invoice: When the goods are received in satisfactory condition, the invoice
is checked before it is approved for the payment. The invoice is checked to see that the
goods were duly authorised to purchase, they were properly ordered, they are priced as
per the agreed terms, the quantity and quality confirm to the order, the calculations are
arithmetically correct etc.
7. Maintenance of the records: Maintenance of the records is an important part and parcel
of the efficient purchase function. In the industrial firms, most of the purchases are repeat
orders and hence the past records serve as a good guide for the future action. They are
very useful for deciding the timings of the purchases and in selecting the best source of the
supply.
8. Maintenance of vendor relations: The quantum and frequency of the transactions with
the same key suppliers provide a platform for the purchase department to establish and
maintain good relations with them. Good relations develop mutual trust and confidence in
the course of the time which is beneficial to both the parties. The efficiency of the purchase
department can be measured by the amount of the goodwill it has with its suppliers.
SELECTION OF SUPPLIER
Selection of the right supplier is the responsibility of the purchase department. It can
contribute substantially to the fundamental objectives of the business enterprise. Different
strategies are required for acquiring different types of materials. The selection of supplier for
standardised products will differ from non-standardised products. Following factors are
considered for the selection of suppliers:
SELECTION OF SOURCES OF SUPPLIER AND VENDOR DEVELOPMENT
The best buying is possible only when the decision maker is familiar with all possible sources
of supply and their respective terms and conditions. The purchase department should try to
locate the appropriate sources of the supplier of various types of materials. This is known as
survey stage‘.
The government department, large manufacturing and business companies like public sector
firms keep the records of approved suppliers depending upon their
(i) Manufacturing capabilities
(ii) Financial conditions
(iii) Reputation
(iv) Service facility

(v) Quality of product produced by them
(i) Trade Journals and Trade Directories: Trade journals or magazines routinely publish the
information about different companies about their technical or innovative
developments of a material, product, process or service. Advertisements in trade

journals about the products and services also help in selection of suppliers. Almost all
the industries publish the directories of firms and companies which produce their items
and services required to facilitate to refer to the selection of supplier and vendors.
(ii) Industrial Exhibitions and Trade Fairs
These are the best ways of exposure directly for the industrial products to sell and
purchase of items. It is also exhibiting the latest technological developments,
introduction of new products and information about latest prices.
(iii) Internet Searches
Now the internet is providing lot of information and access to the remote suppliers.
Ecommerce and E- Business is helping to make direct purchase from the
manufacturers to get the items worldwide.
(iv) Local or Distant Suppliers
The problems associated with distant supplies is that the cost of transportation,
packing, insurance, sales tax and octroi etc. are high and the repair and maintenance
become difficult by such suppliers. Therefore, it is always preferred to select local
suppliers to purchase the materials provided their performance and prices are
comparable to distance suppliers.
(v) Small or Big Suppliers
There are various types of companies and manufacturers in India for example, large-
scale manufacturers, medium scale, small scale and mini-scale manufacturing concerns.
Each one is having its own advantages and disadvantages for supplying their products.
Large-scale manufacturers find large potential buyers.
They supply goods at cheaper cost. The small-scale manufacturers however render
more attention to their clients and ensure about quality of items and delivery time.
VENDOR DEVELOPMENT:
The survey stage highlights the existence of the source. A business inquiry is made with
the appropriate supplier. It is known as Inquiry Stage‘. Here a short listing is made out
of the given sources of suppliers in terms of production facilities and capacity, financial
standing, product quality, possibility of timely supply, technical competence,
manufacturing efficiency, general business policies followed, standing in the industry,
competitive attitude, and interest in buying orders etc. A survey of the following will
help in developing the possible sources of supply
 Specialised trade directories.
 Assistance of professional bodies or consultants.
 The buyer‘s guide or purchase handbook.
 The manufacturer‘s or distributor‘s catalogue.
 Advertisements in dailies.
 Advertisement in specialised trade journals.
 Trade fair exhibitions.
Hence these above plays a major role in vendor development.

VENDOR EVALUATION:
The evaluation of supplier is done through the weightage assigned by measuring their
performance by purchase. The criteria are
1. Cost price 2. Quality 3. Delivery
The following variables to be considered while evaluating the quotations of the suppliers:
1. Cost factors: Price, transportation cost, installation cost if any, tooling and other operations
cost, incidence of sales tax and excise duty, terms of payment and cash discount are
considered in cost factor.
2. Delivery: Routing and F.O.B. terms are important in determining the point at which the
title to the goods passes from vendor to the buyer and the responsibility for the payment
of the payment charges.
3. Design and specification factors: Specification compliance, specification deviations,
specification advantages, important dimensions and weights are considered in line with
the demonstration of sample, experience of other users, after sale services etc.
4. Quality performance: The buyer can compare the supplier quality and define supplier
quality performance
5. Legal factors: Legal factors include warranty, cancellation provision, patent protection,
public liability, federal laws and reputation compliance
VENDOR RATING:
Vendor rating: The evaluation of supplier or vendor rating provides valuable information
which help in improving the quality of the decision. In the vendor rating three basic aspects
are considered namely quality, service and price. How much weight should be given to each
of these factors is a matter of judgment and is decided according to the specific need of the
organization. Quality would be the main consideration in the manufacturing of the electrical
equipments while price would be the prime consideration in the product having a tense
competitive market and for a company procuring its requirements under the blanket contract
with agreed price, the supplier rating would be done on the basis of two variables namely
quality and delivery.
In order to compare the performance of various vendors, it is necessary to rate them. The
rating of supplier (vendor) will be done on the following parameters.
(i) Quality performance
(ii) Delivery performance
(iii) Price performance

(i) Quality Performance

The supplier can be judged for quality performance from the view point of rejected lots. If a
supplier has supplied 100 pieces and 10 pieces are rejected out of this lot, he has rating of
90%.
Weightage = Number of lot accepte X 100
Number of lot supplied
(ii) Delivery Performance
Delivery performance can be made in two ways

(a) Adherence to time schedule
(b) Adherence to quantity schedule.
(a) Adherence to time schedule
Number of deliveries made in time × weightage
Total number of scheduled delivery
(b) Adherence to quantity schedule
Quantity supplied × weightage
Scheduled delivery
(iii) Price Performance
Price is very important criterion for evaluating a vendor which is as = Minimum price
offered × weightage vendor‘s price.
PURCHASING METHODS :
The following are some of the important purchasing methods:
1. Forward buying: Forward buying or committing an organization far into the future, usually
for a year. Depending upon the availability of the item, the financial policies, the economic
order quantity, the quantitative discounts, and the staggered delivery, the future
commitment is decided. This type of forward buying is different from speculative buying
where the motive is to make capital out of the price changes, by selling the purchased
items. Manufacturing organizations normally do not indulge in such buying. However, a
few organizations do ‗Hedge‘, particularly in the commodity market by selling or buying
contracts.
2. Tender buying: In public, all semblance of favouritism, personal preferences should be
avoided. As such, it is common for government departments and public sector
undertakings to purchase through tenders. Private sector organizations adopt tender
buying if the value of purchases is more than the prescribed limits as Rs. 50000 or Rs.
100000. The steps involved are to establish a bidders‘ list, solicit bids by comparing
quotations and place the order with the lowest bidder. However, care has to be taken that

the lowest bidder is responsible party and is capable of meeting the delivery schedule and
quality requirements. Open tender system or advertisement in newspapers is common in
public sector organizations. As advertising bids is costly and time consuming, most private
sector organizations solicit tenders only from the renowned suppliers capable of supplying
the materials
3. Blanket order system: This system minimizes the administrative expenses and is useful for
C‘ type items. It is an agreement to provide a required quantity of specified items, over a
period of time, usually for one year, at an agreed price the buyer‘s needs. The system
relieves the buyers from routine work, giving him more time for focusing attention on high
value items. It requires fewer purchase orders and thus reduces clerical work. It often
achieves lower prices through quantity discounts by grouping the requirements. The
supplier, under the system maintains adequate inventory to meet the blanket orders.
4. Zero stock: Some firms try to operate on the basis of zero stock and the supplier holds the
stock for these firms. Usually, the firms of the buyer and seller are close to each other so that
the raw materials of one is the finished products of another. Alternatively, the system could
work well if the seller holds the inventory and if the two parties work in close coordination.
However, the price per item in this system will be slightly higher as the supplier will include
the inventory carrying cost Operations Management in the price. In this system, the buyer
need not lock up the capital and so the purchasing routine is reduced. This is also significantly
reduces obsolescence of inventory, lead time and clerical efforts in paper work. Thus, the
seller can devote his marketing efforts to other customers and production scheduling
becomes easy.
5. Rate contract: The system of rate contract is prevalent in public sector organizations and
government departments. It is common for the suppliers to advertise that they are on ‗rate
contract‘ for the specific period. After negotiations, the seller and the buyer agree to the
rates of items. Application of rate contract has helped many organizations to cut down the
internal administrative lead time as individual firms need to go through the central
purchasing departments and can place orders directly with the suppliers. However, suppliers
always demand higher prices for prompt delivery, as rate difficulty has been avoided by
ensuring the delivery of a minimum quantity at the agreed rates. This procedure of fixing a
minimum quantity is called the running contract and is being practised by the railways. The
buyer also has an option of increasing the quantity by 25% more than the agreed quantity
under this procedure.
6. Reciprocity: Reciprocal buying means purchasing from one‘s customers in preference to
others. It is based on the principle ―if you kill my cat, I will kill your dog‖, and ―Do unto your
customers as you would have them do unto you‖. Other things, like soundness from the
ethics and economics point of view being equal, the principles of reciprocity can be practiced.
However, a purchasing executive should not indulge in reciprocity on his initiative when the
terms and conditions are not equal with other suppliers. It is often sound that less efficient
manufacturers and distributors gain by reciprocity what they are unable to gain by price and
quality. Since this tends to discourage competition and might lead to higher process and
fewer suppliers, reciprocity should be practiced on a selective basis.

7. Systems contract: This is a procedure in tender to help the buyer and the sellers to reduce
administrative expenses and at the same time ensure suitable controls. In this system, the
original indent, duly approved by competent authorities, is shipped back with the items and
avoids the usual documents like purchase orders, materials requisitions, expediting letters
and acknowledgements, delivery period price and invoicing procedure, Carborandum company
in the US claims drastic reduction in inventory and elimination of 40000 purchase orders by
adopting the system contracting procedure. It is suitable for low unit price items with high
consumption

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IGIT SARANG INDUSTRIAL MANAGEMENT

According to Flippo, “Personnel management is the planning, organizing, compensation,

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BY: DEEPAK SUNA DEPT. OF PRODUCTION ENGINERING

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g. Physically fit people

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Limitations of Checklists and Weighted Checklists

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Methods for Job Evaluation:-

BY: DEEPAK SUNA DEPT. OF PRODUCTION ENGINERING

Non-analytical Job Evaluation Methods:

Analytical Job Evaluation Methods:

BY: DEEPAK SUNA DEPT. OF PRODUCTION ENGINERING

6. It protects the employee from discrimination, favouritisms etc.

Methods for Merit Rating:-

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BY: DEEPAK SUNA DEPT. OF PRODUCTION ENGINERING

Wage Policy and incentives