Unit 2: Human Resource Management

What Is HRM?

Human resource management (HRM) is the process of employing people, training

them, compensating them, developing policies relating to them, and developing strategies
to retain them.

As a field, HRM has undergone many changes over the last twenty years, giving it an even
more important role in today’s organizations. In the past, HRM meant processing payroll,
sending birthday gifts to employees, arranging company outings, and making sure forms
were filled out correctly—in other words, more of an administrative role rather than a
strategic role crucial to the success of the organization. Jack Welch, former CEO of General
Electric and management guru, sums up the new role of HRM: “Get out of the parties and
birthdays and enrolment forms.… Remember, HR is important in good times, HR is
defined in hard times.” 1 It’s necessary to point out here, at the very beginning of this text,
that every manager has some role relating to human resource management. Just because
we do not have the title of HR manager doesn’t mean we won’t perform all or at least
some of the HRM tasks. For example, most managers deal with compensation, motivation,
and retention of employees—making these aspects not only part of HRM but also part of
management. As a result, this book is equally important to someone who wants to be an
HR manager and to someone who will manage a business.

Staffing
You need people to perform tasks and get work done in the organization. Even with the
most sophisticated machines, humans are still needed. Because of this, one of the major
tasks in HRM is staffing. Staffing involves the entire hiring process from posting a job to
negotiating a salary package. Within the staffing function, there are four main steps:

1. Development of a staffing plan. This plan allows HRM to see how many people they
should hire based on revenue expectations.
2. Development of policies to encourage multiculturalism at work. Multiculturalism
in the workplace is becoming more and more important, as we have many more people
from a variety of backgrounds in the workforce.

3. Recruitment. This involves finding people to fill the open positions.

4. Selection. In this stage, people will be interviewed and selected, and a proper
compensation package will be negotiated. This step is followed by training, retention, and
motivation.

Employee Orientation
The first step in training is an employee orientation. Employee orientation is the process
used for welcoming a new employee into the organization. The importance of employee
orientation is two-fold. First, the goal is for employees to gain an understanding of the
company policies and learn how their specific job fits into the big picture. Employee
orientation usually involves filling out employee paperwork such as I-9 and 401(k)
program forms.
The goals of an orientation are as follows:
1. To reduce start-up costs. If an orientation is done right, it can help get the employee up
to speed on various policies and procedures, so the employee can start working right
away. It can also be a way to ensure all hiring paperwork is filled out correctly, so the
employee is paid on time.
2. To reduce anxiety. Starting a new job can be stressful. One goal of an orientation is to
reduce the stress and anxiety people feel when going into an unknown situation.
3. To reduce employee turnover. Employee turnover tends to be higher when employees
don’t feel valued or are not given the tools to perform. An employee orientation can show
that the organization values the employee and provides tools necessary for a successful
entry.
4. To save time for the supervisor and co-workers. A well-done orientation makes for a
better prepared employee, which means less time having to teach the employee.
5. To set expectations and attitudes. If employees know from the start what the
expectations are, they tend to perform better. Likewise, if employees learn the values and
attitudes of the organization from the beginning, there is a higher chance of a successful
tenure at the company.
Some companies use employee orientation as a way to introduce employees not only to
the company policies and procedures but also to the staff. For an example of an
orientation schedule for the day, see Figure 8.1.
 Fig. 8.1:

Some companies have very specific orientations, with a variety of people providing
information to the new hires. This can create a welcoming environment, besides giving
the employee the information they need. This is an example of one such orientation.

Apprenticeship training
An apprentice is a person who is undergoing apprenticeship training.
Apprenticeship training refers to a course of training in any industry or establishment.
Apprenticeship training consists of basic training (theoretical instructions) and practical
on the job training at actual work place.
Any individual, who has completed 14 years of age, is physically fit and having minimum
educational qualification prescribed for a trade can undergo apprenticeship training.
Benefits of apprenticeship training - Apprentices get an opportunity of undergoing 'on
the job' training and are exposed to real working conditions. They get a chance to work
on advanced machines and equipments, industry specific best practices and learn more
about their field. Apprentices become skilled workers once they have acquired the
knowledge and skills in a trade or occupation, which help them in getting wage or self -
employment. In addition apprentices get stipend at the prescribed rates during the
training.
One can undergo apprenticeship training in any industry/ establishments in the
Central/State Pubic Sector or Private Sector, where apprenticeship seats are available.

The Apprentices Act, 1961.

The Apprentices Act provides for a machinery to lay down syllabi and specify period of
training, mutual obligations of apprentices and employees etc. The apprentice after
serving a contractual term of training can be taken on regular rolls. The Act as amended
in 1986, provides for revised rates of compensation during the apprenticeship period and
for failure on the part of the employer to execute the terms of the contract.

PERFORMANCE APPRAISAL
Performance appraisal is a systematic and objective way of judging the relative worth or
ability of an employee in performing his job. Performance appraisal is a method of
evaluating the behaviour of employees in the workspot, normally including both the
quantitative and qualitative aspects of job performance. It is a systematic and objective
way of evaluating both work-related behaviour and potential of employees. It is a process
that involves determining and communicating to an employee how he or she is
performing the job and ideally, establishing a plan of improvement.

Definition
According to Edward Flippo, “Performance appraisal is a systematic, periodic and as
impartial rating of an employee’s excellence in matters performing to his present job and
his potential for the present job”

According to Dale S. Beach, “Performance appraisal is the systematic evaluation of the

individual with respect to his or her performance on the job and his or her potential for
the development”
FEATURES OF PERFORMANCE APPRAISAL
The main characteristics of performance appraisal may be listed thus:
• The appraised is a systematic process involving three steps:
a. Setting work standards.
b. Assessing employee's actual performance relative to these standards.
c. Offering feedback to the employee so that he can eliminate deficiencies and
improve performance in course of time.
• It tries to find out how well the employee is performing the job and tries to establish a
plan for further improvement.
• The appraisal is carried out periodically, according to a definite plan. It is certainly not
a one shot deal
• Performance appraisal is not a past-oriented activity, with the intention of putting poor
performers in a spot. Rather, it is a future oriented activity showing employees where
things have gone wrong, how to set everything in order, and deliver results using their
potential in a proper way.
• Performance appraisal is not job evaluation. Performance appraisal refers to how well
someone is doing an assigned job, Job evaluation, on the other hand, determines how
much a job is worth to the organisation and therefore, what range of pay should be
assigned to the job.
• Performance appraisal is not limited to 'calling the fouls'. Its focus is on employee
development. It forces managers to become coaches rather then judges. The appraisal
process provides an opportunity to identify issues for discussion, eliminate any potential
problems, and set new goals for achieving high performance.
• Performance appraisal may be formal or informal. The informal evaluation is more
likely to be subjective and influenced by personal factors. Some employees are liked
better than others and have, for that reason only, better chances of receiving various
kinds of rewards than others. The formal system is likely to be more fair and objective,
since it is carried out in a systematic manner, using printed appraisal forms.

JOB EVALUATION:
Job Evaluation
Job evaluation aims to provide this equity and consistency by defining the relative
worth of different jobs in an organisation. Job evaluation is the process of determining
the relative worth of different categories of job by analyzing their responsibilities and
consequently, fixation of their remuneration.
Objectives of Job Evaluation
The basic objective of job evaluation is to determine the relative contributions that the
performance of different jobs makes towards the realization of organizational
objectives.
This basic objective of job evaluation serves a number of purposes which may be
grouped into three categories: wage and salary fixation, restructuring job hierarchy, and
overcoming anomalies.

FEATURES OF JOB EVALUATION

The purpose of job evaluation is to produce a defensive ranking of jobs on which a
rational and acceptable pay structure can be built. The important features of job
evaluation may be summarized thus:
 It tries to access jobs, not people.
 The standards of job evaluation are relative, not absolute
 The basic information on which job evaluations are made is obtained from job
analysis.
 Job evaluations are carried out by groups, not by individuals.
 Some degree of subjectivity is always present in job evaluation.
 Job evaluation does not fix pay scales, but merely provides a basis for evaluating
a rational wage structure.

PROCESS OF JOB EVALUAITON

undertaking job evaluation, top management must explain the aim and use of the
programme to the employees and unions. To elaborate the programme further, oral
presentations could be made. Letters, booklets could be used to classify all relevant
aspects of the job evaluation programme.

 Creating job evaluation committee: It is not possible for a single person to

evaluate all the key jobs in an organization. Usually a job evaluation committee
consisting of experienced employees, union representatives and HR experts is
created to set the ball rolling.
 Finding the jobs to be evaluated: Every job need not be evaluated. This may be
too taxing and costly. Certainly key jobs in each department may be identified.
While picking up the jobs, care must be taken to ensure that they represent the
type of work performed in that department.
 Analysing and preparing job description: This requires the preparation of a job
description and also an analysis of job needs for successful performance.
 Selecting the method of evaluation: The most important method of evaluating
the jobs must be identified now, keeping the job factors as well as organizational
demands in mind.
 Classifying jobs : The relative worth of various jobs in an organisation may be
found out after arranging jobs in order of importance using criteria such as skill
 requirements, experience needed, under which conditions job is performed, type
of responsibilities to be shouldered, degree of supervision needed, the amount of
stress caused by the job, etc. Weights can be assigned to each such factor. When
we finally add all the weight, the worth of a job is determined. The points may then
be converted into monetary values.
 Installing the programme: On the evaluation process is over and a plan of action
is ready, management must explain it to employees and put it into operation.
 Reviewing periodically: In the light of changes in environmental conditions
(technology, products, services, etc.) jobs need to be examined closely. For
example, the traditional clerical functions have undergone a rapid change in
sectors like banking, insurance and railways, after computerization. New job
description need to be written and the skill needs of new jobs need to be duly
incorporated in the evaluation process. Otherwise, employees may feel that all
relevant job factors – based on which their pay has been determined – have not
been evaluated properly

BENEFITS OF JOB EVALUAITON

The pay offs from job evaluation may be stated thus:
 It tries to link pay with the requirements of the job.

 It offers a systematic procedure for determining the relative worth of jobs. Jobs are
ranked on the basis of rational criteria such as skill, education, experience,
responsibilities, hazards, etc. and are priced accordingly.
 An equitable wage structure is a natural outcome of job evaluation. An unbiased job
evaluation tends to eliminate salary inequities by placing jobs having similar
requirements in the same salary range.
 Employees as well as unions participate as members of job evaluation committee while
determining rate grades for different jobs. This helps in solving wage related grievances
quickly.
 Job evaluation, when conducted properly and with care, helps in the evaluation of new
jobs.
 It points out possibilities of more appropriate use of the plant’s labour force by
indicating jobs that need more or less skilled workers than those who are manning these
jobs currently.
Incentive Schemes

In addition to a basic wage structure, most organizations now a days offer incentive
compensation based on actual performance. Unlike incentives, benefits and services
are offered to all employees as required by law including social security, insurance,
workmen’s compensation, welfare amenities etc.
There are several types of incentive pay systems that can be tied directly to business
objectives and the employees’ ability to help the company meet those objectives. They
include commissions, bonuses, profit sharing, stock options, team pay, and merit pay.
Many commission incentive plans require employees to meet a minimum level of
sales, who then are paid a commission on each sale beyond the minimum. A straight
commission plan is one in which the employee receives no base pay and entire pay is
based on meeting sales goals.
Several types of bonuses can be given to employees as incentive pay. Meeting certain
company goals or successfully completing a project or other objectives can be tied to
a bonus, which is a one-time payment to an employee. A spot bonus is an unplanned
bonus given to an employee for meeting a certain objective. These types of bonuses
do not always have to be money; they can be other forms such as a gift certificate or
trip.
Some organizations choose to reward employees financially when the organization as
a whole performs well, through the use of profit sharing as an incentive. For example,
if an organization has a profit-sharing program of 2 percent for employees, the
employees would earn 2 percent of the overall profit of the company.

Managing and human factor

Individuals have a wide range of abilities and limitations. A Human Factors (or
Ergonomics) approach focuses on how to make the best use of these capabilities: by
designing jobs and equipment which are fit for people. This not only improves their
health and safety but often ensures a better managed, more effective organisation.
Management researchers gave a close look at the human factor at work and the
variables that affected people’s behaviour.
(1) Social factors at the workplace,
(2) Group formation and group influence,
(3) Nature of leadership and supervision, and
(4) Communication.
Motivation,
It is a process which inspires people to give their best to the organization through the
use of intrinsic (achievement, recognition, responsibility) and extrinsic (job design,
work scheduling, appraisal based incentives) rewards.

The word Motivation derives from the Latin word “Movere”. The Latin word
“Movere” means “To move”, “To drive” or “To drive forward” etc. Motivation can be
defined as stimulating, inspiring and inducing the employees to perform to their best
capacity. Motivation is a psychological term which means it cannot be forced on
employees. It comes automatically from inside the employees as it is the willingness
to do the work.

Joe Kelly defined Motivation as “Motivation is a process where by needs instigate

behavior directed towards the goals that can satisfy those needs.”

According to W. G. Scot, “Motivation means a process of stimulating people to action

to accomplish the desired goals.”

Motivation in management refers to the steps managers can take to inspire their
teams to achieve more and support their workplace experience. When a company has
managers who motivate their teams, they may find an overall increase in productivity
and achievement. It can be important for leaders to learn management motivation, as
this is a skill that may follow you throughout your working career, no matter your
industry.

Leadership,

What is Leadership?

Leadership is a process by which an executive can direct, guide and influence the
behaviour and work of others towards accomplishment of specific goals in a given
situation. Leadership is the ability of a manager to induce the subordinates to work
with confidence and zeal.

Leadership is the potential to influence behaviour of others. It is also defined as the

capacity to influence a group towards the realization of a goal. Leaders are required
 to develop future visions, and to motivate the organizational members to want to
achieve the visions.

According to Keith Davis, “Leadership is the ability to persuade others to seek defined
objectives enthusiastically. It is the human factor which binds a group together and
motivates it towards goals.”

Characteristics of Leadership

1. It is a inter-personal process in which a manager is into influencing and

guiding workers towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence,
maturity and personality.
3. It is a group process. It involves two or more people interacting with each
other.
4. A leader is involved in shaping and moulding the behaviour of the group
towards accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all
depends upon tackling with the situations.

Morale
Employee morale is the attitude, satisfaction, and overall outlook of employees during
their association with an organization or a business. If your organization has a poor
culture then there will be adverse effects like low productivity, low employee
satisfaction, etc.

According to Davis, “Morale is a mental condition of groups and individuals which

determines their attitude.”

In short, morale is a fusion of employees’ attitudes, behaviours, manifestation of views

and opinions - all taken together in their work scenarios,
Characteristics of Morale
1. Morale is basically a psychological concept.
2. Morale is intangible therefore it is very difficult to measure the degree of
morale accurately.
3. Morale is contagious in the sense that people learn from each other.
4. Morale in dynamic in nature. It cannot be developed overnight. Managers have
to make continuous efforts to build and maintain high morale. It is a long-term
concept.
5. Morale is a group phenomenon consisting of a pattern of attitudes. It is the sum
total of employees’ attitudes, feelings and sentiments.

Team building

Definition: Team building is a management technique used for improving the

efficiency and performance of the workgroups through various activities. It involves
a lot of skills, analysis and observation for forming a strong and capable team. The
whole sole motive here is to achieve the organization vision and objectives.

Forming a great team requires a lot of skills and presence of mind. Usually, some
managers specialize in team-building skills and are hired by the companies on this
parameter.

The manager responsible for team building must be able to find out the strengths and
weaknesses of the team members and create the right mix of people with different
skill sets. He must focus on developing strong interpersonal relations and trust among
the team members.

Communication.

Managerial communication plays a pivotal role in knowledge sharing. Managers must

communicate with their subordinates to share whatever they know. A unique idea is
of no use, if not shared. Managers need a medium which helps them interact with their
immediate team members and vice a versa. Here comes the role of effective
managerial communication. Managers need to communicate with their team
members to make them clear as to what is expected out of them. Managerial
communication helps managers to extract the best out of team members. Employees
need to be told their key responsibility areas.

Effective communication leads to transparency among team members. Employees

who do not communicate are generally likely to stress and anxiety. Managerial
communication enables the manager to delegate roles and responsibilities to their
subordinates as per their interests and also allows the employees to ask whatever
they have not understood. Managerial communication helps managers to know what
their team members are up to and thus prevents overlapping of work.

Controlling:

Controlling is one of the most important functions of management. Its main objective
is to ensure that an organization’s activities are advancing as planned. The control
process that all managers have to implement consists of several steps. Each one of
these is equally important and plays a big role in effective management.

Controlling function of personnel management comprises measuring the employee’s

performance, correcting negative deviations and industrial assuring an efficient
accomplishment of plans. It makes individuals aware of their performance through
review reports, records and personnel audit programmes. It ensures that the
activities are being carried out in accordance with stated plans.

The control process of management ensures that every activity of a business is

furthering its goals. This process basically helps managers in evaluating their
organization’s performance. By using it effectively, they can decide whether to change
their plans or continue with them as they are.

Controlling Process Steps in Business Management

1. Set Performance Standards. You need a goal for your business, but you also
need guidance for your team to keep them working towards that goal. ...
2. Measure Performance. ...
3. Compare Actual Performance Against Performance Standards. ...
4. Analyse Deviations. ...
5. Take Corrective Actions.