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Chapter 5

Topic: - Human Resource Management


Contents

5.1 Concept of Human resource management 5.2 Functions of Human resource management 5.3 Significance of Human Resource Management 5.4 Core Values of HRM 5.5 Strategic Role of Human Resource Manager 5.6 Human Resource planning 5.7 Recruitment 5.8 Selection 5.9 Training 5.10 Performance Appraisal 5.11 Evaluating Human Resources

5.1 Concept of human resource Management (HRM)


During and after 1970s, several changes took place in many countries which led to the use of the term Human Resource Management in the place of the traditional term Personnel Management. These changes include technological changes, declining importance of trade unionism, shift from industrial employment to service sector employment, growing competition, deregulation and globalization of economies, etc. As a result, three important roles of human resources have emerged as stated below:

Human resource policies can be integrated with strategic business planning and used to reinforce appropriate (or change an inappropriate) culture. (ii) Human resources are valuable and a source of competitive advantage. (iii) Human resources can be tapped most effectively by mutually consistent policies which promote commitment and foster a willingness in employees to act flexibly in the interests of the adaptive organizations pursuit of excellence. According to Dessler, Human resource management is the process of acquiring, training, and compensating employees, and attending to their labors relations, health, safety and fairness concerns. Milkovich and Boudreau have defined human resource management as a series of integrated decisions that form the employment relationship; their quality contributing to the ability of the organization and the employees to achieve their objectives. Human resource management is basically concerned with creating good relationships in the organization and development of people for contributing to the organizational objectives. Human resource management is that part of management process which develops and manages the human element of the enterprise considering their resourcefulness in term of total knowledge, skills, creative abilities, talents, aptitudes and potentialities for effectively contributing to the organizational objectives. Every individual working in an organization is a part of its human resources. Hence, human resource management strategies should be designed keeping in view of the delicate nature of the human element.

(i)

5.2 FUNCTIONS OF HUAMAN RESOURCE MANAGEMENT


Human Resource or Personnel Department is established in most of the organizations, under the charge of an executive known as Human Resource/Personnel Manager. This department plays an important role in the efficient management of human resources. The personnel department gives assistance and provides service to all other departments on personnel matters. Though personal or human resource manager is a staff officer in relation to other department of the enterprise, he has a line authority to get orders executed within is department. There are three categories of functions which the personnel manager is expected to perform. These include: (i) managerial, (ii) operative, and (iii) advisory functions. Managerial Functions The Human Resource Manager is a part of the organizational management. So he must perform the basic managerial functions of planning, organizing, directing and controlling in relation to his department. These functions are briefly discussed below:
1.

2.

Planning. To get things done the subordinates, a manager must plan ahead. Planning is necessary to determine the goals of the organization and lay down policies and procedures to reach the goals. For a human resource manager, planning means the determination of personnel programs that will contribute to the goals of the enterprise, i.e., anticipating vacancies, planning job requirements, job descriptions and determination of the sources of recruitment. The process of personnel planning involves three essential steps. Firstly, a supply and demand forecast for each job category is made. This step requires knowledge of both labour market conditions and the strategic posture and goals of the organization. Secondly, net shortage and excess of personnel by job category are projected for a specific time horizon. Finally, plans are developed to eliminate the forecast shortages and excess of particular categories of human resources. Organizing. Once the human resource manager has established objectives and developed plans and programmes to reach them, he must design and develop organization structure to carry out the various operations. The organization structure basically includes the following:

3.

Grouping of personnel activity logically into functions or position; (ii) Assignment of different functions to different individuals; (iii) Delegation of authority according to the tasks assigned and responsibilities involved; (iv) Co-ordination of activities of different individuals. Directing. The plans are to be put into effect by people. But how smoothly the plans are implemented depends on the motivation of people. The direction function of the personnel manager involves encouraging people to work willingly and effectively for the goals of the enterprise. In other words, the direction function is meant to guide and motivate the people to accomplish the personnel programmes. The personnel manager can motivate the employees in an organization through career panning, salary administration, ensuring employee morale, developing cordial relationships and provision of safety requirements and welfare of employees The motivational function poses a great challenge for any manager. The personnel manager must have the ability to identify the needs of employees and the means and methods to satisfy those needs. Motivation is a continuous process a new needs and expectations emerge among employees when old ones are satisfied. Controlling. Controlling is concerned with the regulation of activities in accordance with the plans, which in turn have been formulated on the basis of the objectives of the organization. Thus, controlling completes the cycle and leads back to planning. It involves the observation and comparison of results with the standards and correction of deviations that may occur. Controlling helps the personnel manager to evaluate and control the performance of the personnel department in terms of various operative functions. It involves performance appraisal, critical examination of personnel records and statistics and personnel audit.

(i)

4.

Operative Functions The operative functions are those tasks or duties which are specifically entrusted to the human resource or personnel department. These are concerned with employment, development, compensation, integration and maintenance of personnel of the organization.

The operative functions of human resource or personnel department are discussed below:
1.

2.

3.

4.

Employment. The first operative function of the human resource or personnel department is the employment of proper kind number of persons necessary to achieve the objectives of the organization. This involves recruitment, selection, placement, etc. of the personnel. Before these processes are performed, it is better to determine the manpower requirements both in terms of numbers and quality of the personal. Recruitment and selection cover the sources of supply of labour and the devices designed to select the right type of people for various jobs. Induction and placement of personnel for their better performance also come under the employment or procurement function. Development. Training and development of personnel is a follow up of the employment function. It is duty of management to train each employee properly to develop technical skills for the job for which he has been employed and also to develop him for the higher jobs in the organization. Proper development of personnel is necessary to increase their skills in doing their jobs and in satisfying their growth need. For this purpose, the personnel departments will device appropriate training programmes. There are several on-the-job and off-the-job methods available for training purposes. A good training programme should include a mixture of both types of methods. It is important to point out that personnel department arranges for training not only of new employees but also of old employees to update their knowledge in the use of latest techniques. Compensation. This function is concerned with the determination of adequate and equitable remuneration of the employees in the organization for their contribution to the organizational goals. The personnel can be compensated both in terms of monetary as well as non-monetary rewards. Factors which must be borne in mind while fixing the remuneration of personnel are their basic needs, requirements of jobs, legal provisions regarding minimum wages, capacity of the organization to pay, wage level afforded by competitors etc. for fixing the wage levels, the personnel department can make use of certain techniques like job evaluation and performance appraisal. Maintenance (Working Conditions and Welfare). Merely appointment and training of people is not sufficient; they must be provided with good working conditions so that they may like their work and work-place and maintain their efficiency. Working conditions

5.

6.

7.

8.

certainly influence the motivation and morale of the employees. These include measures taken for health, safety, and comfort of the workforce. The personnel department also provides for various welfare services which relate to the physical and social well-being of the employees. These may include provision of cafeteria, rest rooms, counseling, group insurance, education for children of employees, recreational facilities, etc. Motivation. Employees work in the organization for the satisfaction of their needs. In many of the cases, it is found that they do not contribute towards the organizational goals as much as they can. This happens because employees are not adequately motivated. The human resource manager helps the various departmental managers to design a system of financial and non-financial rewards to motivate the employees. Personnel Records. The human resource or personnel department maintains the records of the employees working in the enterprise. It keeps full records of their training, achievements, transfer, promotion, etc. it also preserves many other records relating to the behavior of personnel like absenteeism and labour turnover and the personnel programmes and policies of the organization. Industrial relations. These days, the responsibility of maintaining good industrial relations is mainly discharged by the human resource manager. The human resource manager can help in collective bargaining, joint consultation and settlement of disputes, if the need arises. This is because of the fact that he is in possession of full information relating to personnel and has the working knowledge of various labour enactments. The human resource manager can do a great deal in maintaining industrial peace in the organization as he is deeply associated with various committees on discipline, labour welfare, safety, grievance, etc. he helps in laying down the grievance procedure to redress the grievances of the employees. He is also gives authentic information to the trade union leaders and conveys their views on various labour problems to the top management. Separation. Since the first function of human resource management is to procure the employees, it is logical that the last should be the separation and return of that person to society. Most people do not die on the job. The organization is responsible for meeting certain requirements of due process in separation, as well as assuring that the returned person is in as good shape as possible. The personnel manager has to ensure the release of retirement benefits to the retiring personnel in time.

Advisory Function Human resource manager has specialized education and training in managing human resources. He is an expert in his area and so can give advice on matters relating to human resources of the organization. He offers his advice to:
1.

2.

Top Management. Personnel manager advises the top management in formulation and evaluation of personnel programmes, policies and procedures. He also gives advice for achieving and maintaining good human relations and high employee morale. Departmental Heads. Personnel manager offers advice to the heads of various departments on matters such as manpower planning, job analysis and design, recruitment and selection, placement, training, performance appraisal, etc.

5.3Significance of Human Resource Management


HRM is very important to us for the following reasons: 1. Development and Growth of the organisation: HRM paves way for development and growth in the organisation. By improving the individual capabilities, acquiring necessary cooperation and developing teamwork HRM makes sure that the organization develops and grows well. Goals of the organization are met by HRM by effective motivation and excellent utilization of employees. 2. Creation of healthy culture in the Organization: HRM creates and maintains excellent culture in the organization and it makes people develop and grow. 3. Maintenance of Human Resources: The development, care of Human Resources is done by the HRM. 4. The concept of Human beings is a very crucial and vital factor of production; HRM is gaining more and more importance day by day. It also has important

implication in societal development also. IT IS THE HEART AND SOUL OF MODERN MANAGEMENT.

5.4 Core Values of HRM:


The core values of HRM states that 1. Human beings are the crucial aspects of every organization. The greater is the commitment of the human resources the more successful is the organization. 2. An individual is a whole person. He brings all aspects of his personality, attitudes, traits and behavior to the work place. 3. All people represent the organization. The building, equipment and other resources are productive only because they are being handled by the hyper energic force of humans. 4. People are different from each other. They vary in abilities, nature, personality; religion etc. people are also influenced by social economic and environmental factors. Human resources have to be acquired, developed and motivated to give higher performances and also must be retained.
5.

6. The success of an organization depends upon the satisfaction of organizational needs and employees needs. There are various levels of hierarchical levels in an organisation. The people who manage (i.e., the managers), and people who are at work (subordinates). The effective coordination and commitment between managers and subordinates is essential for organizational success. Apart from that healthy relationships are to be maintained with consumers, shareholders, entrepreneurs, governments and suppliers. 7. Human relations enable people to work effectively in an organization with other people in organization.

5.5 SRATEGIC ROLE OF HUMAN RESOURCE MANAGER


What are the emerging challenges of HRM? The world order is changing dramatically and is in the process of complete transformation. The impossible things of yesterdays have become possible today and the impossible things of today will become possible tomorrow. That is why it is said that change is the only permanent aspect of nature. The concept of self-sufficient nations is losing importance and the concept of Global Village is emerging. Management of economics and organizations is bound to cope up with the radical transformation by developing new techniques and practices in the global perspective after carefully analyzing the real challenges being faced by the professional managers. Modern organizations are faced with the following environmental challenges:
(a) Changing technology leading to obsolescence of present skills and techniques; (b) Economic and industrial policy changes leading to tough competition from

multinational corporations; (c) Changing international environment insisting on free flow of goods and services throughout the world; (d) Changing profile of workers, e.g., increased educational level, rising share of women in the work force, increased emphasis on fulfillment of psychological needs; (e) Changing needs and expectations of customers rending the existing processes and products obsolete. The above trends will have a tremendous impact on the tasks of future HR professionals who will have to act change agents or change facilitators. They will have to make judicious use of HRD mechanisms such as performance appraisal, training, etc. to effectively meet the challenges of environment. They will have to build up learning organization having the capacity and capability to learn from experimentation, past experiences and the experiences of other and transfer the learning to all human resources for greater organizational effectiveness. The introduction of Total Quality Management in the organization is one such experience which can bring far reaching improvements in the organization and contribute to the development of human resources on a continuous basis. What is the Strategic role of HRM? The prominent areas where the human resources manager can play strategic role are discussed below:

1. Providing Purposeful Direction The human resource manager must be able to lead people and the organization towards the desired direction involving people right from the beginning. One of the most important tasks of a professional manager is to ensure that the mission of an organization has been internalized by each individual working in the organization. Mission of an organization states the very purpose and justification of its existence. The human resource manager will have to ensure that the mission of an organization becomes the mission of each person working in the organization and the objectives are set to fulfill the same. Objectives are specific aims which must be in line with the mission of the organization and all the actions of each person must be consistent with the objective defined. 2. Building Core Competency The human resource manager has a great role to play in developing core competency by the firms. A core competence is a unique strength of an organization which may not be shared by others. This may be in the form of human resources, marketing capability, or technological capability. If the business is organized on the basis of core competency, it is likely to generate competitive advantage. Because of this reason, many organizations have restructured their businesses by divesting those businesses which do not match core competence or acquiring those businesses which fit core competency such as Ambuja acquiring cement companies and Reliance Industries acquiring yarn companies. Organization of business around core competence implies leveraging the limited resources of a firm. It needs creative, courageous and dynamic leadership having faith in the organizations human resources. 3. Creating Competitive Advantage In todays globalised market place, maintaining a competitive advantage is the foremost goal of any business organization. There are two important ways a business can achieve a competitive advantage. The first is cost leadership which means the firm aims to become the low-cost leader in the industry. The second competitive strategy is differentiation under which the firms seek to be unique in

the industry in terms of dimensions that are widely valued by the customers. Putting these strategies into effect carries a heavy premium on having a highly committed and competent workforce. Such a workforce would enable the organization to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation.
4. Facilitation

of Change

The HR managers will be required to act as change agents through greater involvement in environmental scanning and development planning. The HR function will become more creative and less mechanistic. It will be more concerned with substance rather than form, accomplishments rather than activities, and practice rather than theory. The personal function will be responsible for furthering the organization not just maintaining it. HR managers will have to devote more time to promote changes than to maintain the status quo. 5. Managing Work Diversity In modern organizations, management of diverse workforce is a great challenge. Workforce diversity can be observed in terms of male and female workers, young and old workers, educated and uneducated workers, unskilled, skilled and professional employees, etc. Moreover, many organizations also have people of different castes, religion and nationalities. The work-force in future will comprise more of educated and self-conscious workers. They will ask for higher degree of participation and avenues for selffulfillment. Moreover, the proportions of professional and technical employees will increase in relation to blue-collar workers. The ratio of female employees in the total workforce will also rise. Integration of women within managerial ranks will itself be a problem. Money will no longer be the sole motivating force for majority of the workers. Non-financial incentives will also play an important role in motivating the workforce. In short, human resources will be treated as assets which will appear in Balance Sheets of business organizations in future. Two important trends among the employees which need mention briefly discussed below:

Aspirations of employees. Considerable changes have been noted in the worker of today in comparison to his counterpart of 1980s. The workers are becoming more aware of their higher level needs and this awareness would intensify further in the future workers. The managers would be required to evolve appropriate techniques to satisfy the higher level needs of workers and thus motivate them. (b) Increasing Mobility of Personnel. Organization will expand the use of boundary agents whose primary function will be achieving coordination with the environment. One interesting fact will be an increase in the mobility of various managerial and professional personnel between organizations. As individuals develop greater technical and professional expertise, their services will be in greater demand by other organizations in the environment. Professional mobility may be one of the primary forces helping to increase effective interface between organizations. 6. Development of Work Ethics and Culture The future personnel or HR managers will have to mobilize a new work ethic so as to assist the line managers in setting up and enforcing good quality standards. Greater focus will be on project and team forms of organization. Greater efforts will be needed to achieve group cohesiveness because workers will have transient commitment to groups. As changing work ethic requires increasing emphasis on individual, jobs will have to be redesigned to provide challenge. Flexible starting and quitting times for employees [flexi time] may be necessary. Focus will shift from extrinsic to intrinsic motivation. In future, change will have to be initiated and managed to improve organizational effectiveness. A vibrant work culture will have to be developed in the organizations to create an atmosphere of trust among people and to encourage creative ideas by the people. Far reaching changes with the help of technical knowledge will be required for this purpose. Top management will become more actively involved in the development of human resources. 7. Empowerment of Human Resources Empowerment means authorizing every members of a society or organization to take control of his/her own destiny and realizing his/her potential to the full. It involves giving more power to those who, at present, have little control over what they do and little ability to influence the decisions being made around them.

(a) Increasing

Human behavior is greatly influenced by power is the result of the interplay between individual consciousness and the forces and pressures of the external world. Power resides in every aspect of the web of forces, values and beliefs which determine human behavior. The process of empowering can be defined as the reorientation of all these forces, values and beliefs so that they support and liberate the individual, rather than diminish their range of thought and action. The basic goals of empowerment are that all people should: Understand and feel good about themselves; Relate to each other with empathy and respect; Give voluntary agreement to the rules and structures that govern their lives; and (iv) Have sufficient resources (of knowledge, training, authority, time, tools, support, money, etc.) to be able to contribute all the value they can to their chosen roles. 9. Total Quality Management (TQM)
(i) (ii) (iii)

TQM is a dynamic process involving all levels in an organization to promote never ending improvement in the efficiency and effectiveness of all elements of a business. Quality was earlier considered to be the domain of shop-floor and nowadays has spread all over the organization encompassing every conceivable activity in the organization, with the customer at the center of all thoughts, processes and decisions. The goal of TQM is to mobilize the entire workforce in pursuits of specific company goals with the primary aim of achieving customer satisfaction with regard to quality, price, and delivery and after sale service. Ever since the beginning of factory system, the concern for quality and quality control has been in practice. But TQM has brought a qualitative change in both the concept and practice. Quality was a responsibility of the management and an instruction to be followed by the workers. But now TQM is a philosophy of the entire organization. It embodies development of a company wide culture for quality. TQM typically involves an increase of awareness through training and motivation. It requires every member of an organization accepts quality as his responsibility. TQM is nothing but an understanding and performance of role by each and every individual in the pursuit of quality improvement. A positive

attitude towards customer and constant enhancement of quality must be ingrained in the minds of employees.

5.6 HUMAN RESOURCE PLANNING


Human Resource Planning is the process of anticipating and carrying out the movement of people into, within, and out of the organization. Human resources planning is done to achieve the optimum use of human resources and to have the correct number and types of employees needed to meet organizational goals. Thus, it is a double-edged weapon. If used properly, it leads not only to proper utilization, but also reduces excessive labor turnover and high absenteeism, and improves productivity. It can also be defined as the task of assessing and anticipating the skill, knowledge and labor time requirements of the organization, and initiating action to fulfill or source those requirements. Thus, if the organization as a whole or one of its subsystem is not performing to the benchmark, in other words, it is declining, it may need to plan a reduction or redeploys its existing labor force. If you go look back in history, you will come across example of such activities (the dot com burst!! And how Hindustan motors had to redeploy its workforce from uttarpada in Calcutta to pithampur in M.P. to avail the strategic advantage and save itself from closing down). On the other hand, if it is growing or diversifying, it might need to find and tap into a source of suitably skilled labor (for example: GE, the pioneers in BPO industry went for a large scale recruitment while setting up office here in India.). That is why; we need to plan in advance even for procuring human resources, which in contrast to a general myth are not abundant!! Thus, in the same line, we propose that organization can achieve its goals effective through effective contingencies of all the HR functions; for example, the structure of an organization and the design of the job within it affect an organizations ability to achieve only through the efforts of people. It is essential therefore, those jobs within the organization be staffed with the personnel who are qualified to perform them. Meeting these staffing needs requires effective planning for human resources

Definitions of HRP as given by different experts are as follows: Vetter opines that it is the process by which management determines how the organization should move from its manpower position to its desired manpower position to carry out integrated plan of the organization. According to Geisler, Manpower planning is the process including forecasting, developing and controlling by which a firm ensures that it has1 2 3 4 The right number of people, The right kind of people, At the right places, At the right time, doing work for which they are economically most useful.

Wickstrom very beautifully summarizes the features of HRP, viz., 1 Forecasting future manpower requirements, where we use mathematical projections you might have studied in business economics and quantitative techniques paper, to project trends in the economic environment and development of the industry. 1 Making an inventory of present manpower resources and assessing the extent to which these resources are employed optimally. Procuring competent personnel requires positive recruitment efforts and the development of a variety of recruitment sources. These sources must consider not only the nature and conditions of the external labor market, but also the presence of qualified personnel who are available to fill vacancies through internal promotions or transfers. 1 Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of requirements to determine their adequacy, both quantitatively and qualitatively; and 2 Planning the necessary programmes of requirement, selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure that future manpower requirements are properly met. Thus, we can summarize that: HRP is a kind of risk management. It involves realistically appraising the present and anticipating the future (as far as possible) in order to get the right people into right jobs at the right time. (Reiterating the view of Geisler). Significance of Human Resource Planning: Human Resource Planning is a highly important and useful activity .If used properly; it offers a number of benefits:

1. Reservoir of Talent. The organisation can have a reservoir of talent at any point of time. People with requisite skills are readily available to carry out the assigned tasks. 2. Prepare People for Future. People can be trained, motivated and developed in advance and this helps meeting future needs for highquality employees quite easily. Likewise, manpower shortages can also be met comfortably through proper human resource planning. 3. Expand or Contract. If the organisation wants to expand its scale of operations, it can go ahead easily. Advance planning ensures a continuous supply of people with requisite skills who can handle challenging jobs easily. 4. Cut Costs. Planning facilitates the preparation of an appropriate manpower budget for each department or division. This in turn helps in controlling manpower costs by avoiding shortages/excesses in manpower supply. The physical facilities such as canteen, quarters, school, medical help etc, can also be planned in advance. 5. Succession Planning. Human Resource Planning as pointed out previously prepares people for future challenges. The stars can be picked up and kept ready for further promotions whenever they arise. All multinational companies for example, have this policy of having a hot list of promising candidates prepared in advance. Such candidates are rolled over various jobs and assessed and assisted continuously. When the time comes, such people switch hats quickly and replace their respective losses without any problem.

5.7 Recruitment
According to Edwin B.Flippo, Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation. It is a linking activity that brings together those offering jobs and those seeking jobs. Dale S.Beach observed, Recruitment is the development and maintenance of adequate manpower resources. It involves the creation of a pool of available labour upon whom the organisation can draw when it needs additional employees. There are two broad methods of Recruitment which are as follows: 1. External Recruitment

2. Internal Recruitment External Recruitment Every enterprise has to tap external sources for various positions. Running enterprises have to recruit employees from outside for filling the positions whose specifications cannot be met by the present employees, and for meeting the additional requirements of manpower. The following are the most commonly used external sources of recruitment: PRESS ADVERTISEMENTS Advertisements of the vacancy in newspapers and journals are a widely used source of recruitment. The main advantage of this method is that it has a wide reach. EDUCATIONAL INSTITUTES various management institutes, engineering colleges, medical Colleges etc. are a good source of recruiting well qualified executives, engineers, medical staff etc. They provide facilities for campus interviews and placements. This source is known as Campus Recruitment. PLACEMENT AGENCIES Several private consultancy firms perform recruitment functions on behalf of client companies by charging a fee. These agencies are particularly suitable for recruitment of executives and specialists. It is also known as RPO (Recruitment Process Outsourcing) EMPLOYMENT EXCHANGES Government establishes public employment exchanges throughout the country. These exchanges provide job information to job seekers and help employers in identifying suitable candidates LABOUR CONTRACTORS Manual workers can be recruited through contractors who maintain close contacts with the sources of such workers. This source is used to recruit labour for construction jobs. UNSOLICITED APPLICANTS Many job seekers visit the office of well-known companies on their own. Such

callers are considered nuisance to the daily work routine of the enterprise. But can help in creating the talent pool or the database of the probable candidates for the organisation EMPLOYEE REFERRALS / RECOMMENDATIONS Many organisations have structured system where the current employees of the organisation can refer their friends and relatives for some position in their organisation. Also, the office bearers of trade unions are often aware of the suitability of candidates. Management can inquire these leaders for suitable jobs. In some organizations these are formal agreements to give priority in recruitment to the candidates recommended by the trade union.
RECRUITMENT AT FACTORY GATE Unskilled workers may be recruited at the factory gate these may be employed whenever a permanent worker is absent. More efficient among these may be recruited to fill permanent vacancies.

Merits of external sources of recruitment Qualified Personnel. By using external sources of recruitment, the management can make qualified and trained people to apply for vacant jobs in the organisation. Wider Choice. When vacancies are advertised widely, a large number of applicants from outside the organisation apply. The management has a wider choice for selecting the people for employment. Fresh Talent. The insiders may have limited talents. External sources facilitate infusion of fresh blood with new ideas into the enterprise. Competitive Spirit. If a company can tap external sources, the existing staff will have to compete with the outsiders. They will work harder to show better performance. Demerits of External Sources Dissatisfaction amongst existing staff. External recruitment may lead to dissatisfaction and frustration amongst existing employees. They may feel that their chances of promotion are reduced.

Costly Process. It is very costly to recruit staff from external sources. A lot of money has to be spent on advertisement and processing of applications. Uncertain Response. The candidates from outside may not be suitable for the enterprise. There is no guarantee that the enterprise will be able to attract right kinds of people from external sources. INTERNAL RECRUITMENT Internal recruiting is the search for in-house employees who have the abilities and the attitudes to fulfill the requirements needed and to help the organization achieve its objectives. Although internal recruiting is often neglected, and the Internet hardly offers any useful discussions for this recruiting strategy, it is crucial not to overlook this strategy. The discussion of internal recruiting provides the advantages and disadvantages of this recruiting technique in comparison to the external method. Advantages of internal recruiting: Recruiting costs: Since the recruiting machinery is focused on an already existing pool of employees to fill a vacant position, and therefore selection and socializing processes are less time and dollar consuming, internal recruiting tends to be less expensive than external recruiting. Motivation: The prospect of potential promotion or transfers provides a clear sign to the current work force that the organization offers room for advancement. This addresses the employee's need for self-achievement. Familiarity: The familiarity of the employee has a two-side effect: On the one hand the employee is familiar with the organization's policies, procedures, and customs. At the same time, the organization has established an employment history showing the workers formal and informal skills and abilities.

Disadvantages of internal recruiting Inbreeding: One drawback of extensive internal recruiting is the reduced likelihood of innovation and new perspectives. A lack of new employees from the outsides leads to a lack of new ideas and approaches. EEO Criteria: A use of the internal pool for the consideration of vacant positions can lead to conflicts with the Equal Employment Opportunity Commission. The organization has to ensure and continuously check its balance of a diverse workforce. This has to relate to the organizations legal, political and geographical environment. More training: Internal recruiting demands a higher degree of employee training. In order to develop the skills needed to train the current workforce in new processes and technologies, the organization has to provide a more expensive training program.

5.8 SELECTION
Nature and Purpose of Selection Selection involves a series by which the candidates are screened for choosing the most suitable persons for vacant posts. The process of selection leads to employment of persons who possess the ability and qualifications to perform the jobs which have fallen vacant in an organization. It divides the candidates for employment into two categories, namely, those who will be offered employment and those who will not be. This process should be called rejection since more candidates may be turned away than employed. That is why, selection is frequently described as a negative process in contrast with the positive nature of recruitment. The most basic purpose of the selection process is to choose right type of candidates to man various positions in the organization. In order to achieve this purpose, a well-organized selection procedure involves many steps and at each step, unsuitable candidates are rejected. In other words, the aim of selection process is to reject the unsuitable candidates. But recruitment, on the other hand, is a positive process. Its aim is to attract applicants for vacant jobs in the organization. Various sources of recruitment are used for this purpose.

Thus, recruitment is a positive process because it aims at attracting applicants for various jobs. But selection is a negative process because it aims at rejecting applicants who are unsuitable and offering jobs to those who are found fully suitable. Significance of Selection Selection is a critical process these days because it requires a heavy investment of money to get right types of people. Induction and training costs are also high. If the right types of person are not chosen, it will lead to huge loss of the employer in terms of time, effort and money. Therefore, it is essential to devise a suitable selection procedure. Each step in the selection procedure should help in getting more and more information about the applicants to facilitate decisionmaking in the area of selection. Absenteeism and employee turnover are the important problems which are often faced by many organization. The intensity of these problems can be reduced if in the future all selections are made carefully so that there are round pegs in the round holes. Whenever unsuitable employees are appointed, the efficiency of the organization will go down. Such employees will shirk work and absent themselves from the work more often. They may also be compelled to leave their jobs. If this happens, all the expenses incurred on the selection and training of such employees will go waste. Scientific selection and placement of personnel will go a long way towards building up a stable work-force. It will keep the rates absenteeism and labor turnover low and will increase the morale of the employees. If the employees are suitable according to the requirements of the jobs, they will show higher efficiency and productivity. This will also enable the organization to achieve its objectives effectively. The benefits of selecting right kinds of people for various jobs are as follows: (i) (ii) Proper selection and placement of personnel go a long way towards building up a stable workforce. It will keep the rates of absenteeism and labor turnover low, Competent employees will show higher efficiency and enable the organization to achieve its objective effectively.

(iii)

The rate of industrial accidents will be considerably low if suitable employees are placed on various jobs. (iv) When people get jobs of their taste and choice, they get higher job satisfaction. This will build up a contended workforce for the organization. The moral of the employees who are satisfied with their jobs is often high

Recruitment Vs Selection Both recruitment and selection are the two phases of the employment process. The differences between the two are:
1.

Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation WHEREAS selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.

2. The basic purpose of recruitments is to create a talent pool of candidates to enable the selection of best candidates for the organisation, by attracting more and more employees to apply in the organisation WHEREAS the basic purpose of selection process is to choose the right candidate to fill the various positions in the organisation.
3.

Recruitment is a positive process i.e. encouraging more and more employees to apply WHEREAS selection is a negative process as it involves rejection of the unsuitable candidates.

4. Recruitment is concerned with tapping the sources of human resources WHEREAS selection is concerned with selecting the most suitable candidate through various interviews and tests. 5. There is no contract of recruitment established in recruitment WHEREAS selection results in a contract of service between the employer and the selected employee

5.9 TRAINING
Training is a process of learning a sequence of programmed behavior. It is the application of knowledge & gives people an awareness of rules & procedures to guide their behavior. It helps in bringing about positive change in the knowledge, skills & attitudes of employees. Thus, training is a process that tries to improve skills or add to the existing level of knowledge so that the employee is better equipped to do his present job or to mould him to be fit for a higher job involving higher responsibilities. It bridges the gap between what the employee has & what the job demands. Since training involves time, effort & money by an organization, so an organization should to be very careful while designing a training program. The objectives & need for training should be clearly identified & the method or type of training should be chosen according to the needs & objectives established. Once this is done accurately, an organization should take a feedback on the training program from the trainees in the form of a structured questionnaire so as to know whether the amount & time invested on training has turned into an investment or it was a total expenditure for an organization. Training is a continuous or never ending process. Even the existing employees need to be trained to refresh them & enable them to keep up with the new methods & techniques of work. This type of training is known as Refresher Training & the training given to new employees is known as Induction Training. This is basically given to new employees to help them get acquainted with the work environment & fellow colleagues. It is a very short informative training just after recruitment to introduce or orient the employee with the organization's rules, procedures & policies. Training plays a significant role in human resource development. Human resources are the lifeblood of any organization. Only through trained & efficient employees, can an organization achieve its objectives. TRAINING NEED ANALYSIS An analysis of training need is an essential requirement to the design of effective training. The purpose of training need analysis is to determine whether there is a gap between what is required for effective performance and present level of performance.

Training need analysis is conducted to determine whether resources required are available or not. It helps to plan the budget of the company, areas where training is required, and also highlights the occasions where training might not be appropriate but requires alternate action. Training Need arises at three levels: Organizational Level Training need analysis at organizational level focuses on strategic planning, business need, and goals. It starts with the assessment of internal environment of the organization such as, procedures, structures, policies, strengths, and weaknesses and external environment such as opportunities and threats. After doing the SWOT analysis, weaknesses can be dealt with the training interventions, while strengths can further be strengthened with continued training. Threats can be reduced by identifying the areas where training is required. And, opportunities can be exploited by balancing it against costs. For this approach to be successful, the HR department of the company requires to be involved in strategic planning. In this planning, HR develops strategies to be sure that the employees in the organization have the required Knowledge, Skills, and Attributes (KSAs) based on the future KSAs requirements at each level.

Individual Level Training need analysis at individual level focuses on each and every individual in the organization. At this level, the organization checks whether an employee is performing at desired level or the performance is below expectation. If the difference between the expected performance and actual performance comes out to be positive, then certainly there is a need of training. However, individual competence can also be linked to individual need.
Operational Level Training Need analysis at operational level focuses on the work that is being assigned to the employees. The job analyst gathers the information on whether the job is clearly understood by an employee or not.

He gathers this information through technical interview, observation, psychological test; questionnaires asking the closed ended as well as open ended questions, etc. Today, jobs are dynamic and keep changing over the time. Employees need to prepare for these changes. The job analyst also gathers information on the tasks needs to be done plus the tasks that will be required in the future. Based on this information training need analysis is done.

Significance of training

To impart to the new entrants the basic knowledge & skills they need for an intelligent performance of definite tasks. To prepare employees for more responsible positions. To bring about change in attitudes of employees in all directions. To reduce supervision time, reduce wastage & produce quality products. To reduce defects & minimize accident rate. To absorb new skills & technology. Helpful for the growth & improvement of employee's skills & knowledge.

METHODS OF TRAINING: The most widely used methods of training used by organizations are classified into two categories: On-the-Job Training & Off-the-Job Training. ON-THE-JOB TRAINING is given at the work place by superior in relatively short period of time. This type of training is cheaper & less time-consuming. This training can be impacted by basically four methods: Coaching is learning by doing. In this, the superior guides his subordinates & gives him/her job instructions. The superior points out the mistakes & gives suggestions for improvement. Job Rotation: - In this method, the trainees move from one job to another, so that he/she should be able to perform all types of jobs. E.g. In banking industry, employees are trained for both back-end & front-end jobs. In case of emergency, (absenteeism or resignation), any employee would be able to perform any type of job. OFF THE JOB TRAINING: - is given outside the actual work place. Lectures/Conferences:- This approach is well adapted to convey specific information, rules, procedures or methods. This method is useful, where the information is to be shared among a large number of trainees. The cost per trainee is low in this method. Films: - can provide information & explicitly demonstrate skills that are not easily presented by other techniques. Motion pictures are often used in conjunction with Conference, discussions to clarify & amplify those points that the film emphasized. Simulation Exercise: - Any training activity that explicitly places the trainee in an artificial environment that closely mirrors actual working conditions can be considered a Simulation. Simulation activities include case experiences, experiential exercises, vestibule training, management games & role-play.

Cases: - present an in depth description of a particular problem an employee might encounter on the job. The employee attempts to find and analyze the problem, evaluate alternative courses of action & decide what course of action would be most satisfactory.

Experiential Exercises: - are usually short, structured learning experiences where individuals learn by doing. For instance, rather than talking about inter-personal conflicts & how to deal with them, an experiential exercise could be used to create a conflict situation where employees have to experience a conflict personally & work out its solutions. Vestibule Training: - Employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. While expensive, Vestibule training allows employees to get a full feel for doing task without real world pressures. Additionally, it minimizes the problem of transferring learning to the job. Role Play: - Its just like acting out a given role as in a stage play. In this method of training, the trainees are required to enact defined roles on the basis of oral or written description of a particular situation. Management Games: - The game is devised on a model of a business situation. The trainees are divided into groups who represent the management of competing companies. They make decisions just like these are made in real-life situations. Decisions made by the groups are evaluated & the likely implications of the decisions are fed back to the groups. The game goes on in several rounds to take the time dimension into account. In-Basket Exercise: - Also known as In-tray method of training. The trainee is presented with a pack of papers & files in a tray containing administrative problems & is asked to take decisions

on these problems & is asked to take decisions on these within a stipulated time. The decisions taken by the trainees are compared with one another. The trainees are provided feedback on their performance.

5.10 Performance Appraisal

Performance mechanism is a method of assessing the contribution of employees at different levels of the organisation during a particular period of time. This is necessary to evaluate the contribution of the employees during the past year and to provide feedback for improvement. Performance appraisal is also vital to deciding the appropriate compensation decisions. It also helps decide on promotions and helps the superior determine the appropriate compensation decisions. It also helps decide on promotions and helps the superior determine the appropriate training that may be necessary to enhance the employees performance. Performance evaluation also helps build confidence as the employee has an opportunity to voice his opinions and his grievances to his superior. There are a number of methods of performance appraisal. No single method can be considered ideal in all circumstances. The methods of performance appraisal can be broadly classified into two categories: traditional and modern methods. Traditional methods are the relatively older methods of performance appraisal. These methods are based on studying the personal qualities of the employees. The traditional methods are as follows: 1. ESSAY APPRAISAL METHOD This traditional form of appraisal, also known as Free Form method involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator. 2. STRAIGHT RANKING METHOD This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation. PAIRED COMPARISON A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

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CRITICAL INCIDENTS METHODS In this method of performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur. FIELD REVIEW In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors personal bias. CHECKLIST METHOD The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees. GRAPHIC RATING SCALE In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

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FORCED DISTRIBUTION To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.

Modern Methods: Modern Methods were devised to improve upon the traditional methods. Modern methods attempt to remove the short comings of the old methods such as subjectivity, bias etc. Some of the modern methods are: 1. BEHAVIORALLY ANCHORED RATING SCALES

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioral statements describing important job performance qualities as good or bad (for e.g. the qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents. In this method, an employees actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.

2..Management By Objectives(MBO) The concept of Management by Objectives (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. THE MBO PROCESS

UNIQUE FEATURES AND ADVANTAGES OF MBO The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. Some of the important features and advantages of MBO are: Clarity of goals With MBO, came the concept of SMART goals i.e. goals that are: Specific Measurable Achievable Realistic Time bound

The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees.

The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. 360 degree performance appraisal 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the on-the-job performance of the employee. 360 1. 2. 3. 4. Self Superiors Subordinates Peer degree appraisal has four integral components: appraisal appraisal appraisal appraisal.

Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360 degree appraisal where the employees responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees abilities to work in a team, co-operation and sensitivity towards others.

Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees performance and is considered to be one of the most credible performance appraisal methods. 360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc. 4.ASSESSMENT CENTRES An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centers are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centers are also an effective way to determine the training and development needs of the targeted employees. 5.HUMAN RESOURCE ACCOUNTINGMETHOD

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them

5.11 Evaluating Human Resources


The Four Cs Model for Evaluating Human Resources To evaluate the effectiveness of the HRM process, within an organization, Harvard researchers have proposed a four Cs model: competence, commitment, congruence, and cost effectiveness. Examples of questions related to each of the four Cs, and some methods for measuring them follow:

1. Competence: How competent are employees in their work? Do they need additional training? Performance evaluations by managers can help a company determine what talent it has available. To what extent do HRM policies attract, keep, and develop employees with skills and knowledge needed now and in the future? 2. Commitment: How committed are employees to their work and organization?

Surveys can be conducted through interviews and questionnaires to find answers to this question. Additional information can be gained from personnel records about voluntary separation, absenteeism, and grievances. TO what extent do HRM policies enhance the commitment of employees to their work and organization? 3. Congruence: Is there congruence, or agreement, between the basic philosophy and goals of the company and its employees? Is there trust and common purpose between managers and employees? Incongruence can be detected in the frequency of strikes, conflicts between managers and subordinates, and grievances. A low level of congruence results in low levels of trust and common purpose; tension and trust between employees and managers may increase. What levels of congruence between management and employees do HRM policies and practices enhance or retain? 4. Cost effectiveness: Are HRM policies cost-effective in terms of wages, benefits, turnover, absenteeism, strikes, and similar factors? By shaping HRM policies to enhance commitment, competence, congruence, and cost effectiveness, an organization increases its capacity to adapt to changes in its environment. High commitment means: 1. Better communication between employees and managers. 2. Enhanced mutual trust. 3. All stakeholders responsive to one anothers needs and concerns whenever changes in environmental demands occur. High competence means:

1. Employees are versatile in their skills and can take on new roles and jobs as needed. 2. Employees are better able to respond to changes in environmental demands. Cost effectiveness means: That human resource costs, such as wages, benefits, and strikes, are kept equal to or less than those of competitors. Higher congruence means: That all stakeholders share a common purpose and collaborate in solving problems brought about by changes in environmental demands. This capacity to collaborate is crucial in an ever changing environment. Managers need the participation of a broad range of stakeholders (including management, unions, and governmental agencies) to obtain the data needed to evaluate the impact of HRM practices and policies.

High competence means: 1. Employees are versatile in their skills and can take on new roles and jobs as needed. 2. Employees are better able to respond to changes in environmental demands. Cost effectiveness means: That human resource costs, such as wages, benefits, and strikes, are kept equal to or less than those of competitors. Higher congruence means: That all stakeholders share a common purpose and collaborate in solving problems brought about by changes in environmental demands. This capacity to collaborate is crucial in an ever changing environment.

Managers need the participation of a broad range of stakeholders (including management, unions, and governmental agencies) to obtain the data needed to evaluate the impact of HRM practices and policies.