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HRM-Sem-II (GTU) Human Resources Management (HRM)

Module I!!!
1. INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. HRM can also be performed by line managers. HRM is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. HRM is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. HRM is moving away from traditional personnel, administration, and transactional roles, which are increasingly outsourced. HRM is now expected to add value to the strategic utilization of employees and that employee programs impact the business in measurable ways. The new role of HRM involves strategic direction and HRM metrics and measurements to demonstrate value. Different sub-streams of Human Resource Management Human resources management originally began as personnel management, but today it encompasses many well defined sub-streams of FUNCTIONS THAT CAN

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(1)Workforce planning

(2) Recruitment

(3) Orientation & skills management

(4) Personnel administration & compensation

(5) Time management

(6) Employee benefits administration & personnel cost planning

(7) Performance appraisal

Each of these sub-streams is a more or less specialized function, yet one can say that HRM itself is more than all of these put together. THE GREATEST CHALLENGE OF HUMAN R ESOURCE MANAGEMENT Unlike managing other resources like machines, real estate and finance, managing human beings is a totally different ball game, simply because unlike other assets, each employee has his own goal and will work first to attain that goal, even if it is at the cost of the goals of the organization. Thus, no employee can ever be made to provide his optimum output for the organization unless the goals of the organization are closely aligned with his own goals. This, in short, is the greatest challenge for all HRM experts, and in every organization, the need is to go about it in a way which is unique and specific for that organization.


The following trends have an effect on human resource management function and department. The importance of HRM increases due to some of them and the practices of HRM are affected to some extent due to some of them.

1. Increased globalization of the economy. 2. Technological changes and environmental changes. 3. The need to be flexible in response to business changes. 4. Increase in litigation related to HRM. 5. Changing characteristics of the workforce.


J OB ANALYSIS IS THE PROCESS OF describing and recording aspects of jobs and specifying the skills and other requirements necessary to perform the job. One of the main purposes of conducting job analysis is to prepare job description and job specification which in turn helps to hire the right quality of workforce into the organization. The general purpose of job analysis is to document the requirements of a job and the work performed. Job and task analysis is performed as a basis for later improvements, including: definition of a job domain; describing a job; developing performance appraisals, selection systems, promotion criteria, training needs assessment, and compensation plans.

METHODS Job Analysis Methods Questionnaires

PAQ Functional job analysis Observation Critical incident technique Interviews Employee recording Combination of methods

There are several ways to conduct a job analysis, including: interviews with incumbents and supervisors, questionnaires (structured, open-ended, or both), observation, critical incident investigations, and gathering background information such as duty statements or classification specifications. In job analysis conducted by HR professionals, it is common to use more than one of these methods.


Three major factors create the need for job analysis:

statutory concerns, such as equal employment opportunity responses to business competitionrecruiting and retaining talent technological changes that create new jobs and render others obsolete



Worker-oriented activities Machines, tools, equipment, and work aids used Job-related tangibles and intangibles Work performance Job content Personal requirements for the job


Work Activities work activities and processes; activity records (in film form, for example); procedures used; personal responsibility Worker-oriented activities human behaviors, such as physical actions and communicating on the job; elemental motions for methods analysis; personal job demands, such as energy expenditure Machines, tools, equipment, and work aids used Job-related tangibles and intangibles knowledge dealt with or applied (as in accounting); materials processed; products made or services performed Work performance error analysis; work standards; work measurements, such as time taken for a task Job context work schedule; financial and nonfinancial incentives; physical working conditions; organizational and social contexts Personal requirements for the job personal attributes such as personality and interests; education and training required; work experience


Manager Incumbent SME Job analyst DOT O*NET


Job analysis information is used in human resources on a regular basis to define:

Job description: A job description gives an account of the work and duties associated with a particular job. It describes the way the job is performed currently. Most job descriptions contain the following information:

the job name summary description of the job

a list of duties for the job a list of organizational responsibilities related to the job

Job specifications: Job specifications define the characteristics of the activities associated with the job and given in the job description. They describe the skill sets and qualifications that a candidate for the job should possess. Job classification: Job classification groups similar jobs into classes and families. This simplifies the overview for managers and is essential for streamlined functioning of an organization. Job evaluation: Job evaluation involves finding out the monetary worth of a job and helps to set up equitable pay structures. Job design: Job design integrates employee needs with productivity needs to maximize worker efficiency.


Identifying training needs of personnel Creating recruitment strategies Making performance reviews Without proper job analysis by the human resources department, it is difficult for any organization to remain competitive and be able to attract and retain talent.



process by which an organization ensures that it has the right number & kind of people at the right place and at the right time , capable of effectively and efficiently completing those tasks that help the organization achieve its overall objectives.. The process of systematically reviewing HR requirements to ensure that the required number of employees,with the required skills, are available when they are needed


1) Each Organisation needs personnel with necessary qualifications, skills, knowledge, experience & aptitude. 2) Need for Replacement of Personnel - Replacing old, retired or disabled personnel. 3) Meet manpower shortages due to labour turnover - Indian Airlines, Gas Authority of India headless for 10 months.

4) Meet needs of expansion / downsizing programmes - As a result of expansion of IT companies the demand for IT professionals are increasing. PSUs offering VRS to employees to retrench staff and labour costs. DOT.COMs firing staff. 5) Cater to Future Personnel Needs - Avoid surplus or deficiency of labour. 75% of organisations are overstaffed. Redeployment of staff to other units. 6) Nature of present workforce in relation with Changing Environment - helps to cope with changes in competitive forces, markets, technology, products and government regulations. Shift in demand from ERP to internet programming has increased internet programmers demand at Wipro, Infosys etc. ITI retrained its existing workforce in the new electronic telephone system.

i) ii) iii) iv) v) vi) quantify job for producing product / service quantify people & positions required determine future staff-mix assess staffing levels to avoid unnecessary costs reduce delays in procuring staff Prevent shortage / excess of staff vi) comply with legal requirements.


Trend analysis The study of a firms past employment needs over a period of years to predict future needs. Ratio analysis A forecasting technique for determining future staff needs by using ratios between a causal factor and the number of employees needed. Assumes that the relationship between the causal factor and staffing needs is constant. Scatter plot A graphical method used to help identify the relationship between two variables.

Determining the Relationship between Hospital Size and Number of Nurses Computerized forecasts The use of software packages to determine of future staff needs by projecting sales, volume of production, and personnel required to maintain a volume of output. Generates figures on average staff levels required to meet product demands, as well as forecasts for direct labor, indirect staff, and exempt staff. Typical metrics: direct labor hours required to produce one unit of product (a measure of productivity), and three sales projectionsminimum, maximum, and probable. Managerial Judgment To modify forecast based on factors e.g. entering into a new market Difficult to take a long-term perspective when market conditions change dramatically


Job Analysis Process of collecting and studying information relating to the operations and responsibilities of a specific job. Determination of tasks which comprise the job and of skills, knowledge, abilities and responsibilities required of the worker for a successful performance and which differentiates one job from all others. Products of Job Analysis are Job Description & Job Specification.


i. ii. iii. iv. v.

Collection of Organizational Structure Information Selection of Representative Position to be Analyzed Collection of Job Analysis Data Developing Job Description Developing Job Specification Collection of Data Who Collects? On-the-job Employees, Supervisors, Consultants / trade job analyst What to Collect Physical & Mental activity involved - Each task essential to achieve overall result - Skill / Educational factor needed for the job

How to Collect? Checklist, Interview, Observation, Participation, Technical Conference, Diary Method, Quantitative techniques Areas in which information may be gathered: Job title Alternative title Work performed Equipment, Tools & Materials used Reports & records made Relation of the job to other jobs Education & experience required Physical, Mental& Visual effort required Responsibility (for equipment, reports, performance) & duties Supervision given & received Hazards, Discomfort & Safety

Job Analysis Process of Obtaining all pertinent Job Facts


Job Description A proper definition & design of work. A statement containing : Job Title Location Job Summary Duties & Responsibilities Materials, Tools & Equipment used Forms & reports handled Supervision given / received Working conditions Hazards & Safety precautions


Job Specification A statement of human qualifications necessary to do the job containing: Education & Qualifications Experience & Training Knowledge & Skills Communication skills Physical requirements - Height, Weight, Age Personality requirements - Appearance, Judgment, Initiative, Emotional stability Purpose / Use Of Job Analysis Organization & Manpower planning Recruitment & Selection Job Evaluation & Wage, Salary administration Job Re-engineering Employee Training & Managerial Development Performance Appraisal Health & Safety HRP Process Determination of Quantity of Personnel Organizational Objectives HR Needs Forecast --HR Supply Forecast i)HR Programming ii)HRP Implementation iii)Control & Evaluation Surplus - Restricted Hiring, Lay Off, VRS, Reduced Hours -Shortage - Recruitment & Selection

Organizational Objectives & Policies

Downsizing / Expansion Acquisition / Merger / Sell-out Technology up gradation / Automation New Markets & New Products External Vs internal hiring Training & Re-training Union Constraints HR Demand Forecast Process of estimating future quantity and quality of manpower required for an organization. External factors - competition, laws & regulation, economic climate, changes in technology and social factors Internal factors - budget constraints, production levels, new products & services, organizational structure & employee separations Forecasting Techniques

Managerial Judgment - Managers discuss and arrive at a figure of inflows & outflows which would cater to future labour demand. # Ratio-Trend Analysis - Studying past ratios, i.e. No. of Workers Vs Volume of Sales, forecasting future ratios and adjusting for future changes in the organization. . Work-Study Technique - Used when length of operations and amount of labour required can be calculated. # Delphi Technique - From a group of experts the personnel needs are estimated. HR Supply Forecas

Process of estimating future quantity and quality of manpower available internally & externally to an organization. Supply Analysis Existing Human Resources Internal Sources of Supply External Sources of Supply HR Plan Implementation Recruitment, Selection & Placement Training & Development Retraining & Redeployment Retention Plan Downsizing Plan Control & Evaluation Are Budgets, Targets & Standards met? Responsibilities for Implementation & Control Reports for Monitoring HR Plan Recruiting

Recruitment refers to the process of attracting, screening, and selecting a qualified person for a job


Internal Sources of Candidates: Hiring from Within

SUCCESSION P LANNING Succession planning The process of ensuring a suitable supply of successors for current and future senior or key jobs. Succession planning steps: Identifying and analyzing key jobs. Creating and assessing candidates. Selecting those who will fill the key positions.

STEP 1: Identify and analyze key jobs Based on the companys strategic goals, top management and the HR manager identify what the companys future key positions will be. They then write job descriptions and specifications for these positions. For instance, if the company plans to expand abroad, it may look for talent in its international division.

STEP 2: Assess candidates After identifying future key positions, the management team assesses candidates for these jobs. It then provides them with the developmental experience they need in these positions.

STEP 3: Select those who will fill the positions Top management selects those who will fill the key positions.

A general recruitment process is as follows: Identifying the vacancy: The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company. These contain: Posts to be filled Number of persons Duties to be performed Qualifications required

Preparing the job description and person specification.

Locating and developing the sources of required number and type of employees (Advertising etc).

Short-listing and identifying the prospective employee with required characteristics.

Arranging the interviews with the selected candidates.

Conducting the interview and decision making

1. Identify vacancy

2. Prepare job description and person specification

3. Advertising the vacancy

4. Managing the response

5. Short-listing

6. Arrange interviews

7. Conducting interview and decision making The recruitment process is immediately followed by the selection process i.e. the final interviews and the decision making, conveying the decision and the appointment formalities.

Job analysis The proper start to a recruitment effort is to perform a job analysis, to document the actual or intended requirement of the job to be performed. This information is captured in a job description and provides the recruitment effort with the boundaries and objectives of the search. Oftentimes a company will have job descriptions that represent a historical collection of tasks performed in the past. These job descriptions need to be reviewed or updated prior to a recruitment effort to reflect present day requirements. Starting a recruitment with an accurate job analysis and job description ensures the recruitment effort starts off on a proper track for success. Sourcing

Sourcing involves 1) advertising, a common part of the recruiting process, often

encompassing multiple media, such as the Internet, general newspapers, job ad newspapers, professional publications, window advertisements, job centers, and campus graduate recruitment programs; and 2) recruitment research, which is the proactive identification of passive candidates who are happy in their current positions and are not actively looking to move companies. This initial research for so-called passive candidates, also called name generation, results in a contact information of potential candidates who can then be contacted discreetly to be screened and approached on behalf of an executive search firm or corporate client (see below).

Screening and selection Suitability for a job is typically assessed by looking for skills, e.g. communication, typing, and computer skills. Qualifications may be shown through rsums, job applications, interviews, educational or professional experience, the testimony of references, or in-house testing, such as for software knowledge, typing skills, numeracy, and literacy, through psychological tests or employment testing. Other resume screening criteria may include length of service, job titles and length of time at a job. In some countries, employers are legally mandated to provide equal opportunity in hiring. Business management software is used by many recruitment agencies to automate the testing process. Many recruiters and agencies are using an applicant tracking system to perform many of the filtering tasks, along with software tools for psychometric testing. British Army etc. recruitment centre in Oxford. Lateral hiring "Lateral hiring" refers to a form of recruiting; the term is used with two different, almost opposite meanings. In one meaning, the hiring organization targets employees of another, similar organization, possibly luring them with a better salary and the promise of better career opportunities. An example is the recruiting of a partner of a law firm by another law firm. The new lateral hire then has specific applicable expertise and can make a running start in the new job. In some professional branches such lateral hiring was traditionally frowned upon, but the practice has become increasingly more common. An employee's contract may have a non-compete clause preventing such lateral hiring. In another meaning, a lateral hire is a newly hired employee who has no prior specific applicable expertise for the new job, and for whom this job move is a radical change of career. An example is the recruiting of a university professor to become chairman of the board of a company.

The major challenges faced by the HR in recruitment are:

Adaptability to globalization The HR professionals are expected and required to keep in tune with the changing times, i.e. the changes taking place across the globe. HR should maintain the timeliness of the process

Lack of motivation Recruitment is considered to be a thankless job. Even if the organisation is achieving results, HR department or professionals are not thanked for recruiting the right employees and performers.

Process analysis The immediacy and speed of the recruitment process are the main concerns of the HR in recruitment. The process should be flexible, adaptive and responsive to the immediate requirements. The recruitment process should also be cost effective.

Strategic prioritization The emerging new systems are both an opportunity as well as a challenge for the HR professionals. Therefore, reviewing staffing needs and prioritizing the tasks to meet the changes in the market has become a challenge for the recruitment professionals.


External factors affecting recruiting: Looming undersupply of workers Lessening of the trend in outsourcing of jobs Increasingly fewer qualified candidates

Internal factors affecting recruiting: The consistency of the firms recruitment efforts with its strategic goals The available resources, types of jobs to be recruited and choice of recruiting methods Non-recruitment HR issues and policies Line and staff coordination and cooperation

Advantages of centralizing recruitment Strengthens employment brand Ease in applying strategic principles Reduces duplication of HR activities Reduces the cost of new HR technologies Builds teams of HR experts Provides for better measurement of HR performance Allows for the sharing of applicant pools


Attract and encourage more and more candidates to apply in the organisation. Create a talent pool of candidates to enable the selection of best candidates for the organisation. Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. Recruitment is the process which links the employers with the employees. Increase the pool of job candidates at minimum cost.

Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants.

Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. Meet the organizations legal and social obligations regarding the composition of its workforce. Begin identifying and preparing potential job applicants who will be appropriate candidates. Increase organization and individual effectiveness of various recruiting techniques and sources for all types of job applicants


The following trends are being seen in recruitment: OUTSOURCING In India, the HR processes are being outsourced from more than a decade now. A company may draw required personnel from outsourcing firms. The outsourcing firms help the organisation by the initial screening of the candidates according to the needs of the organisation and creating a suitable pool of talent for the final selection by the organisation. Outsourcing firms develop their human resource pool by employing people for them and make available personnel to various companies as per their needs. In turn, the outsourcing firms or the intermediaries charge the organisations for their services.


1. Company need not plan for human resources much in advance.

2. Value creation, operational flexibility and competitive advantage

3. turning the management's focus to strategic level processes of HRM

4. Company is free from salary negotiations, weeding the unsuitable resumes/candidates.

5. Company can save a lot of its resources and time


Buying talent (rather than developing it) is the latest mantra being followed by the organisations today. Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry; the organisation might be a competitor in the industry. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions, better than the current employer of the candidate. But it is seen as an unethical practice and not openly talked about. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today. It has become a challenge for human resource managers to face and tackle poaching, as it weakens the competitive strength of the firm.


Many big organizations use Internet as a source of recruitment. Erecruitment is the use of technology to assist the recruitment process. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum vitae i.e. CV through e mail using the Internet. Alternatively job seekers place their CVs in worldwide web, which can be drawn by prospective employees depending upon their requirements. Advantages of recruitment are:

Low cost.

No intermediaries

Reduction in time for recruitment.

Recruitment of right type of people.

Efficiency of recruitment process.



The Importance of Selecting the Right Employees I) Organizational Performance II) Costs of Recruiting and Hiring III) Legal Obligations and Liability TYPES OF VALIDITY I) Criterion Validity II) Content Validity III) Face Validity TYPES OF TESTS What Tests Measure

I) Cognitive (Mental) Abilities II) Motor and Physical Abilities III) Personality and Interests IV) Achievement


MEASURING WORK PERFORMANCE DIRECTLY I) Work Samples II) Management Assessment Centers III) Video-Based Situational Testing IV)Miniature Job Training and Evaluation

BACKGROUND INVESTIGATIONS AND REFERENCE CHECKS SOURCES OF INFORMATION Former Employers Current Supervisors Commercial Credit Rating Companies Written References Social Networking Sites

Comprehensive Automated Applicant Tracking and Screening Systems Benefits of Applicant Tracking Systems

Knock out applicants who do not meet job requirements Allow employers to extensively test and screen applicants online Can match hidden talents of applicants to available openings 5) INTERVIEWING CANDIDATES INTERVIEWA procedure designed to obtain information from a person through oral responses to oral inquiry BASIC FEATURES OF INTERVIEWS Selection Interviews Interview Structure Interview Content Interview Administration TYPES OF INTERVIEWS Selection Interview A selection procedure designed to predict future job performance on the basis of applicants oral responses to oral inquirie Appraisal Interview A discussion, following a performance appraisal, in which supervisor and employee discuss the employees rating and possible remedial actions. Exit Interview An interview to elicit information about the job or related matters to the employer some insight into whats right or wrong about the firm. INTERVIEW FORMATS Unstructured or Nondirective Interview Structured or Directive Interview

Interview Content Types of Questions Situational Interview A series of job related questions that focus on how the candidate would behave in a given situation Example Suppose you were faced with the following situationWhat would you do? Behavioral Interview A series of job related questions that focus on how the candidate reacted on actual situations in the past Example Can you think of a time when What did you do?

Job-Related Interview A series of job related questions that focus on relevant past job related behaviors Stress Interview An interview in which the applicant is made uncomfortable by a series of often rude questions. This technique helps identify hypersensitive applicants and those with low or high stress tolerance. ADMINISTERING THE INTERVIEW WAYS IN WHICH INTERVIEWS CAN BE CONDUCTED Unstructured Sequential Interview An interview in which each interviewer forms an independent opinion after asking different questions

Structured Sequential Interview An interview in which the applicant is interviewed sequentially by several persons; each rates the applicant on a standard form. Panel Interview An interview in which a group of interviewers questions the applicant. Mass Interview A panel interviews several candidates simultaneously. Phone and Video Interviews

Computerised interview is one in which a job candidates oral and/or computerized replies are obtained in response to computerized oral, visual or written questions and/or situations Web-Assisted Interviews


Nonverbal Behavior
Influence of Nonverbal Behavior applicants who demonstrate greater amounts of eye contact, smiling and other similar nonverbal behaviors are rated higher. trained to ACT RIGHT Impression Management Impression management Clever interviewees attempt to manage the impression they present to persuade interviewers to view them more favorably.

Applicants Personal Characteristics

Interviewer Behavior Interviewer Behavior Talking so much that applicants have no time to answer questions. Letting the applicant dominate the interview. Acting more positively toward a favored (or similar to the interviewer) applicant. Candidate-Order (Contrast) Error and Pressure to Hire Candidate-order Strong(er) candidates who interview after weak(er) ones may appear more qualified than they are because of the Contrast between the two. Interviewers Misunderstanding of the Job Misunderstanding the job Interviewers who dont precisely know what a job entails and what sort of candidate is best suited for it usually make their decisions based on incorrect stereotypes about what a good applicant is. Lack of Updated Job Description/ Knowledge of Job Dutie First Impressions (Snap Judgments) One of the most common interviewing errors is that interviewers tend to jump to conclusions or make snap judgments about candidates during the first few minutes of the interview.

HOW TO CONDUCT A M ORE EFFECTIVE INTERVIEW Structure Your Interview Prepare for the Interview Establish Rapport Ask Questions Close the Interview Review the Interview 6) TRAINING AND DEVELOPMENT

ORIENTING EMPLOYEES Employee orientation A procedure for providing new employees with basic background information about the firm. Orientation content Information on employee benefits Personnel policies The daily routine Company organization and operations Safety measures and regulations Facilities tour

A successful orientation should accomplish four things for new employees: Make them feel welcome and at ease. Help them understand the organization in a broad sense. Make clear to them what is expected in terms of work and behavior. Help them begin the process of becoming socialized into the firms ways of acting and doing things.

THE TRAINING P ROCESS Training The process of teaching new employees the basic skills they need to perform their jobs. The strategic context of training Performance management: the process employers use to make sure employees are working toward organizational goals. Web-based training Distance learning-based training Cross-cultural diversity training

THE TRAINING AND DEVELOPMENT PROCESS Needs analysis Identify job performance skills needed, assess prospective trainees skills, and develop objectives. Instructional design Produce the training program content, including workbooks, exercises, and activities. Validation Presenting (trying out) the training to a small representative audience. Implement the program Actually training the targeted employee group. Evaluation Assesses the programs successes or failures. M AKE THE LEARNING MEANINGFUL At the start of training, provide a birds-eye view of the material to be presented to facilitates learning. Use a variety of familiar examples. Organize the information so you can present it logically, and in meaningful units. Use terms and concepts that are already familiar to trainees. Use as many visual aids as possible. MAKE SKILLS TRANSFER EASY Maximize the similarity between the training situation and the work situation.

Provide adequate practice. Label or identify each feature of the machine and/or step in the process. Direct the trainees attention to important aspects of the job. Provide heads-up preparatory information that lets trainees know they might happen back on the job.

M OTIVATE THE LEARNER People learn best by doing so provide as much realistic practice as possible. Trainees learn best when the trainers immediately reinforce correct responses Trainees learn best at their own pace. Create a perceived training need in the trainees minds. The schedule is important too: The learning curve goes down late in the day, less than full day training is most effective.

ANALYZING TRAINING N EEDS Task analysis A detailed study of a job to identify the specific skills required, especially for new employees. Performance analysis Verifying that there is a performance deficiency and determining whether that deficiency should be corrected through training or through some other means (such as transferring the employee). TRAINING METHODS On-the-job training (OJT) Having a person learn a job by actually doing the job. OJT methods Coaching or understudy Job rotation Special assignments Advantages Inexpensive Immediate feedback STEPS IN ON-THE-JOB TRAINING (OJT) Step 1: Prepare the learner Put the learner at easerelieve the tension. Explain why he or she is being taught.

Create interest, encourage questions, find out what the learner already knows about this or other jobs. Explain the whole job and relate it to some job the worker already knows. Place the learner as close to the normal working position as possible. Familiarize the worker with equipment, materials, tools, and trade terms.

Step 2: Present the operation Explain quantity and quality requirements. Go through the job at the normal work pace. Go through the job at a slow pace several times, explaining each step. Between operations, explain the difficult parts, or those in which errors are likely to be made. Again go through the job at a slow pace several times; explain the key points. Have the learner explain the steps as you go through the job at a slow pace.

Step 3: Do a tryout Have the learner go through the job several times, slowly, explaining each step to you. Correct mistakes and, if necessary, do some of the complicated steps the first few times. Run the job at the normal pace. Have the learner do the job, gradually building up skill and speed. As soon as the learner demonstrates ability to do the job, let the work begin, but dont abandon him or her.

Step 4: Follow up Designate to whom the learner should go for help. Gradually decrease supervision, checking work from time to time against quality and quantity standards. Correct faulty work patterns before they become a habit. Show why the learned method is superior.

Compliment good work; encourage the worker until he or she is able to meet the quality and quantity standards.

TRAINING METHODS (CONTD) Apprenticeship training A structured process by which people become skilled workers through a combination of classroom instruction and on-the-job training. Informal learning The majority of what employees learn on the job they learn through informal means of performing their jobs on a daily basis. Job instruction training (JIT) Listing each jobs basic tasks, along with key points, in order to provide step-by-step training for employees. Effective lectures Use signals to help listeners follow your ideas. Dont start out on the wrong foot. Keep your conclusions short. Be alert to your audience. Maintain eye contact with the trainees. Make sure everyone in the room can hear. Control your hands. Talk from notes rather than from a script. Break a long talk into a series of five-minute talks. Programmed Learning Programmed instruction (PI) A systematic method for teaching job skills involving: Presenting questions or facts Allowing the person to respond Giving the learner immediate feedback on the accuracy of his or her answers Advantages Reduced training time Self-paced learning Immediate feedback Reduced risk of error for learner TRAINING METHODS (CONTD) Literacy training techniques

Responses to functional illiteracy Testing job candidates basic skills. Setting up basic skills and literacy programs. Audiovisual-based training To illustrate following a sequence over time. To expose trainees to events not easily demonstrable in live lectures. To meet the need for organizationwide training and it is too costly to move the trainers from place to place. Simulated training (occasionally called vestibule training) Training employees on special off-the-job equipment so training costs and hazards can be reduced. Computer-based training (CBT) Electronic performance support systems (EPSS) Learning portals Computer-based Training (CBT) Advantages Reduced learning time Cost-effectiveness Instructional consistency Types of CBT Intelligent Tutoring systems Interactive multimedia training Virtual reality training Distance and Internet-Based Training Teletraining A trainer in a central location teaches groups of employees at remote locations via TV hookups. Videoconferencing Interactively training employees who are geographically separated from each otheror from the trainervia a combination of audio and visual equipment. Training via the Internet Using the Internet or proprietary internal intranets to facilitate computer-based training. WHAT IS M ANAGEMENT DEVELOPMENT? Management development

Any attempt to improve current or future management performance by imparting knowledge, changing attitudes, or increasing skills. Succession planning A process through which senior-level openings are planned for and eventually filled. Anticipate management needs Review firms management skills inventory Create replacement charts Begin management development Managerial on-the-Job Training Job rotation Moving a trainee from department to department to broaden his or her experience and identify strong and weak points. Coaching/Understudy approach The trainee works directly with a senior manager or with the person he or she is to replace; the latter is responsible for the trainees coaching. Action learning Management trainees are allowed to work full-time analyzing and solving problems in other departments. Off-the-Job Management Training and Development Techniques Case study method Managers are presented with a description of an organizational problem to diagnose and solve. Management game Teams of managers compete by making computerized decisions regarding realistic but simulated situations. Outside seminars Many companies and universities offer Web-based and traditional management development seminars and conferences. Role playing Creating a realistic situation in which trainees assume the roles of persons in that situation. Behavior modeling Modeling: showing trainees the right (or model) way of doing something. Role playing: having trainees practice that way Social reinforcement: giving feedback on the trainees performance. Transfer of learning: Encouraging trainees apply their skills on the job.

Corporate universities Provides a means for conveniently coordinating all the companys training efforts and delivering Web-based modules that cover topics from strategic management to mentoring. In-house development centers A company-based method for exposing prospective managers to realistic exercises to develop improved management skills. Executive coaches An outside consultant who questions the executives boss, peers, subordinates, and (sometimes) family in order to identify the executives strengths and weaknesses. Counsels the executive so he or she can capitalize on those strengths AND OVERCOME THE WEAKNESSES. MANAGING ORGANIZATIONAL CHANGE AND DEVELOPMENT What to change? Strategy: mission and vision Culture: new corporate values Structure: departmental structure, coordination, span of control, reporting relationships, tasks, decision-making procedures Technologies: new systems and methods Employees: changes in employee attitudes and skills What causes resistance? All behavior in organizations is a product of two kinds of forcesthose striving to maintain the status quo and those pushing for change. Lewins Change Process Unfreezing: reducing the forces striving to maintain the status quo. Moving: developing new behaviors, values, and attitudes, sometimes through structural changes. Refreezing: reinforcing the changes. Change initiatives Political campaign: creating a coalition strong enough to support and guide the initiative. Marketing campaign: tapping into employees thoughts and feelings and also effectively communicating messages about the prospective programs theme and benefits. Military campaign: Deploying executives scarce resources of attention and time to actually carry out the change. HOW TO LEAD THE CHANGE

1. Establish a sense of urgency. 2. Mobilize commitment through joint diagnosis of problems. 3. Create a guiding coalition. 4. Develop a shared vision. 5. Communicate the vision. 6. Help employees to make the change. 7. Generate short-term wins. 8. Consolidate gains and produce more change. 9. Anchor the new ways of doing things in the companys culture. 10. Monitor progress and adjust the vision as required.


Organizational development (OD) A special approach to organizational change in which employees themselves formulate and implement the change thats required. Usually involves action research. Applies behavioral science knowledge. Changes the attitudes, values, and beliefs of employees. Changes the organization in a particular direction. Examples of OD Interventions Human Process T-groups Process consultation Third-party intervention Team building Organizational confrontation meeting Intergroup relations

Techno structural Formal structural change Differentiation and integration Cooperative unionmanagement projects Quality circles Total quality management Work design

Human Resource Management Goal setting Performance appraisal Reward systems Career planning and development Managing workforce diversity Employee wellness Strategic Integrated strategic management Culture change Strategic change Self-designing organizations

Evaluating the Training Effort

Designing the study Time series design Controlled experimentation Training effects to measure Reaction of trainees to the program Learning that actually took place Behavior that changed on the job Results that were achieved as a result of the training

Module II!!!

P ERFORMANCE APPRAISAL Evaluating an employees current and/or past performance relative to his or her performance standards.

PERFORMANCE MANAGEMENT The process employers use to make sure employees are working toward organizational goals. Employees individual goals point towards overall strategic direction

WHY P ERFORMANCE M ANAGEMENT? Increasing use by employers of performance management reflects: The popularity of the total quality management (TQM) concepts. The belief that traditional performance appraisals are often not just useless but counterproductive.

The necessity in todays globally competitive industrial environment for every employees efforts to focus on helping the company to achieve its strategic goals.

CONTINUOUS IMPROVEMENT A management philosophy that requires employers to continuously set and relentlessly meet ever-higher quality, cost, delivery, and availability goals by: Eradicating the seven wastes: overproduction, defective products, and unnecessary downtime, transportation, processing costs, motion, and inventory. Requiring each employee to continuously improve his or her own personal performance, from one appraisal period to the next.

WHY APPRAISE PERFORMANCE? Appraisals play an integral role in the employers performance management process. Appraisals help in planning for correcting deficiencies and reinforce things done correctly. Appraisals, in identifying employee strengths and weaknesses, are useful for career planning Appraisals affect the employers salary raise decisions.


The tool will NOT matter if the appraisal isnt accurate Motivations for soft (less-than-candid) appraisals The fear of having to hire and train someone new The unpleasant reaction of the appraisee A company appraisal process thats not conducive to candor Hazards of giving soft appraisals Employee loses the chance to improve before being forced to change jobs. Lawsuits arising from dismissals involving inaccurate performance appraisals.

DEFINING GOALS AND WORK EFFORTS Guidelines for effective goals Assign specific goals Assign measurable goals Assign challenging but doable goals Encourage participation SMART goals are: Specific, and clearly state the desired results. Measurable in answering how much. Attainable, and not too tough or too easy. Relevant to whats to be achieved. Timely in reflecting deadlines and milestones.

PERFORMANCE APPRAISAL R OLES Supervisors Usually do the actual appraising. Must be familiar with basic appraisal techniques. Must understand and avoid problems that can cripple appraisals. Must know how to conduct appraisals fairly. Give the employee advance notice Give the employee an advance copy of the appraisal Must BE PREPARED. Review prior performance appraisals Review any notes taken regarding employees performance BE FAMILIAR with the employees job What projects they are working on, etc. HR department Serves a policy-making and advisory role. Provides advice and assistance regarding the appraisal tool to use. Prepares forms and procedures and insists that all departments use them. Responsible for training supervisors to improve their appraisal skills. Responsible for monitoring the system to ensure that appraisal formats and criteria comply with EEO laws and are up to date.

STEPS IN A PPRAISING P ERFORMANCE Defining the job Making sure that you and your subordinate agree on his or her duties and job standards. Heres where that job description comes in handy.. Appraising performance Comparing your subordinates actual performance to the standards that have been set; this usually involves some type of rating form. Providing feedback Discussing the subordinates performance and progress, and making plans for any development required. DESIGNING THE APPRAISAL TOOL What to measure? Work output (quality and quantity) Personal competencies Goal (objective) achievement How to measure? Graphic rating scales Alternation ranking method MBO P ERFORMANCE A PPRAISAL METHODS Graphic rating scale A scale that lists a number of traits and a range of performance for each that is used to identify the score that best describes an employees level of performance for each trait. Alternation ranking method Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked. Paired comparison method Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair. Forced distribution method Similar to grading on a curve; predetermined percentages of ratees are placed in various performance categories. Example: 15% high performers

20% high-average performers 30% average performers 20% low-average performers 15% low performers Narrative Forms Behaviorally anchored rating scale (BARS) An appraisal method that uses quantified scale with specific narrative examples of good and poor performance. Developing a BARS: Generate critical incidents Develop performance dimensions Reallocate incidents Scale the incidents Develop a final instrument Advantages of using a BARS A more accurate gauge Clearer standards Feedback Independent dimensions Consistency

MANAGEMENT BY OBJECTIVES (MBO) Involves setting specific measurable goals with each employee and then periodically reviewing the progress made. 1. Set the organizations goals. 2. Set departmental goals. 3. Discuss departmental goals. 4. Define expected results (set individual goals). 5. Performance reviews. 6. Provide feedback. Biggest problem with MBOs is when they are vague or unclear P OTENTIAL RATING SCALE A PPRAISAL P ROBLEMS Unclear standards An appraisal that is too open to interpretation. Halo effect Occurs when a supervisors rating of a subordinate on one trait biases the rating of that person on other traits. Central tendency

A tendency to rate all employees the same way, such as rating them all average. Strictness/leniency The problem that occurs when a supervisor has a tendency to rate all subordinates either high or low. Bias The tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings employees receive. HOW TO A VOID A PPRAISAL P ROBLEMS Learn and understand the potential problems, and the solutions for each. Use the right appraisal tool. Each tool has its own pros and cons. Train supervisors to reduce rating errors such as halo, leniency, and central tendency. Have raters compile positive and negative critical incidents as they occur. PAY ATTENTION

WHO SHOULD DO THE APPRAISING? The immediate supervisor Peers Rating committees Employees supervisor and 2-3 other supervisors Self-ratings Subordinates 360-Degree feedback


THE A PPRAISAL INTERVIEW Types of appraisal interviews SatisfactoryPromotable SatisfactoryNot promotable UnsatisfactoryCorrectable Immediately followed by some form of a CAP UnsatisfactoryUncorrectable How to conduct the appraisal interview Talk in terms of objective work data. Dont get personal. Encourage the person to talk. Dont tiptoe around. How to handle a defensive subordinate Recognize that defensive behavior is normal. Never attack a persons defenses. Postpone action.

Recognize your own limitations. You are their boss not their shrink How to criticize a subordinate Do it in a manner that lets the person maintain his or her dignity and sense of worth. Criticize in private, and do it constructively. Avoid once-a-year critical broadsides by giving feedback on a daily basis, so that the formal review contains no surprises. Never say the person is always wrong Criticism should be objective and free of any personal biases on your part. How to ensure the interview leads to improved performance Dont make the subordinate feel threatened during the interview. Give the subordinate the opportunity to present his or her ideas and feelings and to influence the course of the interview. Have a helpful and constructive supervisor conduct the interview. Offer the subordinate the necessary support for development and change. How to handle a formal written warning Purposes of the written warning Purpose is to CHANGE BEHAVIOR To shake your employee out of bad habits. Help you defend your rating, both to your own boss and (if needed) to the courts. Written warnings should: Identify standards by which employee is judged. Make clear that employee was aware of the standard. Specify deficiencies relative to the standard. Indicates employees prior opportunity for correction.

CREATING THE TOTAL PERFORMANCE MANAGEMENT PROCESS What is our strategy and what are our goals? What does this mean for the goals we set for our employees, and for how we train, appraise, promote, and reward them? What will be the technological support requirements?


DETERMINING PAY RATES Employee compensation All forms of pay or rewards going to employees and arising from their employment. There are two kinds: I. Direct financial payments Pay in the form of wages, salaries, incentives, commissions, and bonuses. Also pay for performance.piecework is an example. II. Indirect financial payments Pay in the form of financial benefits such as insurance.


Davis-Bacon Act (1931) A law that sets wage rates for laborers employed by contractors working for th federal government. Walsh-Healey Public Contract Act (1936) A law that requires minimum wage and working conditions for employees working. Title VII of the 1964 Civil Rights Act This act makes it unlawful for employers to discriminate against any individual with respect to hiring, compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, or national origin. Fair Labor Standards Act (1938) This act provides for minimum wages, maximum hours, overtime pay for nonexempt employees after 40 hours worked per week, and child labor protection. The law has been amended many times and covers most employees. Equal Pay Act (1963) An amendment to the Fair Labor Standards Act designed to require equal pay for women doing the same work as men. Employee Retirement Income Security Act (ERISA) The law that provides government protection of pensions for all employees with company pension plans. It also regulates vesting rights (employees who leave before retirement may claim compensation from the pension plan).

The Age Discrimination in Employment Act Prohibits age discrimination against employees who are 40 years of age and older in all aspects of employment, including compensation. The Americans with Disabilities Act Prohibits discrimination against qualified persons with disabilities in all aspects of employment, including compensation. The Family and Medical Leave Act Entitles eligible employees, both men and women, to take up to 12 weeks of unpaid, job-protected leave for the birth of a child or for the care of a child, spouse, or parent.


Aligned reward strategy How can we link both short & long term business success to reward programs? HR and top management will write the policies so that they are consistent with the firms strategic aims. QUESTIONS TO ASK: 1. What are our companys key success factors? What must our company do to be successful in fulfilling its mission or achieving its desired competitive position? 2. What are the employee behaviors or actions necessary to successfully implement this competitive strategy? 3. What compensation programs should we use to reinforce those behaviors? What should be the purpose of each program in reinforcing each desired behavior? 4. What measurable requirements should each compensation program meet to be deemed successful in fulfilling its purpose? 5. How well do our current compensation programs match these requirements?


Salary compression A salary inequity problem, generally caused by inflation, resulting in longer-term employees in a position earning less than workers entering the firm today.

Salaries in the market go up faster than the companys salariesits a constant, classic issue!! Geography Cost of living differences between cities.can be HUGE! How about compensating expatriates? Lets Talk Equity and Its Impact on Pay Rates The equity theory of motivation States that if a person perceives an inequity, the person will be motivated to reduce or eliminate the tension and perceived inequity. Forms of Equity External equity How a jobs pay rate in one company compares to the jobs pay rate in other companies. Internal equity How fair the jobs pay rate is, when compared to other jobs within the same company Individual equity How fair an individuals pay as compared with what his or her coworkers are earning for the same or very similar jobs within the company. Procedural equity The perceived fairness of the process and procedures to make decisions regarding the allocation of pay.


Salary surveys To monitor and maintain external equity. Job analysis and job evaluation To maintain internal equity. Performance appraisal and incentive pay To maintain individual equity. Communications, grievance mechanisms, and employees participation To help ensure that employees view the pay process as transparent and fair.


Step Step Step Step Step


The Salary Survey Job Evaluation Group Similar Jobs into Pay Grades Price Each Pay Grade Fine-Tune Pay Rates

STEP 1: THE SALARY SURVEY Aimed at determining prevailing wage rates. A good salary survey provides specific wage rates for specific jobs. Formal written questionnaire surveys are the most comprehensive, but telephone surveys and newspaper ads are also sources of information. - Benchmark job: A job that is used to anchor the employers pay scale around which other jobs are arranged in order of relative worth. - Surveys collect data on benefits, leaves of absence, etc. Sources for Salary Surveys Consulting firms (Watson Wyatt Data Services) Professional associations Government agencies U.S. Department of Labors Bureau of Labor Statistics (BLS) conducts three annual surveys: Area wage surveys Industry wage surveys Professional, administrative, technical, and clerical (PATC) surveys.


Defined: Done in order to determine the worth of one job relative to another.

Basic premise that require greater qualifications, more responsibilities, and more complex job duties should be ???? Compensable factor The factors that establish how the jobs compare to each other. What are those? ....areas such as skills, effort, responsibility, and working conditions. But, those factors can vary job to job. You decide what they are Job Evaluation Methods: Ranking Ranking each job relative to all other jobs, usually based on some overall factor. Steps in job ranking: Obtain job information. Select and group jobs. Select compensable factors. Rank jobs. Combine ratings. Job Evaluation Methods: Job Classification Raters categorize jobs into groups or classes of jobs that are of roughly the same value for pay purposes. Classes contain similar jobs. Grades are jobs that are similar in difficulty but otherwise different. Jobs are classed by the amount or level of compensable factors they contain. Job Evaluation Methods: Point Method & Factor Comparison Point MethodA quantitative technique that involves: Identifying the degree to which each compensable factors are present in the job. Awarding points for each degree of each factor. Calculating a total point value for the job by adding up the corresponding points for each factor. Most widely used job evaluation method. Factor Comparison MethodA refinement of the ranking method that involves: Rank each job several times, once for each compensable factor. Combine the rankings for each job into an overall number for the job.

Also a widely used tool.


This is comprised of jobs of approximately equal difficulty or importance as established by job evaluation. Point method: the pay grade consists of jobs falling within a range of points. Ranking method: the grade consists of all jobs that fall within two or three ranks. Classification method: automatically categorizes jobs into classes or grades.


Next we need to assign pay rates to the pay grades.. Wage Curve Shows the pay rates currently paid for jobs in each pay grade, relative to the points or rankings assigned to each job or grade by the job evaluation. Shows the relationships between the value of the job as determined by one of the job evaluation methods and the current average pay rates for your grades.

Step 5. Fine-tune pay rates Developing pay ranges Flexibility in meeting external job market rates Easier for employees to understand Allows for rewarding performance differences and seniority Correcting out-of-line rates Raising underpaid jobs to the minimum of the rate range for their pay grade. Freezing rates or cutting pay rates for overpaid (red circle) jobs to maximum in the pay range for their pay grade. Or you might look at a lump sum if red circled, or change range.


Competency-based pay Where the company pays for the employees: Range, depth, and types of skills and knowledge Experience on the job Pays the employee for what they can do

Pays the employee on what their current job demands AKA.Pay for Knowledge or Skill-Based Pay


Traditional pay plans may actually backfire if a high-performance work system is the goal. Paying for skills, knowledge, and competencies is more strategic. Measurable skills, knowledge, and competencies are the heart of any companys performance management process. It encourages employees to learn more skills, cross-train= value!


Broadbanding Consolidating salary grades and ranges into just a few wide levels or bands. Wide bands provide for more flexibility in assigning workers to different job grades. Includes supervisors and subordinates. On average, about 15% of employers use this comp trend.



Incentives Financial rewards paid to workers whose production exceeds a predetermined standard. Frederick Taylor Popularized scientific management and the use of financial incentives in the late 1800s.

Systematic soldiering: the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level.


Law of individual differences The fact that people differ in personality, abilities, values, and needs. Different people react to different incentives in different ways. Managers should be aware of employee needs and fine-tune the incentives offered to meets their needs. Money is not the only motivator.


N EEDS AND MOTIVATION Abraham Maslows Hierarchy of Needs Five increasingly higher-level needs: physiological (food, water, sex) security (a safe environment) social (relationships with others) self-esteem (a sense of personal worth) self-actualization (becoming the desired self) Lower level needs must be satisfied before higher level needs can be addressed or become of interest to the individual. Herzbergs HygieneMotivator theory Hygienes (extrinsic job factors) Inadequate working conditions, salary, and incentive pay can cause dissatisfaction and prevent satisfaction. Motivators (intrinsic job factors) Job enrichment (challenging job, feedback and recognition) addresses higher-level (achievement, self-actualization) needs. The best way to motivate someone is to organize the job so that doing it helps satisfy the persons higher-level needs. Edward Deci Intrinsically motivated behaviors are motivated by the underlying need for competence and self-determination. Offering an extrinsic reward for an intrinsically-motivated act can conflict with the acting individuals internal sense of responsibility. Some behaviors are best motivated by job challenge and recognition, others by financial rewards. INSTRUMENTALITY AND REWARDS Vrooms Expectancy Theory A persons motivation to exert some level of effort is a function of three things: Expectancy: that effort will lead to performance. Instrumentality: the connection between performance and the appropriate reward. Valence: the value the person places on the reward. Motivation = E x I x V If any factor (E, I, or V) is zero, then there is no motivation to work toward the reward.

Employee confidence building and training, accurate appraisals, and knowledge of workers desired rewards can increase employee motivation.

TYPES OF INCENTIVE PLANS Pay-for-performance plans Variable pay (organizational focus) A team or group incentive plan that ties pay to some measure of the firms overall profitability. Variable pay (individual focus) Any plan that ties pay to individual productivity or profitability, usually as one-time lump payments. Pay-for-performance plans Individual incentive/recognition programs Sales compensation programs Team/group-based variable pay programs Organizationwide incentive programs Executive incentive compensation programs INDIVIDUAL INCENTIVE P LANS Piecework Plans The worker is paid a sum (called a piece rate) for each unit he or she produces. Straight piecework: A fixed sum is paid for each unit the worker produces under an established piece rate standard. An incentive may be paid for exceeding the piece rate standard. Standard hour plan: The worker gets a premium equal to the percent by which his or her work performance exceeds the established standard. Pro and cons of piecework Easily understandable, equitable, and powerful incentives Employee resistance to changes in standards or work processes affecting output Quality problems caused by an overriding output focus Possibility of violating minimum wage standards Employee dissatisfaction when incentives either cannot be earned due to external factors or are withdrawn due to a lack of need for output Merit pay A permanent cumulative salary increase the firm awards to an individual employee based on his or her individual performance.

Merit pay options Annual lump-sum merit raises that do not make the raise part of an employees base salary. Merit awards tied to both individual and organizational performance. Incentives for professional employees Professional employees are those whose work involves the application of learned knowledge to the solution of the employers problems. Lawyers, doctors, economists, and engineers. Possible incentives Bonuses, stock options and grants, profit sharing Better vacations, more flexible work hours improved pension plans Equipment for home offices Recognition-based awards Recognition has a positive impact on performance, either alone or in conjunction with financial rewards. Combining financial rewards with nonfinancial ones produced performance improvement in service firms almost twice the effect of using each reward alone. Day-to-day recognition from supervisors, peers, and team members is important. Online award programs Programs offered by online incentives firms that improve and expedite the awards process. Broader range of awards More immediate rewards Information technology and incentives Enterprise incentive management (EIM) Software that automates the planning, calculation, modeling and management of incentive compensation plans, enabling companies to align their employees with corporate strategy and goals. INCENTIVES FOR SALESPEOPLE Salary plan Straight salaries Best for: prospecting (finding new clients), account servicing, training customers salesforce, or participating in national and local trade shows. Commission plan Pay is only a percentage of sales Keeps sales costs proportionate to sales revenues.

May cause a neglect of nonselling duties. Can create wide variation in salespersons income. Likelihood of sales success may linked to external factors rather than to salespersons performance. Can increase turnover of salespeople. Combination plan Pay is a combination of salary and commissions, usually with a sizable salary component. Plan gives salespeople a floor (safety net) to their earnings. Salary component covers company-specified service activities. Plans tend to become complicated, and misunderstandings can result. SPECIALIZED COMBINATION P LANS Commission-plus-drawing-account plan Commissions are paid but a draw on future earnings helps the salesperson to get through low sales periods. Commission-plus-bonus plan Pay is mostly based on commissions. Small bonuses are paid for directed activities like selling slow-moving items. TEAM/GROUP VARIABLE PAY INCENTIVE PLANS Team or group incentive plan A plan in which a production standard is set for a specific work group, and its members are paid incentives if the group exceeds the production standard. HOW TO DESIGN TEAM INCENTIVES Set individual work standards Set work standards for each team member and then calculate each members output. Members are paid based on one of three formulas: All members receive the same pay earned by the highest producer. All members receive the same pay earned by the lowest producer. All members receive same pay equal to the average pay earned by the group. Use an engineered production standard based on the output of the group as a whole.

All members receive the same pay, based on the piece rate for the groups job. This group incentive can use the piece rate or standard hour plan, but the latter is more prevalent. Tie rewards to goals based on an overall standard of group performance If the firm reaches its goal, the employees share in a percentage of the improvement (in labor costs saved). ORGANIZATION WIDE VARIABLE PAY PLANS Profit-sharing plans Cash plans Employees receive cash shares of the firms profits at regular intervals. The Lincoln incentive system Profits are distributed to employees based on their individual merit rating. Deferred profit-sharing plans A predetermined portion of profits is placed in each employees account under a trustees supervision. Employee stock ownership plan (ESOP) A corporation annually contributes its own stockor cash (with a limit of 15% of compensation) to be used to purchase the stockto a trust established for the employees. The trust holds the stock in individual employee accounts and distributes it to employees upon separation from the firm if the employee has worked long enough to earn ownership of the stock. A DVANTAGES OF ESOP S Employees ESOPs help employees develop a sense of ownership in and commitment to the firm, and help to build teamwork. No taxes on ESOPs are due until employees receive a distribution from the trust, usually at retirement when their tax rate is lower. Shareholders of closely held corporations Helps to diversify their assets by placing their shares of company stock into an ESOP trust and allowing them to purchase other marketable securities for themselves in their place. The company A tax deduction equal to the fair market value of the shares transferred to the trustee.

An income tax deduction for dividends paid on ESOP-owned stock. The Employee Retirement Income Security Act (ERISA) allows a firm to borrow against employee stock held in trust and then repay the loan in pretax rather than after-tax dollars. Firms offering ESOP had higher shareholder returns than did those not offering ESOPs.

SCANLON P LAN Scanlon plan (Joseph Scanlon, 1937) Philosophy of cooperation No us and them attitudes that inhibit employees from developing a sense of ownership in the company. Identity Employees understand the businesss mission and how it operates in terms of customers, prices, and costs. Competence The plan depends a high level of competence from employees at all levels. Sharing of benefits formula Employees share in 75% of the savings (reduction in payroll expenses divided by total sales). GAINSHARING PLANS Gainsharing An incentive plan that engages many or all employees in a common effort to achieve a companys productivity objectives. Cost-savings gains are shared among employees and the company. Rucker plan Improshare IMPLEMENTING A GAINSHARING PLAN 1. 2. 3. 4. Establish general plan objectives. Choose specific performance measures. Decide on a funding formula. Decide on a method for dividing and distributing the employees share of the gains. 5. Choose the form of payment. 6. Decide how often to pay bonuses. 7. Develop the involvement system.

8. Implement the plan. SHORT-TERM INCENTIVES FOR MANAGERS AND EXECUTIVES Annual bonus Plans that are designed to motivate short-term performance of managers and are tied to company profitability. Eligibility basis: job level, base salary, and impact on profitability Fund size basis : nondeductible formula (net income) or deductible formula (profitability) Individual awards: personal performance/contribution LONG-TERM INCENTIVES FOR M ANAGERS AND EXECUTIVES Stock option The right to purchase a specific number of shares of company stock at a specific price during a specific period of time. Nonqualified stock option Indexed option Premium priced option Options have no value (go underwater) if the price of the stock drops below the options strike price (the options stock purchase price). Other plans Key employee program Stock appreciation rights Performance achievement plan Restricted stock plans Phantom stock plans Performance plans Plans whose payment or value is contingent on financial performance measured against objectives set at the start of a multi-year period. OTHER EXECUTIVE INCENTIVES Golden parachutes Payments companies make to departing executives in connection with a change in ownership or control of a company. Guaranteed loans to directors Loans provided to buy company stock. A highly risky and now frowned upon practice.

CREATING AN EXECUTIVE COMPENSATION PLAN Define the strategic context for the executive compensation program. Shape each component of the package to focus the manager on achieve the firms strategic goals. Create a stock option plan to meet the needs of the executives and the company and its strategy. Check the executive compensation plan for compliance with all legal and regulatory requirements and for tax effectiveness. Install a process for reviewing and evaluating the executive compensation plan whenever a major business change occurs. WHY INCENTIVE PLANS FAIL Performance pay cant replace good management. You get what you pay for. Pay is not a motivator. Rewards punish. Rewards rupture relationships. Rewards can have unintended consequences. Rewards may undermine responsiveness. Rewards undermine intrinsic motivation.

Implementing Effective Incentive Plans Ask: Is effort clearly instrumental in obtaining the reward? Link the incentive with your strategy. Make sure effort and rewards are directly related. Make the plan easy for employees to understand. Set effective standards. View the standard as a contract with your employees. Get employees support for the plan. Use good measurement systems. Emphasize long-term as well as short-term success. Adopt a comprehensive, commitment-oriented approach.

HR Activities that Build Commitment Clarifying and communicating the goals and mission of the organization. Guaranteeing organizational justice. Creating a sense of community by emphasizing teamwork and encouraging employees to interact.

Supporting employee development by emphasizing promotion from within, developmental activities, and career-enhancing activities. Generally committing to people-first values. EXPRESS A UTO COMPENSATION SYSTEM

Module III!!!

1) INDUSTRIAL RELATIONS DEFINITIONS AND M AIN A SPECTS Industrial relations is a multidisciplinary field that studies the employment relationship. Industrial relations is increasingly being called employment relations because of the importance of non-industrial employment relationships. I NDUSTRIAL RELATIONS HAS THREE FACES: I) science building II) Problem solving and III) ethical. IN THE SCIENCE BUILDING PHASE , industrial relations is part of the social sciences, and it seeks to understand the employment relationship and its institutions through highquality, rigorous research. In this vein, industrial relations scholarship intersects with scholarship in labor economics, industrial sociology, labor and social history, human resource management, political science, law, and other areas. IN THE PROBLEM SOLVING PHASE , industrial relations seeks to design policies and institutions to help the employment relationship work better. IN THE ETHICAL PHASE , industrial relations contains strong normative principles about workers and the employment relationship, especially the rejection of treating labor as a commodity in favor of seeing workers as human beings in democratic communities entitled to human rights. The term human relations refers to the whole field of relationship that exists because of the necessary collaboration of men and women in the employment process of modern industry. It is that part of management which is concerned with the management of enterprise - whether machine operator, skilled worker, or manager. It deals with either the relationship between the state and employers and workers organisation or the relation between the occupational organisation themselves.

C ONTROL OVER LABOUR PROCESS transformation in inputs by labour using tools & methods. Products, under capitalism, become exchangable, marketable commodities. Relevance to banking, retailing, local govt etc ? labour-capital relationship - essentially exploitative (ownership, surplus value, logic of efficiency & savings, structures of control. Braverman - to achieve capitals objectives - specialisation, standardisation, simplification, substitute technology for labour (Taylor), de-skilling? Critique? Core + peripheral employees. Segmented labour markets Job enrichment, empowerment & responsible autonomy Personal control & bureaucratic control

LABOUR MARKET - HOW WORK IS DISTRIBUTED WITHIN SOCIETY Issues increase in womens activity rates level + nature of unemployment, long vs. short-term jobs manufacturing service + globalisation vs. local market regulation strategies + dual labour markets

ECONOMIC LABOUR MARKET MODEL Pay = price mechanism (SS/DD. elasticity & equilibrium) One market (same for all) or differentiated by skill, job, location etc. assumes Pricing + Work - disutility. Wages compensate for less leisure Marginal productivity gain from using one extra unit of labour institutionalised labour market - wage floor, "going rate", range (quartiles), collective bargaining vs. individual negotiation.

LABOUR MARKET - SOCIAL ACCEPTANCE & HIERARCHIES Possible Issues Unskilled, semi-skilled & skilled. Blue-collar, white-collar. Professionalisation. Other desire the same. UK recognition of engineers UK class system & differential access to education (private schools) & labour divisions. Government interest Passive & active policies Retirement age, unemployment benefit, training, job support

Who pays - via taxation or direct Er /Ee contributions? Interventionist & corporatist approaches (state regulation) Deregulation - free, flexible labour market, pay decided by ability to pay.

ECONOMIC ENVIRONMENT UK de-industrialisation + manufacturing decline increasing liberalisation, internationalisation & globalisation of trade government management of economy e.g. Keynesian vs monetarism. increasing inequality in wage distribution industrial restructuring & introduction of new technologies expansion of service sector Participation rates in employment between 1966 & 1981 77.3 to 75.3% Overall 97.7 to 87.8% Men 55.4 to 61.5% Women

SOCIAL ENVIRONMENT industrialised, capitalist society principles of freedom of thought, expression & association Protestant work ethic Welfare state vs. independence & expansion of individual opportunities class & social mobility - manual to middle & professional home & share ownership unemployment, haves & have nots. NHS vs. private medicine

POLITICAL ENVIRONMENT internal organisational decision-making. Power-authority structures external governmental politics individual liberalist, laissez faire vs. corporatist, interventionist government responsibility for high employment privatisation (public vs private) TU role/protections & employer role/protections law & order European Union - national vs supra-national & conflicting political ideologies

DEVELOPMENT OF INDUSTRIAL RELATIONS 1 in restraint of trade - Tolpuddle Martyrs late 19th c. TUs & collective bargaining confined to skilled trades & piecework. Industrial strength, mutual assurance, control over entry. Common interest in local rules. Employer interest in controlling wage competition WW1 industry level bargaining uniformity in wage claims. 1916 Whitley Committee 70+ JICs set up 1918-21 20s & 30s recession, unemployment decline in TU membership, wage cuts and...!!!...more industrial action. Some JICs disbanded (industries facing foreign competition). Many survive (public utilities, Logov & govt.)

INDIVIDUALISM & COLLECTIVISM individual negotiation vs combining against Er-Ee imbalance Oversimplification to say Mgt-employee relationship = individual & Mgt-TU = collectivism . Issue = degree to which the individual is or should be Feels in control, responsible, allied with or subordinated to, regulated by & protected Issues of I & C in industrial relations Mgt claim right to deal with staff without intermediate TU constraint (represent/regulate on joint basis) Individual PRP vs. one package for all individual sees his/her well-being deriving from own efforts vs.fraternalism (improvement through solidarity) High trust - Low trust (Alan Fox - Beyond Contract) 2) TRADE UNION LEGISLATIONS..

WHAT IS A TRADE UNION? Definition: A group of workers who collectively want to Improve the terms and conditions at their workplace Enhance their status in society

In most countries, there are laws governing the formation, membership and administration of trade unions.

OBJECTIVES OF A TRADE UNION 1. Collective bargaining Represent members to negotiate with employers, for better wages and conditions of employment 2. Safeguard jobs Protect jobs of members 3. Cooperate with employers For the benefits of members, resolve disputes in a mutually acceptable manner 4. Political activities - Support pro-union political parties 5. Social activities - Support members with recreation facilities and benefits for unemployment, illness, retirement, death TYPES OF UNIONS 1. Craft union Same craft or occupation 2. General union For unskilled workers 3. Staff union Non-manual workers 4. Industry union Same industry, regardless of skills, occupation or job 5. House union (company or enterprise union) All members are from the same company regardless of occupation or job WHY WORKERS J OIN UNIONS Higher wages and better working conditions Collective bargaining with employer

2. Job security

More secured with collective agreement

3. Social need Meet co-workers from other departments or companies

Upgrading of skills Attend training courses organized by union

5. Peer pressure Colleagues are members

6. Self-fulfillment Negotiations Process depends on these factors: 1. Subject matter to be discussed 2. Persons involved 3. Circumstances under which the discussion is held. A Typical Negotiation Process begins with each party stating its position. As discussion progresses, each party adjusts its demands to seek a mutually acceptable agreement. Steps in Negotiation 1. Preparation Each party must know what it wants. 2. Presentation Each party presents its case. 3. Exchange and compromise Parties look for possible adjustment or compromise. 4. Reaching an agreement Parties sign a written statement on what have been agreed. Serve other members

TRADE UNION FUNCTIONS Power - protect/support through strength in association - a countervailing force, pressure group. Note: bargaining leverage & member willingness to act together. Economic regulation - maximise member returns within wage-work framework. Note: political nature of TU wage policy - comparability & differentials. Inflation & unemployment (cost-push & demand pull). Win bigger slice of national income. Job regulation - establish a joint-rule making system to protect members from arbitary management action . Enable participation in decisions affecting their employment. Expand job opportuities? Social change - express social cohesion, aspirations, political ideology & develop a society which reflects this? Institutionalise class & conflict? Dilemma of participating in government. Member services - provide benefits/services to members Self-fulfilment - assist individuals to develop outside their job domain & participate in wider decision-making processes


expression of sectional/class consciousness ---> socialist society social responsibility - exercise role in non-detrimental ways business unionism - maximise benefits from employer relationships welfare unionism - wider social, econ. & political involvement for all political unionism - through political alliances


Blue/white collar Manual, clerical, technician, technologist, supervisor, manager Heavy light, old high-tech. industry Individualism vs. fraternal/collective Instrumental reasons for joining. Support in uncertainty preference for cooperation with Mgt rather than conflict

3) M ETHODS OF SETTLING INDUSTRIAL DISPUTES WAYS TO SETTLE DISPUTES Impasse: settlement cannot be reached Impasses may be solved by these alternatives: Conciliation Mediation Arbitration Conciliation Impartial third party helps the two parties to reach a mutually acceptable settlement. Conciliator meets parties separately or together to exchange information, clarify issues and settle misunderstanding. Conciliator does not impose a solution but works with the parties to enable them to come to an agreement. Mediation Impartial third party helps to reach a mutually acceptable agreement. Mediator makes recommendations for the two parties to consider. Final agreement is made by the two parties themselves. Arbitration Third party settles the dispute by making an independent decision for the two parties. Some prefer arbitration as the responsibility for reaching agreement is made by a neutral party (quite often, appointed by the government e.g. Arbitration Court). Arbitration gives some people the impression that they did not give in to the other party but fought all the way to the Arbitration Court. 4) COLLECTIVE BARGAINING

COLLECTIVE BARGAINING DEFINITION Negotiation between employer and workers About terms of employment and working conditions With objective of reaching an agreement

Representation Employer - its management Workers - their union representative COLLECTIVE BARGAINING CONTENT Matters related to Salary Amount, time of payment, bonus, financial and non-financial benefits Conditions of employment Annual leave, rest days etc A DVANTAGES: Provides parties with a method to discuss directly and agree on the terms and conditions of employment Outcome resulting in high labor costs will ultimately be passed on to consumers Result in consideration for manufacturers to shift their activities to countries with lower labor costs and cheaper materials to remain competitive with others

COLLECTIVE BARGAINING PERSPECTIVES 1. Behavioral Balance of power between employer and employees Reflects labor market conditions in determining wage increases and terms of conditions. 2. Economic Reflects labor market conditions in determining wage increases and terms of employment. 3. Legal Employers are required by law to negotiate with employees representative. Both parties must follow legal procedures in collective bargaining.

CONDITIONS FOR SUCCESSFUL BARGAINING 1. Freedom of association Workers and employers are free to form their own associations to represent their interests. 2. Stability of union Unions have to be stable for collective bargaining to be effective union is able to honor the agreement. 3. Recognition of union by employer Collective bargaining begins after employer recognizes the union that claims to represent the specific group of workers. 5) LEGISLATIONS CONCERNING SETTLEMENT OF INDUSTRIAL DISPUTES Any dispute or difference between employer and employer or between employer and workmen or between workmen and workmen, which is connected with the employment or non-employment or terms of employment or with the conditions of labour of any person In practice, Industrial dispute mainly refers to the strife between employers and their employees. An Industrial dispute is not a personal dispute of any one person. It generally affects a large number of workers community having common interests. PREVENTION OF INDUSTRIAL DISPUTES: The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means. Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, prevention is better then cure.

1. M ODEL STANDING ORDERS: Standing orders define and regulate terms and conditions of employment and bring about uniformity in them. They also specify the duties and responsibilities of both employers and employees thereby regulating standards of their behaviour. Therefore, standing orders can be a good basis for maintaining harmonious relations between employees and employers. Under Industrial Dispute Act, 1947, every factory employing 100 workers or more is required to frame standing orders in consultation with the workers. These orders must be certified and displayed properly by the employer for the information of the workers. 2. CODE OF INDUSTRIAL DISCIPLINE : The code of Industrial discipline defines duties and responsibilities of employers and workers. The objectives of the code are:

To secure settlement of disputes by negotiation, conciliation and voluntary arbitration. To eliminate all forms of coercion, intimidation and violence. To maintain discipline in the industry. To avoid work stoppage. To promote constructive co-operation between the parties concerned at all levels.

3. WORKS COMMITTEE: Every industrial undertaking employing 100 or more workers is under an obligation to set up a works committee consisting equal number of representatives of employer and employees. The main purpose of such committees is

to promote industrial relations. committees are concerned with:

According to Indian Labour Conference work

Administration of welfare & fine funds. Educational and recreational activities. Safety and accident prevention Occupational diseases and protective equipment. Conditions of work such as ventilation, lightening, temperature & sanitation including latrines and urinals. Amenities such as drinking water canteen, dining rooms, medical & health services.

The following items are excluded from the preview of the work committees.

Wages and allowances Profit sharing and bonus Programs of planning and development Retirement benefits PF and gratuity Housing and transport schemes Incentive schemes Retirement and layoff

4. J OINT MANAGEMENT COUNCILS: Just to make a start in labour participation in management, the govt: suggested in its Industrial Resolution 1956 to set up joint management councils. It consists of equal numbers of workers and employers (minimum 6 & maximum 12) decisions of the JMC should be unanimous and should be implemented without any delay. JMC members should be given proper training. JMC should look after 3 main areas:1. information sharing 2. consultative 3. administrative Representation of workers to the JMCs should be based on the nomination by the representation. OBJECTIVES

Satisfy the psychological needs of workers Improve the welfare measures Increase workers efficiency

Improve the promoters.








JMC deals with matters like:

Employee welfare Apprenticeship scheme

5. SUGGESTION SCHEMES: 6. J OINT COUNCILS: Joint Councils are set up for the whole unit and deals with matters relating optimum production and efficiency and the fixation of productivity norms for man and machine for the as a whole. in every industrial unit employing 500 and more workers there should be a Joint Council for the whole unit. Features

Members of the council must be actually engaged in the unit. The chief executive of the unit will be the chairman of the council and vice chairman will be nominated by worker members. Term of the council will be two years. JC shall meet at once in a quarter. Decision of the council will be based on consensus and not on voting.


Optimum use of raw materials and quality of finished products Optimum production, efficiency and function of productivity norms of man and machine as a whole. Preparation of schedules of working hours and of holidays. Adequate facilitates for training. Rewards for valuable and creative suggestions received from workers.

7. COLLECTIVE BARGAINING : Collective Bargaining is a process in which the representatives of the employer and of the employees meet and attempt to negotiate a contract governing the employer-employee-union relationships. Collective Bargaining involves discussion and negotiation between two groups as to the terms and conditions of employment. 8. LABOUR WELFARE OFFICER: The factories Act, 1948 provides for the appointment of a labour welfare officer in every factory employing 500 or more workers. The officer looks after all facilities in the factory provided for the health, safety and welfare of workers. He maintains liaison with both the employer and the workers, thereby

serving as a communication link and contributing towards healthy industrial relations through proper administration of standing orders, grievance procedure etc. 9. TRIPARTITE BODIES: Several tripartite bodies have been constituted at central, national and state levels. The India labour conference, standing labour committees, Wage Boards and Industries Committees operate at the central level. At the state level, State Labour Advisory Boards have been set up. All these bodies play an important role in reaching agreements on various labour-related issues. The recommendations given by these bodies are however advisory in nature and not statutory. MACHINERY FOR SETTLEMENT OF INDUSTRIAL DISPUTES: 1. CONCILIATION: Conciliation refers to the process by which representatives of employees and employers are brought together before a third party with a view to discuss, reconcile their differences and arrive at an agreement through mutual consent. The third party acts as a facilitator in this process. Conciliation is a type of state intervention in settling the Industrial Disputes. The Industrial Disputes Act empowers the Central & State governments to appoint conciliation officers and a Board of Conciliation as and when the situation demands. Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are: a) To hold conciliation proceedings with a view to arrive at amicable settlement between the parties concerned. b) To investigate the dispute in order to bring about the settlement between the parties concerned. c) To send a report and memorandum of settlement to the appropriate government. d) To send a report to the government stating forth the steps taken by him in case no settlement has been reached at. The conciliation officer however has no power to force a settlement. He can only persuade and assist the parties to reach an agreement. The Industrial Disputes Act prohibits strikes and lockouts during that time when the conciliation proceedings are in progress.

2. ARBITRATION: A process in which a neutral third party listens to the disputing parties, gathers information about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then gives his judgement. Advantages of Arbitration:

It is established by the parties themselves and therefore both parties have good faith in the arbitration process. The process in informal and flexible in nature. It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations.


Delay often occurs in settlement of disputes. Arbitration is an expensive procedure and the expenses are to be shared by the labour and the management. Judgement can become arbitrary when the arbitrator is incompetent or biased.

There are two types of arbitration:

Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties through mutual consent and the arbitrator acts only when the dispute is referred to him. Compulsory Arbitration: Implies that the parties are required to refer the dispute to the arbitrator whether they like him or not. Usually, when the parties fail to arrive at a settlement voluntarily, or when there is some other strong reason, the appropriate government can force the parties to refer the dispute to an arbitrator.

3. A DJUDICATION: Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication means intervention of a legal authority appointed by the government to make a settlement which is binding on both the parties. In other words adjudication means a mandatory settlement of an Industrial dispute by a labour court or a tribunal. For the purpose of adjudication, the Industrial Disputes Act provides a 3-tier machinery:

Labour court Industrial Tribunal National Tribunal

a) Labour Court: The appropriate government may, by notification in the official gazette constitute one or more labour courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial Disputes Act. They are:

Dismissal or discharge or grant of relief to workmen wrongfully dismissed. Illegality or otherwise of a strike or lockout. Withdrawal of any customary concession or privileges.

Where an Industrial dispute has been referred to a labour court for adjudication, it shall hold its proceedings expeditiously and shall, within the period specified in the order referring such a dispute, submit its report to the appropriate government. b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or more Industrial Tribunals for the adjudication of Industrial disputes relating to the following matters:

Wages Compensatory and other allowances Hours of work and rest intervals Leave with wages and holidays Bonus, profit-sharing, PF etc. Rules of discipline Retrenchment of workmen Working shifts other than in accordance with standing orders

It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its report to the appropriate government within the specified time. c) National Tribunal: The central government may, by notification in the official gazette, constitute one or more National Tribunals for the adjudication of Industrial Disputes in

Matters of National importance Matters which are of a nature such that industries in more than one state are likely to be interested in, or are affected by the outcome of the dispute.

It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its report to the central government within the stipulated time.

6) FACTORIES ACT. INTRODUCTION The Law relating to factories is governed under the factories Act, 1948. OBJECTIVE OF THE ACT The Act has been enacted primarily with the object of protecting workers employed in factories against industrial and occupational hazards. For that purpose, it seeks to impose upon the owner or the occupier certain obligations to protect the workers and to secure for them employment in conditions conductive to their health and safety. A PPLICABILITY OF THE ACT The act applies to all factories. The State Government may, by notification in the official Gazette, declare that all or any of the provisions of the act shall apply to any place wherein manufacturing process is caused on with or without the aid of power or is so ordinarily carried on, not with standing that: the number of persons employed therein is less than ten, if working with the aid of power and less than twenty if working without the aid of power, or the persons working therein are not employed by the owner thereof but are working with the permission of, or under agreement with, such owner. However, no such declaration can be made where the manufacturing process is being carried on by the owner only with the aid of his family. OBLIGATIONS OF THE EMPLOYER Approval, licensing and registration of factory Notice of resumption of work Notice regarding appointment of manager General duties of occupier General duties of manufacturers Health measures Safety Measures Handling of hazardous Processes Welfare measures Working hours of adults Employment of young persons Annual leave with wages Issue of Notices

Display of Notices Timely submission of Returns. Appeal OFFENCES & PENALTIES Save as is otherwise expressly provided in this Act and subject to the provision of section 93, if in, or in respect of any contravention of any of the provisions of this Act or of any rules made there under or of any order in writing given there under, the occupier and manger of the factory shall each be guilty of an offence and punishable with imprisonment for a term which may extend to two years or with fine which may extend to One Lakh Rupees or with both, and if the contravention is continued after conviction, with a further fine which may extend to one thousand rupees for each day on which the contravention is so continued.

Module IV!!!



THE CONCEPT OF WORKERS PARTICIPATION IN MANAGEMENT Workers Participation in Management is a system of communication and consultation, either formal or informal, by which employees of an organization are kept informed about the affairs of the undertaking and through which they express their opinion and contribute to management decisions. It is industrial democracy in action based on the principles of equity, equality and voluntarism. It is distribution of social power in industry so that it tends to be shared among all who are engaged in the work rather than concentrated in the hands of minority.


Thinkers like Comte and Owen advocated the participation of workers in management for achieving distributive social justice. Karl Marx proposed complete control of the enterprise by workers and socialisation of the means of the production. Marx wanted trade unions to be developed as an alternative for self-government. Thinkers favoured guilds of all classes of workers should be controlled under a charter from the state. With the outbreak of the First World War, an acute industrial unrest was experienced. Labour was largely regarded as a Commodity of Commerce and exploited to the maximum in England, West Germany, France and USA. The main concern of ideologists in advocating workers participation in Management was the sharing of a part of managerial power with workers. Various research conducted at the Tavistock Institute, London revealed that autonomous and cohesive work groups were more efficient and healthier. FACTORS INFLUENCING WPM Increased use of technology in industry necessitated the growing co-operation of workers because of the complex operations of production. The changed view that employees are no longer servants but are equal partners in their effort to attain organization goal. The growth of trade unions which would safeguard the interest of workers and protect them against possible exploitation by their employers. The growing interest of the Government in the development of industries and the welfare of the workers.

OBJECTIVES OF WPM 1) 2) 3) 4) Democratization of Management Eliciting workers participation-organization goals Personalization & Humanization of management process Behavioral approach to the management of workers-management relations

FORMS OF PARTICIPATIONS Collective Bargaining Issues over which the interests of workers and management are competitive such as employment conditions, wage rates, working hours and the number of holidays are usual areas for collective bargaining. Joint Administration, Joint decision-making or Consultation Issues over which parties are equally concerned such as fund money, canteen, annual sports, workers welfare facilities, etc., The difference between Joint Administration, Decision Making and Consultation is very narrow in nature. LEVELS OF PARTICIPATION Informative and Associative Participation - Right to receive information, discuss and give suggestions on the general economic situation of the concern. For example The state of the market, Production and Sales Programmes Circumstances affecting the economic position of the company Long term plans of expansion and redeployment Consultative Participation Involves a high degree of sharing of views of the members and giving them an opportunity to express their feelings. Members are consulted on matters such as Welfare amenities Adoption of New Technology and the problems emanating from it Safety measures

Administrative Participation Involves a greater degree of sharing of authority and responsibility of the management functions. Members are given little for autonomy in the exercise of administrative and supervisory powers with regard to The preparation of schedules of working hours, breaks and holidays Payment of reward for valuable suggestions Decision Participation Is the highest form of participation. The delegation of authority and responsibility of managerial function is maximum in matters like Economic, Financial and Administrative policies the decisions are mutually taken

FORMS OF WORKERS PARTICIPATION IN INDIA Workers Participation in Management Scheme is in vogue in three forms: The Works Committee set up under the Industrial Disputes Act, 1947 The Joint Management Councils - set up as a result of the Labour-Management Cooperation Seminar, 1958 The scheme for workers Representative on the Board of Management (under the Management and Miscellaneous Scheme, 1970) on some public and private sector enterprises, including industrial undertakings and nationalised banks



The Minimum Wages Act is an Act to enforce minimum rates of wages in different scheduled industries. This Act empowers the state government to fix minimum rates of wages to employees employed in different industries. This Act makes it obligatory on the part of employers to pay at least the minimum rates of wages as fixed by the government. The Payment of Wages Act is an Act to regulate payment of wages by fixing wage periods, modes of payment of wages and restricting the deductions from wages. As such, an employer has to fix wage period and in no case it should not exceed one month. Similarly, the employer has to pay wages in currency notes and not in kind. The Act also gives a list of permissible deductions and any deduction which is not provided in the Act will be deemed wrongful deduction. The Industrial Revolution and the consequent industrialization led to masses becoming wage-laborers. o Today, 75 to 85 per cent of the total labour force of the industrially developed countries is wage-labourers. o In the early days of industrialization, the economic position of the employer was strong while that of the worker was weak. o This made it easy for the employer to unilaterally lay down the mode and manner of wage payment and also determine the wage rates in his own interests. o Such unilateral actions led to many evils.

Evils of employers unilateral actions: Payment in kind: o This was first seen prior to the introduction of money. o But even after the introduction of money, the system of payment of wages in kind persisted. o This led to certain evil practices like: Under-payment,and Payment in terms of inferior quality of goods or commodities supplied. When paid in cash, payment in illegal tender: o Where cash was used, employers would prefer to pay in illegal tender and in the form of depreciated currency. Arbitrary deductions: o These deductions were primarily related to: Fines for breach of discipline; Compensation to the master for spoilt work or damage done to materials; and Charges for materials, tools, services supplied by the employer. o But many times, arbitrariness was exercised in the frequency and amount of wage deductions. o As a result, the quantity of wages received by the worker was much less than what he actually earned on the basis of wage rates decided upon at the time of employment. Irregular Payment and Non-payment altogether: o Employers desire to economize by postponing payment of wages on various pretexts. o In many cases, the employers withheld paying wages altogether, depriving the workers of their hard-earned income.

These evils became so glaring that the state was forced to legislate in order to regulate on the mode and manner of wage payment. Payment of Wages Act, 1936: The Act, with subsequent amendments, is still in force in the country. The objectives of the Act are: o o o o o Ensuring regularity of payment, Ensuring payment in legal tender, Preventing arbitrary deductions, Restricting employers right to impose fines, and Providing remedy to workers.

Workers no longer need to resort to time-consuming and expensive litigations in the courts of law for claiming their dues from their defaulting employers. Scope: The Act applies to payment of wages to: o Persons employed in any factory; o Persons employed in any railway by a railway administration either directly, or through an authorized subcontractor. o Persons employed in any of the following industrial or other establishments: Definition of wages: [Sec.2] The term `wages is defined to include all remuneration (salary, allowances included) o expressed in terms of money; or o capable of being so expressed; o which would, on fulfilling the terms of employment (expressed or implied), be payable to the person employed, and includes: Remuneration payable under any award or settlement between parties or

order of a court; Remuneration entitlement on working overtime or remuneration for paid holidays and other leave period; Additional remuneration payable only under the terms of employment (bonus etc.); Sum payable on the termination of employment as per the relevant law or contract, with or without deductions; The term wages does not include: o Additional remuneration that is not mentioned in the terms of employment; o The value of any accommodation or any other amenities as mentioned and waived-off in the general or special order by the state government; o Any contribution paid by the employer to any pension or provident fund, and the interest that may have accrued; o Any TA or the value of any traveling concession; o Any sum paid to the employed person to reimburse special expenses entailed to him by the nature of his employment. Responsibility for wage payment: [Sec.3] Ordinarily, every employer is responsible for payment of wages to persons employed by him. Fixation of wage period: [Sec.4] The person responsible for payment of wages has to fix periods in respect of which wages are payable; e.g. for the previous week, or the previous fortnight, etc. No wage period is to exceed one month. Time of payment of wages: [Sec.5] Wages of every person employed in any railway, factory or industrial or other establishment employing less than 1000 persons, will have to be paid before the expiry of the 7th day after the last day of the wage period for the wages are payable.

In establishments where 1000 or more persons are employed, wages are to be paid before the expiry of the 10th day after the last day of wage period. In case the services of an employee are terminated, the wages earned by him will have to be paid before the expiry of the 2nd working day from the day on which his services were terminated. Payment in legal tender: [Sec.6] All wages are to be paid in current coins or currency notes or both. If the worker authorizes, in writing, payment may also be made in cheque or the workers bank account may also be credited. Authorized deductions: [Sec.7] Deductions for fines: Conditions: o The employed persons are notified about the acts and omissions that can invite a fine and this notification has bee previously approved by the state government; o Such a notice has been prominently displayed on the premises; o The person employed has been given an opportunity to show cause against the fine; o The person employed in of 15 years of age or above; o Total amount of fine not to exceed 3% of the wages payable for that wage period; o All fines and their realizations to be recorded in a prescribed register; o The amount so collected to be utilized for activities that are beneficial to the persons employed in the establishment.


Minimum Wage
After the third increase in three years, on July 24, 2009, the federal minimum wage for covered, nonexempt employees was raised to $7.25 per hour. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). Many states also have minimum wage laws. Check your state for its minimum wage requirements. Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners. 4) THE STRATEGIC ROLE OF HUMAN RESOURCES M ANAGEMENT HRS STRATEGIC R OLE HRs Evolving Role Strategic Human Resource Management HRs Role as a Strategic Partner HR and Technology HR and Employee Performance and Commitment Is there a One Best HR Way? Research Insight THE MANAGEMENT P ROCESS Planning Organizing Staffing Leading Controlling

PLANNING Goals and standards Rules and procedures Plans and forecasting. ORGANIZING Tasks Departments Delegating Authority and communication Coordinating STAFFING Hiring Recruiting Selecting Performance standards Compensation Evaluating performance Counseling Training and developing LEADING Getting the job done Morale

Motivation CONTROLLING Setting standards Comparing actual performance to standards Corrective action

HRM P EOPLE FUNCTIONS INCLUDE: Job analyses Labor needs Recruit Select candidates Orient and train Wages and salaries Incentives and benefits Performance Communicate Train and develop Employee commitment Equal opportunity Health and safety Grievances/labor relations

HRM IS IMPORTANT TO ALL MANAGERS-DONT LET THESE HAPPEN TO Y OU! The wrong person High turnover Poor results Useless interviews Court actions Safety citations Salaries appear unfair Poor training Unfair labor practices LINE AND STAFF ASPECTS OF HRM Authority Making decisions Directing work Giving orders L INE M ANAGERS Accomplishing goals STAFF MANAGERS Assisting and advising line managers Definition


The right person Orientation Training Performance Creativity Working relationships Policies and procedures Labor costs Development Morale Protecting


Line authority Implied authority Functional control Employee advocacy

Definition Strategic human resource management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility. Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine



Formation of a companys strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses Environmental scanning


Make workforce strategies integral to company strategies and goals Leverage HRs role in major change initiatives Earn the right to a seat at the corporate table Understand finance and profits Help line managers achieve their goals

5) M ANAGING GLOBAL HUMAN RESOURCES HR and the Internationalization of Business


Coordinating market, product, and production plans on a worldwide basis. Creating organization structures capable of balancing centralized home-office control with adequate local autonomy. Extending HR policies and systems to service staffing needs abroad.


Use of Pay Incentives Personnel Selection Procedure Purpose of Performance Appraisal Training and Development Practices





Best practices for making a global HR system more acceptable to local managers: Remembering that global systems are more accepted in truly global organizations. Investigating pressures to differentiate and determine their legitimacy. Working within the context of a strong corporate culture is best. Best practices for developing a more effective global HR system: Form global HR networks that make local HR managers a part of global teams. Remember that its more important to standardize ends and competencies than specific methods. Best practices for implementing the global HR system: Remember, You cant communicate enough. Dedicate adequate resources for the global HR effort. Staffing the Global Organization


Inability of Spouse to Adjust Inability to Cope with Overseas Responsibilities Lack of Cultural Skills Family Pressures Personal Intentions Personality


Realistic Previews Careful Screening Improved Orientation Cultural and Language Training Improved Benefits Packages


Adaptability Screening Assessing the assignees (and spouses) probable success in handling the foreign transfer.

Overseas Assignment Inventory A test that identifies the characteristics and attitudes international assignment candidates should have. Realistic Previews The problems to expect in the new job, as well as the cultural benefits, problems, and idiosyncrasies of the country.

The Balance Sheet Approach Home-country groups of expensesincome taxes, housing, goods and services, and discretionary expensesare the focus of attention. The employer estimates what each of these four expenses is in the expatriates home country, and what each will be in the host country. The employer then pays any differences such as additional income taxes or housing expenses.





(1) Labour and industrial relations is an important for all organizations especially for those commercial and non-commercial organizations which are operating at the international level Labour and industrial relations concepts differ according to country and region and according to the type of industry concerned The labour unions and associations in some countries yield considerable power which can be used to their benefit in their dealings with employers The evolution of labour or industrial relations, and the history of trade unions, has been determined to quite a considerable degree by the historical and ideological contexts (2) Employers and organizations need to understand the structural evolution of how labour unions in order to effectively deal with them

Lack of unfamiliarity with prevailing local industrial and political conditions on the part of employers can have far-reaching damaging consequences for the organization Labour and industrial relations policies of organizations operating at the international level must be flexible and take prevailing local factors, considerations and requirements into account over time


Ideological Political Cultural Economic Structural Legal


Due to the context-related differences, labour relations systems differ between countries and, hence, the task of managing labour relations should be handled decentrally. The headquarters of organizations operating at the international level usually try to maintain some form of coordination and control over the management of labour relations. The level of involvement depends on numerous factors and considerations Two fundamental reasons for the headquarters interest in subsidiary labour and industrial relations are that agreements made by subsidiary units may have possible spill-over effects on the organizations international plans, and that they may create precedents for negotiations in other countries

Monitoring Labour Performance Across Countries Most firms tend to closely monitor and compare labour performance in their subsidiary units.

Comparative labour performance data have the advantage of yielding useful information as to where, for example, new subsidiary units should be established, where capital and investment should flow to on a priority basis, and where production capacities should be rationalized. Comparative data are especially useful in situations where an organization has a spread of subsidiary units which are undertaking similar activities

Parent Organizations Involvement in Labour and Industrial Relations :

Parent Organizations Involvement in Labour and Industrial Relations Degree of Inter-Subsidiary Production Integration Research indicates that a high level of production integration between subsidiary units (for example, in a transnational perspective, the production outputs of one or more subsidiary units become production inputs for other subsidiary units) determines a high level of centralization i.e. involvement by the parent organization in determining labour and industrial relations throughout the organization A global coordinated labour and industrial relations policy becomes an important factor in ensuring a successful global production strategy, and with it, helps ensure the organizations growth and sustainability. Nationality of Ownership of the Organization and Subsidiary Units The level of involvement by the. organizations headquarters in its subsidiary units labour and industrial relations policy has been shown to differ according to the ownership U.S organizations tend to exercise more centralized control over labour and industrial relations than organizations from the European Union Reasons put forward to explain the difference are that U.S. tend to be comparatively more integrated, differences between U.S. and European labour relations systems, and the more ethnocentric managerial style of U.S. organizations International Human Resource Management Approach The type of staffing approach utilized by organizations has an effect on labour and industrial relations. Research indicated that an ethnocentric approach is more prone to labour conflicts than other staffing approaches.

Experience of Organizations in Labour and Industrial Relations- European Organizations have considerable experience dealing with unions at the industry level (for e.g. through employer associations), unlike U.S firms which tend to deal with labour relations at the organizational or firm level Subsidiary Characteristics A number of subsidiary characteristics have been found to be relevant in determining parent organizations involvement in labour and industrial relations: Subsidiaries formed through acquisition of well-established indigenous firms tend to have more autonomy than newly established units. The higher the subsidiary units strategic importance for the organization, and the younger it is, the more the parent organization will seek to control its labour and industrial relations policy

If the parent organization is an important source of investment or operating funds for the subsidiary unit, the more the parent organization will tend to be involved in labour and industrial relations, and the subsidiaries human resource management policy. If a subsidiary unit does not perform up to the desired level of expectation, the higher the likelihood that the parent organization will seek to become involved in its labour and industrial relations, especially if the poor performance is linked to problems with labour Characteristics of the home (product) market If the organizations home market is small - as is the case for many smaller and medium-sized European countries and the organization depends mainly on foreign markets for its revenue generation, then the organization will be more likely to adopt its labour and industrial relations approach to the conditions prevailing in those foreign markets Parent Organizations Involvement in Labour and Industrial Relations Management Attitudes towards Unions Historically and ideologically, managements have evolved different attitudes towards unions: In the U.S., the traditional emphasis has been on the importance of capital in the factors of production; unions have traditionally been avoided, and the U.S. has a comparatively low union-density rate, i.e. the percentage of labourers and employees who belong to a union. A consequence of this is that U.S. managers will have less

experience in dealing with unions than managers in other countries for example, in European countries such as Great Britain, France, Germany and Italy There has been a general trend away from unionization throughout the world in the past couple of decades. Reasons include: Reduction in public-sector employment Reduced employment in the manufacturing sector New forms of work organization Increased job competition and pressure on workers and employees Legislative changes Collapse of the communist bloc




Unions may have an effect on international organizations in three ways: Influencing wage and salary Levels, resulting in higher wages being paid and thus effecting the organizations cost-competitiveness. Constraining the ability of organizations to easily change their employment levels, for example, by lobbying influential groups such as legislators to pass laws (redundancy legislation) that make the dismissal of workers and employees subject to stringent conditions and an expensive undertaking for the organization (redundancy allowance, compensation programmes). Many countries have such legislation and the corresponding judicial infrastructure in place Hindering or preventing global integration or the operations of international organizations, by compelling international organizations to avoid integrating their subsidiaries too much in order to prevent the potentially damaging consequences which may be brought about by potential labour and industrial disputes and demands. This results in a suboptimal allocation of resources.


Financial Resources International organizations have more financial resources than unions, can confront unions simultaneously in one or more countries where they have their operations and still be profitable overall. Alternative Sources of Supply International organizations can limit their vulnerability to labour and industrial action by adopting a dual sourcing policy and/or by switching production to other facilities

Mobility of Production Facilities International organizations may pose a threat to job security by relocating facilities to other countries, for example, where a more skilled workforce is available or where semiskilled labour is cheaper. Lack of Information Some unions may find it difficult to understand the organizations policies, strategies and approach due to lack of awareness and access to the requisite information. Superior Knowledge and Expertise in Labour Relations International organizations often have a repository of information, knowledge and experience in dealing with unions which they can utilize to their benefit. The Investment option International organisations may refuse to invest additional capital into facilities in case of labour and industrial disputes.

Unions have several options at their disposal to enhance their bargaining power vis-vis international organizations, for example: Establish institutional links and exchange information through international trade secretariats. Legislative and political lobbying in order to improve working conditions and pay (e.g. minimum wage, limit on weekly working hours, discouraging the export of jobs to foreign countries) Exertion of influence on international corporations through agencies such as the International Labour Organization, the United Nations Conference on Trade and Development, the OECD and the EU

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