UNIT IV: PERFORMANCE APPRAISAL, PROMOTION & TRANSFERS

INTRODUCTION AND MEANING

A performance appraisal is a systematic and periodic process of measuring an individual’s work performance
against the established requirements of the job. It’s a subjective evaluation of the employee’s strengths and
weaknesses, relative worth to the organization, and future development potential.
Performance appraisals are also called performance evaluations, performance reviews, development
discussions, or employee appraisals.
Performance appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.
According to Edward Flippo, “ Performance appraisal is the systematic, periodic and an impartial rating of an
employee’s excellence in the matters pertaining to his/her present job and his/her potential for a better job”.
According to Dale Yoder, "Personnel appraisals refer to the formal procedures used in working organizations
to evaluate the personalities and contributions and potential of group members."
OBJECTIVES OF PERFORMANCE APPRAISAL
Performance appraisal has the following objectives:

1. Appraisal is a judgment which requires definite standards. Actual performance is compared with standards
and goals. Such standards should be worked out by organisations and conveyed to all the employees,
otherwise, judgment will be one way only. In a sound appraisal system, goal setting must be high; and
accordingly high performance is expected.

Goal setting must be a mutual process and appraisal system should be transparent and known to employees. If
there is no system of appraisal, superiors will waste time in making decisions. Also, in absence of specific
knowledge, they will depend upon chance. To avoid this situation, there should be high goals and high
performance appraisal system.

2. To judge means to apply a set of values. Value judgments without clear, sharp and public standards are
irrational and arbitrary. Such judgment or appraisal will demotivate the manager and subordinates. It should,
thus, be based on sound and objective appraisal standards.

3. Performance appraisal depends on “Merit Rating”. Merit rating refers to what the employee is. Performance
appraisal refers to what the employee does. Appraisal records what is done by the employee. Merit rating
gives information about “Potential”, “Personality” and “Promise” but appraisal tells about performance. It,
thus, helps in deciding employees worthy of promotion or transfer to work areas that meet their skills and
capabilities.

4. Standards consider what work was assigned, what resources were granted and what promises were given
regarding salary/rewards. They, thus, provide a measure of evaluation.

5. One can only build in strength. One can only achieve by doing. One cannot achieve anything with what one
does not do. Appraisal must, therefore, aim at bringing out what a man can do. Only when a man’s strengths
are known and understood, it makes some sense. Weaknesses, by themselves, are of no interest.

Appraisal should refer to knowing more, doing better and behaving differently. If these three things are
accomplished, the manager will be better, stronger and effective in managing people.

6. Appraisal should be an integral part of the system of managing. It is an essential element in the whole
system of managing and in the sub-system of managerial staffing. Knowing how well a manager plans,
organises, staffs, directs, leads and controls is the only way to assure that those occupying managerial
positions are actually managing effectively. If a business is to reach its goals effectively and efficiently, there
should be ways of accurately measuring and implementing management performance.

7. It is human tendency to recall only the latest events or achievements. Similarly only latest failures are
remembered. Appraisals should cover some specific periods where an employee was involved fully, or even
in his absence, how the deputy was doing, to what extent there was delegation of authority and responsibility.
It should reflect a whole picture so that corrective measures can be taken.

8. It provides feedback to employees about their performance. Feedback helps in overcoming deficiencies in
the work, promoting performance and relating his work to organisational objectives.

9. It helps in designing personal improvement plans to overcome the weaknesses of employees on the job and
devising training and development programmes to strengthen their capabilities.

METHODS OF PERFORMANCE APPRAISAL

Methods of Performance appraisal Numerous methods have been designed to appraise the performance of an
employee. Strauss and Sayles have classified appraisal methods which are widely used into two categories,
viz., traditional methods and modern methods. While traditional methods lay emphasis on the rating of the
individual’s personality traits, such as initiative, dependability, drive, creativity, integrity, intelligence,
leadership potential, etc.; the modern methods, on the other hand, place more emphasis on the evaluation of
work results i.e. job achievements than the personal traits. Modern methods tend to be more objective and
worthwhile.
Traditional Methods Modern Methods
Ranking Method Assessment Centre
Paired Comparison method Behaviorally Anchored Rating Scales
Grading Method Management by Objectives
Forced Distribution method 360 Degree Appraisal
Forced choice method Human Resource Accounting
Checklist method
Critical incidents method
Graphic Scale method
Essay method
Field Review method
Confidential Report

Traditional Methods
a. Ranking Method: It is the oldest and simplest formal systematic method of performance appraisal in which
employee is compared with all others for the purpose of placing order of worth. The employees are ranked
from the highest to the lowest or from the best to the worst. In doing this the employee who is the highest on
the characteristic being measured and also the one who is lowest, are indicated. Then, the next highest and the
next lowest between next highest and lowest until all the employees to be rated have been ranked. Thus, if
there are ten employees to be appraised, there will be ten ranks from 1 to 10.
However, the greatest limitations of this appraisal method are that:
• It does not tell that how much better or worse one is than another.
• The task of ranking individuals is difficult when a large number of employees are rated.
• It is very difficult to compare one individual with others having varying behavioral traits. To remedy these
defects, the paired comparison method of performance appraisal has been evolved.
b. Paired Comparison Method: In this method of ranking, each person is compared with others in the group
on the basis of specific traits, usually one trait as otherwise huge number of comparisons have to be made
which can make rating a time-consuming process. A list is prepared containing the names of persons to be
ranked in pairs. The rater puts a tick mark against the person who is better between the two.
The number of possible pairs for a given number of employees is ascertained by the following formula:
N (N-1)
2 Where N = the total number of employees to be evaluated.
Example: If the five teachers (naming K, M, R, V, B) have to be evaluated by the Vice Chancellor of a
University, then above formulae gives 5 (5-1)/2 = 10 pairs which are:
K with M
K with R M with R
K with V M with V M with V
K with B M with B M with B M with B
Thus, the pairs so ascertained give the maximum possible permutations and combinations. The number of
times a worker is considered better makes his/her score. Such scores are determined for each worker and
he/she is ranked according to his/her score. One obvious disadvantage of this method is that the method can
become unmanageable when large numbers of employees are being compared.
c. Grading Method: In this method, certain categories of worth are established in advance and carefully
defined. There can be three categories established for employees: outstanding, satisfactory and unsatisfactory.
There can be more than three grades. Employee performance is compared with grade definitions. The
employee is, then, allocated to the grade that best describes his or her performance. Such type of grading is
done in Semester pattern of examinations and in the selection of a candidate in the public service sector. One
of the major drawbacks of this method is that the rater may rate most of the employees on the higher side of
their performance.
d. Forced Distribution Method This method was evolved to eliminate the central tendency of rating most of
the employees at a higher end or the lower end of the scale. Employees are placed between two extremes of
‘good’ and ‘bad’ job performances. The method assumes that employees’ performance level confirms to a
normal statistical distribution - 10, 20, 40, 20 and 10%. 10% are placed at the top level and are given
outstanding merit, 20% are given good rating, 40% satisfactory (average), 20% fair and 10% unsatisfactory.
This is useful for rating a large number of employees. This method tends to eliminate or reduce bias. It is also
highly simple to understand and easy to apply in appraising the performance of employees in organisations.

The major weakness of this method lies in the assumption that employee performance levels always confirm
to a normal distribution.
e. Forced Choice Method In this method the rater is given a series of statements about an employee. These
statements are arranged in blocks of two or more, and the rater indicates which statement is most or least
descriptive of the employee.
A pair of positive statements may be:
• Gives good and clear instructions to the subordinates.
• Can be depended upon to complete any job assigned.
A pair of negative statements may be:
• Makes promises beyond his limit to keep these.
• Inclines to favour some employees.
Each statement carries a score or weight, which is not made known to the rater. The human resource section
does rating for all sets of statements— both positive and negative. The final rating is done on the basis of all
sets of statements. Thus, employee rating in this manner makes the method more objective. In this method, the
rater is forced to select statements which are readymade.
f. Check-List Method The basic purpose of utilizing check-list method is to ease the evaluation burden upon
the rater. In this method, a series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are prepared
by the HR department. The check-list is, then,
presented to the rater to tick appropriate answers
relevant to the ratee. These questions are
concerned with the employee behavior. Each
question carries a weight-age in relation to their
importance. When the check-list is completed, it
is sent to the HR department to prepare the final
scores for all ratees based on all questions.
However, one of the disadvantages of the check-
list method is that it is difficult to assemble,
analyse and weigh a number of statements about
employee characteristics and contributions. From
a cost point of view, this method may be
inefficient, particularly if there are a number of
job categories in the organisation because a separate checklist of questions must be prepared for each category
of job. It will involve a lot of money, time and efforts.

g. Critical Incidents Method: Critical incident method or critical incident technique is a performance
appraisal tool in which analyses the behavior of employee in certain events in which either he performed very
well and the ones in which he could have done better. Critical incident technique is used to collect data using
a set of procedures. In critical incident
method the observer observes critical
human behaviors, skills used, incidents
that occur on the job. There are three steps
involved in appraising employees using
this method. First, a list of noteworthy
(good or bad) on-the-job behavior of
specific incidents is prepared. Second, a
group of experts then assigns weightage
or score to these incidents, depending
upon their degree of desirability to
perform a job. Third, finally a check-list
indicating incidents that describe workers as “good” or “bad” is constructed. Then, the check-list is given to
the rater for evaluating the workers. The basic idea behind this rating is to appraise the workers who can
perform their jobs effectively in critical situations. This is so because most people work alike in normal
situation. The strength of critical incident method is that it focuses on behaviors and, thus, judge’s
performance rather than personalities. Its drawbacks are that one has to regularly write down the critical
incidents which become time-consuming and burdensome for evaluators, i.e., managers. Generally, negative
incidents are more noticed than positive ones. It is rater’s inference that determines which incidents are
critical to job performance. Hence, the method is subject to all the limitations relating to subjective judgments.
h. Graphic Rating Scale Method: The graphic rating scale is one of the most popular and simplest techniques
for appraising performance. It is also known as linear rating scale. In this method, the printed appraisal form is
used to appraise each employee. The form lists traits (such as quality and reliability) and a range of job
performance characteristics (from unsatisfactory to outstanding) for each trait. The rating is done on the basis
of points on the continuum. The common practice is to follow five points scale. The rater rates each appraisee
by checking the score that best describes his or her performance for each trait and all assigned values for the
traits are then totaled. This method is good for measuring various job behaviors of an employee. However, it
is also subjected to rater’s bias while rating employee’s behavior at job. Occurrence of ambiguity in designing
the graphic scale results in bias in appraising employee’s performance

i. Essay Method : Essay method is the simplest one among various appraisal methods available. In this
method, the rater writes a narrative description on an employee’s strengths, weaknesses, past performance,
potential and suggestions for improvement. Its positive point is that it is simple in use. It does not require
complex formats and extensive/specific training to complete it. However, essay method, like other methods, is
not free from drawbacks. In the absence of any prescribed structure, the essays are likely to vary widely in
terms of length and content. And, of course, the quality of appraisal depends more upon rater’s writing skill
than the employee’s actual level of performance. Moreover, because the essays are descriptive, the method
provides only qualitative information about the employee. In the absence of quantitative data, the evaluation
suffers from subjectivity problem. Nonetheless, the essay method is a good start and is beneficial also if used
in association with other appraisal methods.
j. Field Review Method : This is an appraisal by someone outside the rater’s own department usually
someone from the corporate office or the HR department. The outsider reviews employee’s records and holds
interviews with the appraisee and his or her superior. This method is useful when comparable information is
needed from employees in different units or locations.
k. Confidential Report: It is the traditional way of appraising employees mainly in the Government
Departments. Evaluation is made by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on employee’s strength, weakness,
intelligence, attitude, character, attendance, discipline etc. Overall grading can be given on a five point scale
(outstanding, very good, good, average, and poor). The confidential reports, as the name suggests, are very
confidential.
II. Modern Methods
a. Assessment centres : An assessment centre typically involves the use of methods like social/informal
events, tests and exercises, assignments being given to a group of employees to assess their competencies to
take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they
would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they
perform the assigned jobs and are evaluated on job related characteristics. The major competencies that are
judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing
capabilities, motivation, career orientation etc. Assessment centres are also an effective way to determine the
training and development needs of the targeted employees.
b. Behaviorally anchored rating scales (BARS) Behaviorally Anchored Rating Scales (BARS) is a relatively
new technique which combines the graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of behavioral statements describing important job
performance qualities as good or bad (for example: the qualities like inter-personal relationships, adaptability
and reliability, job knowledge etc). These statements are developed from critical incidents. In this method, an
employee’s actual job behavior is judged against the desired behavior by recording and comparing the
behavior with BARS. Developing and practicing BARS requires expert knowledge.
c. Human resource accounting method : Human resources are valuable assets for every organization. Human
resource accounting method tries to find the relative worth of these assets in the terms of money. In this
method the performance appraisal of the employees is judged in terms of cost and contribution of the
employees. The cost of employees include all the expenses incurred on them like their compensation,
recruitment and selection costs, induction and training costs etc. whereas their contribution includes the total
value added (in monetary terms). The difference between the cost and the contribution will be the
performance of the employees. Ideally, the contribution of the employees should be greater than the cost
incurred on them.
d. 360 degree performance appraisal: 360 degree feedback, also known as “multi-rater feedback”, is the most
comprehensive appraisal where the feedback about the employees’ performance comes from all the sources
that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her
peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who
comes into contact with the employee and can provide valuable insights and information or feedback
regarding the “on-the-job” performance of the employee.
360 degree appraisal has four integral components:
• Self appraisal
• Superior’s appraisal
• Subordinate’s appraisal
• Peer appraisal
Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements,
and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree appraisal
where the employees’ responsibilities and actual performance is rated by the superior. Subordinates appraisal
gives a chance to judge the employee on the parameters like communication and motivating abilities,
superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct
feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity
towards others. Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree
performance appraisal has high employee involvement and also has the strongest impact on behavior and
performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of
the most credible performance appraisal methods. 360 degree appraisal is also a powerful developmental tool
because when conducted at regular intervals (say yearly) it helps to keep a track of the changes of others’
perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as
it helps to assess their leadership and managing styles. This technique is being effectively used across the
globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance
Industries etc.
e. Management by objectives (MBO): The concept of ‘Management by Objectives’ (MBO) was first given
by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come
together to identify common goals, the employees set their goals to be achieved, the standards to be taken as
the criteria for measurement of their performance and contribution and deciding the course of action to be
followed. The essence of MBO is participative goal setting, choosing course of actions and decision making.
An important part of the MBO is the measurement and the comparison of the employee’s actual performance
with the standards set. Ideally, when employees themselves have been involved with the goal setting and the
choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
MBO process The principle behind Management by Objectives (MBO) is to create empowered employees
who have clarity of the roles and responsibilities expected from them, understand their objectives to be
achieved and thus help in the achievement of organizational as well as personal goals.
Some of the important features and advantages of MBO are:
• Clarity of goals – With MBO, came the concept of SMART goals i.e. goals that are: o Specific o
Measurable o Achievable o Realistic, and o Time bound. The goals thus set are clear, motivating and there is
a linkage between organizational goals and performance targets of the employees.
• The focus is on future rather than on past. Goals and standards are set for the performance for the future
with periodic reviews and feedback.
• Involving employees in the whole process of goal setting and increasing employee empowerment enhances
employee job satisfaction and commitment.
• Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious
relationships within the enterprise and also solve many problems faced during the period.

USES AND LIMITATIONS OF PERFORMANCE APPRAISAL

Uses of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by following
advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for
efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit
rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites
are dependent on performance appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the supervisors to
frame training policies and programmes. It helps to analyse strengths and weaknesses of employees so that
new jobs can be designed for efficient employees. It also helps in framing future development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity and
importance of the selection procedure. The supervisors come to know the validity and thereby the strengths
and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
5. Communication: For an organization, effective communication between employees and employers is very
important. Through performance appraisal, communication can be sought for in the following ways:
a. Through performance appraisal, the employers can understand and accept skills of subordinates.
b. The subordinates can also understand and create a trust and confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management relationship.
d. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of

employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a
person for better job and helps him to improve his performance in the future.

LIMITATIONS OF APPRAISAL TECHNIQUES

Performance appraisal techniques have often failed to give a correct assessment of the employee, the causes of
such failures are.
a. The supervisor plays dual and conflicting role of both the judge and the helper.
b. Too many objectives often cause confusion.
c. The supervisor feels that subordinate appraisal is not rewarding.
d. A considerable time gap exists between two appraisal programmes.
e. The skills required for daily administration and employee development are in conflict.
f. Poor communication keeps employees in the dark about what is expected of them.
g. There is a difference of opinion between a supervisor and a subordinate, in regard to the latter’s
performance. Feedback on appraisal is generally unpleasant for both supervisor and subordinate.
h. Unwillingness on the part of supervisors to tell employees plainly how to improve their performance.

PROCESS OF PERFORMANCE APPRAISAL

a. Setting Standards: The process of performance appraisal begins with the establishment of performance
standards. At the time of designing a job and formulating a job description, performance standards are
developed for the position. These standards must be clear and not vague and must be objective enough to be
understood and measured. These standards should be discussed with the supervisor to find out which different
factors are to be incorporated and weights to be given to each factor and later on used for appraising the
performance of employees.
b. Communicating Standards: The next step is to communicate these standards to the employees. To make
communication effective, feedback is necessary from the subordinate to the supervisor. Satisfactory feedback
ensures that the information communicated by the manager has been received and understood in the way it
was intended.
c. Measuring performance: In this step performance is measured. Four sources of information are used for
measuring performance: personal observation, statistical reports, oral reports, and written reports. As for
measuring actual performance information is needed.
d. Comparing performance with standards: In this step gaps are identified between actual performance and
standards. The employee is evaluated and judged of his potential for growth and development.
e. Discussing results with the employees: The results are discussed with the employees. The strengths and
weaknesses of employees are discussed so that their performance is improved.
f. Taking corrective actions: Coaching, counseling and training may be imparted for taking corrective action.
Special assignments and projects may be given to the employees in order that their performance is improved.

PROMOTION
Promotion is an upward movement of employee in the organization to another job, higher in organisation’s
hierarchy. In the new job, the employee finds a change in salary, status, responsibility and grade of job or
designation. As a whole, the organization perceives the staffing of vacancy worth more than the employee’s
present position. In contrast to promotion when the salary of an employee is increased without a
corresponding change in the job-grade, it is known as ‘upgrading’. But when promotion does not result in
change in pay, it is called ‘dry promotion’. Promotion is a method of internal mobility.
According to Scott and Clothier, “A promotion is the transfer of an employee to a job which pays more
money or one that carries some preferred status”.
Edwin B. Flippo, “A promotion involves a change from one job to another that is better in terms of status and
responsibilities.”

Purpose of Promotion
The main purposes of promotion are:
(a) To recognize and reward the efficiency of an employee.
(b) To attract and retain the services of qualified and competent people.
(c) To increase the effectiveness of the employee and of the organisation.
(d) To motivate employees to higher productivity.
(e) To fill up higher vacancies from within the organisation.
(f) To impress upon those concerned that opportunities are available to them also in the organisation if they
perform well.
(g) To build, loyalty, morale and sense of belongings in the employees.

Basis of Promotion
Organisations adopt different bases of promotion depending on their nature, size, managerial policy etc. The
well established bases of promotion are seniority and merit.
a. Seniority based promotion: If seniority is the bases for promotion, an employee with the longest period of
service will get promoted, irrespective of whether he is competent or not.
Advantages
• It is easy to administer.
• It is easy to measure the length of service and judge the seniority.
• With the base of seniority there is no scope for favoritism, discrimination and subjective judgement.
• By seniority everyone is sure of getting promotion one day.
• Subordinates are more willing to work under an older boss who has given many years of service to the
company.
Disadvantages
• The learning capabilities of senior (older) employees may diminish.
• It de-motivates the younger and more competent employees and it results in more employee turnover.
• The organisation is deprived of external talent which is very necessary due to technological advancements
and multi-culture organisation.
• Judging the seniority is highly difficult as the problems like job seniority, company seniority, regional
seniority, service in different organizations, trainee experience, research experience etc., will crop up.

b. Merit or competence based promotion: Merit based promotion occur when an employee is promoted
because of superior performance in the current job. Merit means an individual’s knowledge, skills, abilities as
measured from his educational qualifications, experience, training, and past employment record.
Advantages
• Promotion by merit is a reward to encourage those employees who make a successful effort to increase their
knowledge or skill and who maintain a high level of productivity.
• It helps the employer to focus on talented employees recognize their talent and reward their contributions.
• Efficiency is encouraged, recognized and rewarded.
• Competent people are retained as better prospects are open to them.
• It inspires other employees to improve their standards of performance through active participation in all
activities and putting in more efforts.
Disadvantages
• It is not easy to measure merit. Personal prejudices, biases, and union pressures may come in the way of
promoting the best performer.
• When young employees get ahead of senior employees in the organization this creates frustration among
senior employees .They feel insecure and may also quit the organization.
• The past performance may not guarantee future success of an employee.
• Loyalty and length of service is not properly rewarded.

c. Seniority-Cum-Merit/Merit-Cum-Seniority: Managements mostly prefer merit as the basis of promotion as

they are interested in enriching organizational effectiveness by enriching its human resources. But trade
unions favour seniority as the sole basis for promotion in order to satisfy the interests of majority of their
members. Both seniority and merit as the bases of promotions have their advantages and disadvantages.
Hence it is necessary for the organizations to give due weightage to both seniority and merit while promoting
their employees. A combination of both seniority and merit can be considered as the basis of promotions,
there by satisfying the management for organizational effectiveness and the employees and trade unions for
respecting the length of service.
TRANSFER
A transfer implies a lateral movement of an employee in the hierarchy of positions with the same pay and
status. Transfers may be either company initiated or employee initiated. In fact, a transfer is a change in job
assignment. It may involve a promotion, demotion or no change at all in status and responsibility. Transfers
from one job to another may be either temporary or permanent.
Temporary transfers may be due to
• temporary absenteeism
• shifts in the workload
• vacations
Permanent transfers may be due to
7. shifts in the workload
• vacancies requiring the special skill of the transferred employee
• ill-health of the employee
Transfer requests might come from the worker himself, from his superior, from the head of another
department or may be made necessary by changes in the volume of trading activities. When the transfer
request comes from the employee himself, it is because he does not like the work or the place of work or the
co-workers.
Requests for transfers should be favourably considered especially when it comes from an employee. An
unsatisfied employee is more of a liability than an asset. It is true that no company can comply with all
requests for transfers

REASONS FOR TRANSFERS

In modern organisations, transfers are made because of the following reasons:
a) To Meet the Organizational Requirements: Organizational changes may demand the shift in job
assignments with a view to place the right man on the right job, Such changes may be changes in technology,
changes in the volume of production, product line, production schedule quality of products, change in the job
pattern, fluctuations in the market conditions, reallocation of or reduction in the workforce due to a shortage
or a surplus in the same section so that layoffs may be avoided, filling in of the vacancies which may occur
because of separations or because of the need for suitable adjustments in business operations.
In short, the purpose of transfers is to stabilize employment in an organization.
b) To Meet Employees’ Requests: Sometimes, the transfer is done at the request of the employer himself.
Employees may need a transfer in order to satisfy their desire to work under a different superior in a
department/region where opportunities for advancement are bright, in or near their native place or place of
interest, doing a job where the work itself is challenging, etc.
c) To Ensure Better Utilization of the Employees: An employee may be transferred because
the management feels that he is not performing satisfactorily and adequately and when the management feels
that he may be more useful or suitable elsewhere, where his capacities would be better utilized.
d) To Make the Employees More Versatile: Employees may be shifted from one job to another to expand
their capabilities. Job rotation may prepare the employee for more challenging assignments in the future.
e) To Adjust the Workforce: The workforce may be transferred from a plant where there is less work to a
plant where there is more work. Thus, the employees who have been in service of an organization are not
thrown out of employment but adjusted elsewhere.
f) To Provide Relief to the Employee: Transfers may be made to give relief to employees who are
overburdened or doing hazardous jobs for long periods. The transfer may also be made to break the monopoly
of the employee. The climate of a place may be unsatisfactory for an employee’s health. He may request
a transfer to another place, where his health may not be affected by the climate.
g) To Reduce Conflicts and Incompatibilities: Where employees find it difficult to get along with colleagues
in a particular section or department, they could be shifted to another place to reduce conflicts.
h) To Penalise the Employees: Transfers may be effected as disciplinary measures to shift employees
indulging in undesirable activities to remote, far-flung areas.
i) To Maintain a Tenure System: In senior administrative services of the Government and also in industries or
where there is a system of the annual intake of management trainees, the employee holds a certain job for a
fixed tenure but is made to move from job to job with a view to enable him to acquire a variety of experience
and skills and also to ensure that he does not get involved in politicizing informal groups.
j) To Accommodate Family-Related Issues: Family-related issues cause transfers, especially among female
employees. When they get married, the female employees want to join their husbands and this
fact necessitates transfers or resignations.

Types of Transfers
a. Production Transfers: In order to stabilise the employment in the company and avoidance of lay off, an
employee may be transferred from one department to another department. Such a transfer is known as
production transfer.
b. Replacement transfer : These are transfers in which a long- service employee is transferred to a similar job
where he replaces an employee with shorter service. This type of transfer is made when all operations are
declining but management wants to retain the long-service employee as long as possible.
c. Versatility transfer: The versatility transfer (better called ‘rotation’) is for the purpose of providing
management with a more versatile group of employees. This type of transfer will increase the versatility of the
employee by shifting him from one job to another. The employee gets an opportunity for varied job
experience. This helps the employee through job enlargement.
d. Remedial transfer: In case an employee does not feel comfortable on his job, he may be transferred to
some other job. His initial placement might be faulty; his health might have gone down; he may not be getting
along with his supervisor or workers i.e., he might have developed personal friction with his boss or fellow
employees.
RIGHT-SIZING OF WORKFORCE
Rightsizing the workforce means redefining job descriptions and reorganizing employee structures to
maintain efficiency and properly equip the company to meet its objectives.
Rightsizing is the process of a company restructuring or reorganizing itself by reducing its workforce, cost-
cutting, or rearranging its upper management. The aim is to streamline the business so that it can make a profit
more effectively.
Need for Right-Sizing.
a. Rightsizing managers know where things are probably headed, which help them in making more effective
hiring decisions and provides direction for training/ retraining current employees who want to learn new skills
to prepare for the future.
b. Rightsizing helps the managers to know their priorities and provides them a better chance to create an
organisation structure that is conducive to success.
c. Helps the management in taking the decisions in relation to how many people and efforts are required for
any set of activities. It provides the staff profile and resource plan as an outcome i.e. the information regarding
how many personnel are required in each area in organisation is provided by the rightsizing.