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Training and Development
Q) Meaning and Definition
A business' most important asset is often its people. Training and developing them can be one of the most important investments a business can make. The right training can ensure that your business has the right skills to tackle the future. It can also help attract and retain good quality staff, as well as increasing the job satisfaction of those presently with you increasing the chances that they will satisfy your customers. Training and development refer to the imparting to specific skills’ ability and knowledge to an employee. A formal definition of training and development is: “… it is any attempt to improve current or future employee performance by increasing an employee’s ability to perform through learning, usually by changing the employee’s attitudes or increasing his or her skills and knowledge.” The need for training and development is determined by the employee’s performance deficiency, computed as follows: Training and Development need = Standard performance – Actual performance.

We can make a distinction among training, education and development. Such distinction enables us to acquire a better perspective about the meaning of the terms. Training, as was started earlier, refers to the process of imparting specific skills. Education, on the other hand, is confined to theoretical learning in the classrooms.

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You have received this file from www.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . Submitted by Ashish Jain ( ashish1310@gmail.com ) TRAINING AND EDUCATION DIFFERENTIATED : Training Application oriented Job experience Specific tasks  Narrow perspective Education     Theoretical oriented Classroom learning General concepts Broad perspective

Development refers to those learning opportunities designed to help employees grow. Development is not primarily skill-oriented. Instead, it provides general knowledge and attitudes, which will be helpful to employees in higher positions. Efforts towards development often depend on personal drive and ambition. Development activities, such as those supplied by management development programmes, are generally voluntary.

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You have received this file from www.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . Submitted by Ashish Jain ( ashish1310@gmail.com ) THE TRAINING PROCESS Organizational Objectives and Strategies

Assessment of Training Needs Establishment of Training Goals Devising Training Programme

Implementation of Training programme Evaluation of Results

(1) ORGANIZATIONAL OBJECTIVES AND STRATEGIES: The first step in the training process in an organization is the assessment of its objectives and strategies. What business are we in? At what level of quality do we wish to provide this product or service? Where do we want to be in the future? It is only after answering these and other related questions that the organization must assess the strengths and weaknesses of its human resources.

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You have received this file from www.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . Submitted by Ashish Jain ( ashish1310@gmail.com ) (2) ASSESSMENT OF TRAINING NEEDS: Organizations spend vast sums of money on training and development. Before committing such huge resources, organizations would do well to assess the training needs of the employees. Organizations that implement training programmes without conducting needs assessment may be making errors. Needs assessment occurs at two levels: a) Individual b) Group Individual: An individual obviously needs training when his or her training falls short of standards, that is, when there is performance deficiency. Inadequacy in performance may be due to lack of skill or knowledge or any other problem. The problem of performance deficiency is caused by absence of skills or knowledge can be remedied by training. Faulty selection, poor job design, uninspiring supervision or some personal problem may also result in poor performance. Transfer, job redesign, improving quality of supervision, or discharge will solve the problem. Individuals may also require new skills because of possible job transfers. Although job transfers are as common as organizational personal demands vary, they do not necessarily require elaborate training efforts. Employees commonly require an orientation to new facilities and jobs. Recently, however, economic forces have necessitated significant retraining efforts in order to assure continuous employment for many individuals. Group: Assessment of training needs occurs at group level too. Any change in the organization’s strategy necessitates training groups of employees. For example, when the organization decides to introduce a new line of products, sales personnel and production workers have to

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Training can also be used when high scrap or accident rates. Causes require remedial actions. (3) ESTABLISHMENT OF TRAINING GOALS: Once the training needs are assessed. There are specific benefits of needs assessment.ManagementParadise. Needs Assessment Methods: Several assessment methods for are available for assessing training needs. training and developmental goals must be established. or other problems are diagnosed.You have received this file from www. Submitted by Ashish Jain ( ashish1310@gmail. With out clearly set goals.com : Ultimate educational resource for BMS and MBA students .com for more notes and projects  . Some are useful for organizational level needs assessment and others for individual needs assessment. .ManagementParadise. NEEDS ASSESSMENT METHODS Group analysis Individual analysis Organizational goals and objectives  Performance Appraisal Personnel/skills inventories  Work sampling Organizational climate indices  Interviews  Efficiency indices Questionnaires  Exit interviews Attitude survey MBO or work planning systems  Training progress  Quality circles  Rating scales  Customer survey/satisfaction data Benefits of Needs Assessment: Needs assessment helps diagnose the cause of performance deficiency of employees.com ) be trained to produce. Feel free to circulate these notes and upload your notes on the website. low morale and motivation. it is not possible to design a training and development Visit www.  Trainers are able to pitch their course inputs closer to the specific needs of the participants. sell and service the new products.  The sponsoring organizations are able to reduce the perception gap between the participant and his or her boss about  Consideration of current and their needs and expectations from the training programme.  Trainers may be informed about the broader needs of the training group and their sponsoring organizations.

clear behavioral standards of expected results are necessary so that the programme can be effectively designed and results can be evaluated. Feel free to circulate these notes and upload your notes on the website. Submitted by Ashish Jain ( ashish1310@gmail. and measurable. This is easy where skill training is involved. Visit www. Goals must be tangible.ManagementParadise. For example.com ) programme and. after it has been implemented. verifiable.ManagementParadise. there will be no way of measuring its effectiveness. . the successful trainee will be expected to type 55 words per minute with two or three errors per page. Nevertheless.You have received this file from www. But behavioral objectives like attitudinal changes can be more difficult to state.com : Ultimate educational resource for BMS and MBA students .com for more notes and projects  .

ManagementParadise. 1. Who are the trainers? Training and development may be done by:        Immediate Supervisors Co – workers Personnel Staff Specialists in other parts of the company Outside Consultants Industry Associations Faculty Members at Universities Visit www. . rank-and-file employees and their supervisors may effectively learn together about a new process and their respective roles.com : Ultimate educational resource for BMS and MBA students . It also helps facilitate group processes such as problem solving and decision – making. Feel free to circulate these notes and upload your notes on the website.com for more notes and projects  . it is advisable to have two or more target audiences.You have received this file from www. Submitted by Ashish Jain ( ashish1310@gmail. For example.ManagementParadise.com ) (4) DEVISING THE TRAINING AND DEVELOPMENT PROGRAMME Every training and development programme must address the following vital issues: Who are the trainees? Who are the trainers? What methods & techniques? What should be the level of training? What principles of learning? Where to conduct the program? Who are the trainees? Trainees are selected on the basis of:    Self Nomination Recommendations of the Supervisor By the HR Department itself Whatever is the basis.

introducing innovations in products & services and in special skills training.com ) Who among these are selected to teach. What Methods and Techniques of Training should be used? A multitude of methods and techniques is used to train employees. as when an experienced worker shows a trainee how to perform the job tasks. Submitted by Ashish Jain ( ashish1310@gmail.You have received this file from www. Training methods are categorized into two groups – on-the-job methods and off-the-job methods.com : Ultimate educational resource for BMS and MBA students . OJT is conducted at the work site and in the context of the job. Off-the-Job Training Method:  Visit www. often depends on where the program is held and the skill that is being taught. Training techniques are the means employed in the training methods. it is informal.com for more notes and projects  . METHODS & TECHNIQUES OF TRAINING On-the-Job Method Orientation Training Job-Instruction Training Job Rotation Coaching Off-the-Job Method Simulation Case Study Vestibule Role Play Lecture Films & Television Conference/Discussion Programmed Instruction  On-the-Job Method (OJT): Majority of industrial training is on the job training type.ManagementParadise. The most commonly used techniques are shown in the table given below.ManagementParadise. OJT method is mainly adopted while orienting new employees. Often. Feel free to circulate these notes and upload your notes on the website. .

safety education. technical & professional education and sales.ManagementParadise. Information is provided to the trainee in blocks. special skills training. 4. This method can be made effective when combined with other means of training. Submitted by Ashish Jain ( ashish1310@gmail. . Providing feedback on the accuracy of his or her answers.com for more notes and projects  . Training is offered without the intervention of the trainer. It is an attempt to create a realistic decision – making environment for the trainee. Communication Games: exercises to build bias – free listening and talking. administrative.com ) Off-the-job training is mainly adopted for orienting new employees. Allowing the person to respond. but without the high costs involved should the actions prove undesirable. overheads. The advantage of simulation is the opportunity to ‘create an environment’ similar to real situations the managers incur.You have received this file from www. PI involves: 1. facts. films and LCD Projectors. the learner proceeds to the next block. 3. 2. Skill Games: Tests to develop analytical skills. video-types.ManagementParadise. d) Simulations: A simulator is any kind of equipment or technique that duplicates as nearly as possible the actual conditions encountered on the job. Presenting questions. or problems to the learner. Visit www. If the answers are correct. The advantages and disadvantages of some of the important techniques of off-the-job methods are listed below: a) Lectures: Lecture is a verbal presentation of information by an instructor to a large audience. supervisory and managerial education. creative. Feel free to circulate these notes and upload your notes on the website. The other techniques of training are:    Leadership games: exercises to teach different styles of leadership. either in a book form or through a teaching machine. introducing innovations in products and services. b) c) Audio-Visuals: Programmed Instruction (PI): These include television slides.com : Ultimate educational resource for BMS and MBA students .

com for more notes and projects  . Lateral Thinking: thinking randomly to come up with new ideas.     Visit www. Submitted by Ashish Jain ( ashish1310@gmail. Feel free to circulate these notes and upload your notes on the website.com ) Strategic Planners: Games to test ability to plan ahead.ManagementParadise.You have received this file from www. Cross – cultural training: Programmes to teach specifics of varied cultures.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . . Team – building games: Exercises requiring collaborative efforts.

What should be the level of learning? The inputs passed on to trainees in training and development programmes can be taught at three basic levels.g. Orientation Training The goal is skill development.ManagementParadise.You have received this file from www.com for more notes and projects  . 3. Feel free to circulate these notes and upload your notes on the website.com : Ultimate educational resource for BMS and MBA students . E. Submitted by Ashish Jain ( ashish1310@gmail. . This means developing a basic understanding of a field and becoming acquainted with the language. How effectively they are learned depends upon several principles of learning.com ) 2. Level I The trainee must acquire fundamental knowledge. What should be the Principles of Learning? Training and development programmes are more likely to be effective when they incorporate the following principles of learning: Employee Motivation Transfer of Learning Meaning of Material Schedules of Training Goals  Motivation: Recognition of Individual Differences LEARNING PRINCIPLES Practice Opportunities Reinforcement Knowledge of Results Visit www. This involves obtaining additional experience and improving skills that have already been developed. All the inputs of training can be offered at the three levels.ManagementParadise. Aims at increased operational proficiency. or acquiring the ability to perform in a particular skill area. Level II Level III concepts and relationships involved in it.

Visit www. the individual exhibits the desired behavior to avoid something unpleasant.  Individual Differences: Individuals enjoy varying learning stimuli. Feedback about the performances will enable the learner to know where he or she stands and to initiate corrective action if any deviation from the expected goal has taken place. Example: an employee who does something to avoid incurring a reprimand from his boss. quality of life. Practice is also essential after the individual has been successfully trained.ManagementParadise.  Practice Opportunities: People learn best through practice. At the same time the individual must also have the ability to learn. Feel free to circulate these notes and upload your notes on the website. In negative reinforcement. Submitted by Ashish Jain ( ashish1310@gmail. Reinforcement could be positive and negative.You have received this file from www. job satisfaction) are the most powerful motivators. Example: if an employee does something well and is complemented by the boss. The reinforcement consists of a positive experience for the individual.  Reinforcement: Reinforcement is anything that a) b) Increases the strength of response Tends to induce repetitions of the behavior that preceded the reinforcement. Positive reinforcement strengthens and increases behavior by the presentation of desirable consequences. The trainee should be given the opportunity to practice what is being taught. Ability varies from individual to individual and this difference must be considered while organizing training programmes. . Motivation comes from awareness that training fetches some rise in status and pay.com : Ultimate educational resource for BMS and MBA students . Internal pressures (self-esteem. The effect of negative reinforcement is avoidance of learning. the probability that the behavior will be repeated will be strengthened.ManagementParadise.  Knowledge of Results (feedback): Knowledge of results is a necessary condition for learning.com ) Motivation to learn is the basic requisite of making training and development programmes effective.com for more notes and projects  .

particularly when it is accompanied by knowledge of results. but not for teaching leadership or conceptual skills. This may be possible for training skills such as maintaining a cash register. and ensuring that the behavior is reinforced when it occurs. seldom is such a combination effected in practice. creating opportunities to implement new behavior on the job. The more meaningful the material. Submitted by Ashish Jain ( ashish1310@gmail. Schedules of learning involve: a) b) c) Duration of practice sessions Duration of rest sessions Positioning of rest pauses  All the three must be carefully planned and executed. Individuals generally perform better and learn more quickly when they have goals.com : Ultimate educational resource for BMS and MBA students .  Transfer of Learning: What is learnt in training must be transferred to the job.com ) Goals: Goal setting can also accelerate learning. Techniques for overcoming resistance include creating positive expectations on the part of trainee’s supervisor. 4.ManagementParadise. . Though.You have received this file from www. particularly if the goals are specific and reasonably difficult. Often.  Meaning of material: A definite relationship has been established between learning and meaningfulness of the subject learnt. The traditional approach to transfer has been to maximize the identical elements between the training situation and the actual job. it is desirable that a training and development programme incorporates all these principles.  Schedules of learning: One of the most well – established principles of learning is that distributed or spaced learning is superior to continuous learning. Where to conduct the programme? Visit www. Feel free to circulate these notes and upload your notes on the website.com for more notes and projects  . what is learnt in a training session faces resistance back at the job.ManagementParadise. the better the learning process.

com for more notes and projects  . . On site but not the job – for example. At the job itself ii.ManagementParadise. iii. Off the site. in a training room in the company.ManagementParadise. Visit www.com : Ultimate educational resource for BMS and MBA students . Feel free to circulate these notes and upload your notes on the website. such as in a university or college classroom. hotel. a resort.You have received this file from www. Submitted by Ashish Jain ( ashish1310@gmail. or a conference center.com ) A training and development programme can be conducted: i.

com : Ultimate educational resource for BMS and MBA students . Implementation is beset with certain problems: a) Most managers are action oriented and frequently say they are too busy to engage in training efforts. perhaps. In addition to possessing communication skills. any other personnel specialty. . Feel free to circulate these notes and upload your notes on the website.ManagementParadise. its formal and informal organizations.ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail. it needs to be implemented.You have received this file from www. Programme implementation involves action on the following lines: a) Deciding the location and organizing training and other facilities b) Scheduling the training programme c) Conducting the programme d) Monitoring the progress of trainees Visit www.com for more notes and projects  .com ) (5) IMPLEMENTATION OF THE PROGRAMME : Once the training programme has been designed. c) Scheduling training around the present work is another problem. and the goals of the training programme. its objectives. Training requires a higher degree of creativity than. the trainers must know the company’s philosophy. b) Availability of trainers is a problem.

Training programmes should be evaluated to determine their cost effectiveness. that is. correcting performance deficiencies. Feel free to circulate these notes and upload your notes on the website. A second reason for evaluation is to ensure that any changes in trainee capabilities are due to the training programme and not due to any other conditions. Need for Evaluation: The main objective of evaluating the training programmes is to determine if they are accomplishing specific training objectives. . organizations either overlook or lack facilities for evaluation.ManagementParadise. however. Principles of Evaluation: Evaluation of the training programme must be based on the following programmes: a) Evaluation specialists must be clear about the goals and purpose of evaluation b) Evaluation must be continuous c) Evaluation must be specific d) Evaluation must provide the means and focus for trainers to be able to appraise themselves. Visit www. In practice. how far the programme has been successful must be judged or determined.You have received this file from www. should it occur. their practices.ManagementParadise. Evaluation helps determine the results of the training and development programme. A sense of urgency must be developed. f) Realistic target dates must be set for each face of the evaluation process. Submitted by Ashish Jain ( ashish1310@gmail.com for more notes and projects  . Finally.com ) (6) EVALUATION OF THE PROGRAMME : The last stage in the training and development process is the evaluation of results. and their products. e) Evaluation must be based on objective methods and standards. credibility of training and development is greatly enhanced when it is proved that the organization has benefited tangibly from it. Since huge sums of money are spent in training and development. but deadlines that are unreasonably high will result in poor evaluation.com : Ultimate educational resource for BMS and MBA students . Evaluation is useful to explain programme failure.

Besides. Two writers have suggested that four basic categories of outcome can be measured. Submitted by Ashish Jain ( ashish1310@gmail. The supervisor is asked to rate the former trainee on job proficiency directly related to the training objectives. a test related to the training material is applied. .ManagementParadise. Prior to the training. Did he like the programme? Did he think it worthwhile? b) Learning: did the trainee learn the principles.com ) There are various approaches to training evaluation.ManagementParadise.You have received this file from www. skills and the fact that the supervisor or the trainee wanted him to learn? c) Behavior: Whether the trainee’s behavior on the job changed because of the training programme? d) Results: what final results have been achieved? Did he learn how to work on machine? Did scrappage costs decrease? Was turnover reduced? Are productions quotas have been met? Questionnaires or structured interviews with the immediate supervisors of the trainees are acceptable methods for obtaining feedback on training.com : Ultimate educational resource for BMS and MBA students . the personnel manager should accurately assess trainee’s job performance two to four months after completion of training. pre-and-post tests be administered to the training groups. Feel free to circulate these notes and upload your notes on the website. a) Reaction: evaluate the trainee’s reaction to the programme.com for more notes and projects  . To get a valid measure of training effectiveness. and the results of this pre-test are compared with results on the same or similar test administered after the programme has been completed. Visit www.

) thus they personally gain through exposure to training programmes. .com for more notes and projects  . temperament. which may be due to age. absenteeism.com : Ultimate educational resource for BMS and MBA students . Efficient employees contribute to the growth of the organization. or the inability of the person to adapt himself to technological changes. complaints. Training is an investment in human resource with promise of better returns in future. Quality of products or services will definitely increase. The objectives of Training and Development are as follows: -   Efficiency: Employees become efficient after undergoing training.  Improves quality: Better-informed workers are likely to make less operational mistakes. and turnover can be reduced if employees are trained well. Submitted by Ashish Jain ( ashish1310@gmail. This can be well measured through the reduction in rejections. Training serves as an effective source of recruitment.You have received this file from www. motivation.  Personal growth: Training programmes also deal with personality development of the employees (through goal setting.com ) Q) Objectives of Training and Development Staying ahead in today's business world is more challenging than ever.ManagementParadise. Training and Development is also seen to strengthen the tie between employee development and strategic operation objectives. Visit www.ManagementParadise. Building trust and promoting teamwork are just two expectations of any business leader. Even dissatisfaction.  Meeting manpower needs: Future needs of employees will be met through training and development programmes. etc. scrap and damage to machinery and equipment can be avoided or minimized through training. Fewer accidents: Accidents.  Obsolescence prevention: Training and development programs foster the initiative and the creativity of the employees and help to prevent the manpower obsolescence. Feel free to circulate these notes and upload your notes on the website. leadership skills. Training and development programs are designed to keep an organization at the front of its industry maximize performance and energize every level of the organization.

Efficient employees contribute to the growth of the organization.com for more notes and projects  . • Employee stability: Training contributes to employee stability in at least 2 ways.com : Ultimate educational resource for BMS and MBA students . Employees become efficient after undergoing training.ManagementParadise. All rounders can be transferred to any job.ManagementParadise. Further trained employees tend to stay with the organization.com ) • Versatility in operations: Training makes the employees versatile in operations. . Visit www. Flexibility is therefore ensured. Growth renders stability to the work force. Feel free to circulate these notes and upload your notes on the website. which is reflected in profits every year.You have received this file from www. Growth indicates prosperity. Submitted by Ashish Jain ( ashish1310@gmail.

the individual must have the ability to learn. This is what high performing organizations do. Motivation alone is not enough. Motivation comes from awareness that training fetches some rise in status and pay.Recognition of individual differences Regardless of individual differences.It should be ensured that the management commits itself to allocate major resources and adequate time to training. Similarly Hewlet Packard spends about 5% of its annual revenue to train 87000 workers.Schedule of learning Duration of practice sessions. Training can be made effective. 3. which must be carefully planned and executed for an effective training programme.com for more notes and projects  . invest 300 $ million annually or about 2. .ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail. and whether a trainee is learning a new skill or acquiring knowledge of a given topic. Practice is essential after individual is successfully trained.ManagementParadise. Feel free to circulate these notes and upload your notes on the website. if action on the following lines is initiated: 1.com : Ultimate educational resource for BMS and MBA students . 2. For example XEROX.5% of its revenue on training.com ) Q) Effectiveness and Evaluation of Training and Development Effectiveness of Training Training and Development programmes are most likely to be effective when they incorporate the following principles 1. Visit www. Besides.Employee Motivation-motivation to learn is the basic requisite to make training and development programmes effective. duration of rest sessions and positioning of rest pauses are the three schedules. the trainee should be given the opportunity to practice what he is taught.You have received this file from www.

com ) 2. 5.It should be ensured that training contributes to competitive strategies of the firm. 4.Training can be made effective by making learning as one of the fundamental values of the company. 6. . first line supervisors have difficulty in production norms if employees are attending training programmes. Feel free to circulate these notes and upload your notes on the website. The top management hardly rewards the supervisors for carrying out effective training. The top management rarely plans and budgets systematically for training The middle management. Why Training Fails?     The benefits of training are not clear to the top management.com for more notes and projects  . 3.You have received this file from www. Different strategies need different HR skills for implementation.com : Ultimate educational resource for BMS and MBA students .It should be ensured that there is proper linkage among organizational. Visit www. Submitted by Ashish Jain ( ashish1310@gmail.And finally to make training effective a system to evaluate the effectiveness of training needs to be prepared so that the shortfalls can be easily looked at. and training and retraining are done at all levels on a continuous and ongoing basis. This philosophy should percolate down to all employees in the organization. Let training help employees at all levels acquire the needed skills. without proper incentives from top management does not account for training in production scheduling  Without proper scheduling from above.Ensure that a comprehensive and systematic approach to training exists.ManagementParadise.ManagementParadise. operational and individual training needs.

com ) Trainers provide limited counseling and consulting services to the rest of the organization.com for more notes and projects  .ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail.  Visit www. .ManagementParadise. Feel free to circulate these notes and upload your notes on the website.com : Ultimate educational resource for BMS and MBA students .You have received this file from www.

Evaluation helps determine the results of the training and development programme. not exempted from this purview. organizations either overlook or lack facilities for evaluation. • Secondly training programme should be evaluated to determine their cost effectiveness. The training budget is. that is correctible performance deficiencies. Feel free to circulate these notes and upload your notes on the website. The last and one of the most important stages in the training and development process is the evaluation of results. In practice is however seen. how far the training has been useful must be judged/determined. Business heads and training managers are under pressure to prove the effectiveness of training Thus it can be seen. if it occurs. Need for evaluation: • The main objective of evaluating the training programme is to determine if they are accomplishing specific training objectives.com ) Evaluation of Training Organizations are under pressure to justify various expenses. . Submitted by Ashish Jain ( ashish1310@gmail.com for more notes and projects  . Visit www. There are a number of questions raised on the value derived from training programmes—both directly and indirectly.You have received this file from www.com : Ultimate educational resource for BMS and MBA students .ManagementParadise.ManagementParadise. Since huge sums of money are spent on training and development. • And finally the credibility of training and development is greatly enhanced when it is proved that the organization has benefited tangibility from it. often. Evaluation is useful to explain programme failure.

knowledge and skills of the training. 6. Reaction measures reveal trainees’ opinions regarding the training programme. Evaluation must provide the means and focus for trainers to be able to appraise themselves 5. Submitted by Ashish Jain ( ashish1310@gmail. Realistic target dates must be set for each phase of the evaluation process. I. Evaluation must be specific. 2. HR professionals should try to collect four types of data while evaluation training programmes. Criteria for evaluation. Learning Learning measures assess the degree to which trainees have mastered the concepts.You have received this file from www.com for more notes and projects  . Evaluation must be based on objective methods and standards. but deadlines that are unreasonably high will result in poor evaluation. Feel free to circulate these notes and upload your notes on the website. Measures of reaction. III.ManagementParadise. II.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . 3. Visit www. 4.com ) Principle of evaluation Evaluation of training programme must be based ob following principles 1. A sense of urgency must be developed. . The evaluation specialist must b clear about the goals and purposes of evaluation. Behavioural change Behavior indicates the performance of the learners. Evaluation must be continuous.

The following are the techniques of evaluation: 1.g. Each group is randomly elected. it is important to assess the costs and benefits associated with the programme. These results are plotted on a graph to determine whether changes have occurred and remain as a result of training effort. Techniques of evaluation Several techniques of evaluation are being used in organizations. Feel free to circulate these notes and upload your notes on the website.You have received this file from www. (E. If the gain demonstrated by the experimental group is better than those by the control group.com for more notes and projects  .Longitudinal or time series analysis Measurements are taken before the programme begins and are continued during and after the programme is completed.Experimental and control groups.ManagementParadise. Visit www. Measures are taken of relevant indicators of success. but it is useful in convincing the management about the usefulness of the training.-words typed per minute. one to receive training and the other not to receive training. In order to conduct a thorough evaluation of a training programme. 2. that change has occurred as a result of training and not another variable.com : Ultimate educational resource for BMS and MBA students .ManagementParadise.com ) IV. Organizational results The purpose of collecting organizational results is to examine the impact of training on the work group or the entire company. This is a difficult task. The random selection helps to assure the formation of the groups quite similar to each other. To further validate. It may be stated that the usefulness of the methods is inversely proportional to the ease with which the evaluation can be done. . the training programme is labeled as successful. pieces produced per hour etc) before and after training for both groups. a control group can be included. Submitted by Ashish Jain ( ashish1310@gmail.

The benefits to be compared to the costs are rupee payback associated with the improvement in trainee’s performance.ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail. salaries of training department staff. purchase of equipment.com : Ultimate educational resource for BMS and MBA students .You have received this file from www.com for more notes and projects  . . Visit www.ManagementParadise. their behavioral change and the longevity of the period during which the benefit would last. programme development costs. trainers cost during the training period. Feel free to circulate these notes and upload your notes on the website.com ) Some of the costs that should be measured for a training programme include needs assessment costs.

ManagementParadise.com for more notes and projects  . evaluation helps determine the results of training and development program. many organizations overlook this important step in the training process. Even suitable modification / improvement in the training program is possible after analyzing the results available from such evaluation.com : Ultimate educational resource for BMS and MBA students . supervisors. the training program is already completed and the trainees go back to their departments or positions and start doing the work assigned. These techniques are easy to use. Submitted by Ashish Jain ( ashish1310@gmail. For this. For this. cordial industrial relations and so on. Here. Feel free to circulate these notes and upload your notes on the website. Management will like to know actual results / benefits of training. In brief. service providers and others responsible for implementing the performance improvement interventions. They can be added on to existing training or designed with new training. the management feels that training / development is a means and not the end in itself. follow-up of training in the form of evaluation training is essential. However. don't require large amounts of time or organizational integration and cost very little.ManagementParadise. Visit www. high morale. Unfortunately. Follow-up is the key to ensuring that interventions improve performance. productivity. Management spent huge amount of money on training of employees and this expenditure should give positive return in terms of higher efficiency. Training is essentially for achieving certain objectives. Various follow-up approaches in the work place are used to support trainers.com ) Q) Follow – Up of Training Following-up is the last step in the training process. . This indicates the effectiveness of the training. The follow up technique will increase the probability that learning and behavior changes will "stick" back on the job. In some companies. suitable facilities required for evolution of training are not available.You have received this file from www. critical evaluation of training program is essential.

ManagementParadise. Feel free to circulate these notes and upload your notes on the website.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . follow–up action is required to ensure implementation of evaluation report at every stage of training. Visit www.com ) On the whole.com for more notes and projects  . . Submitted by Ashish Jain ( ashish1310@gmail.You have received this file from www.

Efficient employees contribute to the growth of the organization. They seldom leave the company. Submitted by Ashish Jain ( ashish1310@gmail. Visit www. Flexibility is therefore ensured. trained employees tend to stay with the organization. Nobody else but well trained employees can contribute to the prosperity of an organization. Training and development is an investment in human resources with a promise and it serves as an effective source of recruitment.com ) Q) Importance of Training and Development Training and development programmes help remove performance deficiencies in employees. Training serves as an effective source of recruitment. generally adding to his or her abilities and value to the employer. Training makes the employees versatile in operations. There is greater stability. . Further. A company’s training and development pays dividends to the employee and the organization. the employee’s personal and career goals are furthered. and turnover can be reduced if employees are trained well. the objectives of the HR department are also furthered.You have received this file from www. Accidents. Organizations take fresh diploma holders or graduates as apprentices or management trainees. Growth indicates prosperity. At the same time. and (3) Supervisors and peers are supportive of the desired behaviors. scrap and damage to machinery and equipment can be avoided or minimized through training. complaints. All rounder can be transferred to any job. flexibility and capacity for growth in an organization. Though no single training programme yields all the benefits. This is particularly true when (1) The deficiency is caused by a lack of ability rather than a lack of motivation to perform (2) The individual(s) have the aptitude and motivation needed to learn to do the job better. absenteeism.com : Ultimate educational resource for BMS and MBA students . the organization which devotes itself to training and development enhances its HR capabilities and strengthens its competitive edge.ManagementParadise. which is reflected in increased profits from year to year. Employees become efficient after undergoing training. Training and development is an investment in HR with a promise of better returns in future.com for more notes and projects  . Training contributes to employee stability in at least two ways. They are absorbed after course completion.ManagementParadise. Even dissatisfaction. Feel free to circulate these notes and upload your notes on the website. Future need of employees will be met through training and development programmes. Ultimately. Growth renders stability to the work force.

Organizations that implement training programmes without conducting needs assessment may be making errors. compensation package. uninspiring supervision or some personal problem may also result in poor performance.com ) How to identify training needs? Needs assessment diagnoses present problems and future challenges to be met through training and development.You have received this file from www. For ex.training Measures Assessment of training needs must also focus on anticipated skills of an employee. The problem of performance deficiency caused by absence of skills or knowledge can be remedied by training.ample. It is necessary that the employee be trained to acquire new skills. Technology changes fast and new technology demands new skills. Performance Deficiency Lack of skill or knowledge Other Causes Training Non.ManagementParadise. Organizations spend vast sums of money (usually as a percentage on turnover) on training and development. that is. poor job design. Training and development is essential to prepare Visit www. job redesign. job redesign) could be used in lieu of training. Transfer. or discharge will solve the problem. This will help him/her to progress in his or her career path. Needs assessment occurs at two levels group and individual. improving quality of supervision.g. Figure illustrates the assessment of individual training needs and remedial measures.com for more notes and projects  . organizations would do well to assess the training needs of their employees. Feel free to circulate these notes and upload your notes on the website. . An individual obviously needs training when his or her performance falls short of standards. Faulty selection. Inadequacy in performance may be due to lack of skill or knowledge or any other problem. Before committing such huge resources.com : Ultimate educational resource for BMS and MBA students . a needs assessment exercise might reveal that less costly interventions (e.ManagementParadise. when there is performance deficiency. Submitted by Ashish Jain ( ashish1310@gmail. selection.

9. low morale and motivation. Needs Assessment Methods: How are training needs assessed? Several methods are available for the purpose. . some are useful for organizationallevel needs assessment and others for individual needs assessment. foreign competition. sales personnel and production workers have to be trained to produce.You have received this file from www. For example. Training can also be used when high scrap or accident rates. economic forces have necessitated significant retraining efforts in order to assure continued employment for many individuals. Jobs have disappeared as technology.com ) the employee to handle more challenging tasks.ManagementParadise. Although job transfers are common as organizational personnel demands vary. such undesirable happenings reflect poorly trained work force. Assessment of training needs occurs at the group level too.com : Ultimate educational resource for BMS and MBA students . Recently. Individuals may also require new skills because of possible job transfers.com for more notes and projects  . As shown in Fig. Employees commonly require only an orientation to new facilities and jobs. or other problems are diagnosed. sell and service the new products. Submitted by Ashish Jain ( ashish1310@gmail.4. Any change in the organization’s strategy necessitates training of groups of employees. Feel free to circulate these notes and upload your notes on the website.ManagementParadise.hey do not necessarily require elaborate training efforts. however. and the force of supply and demand are changing the face of our industry. Group or Organizational Analysis          Organizational goals and objectives Personnel/ skill inventories Organizational climate indices Efficiency indices Exit interviews MBO or work planning systems Quality circles Customer survey/satisfaction data Consideration of current and projected changes Individual Analysis       Performance appraisal Work sampling Interviews Questionnaires Attitude survey Training progress Visit www. . Deputation to a part-time MBA programme is ideal to train and develop such employees. Although training is not a cureall. when the organization decides to introduce a new line of products.

Submitted by Ashish Jain ( ashish1310@gmail. Visit www. Trainers may be informed about the broader needs of the training group and their sponsoring organizations. Feel free to circulate these notes and upload your notes on the website. Trainers are able to pitch their course inputs closer to the specific needs of the participants.com )  Rating scales Benefits of Needs Assessment: As was pointed above needs assessment helps diagnose the causes of performance deficiency in employees. . there are certain specific benefits of need& assessment. They are: 1.com : Ultimate educational resource for BMS and MBA students . The sponsoring organizations are able to reduce the perception gap between the participant and his or her boss about their needs and expectations from the training programme. 3.ManagementParadise. This being a generalized statement.com for more notes and projects  .You have received this file from www.ManagementParadise. 2. Causes require remedial actions.

initiative. and merit rating. Either way behavior affects job results. employee performance review. and in an informal sense. stored. It is linked to job analysis. and society all benefit. and used for several purposes. Behavior can be active or passive. judgment. .” A more comprehensive definition is: “Performance appraisal is a formal. the performance being measured against such factors as job knowledge. supervision. and quantity of output. appraisal may be understood as the assessment of an individual’s performance in a systematic way. co-operation. Potentials of the employee for future performance must also be assessed.ManagementParadise.” The second definition includes employee’s behavior as part of the assessment. it is probably as old as mankind. A formal definition of performance appraisal is: “It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. personnel appraisal. The main purposes for employee assessment are: 1) To effect promotions based on competence and performance Visit www. Feel free to circulate these notes and upload your notes on the website. Submitted by Ashish Jain ( ashish1310@gmail. The other terms used for performance appraisal are: performance rating. Assessment should not be confined to past performance alone.ManagementParadise. Nor performance appraisal is done in isolation. leadership abilities. performance evaluation. structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee.com for more notes and projects  . versatility. employee evaluation. health. employee assessment is as old as the concept of management. Data relating to performance assessment of employees are recorded. quality.com : Ultimate educational resource for BMS and MBA students . organization. employee assessment.com ) Performance appraisal Q) Give the meaning and definition of performance appraisal and its objectives? In simple terms. and the like. In a formal sense.You have received this file from www. Objectives of performance appraisal. dependability.

Objectives Of An Appraisal: Visit www.ManagementParadise.com : Ultimate educational resource for BMS and MBA students . What is the Performance Appraisal process? The employee performance appraisal enables you to identify. 7) Finally. departmentally and organizationally Identification of employees who have the potential for advancement or who might be better suited in other areas of the organization 1. 5) To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. This can also have the effect of increasing the trust between the rater and the ratee.com ) 2) To confirm the services of probationary employees upon their completing the probationary period satisfactorily. Submitted by Ashish Jain ( ashish1310@gmail. Feel free to circulate these notes and upload your notes on the website. 3) To assess the training and development need of employees. . It is a tool to encourage strong performers to maintain their high level of performance and to motivate poor performers to do better.com for more notes and projects  . evaluate and develop an individual's performance.ManagementParadise. Performance appraisal provides a format for dialogue between the superior and the subordinate. Other important benefits of a formal appraisal process are: • • • • Validation of hiring practices — are the right people in the right positions? Provision of an objective measuring tool on which compensation decisions. training.You have received this file from www. Q. and improves understanding of personal goals and concerns. performance appraisal can be used to determine whether HR programmes such as selection. and promotions can be based Identification of training needs — individually. 4) To decide upon a pay raise. and transfer have been effective or not. 6) To improve communication.

separation. and other rewards 6. where as the informal approach is used more for performance feedback. The formal approach is used as the primary evaluation. (ii) Who are the raters? • (iii) Immediate supervisors.com ) 1. easy goals do not motivate any more than unattainable goals. the person must feel that the goal can be achieved. including merit increases. Submitted by Ashish Jain ( ashish1310@gmail. What problems are encountered? • Leniency. Realistic goals provide a "balance" between what is hard and what is easy to achieve. severity. subordinates. . Establish Job Expectations: Goals should be realistic. Criteria for evaluating the success of training and development decisions 8. practical and achievable. Feedback to the employee regarding how the organization viewed the employee's performance 3. You should review your goals on a quarterly or semi-annual basis to check your progress and to make any necessary adjustments. Ascertaining and diagnosing training and development decisions 7. bias Visit www. including the relevance of the information used in the decisions within the organization 5.ManagementParadise. specialists from the hr department. and human resources planning can be used 2. Criteria for evaluating the effectiveness of selection and placement decisions.e. Impossible goals de-motivate and defeat the goal-setting process. Design An Appraisal Programme: (i) Formal versus Informal approach? • Many organizations encourage a mixture of both formal and informal approach. committees. budgeting. promotions. Evaluations of relative contributions made by individuals and entire departments in achieving higher level organization goals 4.ManagementParadise. Promotion.com : Ultimate educational resource for BMS and MBA students . Feel free to circulate these notes and upload your notes on the website. and transfer decisions 2. Goals should motivate people to improve and to reach for attainable ends.You have received this file from www. For a goal to be motivational.com for more notes and projects  . or a combination of many.. Reward decisions. Likewise. peers. i. Information upon which work scheduling plans. clients. 3.

Visit www.ManagementParadise. ranking method. When to evaluate? • Once in three months. for luxury Opportunities to interact with other people in a favorable working environment Opportunities to learn grow and make full use of their potential etc. 5.You have received this file from www.com for more notes and projects  . interpersonal impact. the raters should discuss and review the performance with the ratees. quantity. The employers offer significant rewards to employees in the form of: (i) (ii) (iii) Money to purchase goods and services. essay method etc. . Use Appraisal Data For Appropriate Purposes: The Hr department must use the data and information generated through performance evaluation. Submitted by Ashish Jain ( ashish1310@gmail. so that they receive feed back about where they stand in the eyes of the superiors. once in six months or once a year What should be evaluated? 4.ManagementParadise. cost effectiveness.com : Ultimate educational resource for BMS and MBA students . Feel free to circulate these notes and upload your notes on the website. The formal performance appraisal process is one of assessing. Feedback is necessary to effect improvement in performance. The performance appraisal process should include at least two meetings convened by the supervisor with the employee. assessment centers. need for supervision. timeliness. Performance Interview: Once appraisal has been made of employees. Appraise Performances: Use methods of appraisal such as psychological appraisals. Performance interview has 3 goals: (i) (ii) (iii) To change the behavior of employees whose performance does not meet organizational requirements or their own personal goals To maintain the behavior of employees who perform in an acceptable manner To recognize superior performance behaviors so that they will be continued 6. summarizing and developing the work performance of an employee.com ) (iv) (v) How to solve the problems? • • (vi) Train the raters and appraisers Quality. performance tests and observations.

Nearly every type of job can be evaluated with the rating scale. The typical rating-scale system consists of several numeric scales. Each scale ranges from excellent to poor. Broadly all the approaches can be classified into past oriented and future oriented. initiative. each representing a jobrelated performance criterion such as dependability. attitude and the like. relatively easy use and low cost.ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail. then computes the employee’s total numerical score.com ) Data & information outputs of a performance will be useful in the following areas of HRM: (i) (ii) (iii) (iv) (v) (vi) Remuneration administration Validation of selection programmes Employee training & development programmes Promotion.com for more notes and projects  .com : Ultimate educational resource for BMS and MBA students . The rater checks the appropriate performance level on each criterion. whereby so many points equal a rise of some percentage. Each of the methods discuss could be effective for some purposes for some organization as different organizations different methods. the only requirement being that the Visit www. output. transfer & lay-off decisions Grievance & discipline programmes HR planning Q)Methods of Evaluation of Performance Appraisal Numerous methods have been devised to measure the quantity and quality of employee’s job performance.ManagementParadise. Feel free to circulate these notes and upload your notes on the website. . The number of points scored may be linked to salary increases. attendance. PAST ORIENTED Rating Scales This is the simplest and most popular method of appraising employee performance.You have received this file from www. Rating scales offer the advantages of adaptability.

attitude and initiative. superiors. besides assessing performance. This method s used in job evaluation and is called the factor comparison method. the system has become popular in our country too. Reliance Industries.com : Ultimate educational resource for BMS and MBA students . Furthermore. behavioural quirks. numerical scoring gives an illusion of precision that is really unfounded Man to Man comparison method: This technique was used by the US army. Crompton Greaves. Thermax and Thomas Cook are using the method with greater benefits. Closeness of the working relationship and the amount of personal contacts place peers in a better position to make accurate assessments. interpersonal effectiveness. Each man to be rated is compared with the man in the scale. ethical standards. This way a large number of employees can be rated in a short time. A scale of man is also created for each selected factor. Here. communication skills. and the biases are particularly pronounced on subjective criteria such as cooperation. values. Visit www. Submitted by Ashish Jain ( ashish1310@gmail. serious conflicts among co-workers may develop. instead of comparing a “whole man” to a “whole man” personnel are compared to the key man in respect of one factor at a time. US in 1992. Godrej soaps. GB (India). Further. .ManagementParadise. all the peers may join together to rate each other high. Infosys. reliability and initiative. 360-degree system of appraisal Where appraisal are made by peers.You have received this file from www.talents. The Arthur Anderson survey (1997) reveal the20% of the organizations use the 360-degree method. Feel free to circulate these notes and upload your notes on the website. tempers and loyalty are evaluated by people who are best placed to do it. So. Finally. First developed at GE. and the rater does not need any training to use the scale. friendship or animosity may result in distortion of evaluation. subordinates and clients it is called 360degree system of appraisal. Peer appraisal Peers are in a better position to evaluate certain facts of job performance which the subordinates or supervisors cannot do. By this method certain factors are selected for the design by the rater for each factor. Such facts include contribution to work group projects. The raters biases are likely to influence the evaluation. during the first world war.com ) job performance criteria should be changed. other attributes of the assesse. when reward allocation is based on peer evaluation. The disadvantages of this method are several. In performance appraisal it is not of much use because the designing of scales is a complicated task.com for more notes and projects  .ManagementParadise. Unfortunately. and certain scores for each factor are awarded to him.

MBO wroks can be described in four steps: 1) The organization. L&T follows MBO style of evaluation Assessment centers: Mainly used for executive hiring. Submitted by Ashish Jain ( ashish1310@gmail. such as assembly-line work. 2) Second step involves involves setting the performance standard for the subordinates in a previously arranged time period. and what remains to be done. superiors and subordinates together or just the superiors alone establish the goals of the employee. Also if the rewards are semi annual or annual. by observing and evaluating their behaviour across a series of selected exercises or work samples. reflects a management philosophy which values and utilizes employee contributions. the they are more likely to take up less challenging goals so that they are more likely to achieve them. assessment centers are now being used for evaluating executive o supervisory potential.ManagementParadise. as in the actual job. what has been done. The evaluator figures out why the goals were not met and accordingly determines training needs. 3) Then the actual level of goal attained is compared to the goals agreed upon. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. 4) The last step is establishing new goals and. computer simulations. Feel free to circulate these notes and upload your notes on the website.com : Ultimate educational resource for BMS and MBA students . After Visit www. say one to three days.You have received this file from www. . this method has been criticised for not being applicable to jobs with little or no flexibility. new strategies for goals not previously attained. If the goals were succeeded the subordinate may have larger involvement in setting of his next goal otherwise the superior may have to do it alone. they know fairly well what there is to do. This goal usually the desired outcome to be achieved and it can be used to evaluate performance. It works well with managerial personnel and employees who have a fairly wide range of flexibility and self control in their jobs.ManagementParadise. And if this method is linked to employee rewards. then the employees may take up short term goals and neglect the important long term goals. As subordinates perform. role playing. However.com ) FUTURE ORIENTED MBO The Management by objectives concept which was conceived by Peter Drucker. possibly.com for more notes and projects  . The basic idea is to evaluate managers over a period of time. Assesses are requested to participate in-basket exercises. work groups (without leaders). and other similar activities which require the same attributes for successful performance.

ManagementParadise. The decision regarding the performance of each assessee is based upon this discussion of observations.com ) recording their observations. the raters meet and discuss these observations.com for more notes and projects  . Visit www. Feel free to circulate these notes and upload your notes on the website. .You have received this file from www.com : Ultimate educational resource for BMS and MBA students . Self evaluation and peer evaluation are also thrown in for final rating.ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail.

This motivates others to improve their performance and qualities for similar benefits. This information is available progressively and can be us purposefully for assigning duties to employees as per their merits and potentials. Submitted by Ashish Jain ( ashish1310@gmail. It is also possible to train or develop the existing manpower as per the • • • • • • Visit www. .com for more notes and projects  . In addition. Such policies become fair. Cordial Employer-Employees Relation: performance appraisal avoids or at least minimizes grievances of employees as regards promotions. Employees develop a sense of confidence that injustice will not be done to any employee as performance appraisal system is based on sound principles. When they are based on performance appraisal. It is possible to remove such common weaknesses and deficiencies of employees by adjusting their training programmes accordingly.ManagementParadise. wage rates and dismissal are the different areas of personnel management. Feel free to circulate these notes and upload your notes on the website. Introduction of Sound Personnel Policies: transfers. performance appraisal assists the employees in self-development.com : Ultimate educational resource for BMS and MBA students . Incentive to Grown and Develop: Performance appraisal acts as an incentive to employees to improve their performance. transfers. Assistance in Self-improvement: Performance appraisal gives the details of plus points and weaknesses of employees. These personnel policies are directly connected with the performance appraisal of employees. promotions. In brief.ManagementParadise. placement of staff and periodical adjustment in the placement can be made scientifically. Effective training programme: performance appraisal suggests the drawbacks and other weaknesses of employees. increments etc. impartial and acceptable to emp. the employee with merit may be given special increments or promotion to higher position. Management is also not in a position to make partiality/ favouratism when performance appraisal records are maintained properly and used when required.You have received this file from www. It suggests the type of manpower available. Human Resource Planning and Development: performance appraisal facilitates human resource planning and development. Thus. develop new qualities and secure higher positions in the org. This is possible through performance feedback to every employee periodically. they are given guidance for removing their weaknesses and also for making their plus points more conspicuous.com ) Q)What are the uses of Performance Appraisal? • Suitable Placement: Performance appraisal is useful for evaluating performance of subordinates and also for understanding their potentials.

com ) future needs of the enterprise. this creates positive impact on the mental make-up of employees. Submitted by Ashish Jain ( ashish1310@gmail.ManagementParadise.ManagementParadise. They treat mgmt.com for more notes and projects  . Such communication guides emp. And also provides more info. This raises the morale. • Employee Communication: performance appraisal facilitates direct communication with the employees through appraisal interview and post appraisal interviews. Development programmes. High Employee Morale: scientific and impartial appraisal gets the support from the employees. regarding the expectations and feelings of the employees. . as their friend. This is possible through training and exec. to the mgmt. They feel that the mgmt. guide and well wisher.com : Ultimate educational resource for BMS and MBA students . gives due importance to them and is genuinely interested I their career development and well being. Feel free to circulate these notes and upload your notes on the website.You have received this file from www. • Visit www.

In most organizations wage and salary rates are still assigned to jobs. Actually. But most organizations measure employee contributions first in terms of the jobs employees hold. and why people are compensated differently. . technologists. so that people know where they fall within the organization. Submitted by Ashish Jainof Pay Structure ) Q)The meaning ( ashish1310@gmail. The two leading types of pay structures are the internal equity method. Opportunities for incentives are also dealt with in the pay structure. The relationships between the pay for jobs involve pay structure decisions. But because our primary focus is on pay decisions in organizations. wage structures represent wage relationships of all kinds. Feel free to circulate these notes and upload your notes on the website. In fact. are intended to attract employees. Although organizations often make pay level decisions (how much to pay) and pay structure decisions (pay relationship) at the same time. Some organizations pay for skills possessed by employees rather than for the jobs employees hold. To this analysis could be added the statement that wage structure decisions are intended to encourage employees to Visit www.com for more notes and projects  . determining the pay structure of an organization may be usefully described as putting dollar signs on jobs. Analysis of wage differentials of any kind (geographic. which uses a tightly constructed grid to ensure that each job is compensated according to the jobs above and below it in a hierarchy. One interesting analysis of organizational compensation decisions is that pay structure decisions are intended to achieve retention of employees through prevention of dissatisfaction and encouragement of employee cooperation. A company needs job descriptions for positions such as executives. our concern is with pay differences between jobs. community.com A company's pay structure is its method of administering its pay philosophy.com : Ultimate educational resource for BMS and MBA students . It also helps human resources personnel administer fairly any given pay philosophy.ManagementParadise. a company might want to pay everyone at market. Pay level decisions. A pay structure helps answer questions about who's who.ManagementParadise. or pay some people at market and some above it. For example. where each job in an organization is tied to the prevailing market rate. and market pricing. The rationale is usually serious and continual skill shortages experienced by the organization. people with strategic roles will have opportunities for higher incentives. entry-level people. and the like. what each person's role is. industry.You have received this file from www. Decisions on wage relationships among jobs within an organization are largely within the control of its decision makers. in this analysis. managers. or occupation) deals with wage structure issues. Wage level decisions are usually influenced more by forces external to the organization than are wage structure decisions. these decisions and the process by which they are reached require separate treatment. For example.

ManagementParadise. • Mid-range — pay is appropriate for employees who are fully proficient in their job. .ManagementParadise. Submitted by Ashish Jain ( ashish1310@gmail. is appropriate for employees in the learning and development phase of their job. and leverage their strengths to benefit the Organisation. meet job expectations.You have received this file from www. this range is typically for employees new to a position and whose competencies are not yet fully developed. These employees exemplify the best way of doing their job. Feel free to circulate these notes and upload your notes on the website. Entry level pay falls in this range. and consistently demonstrate skills needed and fulfill responsibilities and duties.com ) make a career with the organization and to accept training in preparation for higher-level jobs. possess the full skill set necessary to perform their job well. This is the target market-based competitive pay for employees who are fully competent." share their knowledge. • Upper-range — pay is appropriate for employees who serve as role models.com : Ultimate educational resource for BMS and MBA students . go the "extra mile.com for more notes and projects  . exhibiting an exceptional skill set and consistently exceeding all job expectations. Visit www. • Lower-range — pay is between minimum pay and mid-range.

In terms of both employee attraction and cost considerations. some employees (often the best ones) may leave. and internal labor markets/relationships. a course of study should. Structure decisions (and the level of those structures) are what show up on an income statement.com ) Q)The Meaning of Pay Level The compensation and benefit level is the average compensation paid to employees. More administratively advanced organizations realize that individual decisions within a proper administrative structure are more consistent. hiring standards. The average compensation is a reflection of the total compensation bill of the organization. the organization may experience Visit www. the job. the department.com : Ultimate educational resource for BMS and MBA students . The importance of the compensation level decision to organizations rests on its influence in getting and perhaps keeping the desired quantity and quality of employees.You have received this file from www. one individual’s compensation decision typically goes unnoticed at the end of the year. Compensation decisions are typically micro (individual) or macro (total organization) focused. At the extreme. This has two implications. Also.ManagementParadise. The first is external: how does the organization compare with other organizations? This question is a strategic one of how the organization wishes to position itself in the marketplace. or the economy. most unsophisticated organizations make the decision on compensation level (how much to pay) and compensation structure (relationships to competitors) at the same time. The compensation level decision may be considered the most important one for individuals. The size of the compensation and benefits bill is a reflection of who gets what within the organization. The term compensation level simply means the average compensation paid to workers at some level of analysis. For these reasons. From the organization’s perspective. fair. the employing organization. compensation level decisions are typically the focus of a manager’s attention. and a large segment of the employer's costs are determined by it. and cost-effective over time. Feel free to circulate these notes and upload your notes on the website.ManagementParadise. Although organizations are under no constraint to separate these decisions. The decision on compensation levels (how much will the organization pay?) may be the most important pay decision the organization makes. Labor is one of the claimants on organizational resources. e. an industry. The second implication is internal. If the compensation level is too low. personal decisions. it is often considered by most managers as a primary consideration. In practice. the applicant pool may dry up and recruitment efforts may meet with little success. however. it seems essential to recognize that compensation level decisions can never be completely separate from jobmix. A potential employee's acceptance usually turns on this decision.g. Equally serious. Submitted by Ashish Jain ( ashish1310@gmail.com for more notes and projects  . .

Also. consumers and the general public have major interests in compensation level decisions. The competitive position of the organization may suffer. fringe. trouble may be forthcoming from these officials. but equally real. if compensation and salary levels are too high during periods of compensation controls by federal authorities. and retirement plans. or pressing compensation demands from existing unions. Finally.com : Ultimate educational resource for BMS and MBA students .com for more notes and projects  . Turnover rates may drop below some desirable minimum so that the organization tends toward inflexibility or stagnation. on the other hand. but usually not nearly as great. other compensation decisions have payroll effects.You have received this file from www. Substantial sums of money can be involved. . Frequently. the organization may be confronted with concerted organizing drives if no union is present. Also. equally undesirable results are likely. that a low compensation level may attract only less efficient workers. the compensation level is too high. and here that member loyalty is built or lost. Changes in compensation levels have the most drastic effects on total payroll.com ) difficulties with state and federal regulatory bodies administering minimum compensation laws and prevailing wage laws. it is here that unions exert their major effect. It is less apparent.ManagementParadise. and the general public because wages and salaries represent the major portion of national income. and for this reason alone an organization must pay close attention to compensation levels (both competitively and internally). Feel free to circulate these notes and upload your notes on the website. compensation and benefit level decisions are hidden in the type and structure of benefit.ManagementParadise. If. Of course. Visit www. It is here that the absolute amount of the compensation or salary rate is determined. Nor are employees and their representatives any less concerned with compensation level decisions. with the result that labor costs per unit of output rise. Submitted by Ashish Jain ( ashish1310@gmail. Also. the consumer because wages are a major element in prices. too frequent or too drastic changes in compensation levels affect the health of our economy. Also.

The concept of living wage. varies from country to country. Living Wages Living wage is a step higher than fair wage. Feel free to circulate these notes and upload your notes on the website. Irrespective of the way in which fair wage is understood. and 3. 1. medical requirements and amenities. For this purpose. Fair wage is fixed for other industries Visit www. In a wider sense. In the fixation of minimum wages. While evolving the wage policy. clothing and shelter.com ) Q) Explain the Concepts of wages. minimum wage is determined mainly for sweated industries under the provisions of the Minimum Wages Act.com for more notes and projects  . living wage itself forms the basis for the minimum wage. A living wage must be fixed considering the general economic conditions of the country. the minimum wage must also provide for some measure of education. three concepts of wages are generally considered. Such a standard can be determined with reference to those industries where labour is well organized and has been able to bargain well with the employers. protection against ill health. Submitted by Ashish Jain ( ashish1310@gmail. are also considered. namely. other factors like ability of the concern to pay. requirements of essential social needs. 1948. but is usually determined through legislation. Living wage may be described as one which should enable the wage earner to provide for himself and his family not on the bare essentials of life like food. Fair Wages Fair wage is understood in two ways. wage is fair if it is equal to the rate prevailing in the same trade and in the neighbourhood for similar work. nature of the jobs.com : Ultimate educational resource for BMS and MBA students . and so on. it can be fixed only by comparison with an accepted standard wage. therefore. Living Wages. but a measure of frugal comfort including education for children. 2. . This is more so in the unorganized sector where labour is unionised. In India. and/or measure of insurance against the more important misfortunes including old age. Minimum wage may be tied by an agreement between the management and the workers. In the more advanced countries. In a narrow sense. Fair Wages. Minimum Wages.You have received this file from www. besides the needs of workers.ManagementParadise. Minimum Wages Minimum wage is the one that provides not merely the bare sustenance of life but also for the preservation of the efficiency of the worker.ManagementParadise. it will be fair if it is equal to the predominant rate for similar work throughout the country and for traders in general.

capacity of the employer to pay.ManagementParadise.com ) considering prevailing rates of wages.You have received this file from www. level of national income and other related factors. Submitted by Ashish Jain ( ashish1310@gmail. Tribunals.com : Ultimate educational resource for BMS and MBA students . . awards and wage boards play major role in fair wage fixation.ManagementParadise. Feel free to circulate these notes and upload your notes on the website. Many people are of the opinion that living wage is a luxury for a developing country like India and can therefore be deferred.com for more notes and projects  . Visit www. productivity of labour.