MASTER IN MANAGEMENT

STUDIES
SEMESTER - II (CBCS)

HUMAN RESOURCE
MANAGEMENT

SUBJECT CODE : UMMSII.5

 © UNIVERSITY OF MUMBAI
Prof. Suhas Pednekar
Vice-Chancellor,
University of Mumbai,

Prof. Ravindra D. Kulkarni Prof. Prakash Mahanwar

Pro Vice-Chancellor, Director,
University of Mumbai, IDOL, University of Mumbai,

Program Co-ordinator : Ms. Rajashree Pandit

Assistant Professor (Economics),
Head Faculty of Commerce & Management,
IDOL, University of Mumbai, Mumbai.
Course Co-ordinator : Ms. Anitha Menon
Assistant Prof. IDOL,
University of Mumbai, Mumbai

Course Editor : Ms. Bhairavi Barodia Saha

Co-Ordinator, MMS,
IDOL, University of Mumbai, Mumbai.

Course Writers : Dr. Neelam Arora

Principal, Lala Lajpatrai College of Commerce,
Mahalaxmi, Mumbai - 400034

: Dr. Suryakant Lasune

Lala Lajpatrai College of Commerce,
Mahalaxmi, Mumbai - 400034

: Prof. Vaishali Karande

Vidya Niketan College,
Ghatkopar, Mumbai

: Dr. Khushboo R. Hotchandani

Assistant Professor,
N. M. D. College, Gondia - 441614

July 2022, Print 1

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 CONTENTS
Unit No. Title Page No.

1. Introduction to Human Resource Management 01

2. Human Resource Planning 16
3. Job Analysis 32
4. Recruitment and Selection Part I 53
5. Recruitment and Selection Part II 69
6. Performance Appraisal 86
7. Ethics on Performance Appraisal 110
8. Training and Development 117
9. Management of Organizational Change 140
10. HRD Strategies for Long-Term Planning and Growth 155
11. Succession Planning 166
12. Health and Safety Aspects of HRM 187
13. Meaning and Causes of Stress 205
14. Recent Trends in Human Reources Management I 223
15. Recent Trends in Human Reources Management II 240


Semester : II - Core
Title of the Subject / : Human Resource Management
course
Course Code :
Credits : 4 Duration in Hrs : 40

Learning Objectives

1 To prepare a student for a career in industry and services.

To facilitate learning in modern concepts, techniques and practices in
2 the management of
human resources
To expose the student to different functional areas of Human Resource
3 Management to
enhance the effectiveness.

Prerequisites if any
Connections with
Subjects in the current or
Future courses

Module

Sr. Content Activity Learning outcomes

No.
Human Resource Apply the theoretical and
Management practical aspects of human
1 Lecture resource management to
formulate strategies that will
enable organizations to
achieve both operational and
strategic goals related to the
organization’s human capital.
2 Organization of Lecture Understand the scope of HRM
Personnel and its
Functions relationship to other social
sciences
Manpower Planning Study the personnel function
3 Lecture with respect to its
organization , polices and
responsibilities in an
organization

I
 Motivating Employees – Understand the importance and
the process of man power
4 Lecture planning, the process of job
analysis, compare and contrast
methods used for selection and
placement of human resources.
Performance Appraisal Understand the application of the
Systems theories of motivation,
5 Lecture explaining the difference
between internal and external
equity in terms of monetary and
non-monetary rewards and
recognition
Training & Discuss the importance and
6 Development Lecture process of performance
management, organizational
strategic planning and
succession planning.
Organisation Describe the steps required to
7 Development Lecture analyze needs, develop and
evaluate an employee training
and development programs in
organizations

Sr. Content Activity Learning outcomes

No.
Management of Define the concept and practice
8 Organizational Lecture of change management and
Change organizational development;
with an analytical insight related
to application
of OD interventions strategically
9 HRD Strategies for Lecture
Long
Term Planning
&Growth
10 Case Studies and
Presentations

Text books

1 Human Resource Management – P.SubbaRao

II
Reference books

1 Personnel Management – C.B. Mammoria

2 Dessler: Human Resource Management(Prentice Hall India)
3 Personnel/Human Resource Management: DeCenzo&Robbins (Prentice
Hall India)
4 D. K. Bhattacharya: Human Resource Management (Excel)
5 VSP Rao – Human Resource Management(Excel)
6 Dessler: Human Resource Management(Prentice Hall India)
7 Personnel/Human Resource Management: DeCenzo&Robbins (Prentice
Hall India)
8 Gomez: Managing Human Resource (Prentice Hall India)
9 Human Resource Management – Dr P Jyothi and Dr D.N Venkatesh –
Oxford
Publications

Assessment
Internal 40%
Semester end 60%



III
 1
INTRODUCTION TO HUMAN RESOURCE
MANAGEMENT
Unit Structure
1.0 Objectives
1.1 Introduction
1.2 Meaning and Definition of Human Resource Management
1.3 Components of HRM / Scope of HRM
1.4 Objectives of HRM
1.5 Role of HRM
1.6 HRM in the New Millennium
1.7 Summary
1.8 Self Assessment Questions

1.0 OBJECTIVES
After studying this unit, you will be able to:

 Understand the basic concepts of human resource management

(HRM).

 Explain what human resource management is and how it relates to the

management process.

 Provide an overview of functions of HRM.

 Describe how the major roles of HR management are being

transformed.

 Explain the role of HRM in the present millennium.

1.1 INTRODUCTION
Human beings are social beings and hardly ever live and work in isolation.
We always plan, develop and manage our relations both consciously and
unconsciously. The relations are the outcome of our actions and depend to
a great extent upon our ability to manage our actions. From childhood
each and every individual acquire knowledge and experience on
understanding others and how to behave in each and every situations in
life. Later we carry forward this learning and understanding in carrying
1
Human Resource
Management
and managing relations at our workplace. The whole context of Human
Resource Management revolves around this core matter of managing
relations at work place.
Since mid 1980’s Human Resource Management (HRM) has gained
acceptance in both academic and commercial circle. HRM is a
multidisciplinary organizational function that draws theories and ideas
from various fields such as management, psychology, sociology and
economics.
There is no best way to manage people and no manager has formulated
how people can be managed effectively, because people are complex
beings with complex needs. Effective HRM depends very much on the
causes and conditions that an organizational setting would provide. Any
Organization has three basic components, People, Purpose, and Structure.
That predicted future is today’s reality. Most managers in public and
private sector firms of all sizes would agree that people truly are the
organization’s most important asset. Having competent staff on the payroll
does not guarantee that a firm’s human resources will be a source of
competitive advantage. However in order to remain competitive, to grow,
and diversify an organization must ensure that its employees are qualified,
placed in appropriate positions, properly trained, managed effectively, and
committed to the firm’s success. The goal of HRM is to maximize
employees’ contributions in order to achieve optimal productivity and
effectiveness, while simultaneously attaining individual objectives (such
as having a challenging job and obtaining recognition), and societal
objectives (such as legal compliance and demonstrating social
responsibility).

1.2 MEANING AND DEFINITION OF HUMAN

RESOURCE MANAGEMENT
HRM is the study of activities regarding people working in an
organization. It is a managerial function that tries to match an
organization’s needs to the skills and abilities of its employees.

Definitions of HRM
Human resources management (HRM) is a management function
concerned with hiring, motivating and maintaining people in an
organization. It focuses on people in organizations. Human resource
management is designing management systems to ensure that human
talent is used effectively and efficiently to accomplish organizational
goals.
HRM is the personnel function which is concerned with procurement,
development, compensation, integration and maintenance of the personnel
of an organization for the purpose of contributing towards the
accomplishments of the organization’s objectives. Therefore, personnel

2
management is the planning, organizing, directing, and controlling of the Introduction to Human
Resource Management
performance of those operative functions (Edward B. Philippo).
According to the Invancevich and Glueck, “HRM is concerned with the
most effective use of people to achieve organizational and individual
goals. It is the way of managing people at work, so that they give their
best to the organization”.
According to Dessler (2008) the policies and practices involved in
carrying out the “people” or human resource aspects of a management
position, including recruiting, screening, training, rewarding, and
appraising comprises of HRM.
Generally HRM refers to the management of people in organizations. It
comprises of the activities, policies, and practices involved in obtaining,
developing, utilizing, evaluating, maintaining, and retaining the
appropriate number and skill mix of employees to accomplish the
organization’s objectives. The goal of HRM is to maximize employees’
contributions in order to achieve optimal productivity and effectiveness,
while simultaneously attaining individual objectives (such as having a
challenging job and obtaining recognition), and societal objectives (such
as legal compliance and demonstrating social responsibility).
In short Human Resource Management (HRM) can be defined as the art of
procuring, developing and maintaining competent workforce to achieve
the goals of an organization in an effective and efficient manner.
Nature of HRM
HRM is a management function that helps manager’s to recruit, select,
train and develop members for an organization. HRM is concerned with
people’s dimension in organizations.
The following constitute the core of HRM:
1. HRM Involves the Application of Management Functions and
Principles. The functions and principles are applied to acquiring,
developing, maintaining and providing remuneration to employees in
organization.
2. Decision Relating to Employees must be integrated. Decisions on
different aspects of employees must be consistent with other human
resource (HR) decisions.

3. Decisions Made Influence the Effectiveness of an Organization.

Effectiveness of an organization will result in betterment of services to
customers in the form of high quality products supplied at reasonable
costs.
4. HRM Functions are not confined to Business Establishments Only
but applicable to non-business organizations such as education, health
care, recreation and like.

3
Human Resource
Management
HRM refers to a set of programmes, functions and activities designed and
carried out in order to maximize both employee as well as organizational
effectiveness.

1.3 COMPONENTS OF HRM / SCOPE OF HRM

The scope of HRM is indeed vast. All major activities in the working life
of a worker – from the time of his or her entry into an organization until
he or she leaves the organizations comes under the purview of HRM. The
major HRM activities include HR planning, job analysis, job design,
employee hiring, employee and executive remuneration, employee
motivation, employee maintenance, industrial relations and prospects of
HRM.
The scope of Human Resources Management extends to:
1. All the decisions, strategies, factors, principles, operations, practices,
functions, activities and methods related to the management of people
as employees in any type of organization.
2. All the dimensions related to people in their employment relationships,
and all the dynamics that flow from it.
American Society for Training and Development (ASTD) conducted fairly
an exhaustive study in this field and identified nine broad areas of
activities of HRM.

These are explained below:

Human Resource Planning: The objective of HR Planning is to ensure
that the organization has selected the right types of persons at the right
time at the right place. It prepares human resources inventory with a view
to assess present and future needs, availability and possible shortages in
human resource. Thereupon, HR Planning forecast demand and supplies
and identify sources of selection. HR Planning develops strategies both
long-term and short-term, to meet the man-power requirement.
Design of Organization and Job: This is the task of laying down
organization structure, authority, relationship and responsibilities. This
will also mean definition of work contents for each position in the
organization. This is done by “job description”. Another important step is
“Job specification”.
Job specification identifies the attributes of persons who will be most
suitable for each job which is defined by job description.
Selection and Staffing: This is the process of recruitment and selection of
staff. This involves matching people and their expectations with which the
job specifications and career path available within the organization.

4
Training and Development: This involves an organized attempt to find Introduction to Human
Resource Management
out training needs of the individuals to meet the knowledge and skill
which is needed not only to perform current job but also to fulfill the
future needs of the organization.
Organizational Development: This is an important aspect whereby
“Synergetic effect” is generated in an organization i.e. healthy
interpersonal and inter-group relationship within the organization.
Compensation and Benefits: This is the area of wages and salaries
administration where wages and compensations are fixed scientifically to
meet fairness and equity criteria. In addition labour welfare measures are
involved which include benefits and services.
Employee Assistance: Each employee is unique in character, personality,
expectation and temperament. By and large each one of them faces
problems everyday. Some are personal some are official. In their case he
or she remains worried. Such worries must be removed to make him or her
more productive and happy.
Union-Labour Relations: Healthy Industrial and Labour relations are
very important for enhancing peace and productivity in an organization.
This is one of the areas of HRM.
Personnel Research and Information System: Knowledge on
behavioral science and industrial psychology throws better insight into the
workers expectations, aspirations and behaviour. Advancement of
technology of product and production methods have created working
environment which are much different from the past. Globalization of
economy has increased competition many fold. Science of ergonomics
gives better ideas of doing a work more conveniently by an employee.
Thus, continuous research in HR areas is an unavoidable requirement. It
must also take special care for improving exchange of information through
effective communication systems on a continuous basis especially on
moral and motivation.
HRM is a broad concept; Personnel Management (PM) and Human
Resource Development (HRD) are a part of HRM.

1.4 OBJECTIVES OF HRM

The primary objective of HRM is to ensure the availability of competent
and willing workforce to an organization. The specific objectives include
the following:
Human capital: assisting the organization in obtaining the right number
and types of employees to fulfill its strategic and operational goals.
Developing organizational climate: helping to create a climate in which
employees are encouraged to develop and utilize their skills to the fullest
and to employ the skills and abilities of the workforce efficiently.

5
Human Resource
Management
Helping to maintain performance standards and increase productivity
through effective job design; providing adequate orientation, training and
development; providing performance related feedback; and ensuring
effective two way communication.
Helping to establish and maintain a harmonious employer/employee
relationship.
Helping to create and maintain a safe and healthy work environment.
Developing programs to meet the economic, psychological, and social
needs of the employees and helping the organization to retain the
productive employees.
Ensuring that the organization is in compliance with provincial/territorial
and federal laws affecting the workplace (such as human rights,
employment equity, occupational health and safety, employment
standards, and labour relations legislation). To help the organization to
reach its goals.

 To provide organization with well-trained and well-motivated

employees

 To increase the employees satisfaction and self-actualization

 To develop and maintain the quality of work life

 To communicate HR policies to all employees.

 To help maintain ethical polices and behavior.

The above stated HRM objectives can be summarized under four specific
objectives: societal, organizational, and functional and personnel.
Societal Objectives: seek to ensure that the organization becomes socially
responsible to the needs and challenges of the society while minimizing
the negative impact of such demands upon the organization. The failure of
the organizations to use their resources for the society’s benefit in ethical
ways may lead to restriction.
Organizational Objectives: it recognizes the role of HRM in bringing
about organizational effectiveness. It makes sure that HRM is not a
standalone department, but rather a means to assist the organization with
its primary objectives. The HR department exists to serve the rest of the
organization.
Functional Objectives: is to maintain the department’s contribution at a
level appropriate to the organization’s needs. Human resources are to be
adjusted to suit the organization’s demands. The department’s value
should not become too expensive at the cost of the organization it serves.
Personnel Objectives: it is to assist employees in achieving their personal
goals; at least as far as these goals enhance the individual’s contribution to
6
the organization. Personal objectives of employees must be met if they are Introduction to Human
Resource Management
to be maintained, retained and motivated. Otherwise employee

Table 1.1 HRM Objectives and Functions

HRM Objectives Supporting Functions

1. Societal Objectives Legal compliance Benefits
Union- management relations

2. Organizational Objectives Human Resource Planning Employee

relations Selection
Training and development Appraisal
Placement Assessment
3. Functional Objectives Appraisal Placement
Assessment

4. Personal Objectives Training and development Appraisal

Placement Compensation
Assessment

1.5 ROLE OF HRM

The role of HRM is to plan, develop and administer policies and programs
designed to make optimum use of an organizations human resources. It is
that part of management which is concerned with the people at work and
with their relationship within enterprises. Its objectives are: (a) effective
utilization of human resources, (b) desirable working relationships among
all members of the organizations, and (c) maximum individual
development. Human resources function as primarily administrative and
professional. HR staff focused on administering benefits and other payroll
and operational functions and didn’t think of themselves as playing a part
in the firm’s overall strategy.
HR professionals have an all encompassing role. They are required to
have a thorough knowledge of the organization and its intricacies and
complexities. The ultimate goal of every HR person should be to develop
a linkage between the employee and organization because employee’s
commitment to the organization is crucial.
The first and foremost role of HR personnel is to impart continuous
education to the employees about the changes and challenges facing the
country in general and their organization in particular. The employees
should know about the balance sheet of the company, sales progress, and
diversification of plans, share price movements, turnover and other details
about the company. The HR professionals should impart such knowledge
to all employees through small booklets, video films and lectures.

7
Human Resource
Management
The primary responsibilities of Human Resource managers are:
1. To develop a thorough knowledge of corporate culture, plans and
policies. To act as an internal change agent and consultant
2. To initiate change and act as an expert and facilitator To actively
involve in company’s strategy formulation
3. To keep communication line open between the HRD function and
individuals and groups both within and outside the organization\
4. To identify and evolve HRD strategies in consonance with overall
business strategy.
5. To facilitate the development of various organizational teams and their
working relationship with other teams and individuals.
6. To try and relate people and work so that the organization objectives
are achieved efficiently and effectively.
7. To diagnose problems and determine appropriate solution particularly
in the human resource areas.
8. To provide co-ordination and support services for the delivery of HRD
programmes and services
9. To evaluate the impact of an HRD intervention or to conduct research
so as to identify, develop or test how HRD In general has improved
individual and organizational performance.
Different management gurus have deliberated different roles for the HR
manager based on the major responsibilities that they full fill in the
organization. Few of the commonly accepted models are enumerated
below.
Pat Mc Lagan has suggested nine roles that are played by HR
practitioners:
1. To bring the issues and trends concerning an organization’s external
and internal people to the attention of strategic decision makers and to
recommend long term strategies to support organizational excellence
and endurance.
2. To design and prepare HR systems and actions for implementation so
that they can produce maximum impact on organizational performance
and development.
3. To facilitate the development and implementation of strategies for
transforming one’s own organization by pursuing values and visions.
4. To create a positive relationship with the customer’s by providing
them with the best services; to utilize the resources to the maximum
and to create commitment among the people who help the organization

8
 to meet the customers needs whether directly connected or indirectly Introduction to Human
Resource Management
connected to the organization.
5. To identify the learning needs hence to design and develop structured
learning programmes and materials to help accelerate learning for
individuals and groups.
6. To enable the individuals and groups to work in new situations and to
expend and change their views so that people in power move from
authoritarian to participative models of leadership.
7. To help employees to assess their competencies, values and goals so
that they can identify, plan and implement development plans.
8. He also assists the individual employee to add values in the workplace
and to focus on the interventions and interpersonal skills for helping
people change and sustain change.
9. He assesses the HRD practices and programmes and their impact and
to communicate results so that the organization and its people
accelerate their change and development.
According to Dave Ulrich HR play’s four key roles.
1. Strategic Partner Role-turning strategy into results by building
organizations that create value;
2. Change Agent Role- making change happen, and in particular, help it
happen fast
3. Employees Champion Role- managing the talent or the intellectual
capital within a firm
4. Administrative Role- trying to get things to happen better, faster and
cheaper.
The role HR in organizations has undergone an extensive change and
many organizations have gradually oriented themselves from the
traditional personnel management to a human resources management
approach. The basic approach of HRM is to perceive the organization as a
whole. Its emphasis is not only on production and productivity but also on
the quality of life. It seeks to achieve the paramount development of
human resources and the utmost possible socio-economic development.

CURRENT ROLE OF HR MANAGER

According to R.L Mathis and J. H. Jackson (2010) several roles can be
fulfilled by HR management. The nature and extent of these roles depend
on both what upper management wants HR management to do and what
competencies the HR staff have demonstrated. Three roles are typically
identified for HR:
1. Administrative Personnel practices Legal compliance forms and
paperwork
9
Human Resource
Management
Administrative Role of HR
The administrative role of HR management has been heavily oriented to
administration and record keeping including essential legal paperwork and
policy implementation. Major changes have happened in the
administrative role of HR during the recent years. Two major shifts
driving the transformation of the administrative role are: Greater use of
technology and Outsourcing.
Technology has been widely used to improve the administrative efficiency
of HR and the responsiveness of HR to employees and managers, more
HR functions are becoming available electronically or are being done on
the Internet using Web-based technology.
Increasingly, many HR administrative functions are being outsourced to
vendors. This outsourcing of HR administrative activities has grown
dramatically in HR areas such as employee assistance (counseling),
retirement planning, benefits administration, payroll services, and
outplacement services.
2. Operational Actions Managing employee relationship issues
Employee advocate

Operational and Employee Advocate Role for HR

HR managers manage most HR activities in line with the strategies and
operations that have been identified by management and serves as
employee “champion” for employee issues and concerns.
HR often has been viewed as the “employee advocate” in organizations.
They act as the voice for employee concerns, and spend considerable time
on HR “crisis management,” dealing with employee problems that are
both work-related and not work-related. Employee advocacy helps to
ensure fair and equitable treatment for employees regardless of personal
background or circumstances.
Sometimes the HR’s advocate role may create conflict with operating
managers. However, without the HR advocate role, employers could face
even more lawsuits and regulatory complaints than they do now.
The operational role requires HR professionals to cooperate with various
departmental and operating managers and supervisors in order to identify
and implement needed programs and policies in the organization.
Operational activities are tactical in nature. Compliance with equal
employment opportunity and other laws is ensured, employment
applications are processed, current openings are filled through interviews,
supervisors are trained, safety problems are resolved, and wage and
benefit questions are answered. For carrying out these activities HR
manager matches HR activities with the strategies of the organization.
3. Strategic HR Organizational/business strategies HR strategic or
planning Evaluation of HR Effectiveness.

10
Strategic Role for HR Introduction to Human
Resource Management
The administrative role traditionally has been the dominant role for HR.
However, HR is needed so that significantly less HR time and fewer HR
staffs are used just for clerical work.
Differences between the operational and strategic roles exist in a number
of HR areas. The strategic HR role means that HR professionals are
proactive in addressing business realities and focusing on future business
needs, such as strategic planning, compensation strategies, the
performance of HR, and measuring its results. However, in some
organizations, HR often does not play a key role in formulating the
strategies for the organization as a whole; instead it merely carries them
out through HR activities.
Many executives, managers, and HR professionals are increasingly seeing
the need for HR management to become a greater strategic contributor to
the “business” success of organizations. HR should be responsible for
knowing what the true cost of human capital is for an employer. For
example, it may cost two times key employees’ annual salaries to replace
them if they leave. Turnover can be controlled though HR activities, and if
it is successful in saving the company money with good retention and
talent management strategies, those may be important contributions to the
bottom line of organizational performance.
However, even though this strategic role of HR is recognized, many
organizations still need to make significant progress toward fulfilling it.
Some examples of areas where strategic contributions can be made by HR
are:
1. Evaluating mergers and acquisitions for organizational
“compatibility,” structural changes, and staffing needs.
2. Conducting workforce planning to anticipate the retirement of
employees at all levels and identify workforce expansion in
organizational strategic plans.
3. Leading site selection efforts for new facilities or transferring
operations to international outsourcing locations based on workforce
needs.
4. Instituting HR management systems to reduce administrative time,
equipment, and staff by using HR technology.
5. Working with executives to develop a revised sales compensation and
incentives plan as new products.
It is the era when for the competitive triumph of the organization there is a
need to involve HRM significantly in an integrated manner, which
demands such capabilities from the HR specialists.

11
Human Resource
Management
The role of HR shifted from a facilitator to a functional peer with
competencies in other functions, and is acknowledged as an equal partner
by others. The HR is motivated to contribute to organizational objectives
of profitability and customer satisfaction, and is seen as a vehicle for
realization of quality development. The department has a responsibility for
monitoring employee satisfaction, since it is seen as substitute to customer
satisfaction.
According to McKinsey’s 7-S framework model HR plays the role of a
catalyst for the organization. According to this framework, effective
organizational change is a complex relationship between seven S’s. HRM
(Structure and Systems) and the four Soft S’s (Style, Staff, Skills and
Super-ordinate Goals). Clearly, all the S’s have to complement each other
and have to be aligned towards a single corporate vision for the
organization to be effective. It has to be realized that most of the S’s are
determined directly or indirectly by the way Human Resources are
managed, and therefore, HRM must be a part of the total business
strategy.

1.6 HRM IN THE NEW MILLENNIUM

Human Resources have never been more indispensable than today. The
competitive forces that we face today will continue to face in the future
demanding organizational excellence. In order to achieve this extended
quality, organization’s need to focus on learning, quality development,
teamwork, and re-engineering. These factors are driven by the way
organizations implement things and how employees are treated.
HR Can Help in Dispensing Organizational Excellence: To achieve
this paradigm shift in the organization excellence there is a need for
organizations to reform the way in which work is carried out by the
Human Resource department. By designing an entirely new role and
agenda that results in enriching the organization’s value to customers,
investors and employees, HR can help in delivering organizational
excellence. This can be carried out by helping line managers and senior
mangers in moving planning from the conference room to the market
place and by becoming an expert in the way work is organized and
executed.
Profitability through growth, technology, intellectual capital, and other
competitive challenges that the companies are facing while adjusting to
uncontrollably challenging changes in business environment. The novel
role of HR is to rapidly turn strategy into action; to manage processes
intelligently and efficiently; to maximize employee contribution and
commitment and to construct favorable conditions for flawless change.
Human Resource Should be a Strategy Partner: HR should also
become a partner in strategy executions by propelling and directing
serious discussions of how the company should be organized to carry out
its strategy.

12
Creating the conditions for this discussion involves four steps. First HR Introduction to Human
Resource Management
need to define an organizational architecture by identifying the company’s
way of doing business. Second, HR must be held responsible for
conducting an organizational audit. Third, HR as a strategic partner needs
to identify methods for restoring the parts of the organizational
architecture that need it. Fourth and finally, HR must take stock of its own
work and set clear priorities. In their new role as administrative experts
they will need to shed their traditional image and still make sure all
routine work for the company is done well.
HR Accountability Should be Fixed to Ensure Employee
Commitment: HR must be held accountable for ensuring that employees
feel committed to the organization and contribute fully. They must take
responsibility for orienting and training line management about the
importance of high employee morale and how to achieve it. The new HR
should be the voice of employees in management discussions. The new
role for HR might also involve suggesting that more teams be used on
some projects or that employees be given more control over their own
work schedules.
The New HR Must Become a Change Agent: The new HR must become
a change agent, which is building the organization’s capacity to embrace
and capitalize on change. Even though they are not primarily responsible
for executing change it is the duty of the HR manager to make sure that
the organization carries out the changes framed for implementation.
Improving the Quality of HR: The most important thing that managers
can do to drive the new mandate for HR is to improve the quality of the
HR staff itself. Senior executives must get beyond the stereotypes of HR
professionals as incompetent support staff and unleash HR’s full potential.
Change in Employment Practices: The balance sheet of an organization
shows human resource as an expense and not as a Capital. In the
information age, it is perceived that the machines can do the work more
efficiently than most people however; technology to work is dependent on
people.
The challenges for Employment Practice in the New Millennium will
require that there should be strategic involvement of the people and
labour-management partnerships as they both have to take organization
ahead.
Benchmarking Tool Must be Mastered by HR Professionals: HR
professionals must master benchmarking, which is a tool for continuous
improvement directing the human side associated with the strategic path
adopted by the organization. Through this, HR department will start
appreciating the changes happening within and outside the environment
while expanding the knowledge about how to add value to decision
making at the highest level of the organization.
Aligning Human Resources to Meet Better Strategic Objectives: Too
often organizations craft their strategy in a vacuum. Some organizations
13
Human Resource
Management
don’t even include key people during strategy formulation resulting in
lacunae between the actual problems and the solutions implemented as
critical inputs are not sought from those individuals who are supposed to
implement the new strategies.
A past CEO of Sony once said that organizations have access to the same
technology and the same information. The difference between any two
organizations is the “people”- the human resource. Empowering the
workforce is an essential tool for aligning human resources with the
achievement of corporate objectives. It is the duty of HR manager to hire
talented human resource and to provide them with a positive environment
where they will be able to utilize their skills and potentials and to create an
environment in which these individuals are comfortable taking risks.
Promote From Within and Invest in Employees: Promoting employees
from within sends a powerful message that the organization’s employees
are valued. New blood and fresh ideas often come from newcomers to the
organization. To avoid stagnation of the firm, new ideas and approaches
are critical. Yet to improve employee morale, promoting individuals from
within the organization is essential. This communicates that the
organization values their employees and invests in their human resources.
Review the Recruitment and Selection Process: A key element of
human resource planning is ensuring that the supply of appropriate
employees (with the right skill mix) is on board when needed. This
requires a proactive approach whereby the organization anticipates its
needs well in advance. It is important to identify the competencies being
sought. That is, the criteria upon which selection decisions are to be made
should be decided in advance. A firm must identify those skill sets
required by employees to be successful. Charles O’Reilly suggests that
companies should hire for attitude (perhaps even more so than technical
skills). That is, the fit of the individual with the values of the organization
and the culture of the firm should also be considered when selecting
employees. This has been referred to as the person organization fit. It is no
longer enough to simply consider the person’s fit (and technical skill set)
with the job. Part of the employee’s fit with the organization should focus
on the core values and beliefs of the organization. This will increase
employees’ contributions to the overall success of the organization if they
already embrace the core values of the organization prior to their
selection.
Communicate Mission and Vision: If employees are expected to
contribute to the attainment of the organization’s strategic objectives, they
must understand what their role is. This can be achieved in part by clearly
communicating the mission and vision statements of the firm. The old
adage is certainly true. If a person does not know where he or she is going,
any road will get him or her there.
The mission communicates the identity and purpose of the organization. It
provides a statement of who the firm is and what their business is. Only
those employees who understand this purpose can contribute to the fullest
14
extent possible. The vision statement provides a picture of the future state Introduction to Human
Resource Management
of the firm. It should be a stretch to attain. This keeps all the
organization’s employees pulling in the same direction with a common
end point. It is much easier to align human resources with corporate
objectives when these employees are familiar with the mission and vision
of the firm.
As the mission and vision statements are articulated, organizational
members begin to more closely embrace their very meaning on an
individual level. These statements provide a road map leading employees
down the road to achieve organizational objectives. Employees then
identify how they can contribute their unique talents toward the attainment
of these goals.
Use Teams to Achieve Synergy: Synergy can be concisely defined as
“two plus two equals five”. In other words, the whole is greater than the
sum of the parts. So much more can be achieved as people work together.

1.7 SUMMARY
It is critical that today’s organizations align their human resources to
better meet strategic objectives. A failure to do so results in wasted time,
energy, and resources. Organizations are more likely to achieve this
alignment with their corporate objectives when they review their
recruitment and selection processes for fit, communicate the mission and
vision statements, use joint goal setting, design an appropriate reward
system, empower the workforce, promote and develop from within, and
use teams to achieve synergy. Human Resource Management is the
management function that helps the managers to plan, recruit, select, train,
develop, remunerate and maintain members for an organization. HRM has
four objectives of societal, organizational, functional and personal
development. An organization must have set policies; definite procedures
and well defined principles relating to its personnel and these contribute to
the effectiveness, continuity and stability of the organization.

1.8 SELF ASSESSMENT QUESTIONS

1. Define HRM? What are its functions and objectives?
2. Elaborate about the nature of HRM and its relevance in present
scenario.
3. Explain the role of HR manager in HRM.
4. “Human Resources have never been more indispensable than today”.
Explain.
5. Write note on:
i. Nature of HRM
ii. Objectives of HRM
iii. Scope of HRM

15
 2
HUMAN RESOURCE PLANNING
Unit Structure
2.0 Objectives
2.1 Introduction
2.2 Human Resource Planning (HRP)
2.3 Objectives of Human Resource Planning
2.4 Need for HRP in Organizations
2.4 Importance of HRP
2.6 Factors Affecting HRP
2.7 HRP Process
2.8 Requisites for Successful HRP
2.9 Barriers to Human HRP
2.10 Summary
2.11 Self Assessment Questions

2.0 OBJECTIVES
After studying this unit, you will be able to:
1. Understand the nature and need of HRP
2. Able to gain information about different factors that affect HRP
3. Realize the importance of human resource planning in current
organizational scenario.
4. Understand the HRP process.
5. Know the pre requisites for successful HRP process.

2.1 INTRODUCTION
As told in the last chapter Human resource management has started to play
a significant role in the overall strategic development of the organization.
At present HR strategies are designed in tune with the overall business
strategy of the organization. HR strategy should sub serve the interest of
the organization, translating firm’s goals and objectives into a consistent,

16
integrated and complimentary set of programmes and policies for Human Resource Planning
managing people.
First part of Human resource strategy is HRP – Human Resource
Planning. All other HR activities like employee hiring, training and
development, remuneration, appraisal and labour relations are derived
from HRP. HR planning is important in a wide variety of industries and
firms. HR planning affects what employers do when recruiting, selecting,
and retaining people, and of course these actions affect organizational
results and success. The challenges caused by changing economic
conditions during recent year’s show why HR workforce planning should
occur.
Staffing an organization is an HR activity that is both strategic and
operational in nature. As the HR Headline indicates, HR planning is
important in a wide variety of industries and firms. HR planning affects
what employers do when recruiting, selecting, and retaining people, and,
of course these actions affect organizational results and success. Human
Resources planning mean different means to different organizations. To
some companies, human resources planning mean management
development. It involve helping executives to make better decisions,
communicate more effectively, and know more about the firm. The
purpose of HRP is to make the manager a better equipped for facing the
present and future.

2.2 HUMAN RESOURCE PLANNING (HRP)

1. MEANING AND DEFINITION
Human resource planning is important for helping both organizations and
employees to prepare for the future. The basic goal of human resource
planning is to predict the future and based on these predictions, implement
programmes to avoid anticipated problems. Very briefly humans resource
planning is the process of examining an organization’s or individual’s
future human resource needs for instance, what types of skills will be
needed for jobs of the future compared to future human resource
capabilities (such as the types of skilled employees you already have) and
developing human resource policies and practices to address potential
problems for example, implementing training programmes to avoid skill
deficiencies.
According to Vetter, “HRP is the process by which management
determines how the organization should move from its current man power
position to desired manpower position. Through planning, management
strives to have the right time, doing things which result in both the
organization and individual receiving maximum long run benefits”.
According to Gordon Mc Beath, “HRP is concerned with two things:
Planning of manpower requirements and Planning of Manpower
supplies”.

17
Human Resource
Management
According to Beach, “HRP is a process of determining and assuming that
the organization will have an adequate number of qualified persons,
available at proper times, performing jobs which meet the needs of the
enterprise and which provides satisfaction for the individuals involved”
Simply HRP can be understood as the process of forecasting an
organization’s future demands for and supply of the right type of people in
the right number. In other words HRP is the process of determining
manpower needs and formulating plans to meet these needs.

2. PROCESS OF HRP
HRP is a Four-Phased Process:
The first phase involves the gathering and analysis of data through
manpower inventories and forecasts.
The second phase consists of establishing manpower objectives and
policies and gaining top management approval of these.
The third phase involves designing and implementing plans and
promotions to enable the organization to achieve its manpower objectives.
The fourth phase is concerned with control and evaluation of manpower
plans to facilitate progress in order to benefit both the organization and the
individual. The long run view means that gains may be sacrificed in the
short run for the future grounds. The planning process enables the
organization to identify what its manpower needs is and what potential
manpower problems required current action. This leads to more effective
and efficient performance.

3. NATURE OF HRP
Human resource planning is the process of analyzing and identifying the
availability and the need for human resources so that the organization can
meet its objectives. The focus of HR planning is to ensure that the
organization has the right number of human resources, with the right
capabilities, at the right times, and in the right places. In HR planning, an
organization must consider the availability and allocation of people to jobs
over long periods of time, not just for the next month or the next year.
Present employees, and/or increasing the number of employees in certain
areas. Factors to consider include the current employees’ knowledge,
skills, and abilities and the expected vacancies resulting from retirements,
promotions, transfers, and discharges. To do this, HR planning requires
efforts by HR professionals working with executives and managers.

2.3 OBJECTIVES OF HUMAN RESOURCE PLANNING

The basic objectives of HR Planning are:
1. To ensure optimum utilization of human resources currently available
in the organization.
18
2. To assess or forecast the future skill requirement of the organization. Human Resource Planning

3. To provide control measures to ensure that necessary resources are

available as and when required.
A series of specified reasons are there that attaches importance to
manpower planning and forecasting exercises. They are elaborated below:
1. To link manpower planning with the organizational planning.
2. To determine recruitment levels.
3. To anticipate redundancies.
4. To determine optimum training levels.
5. To provide a basis for management development programs.
6. To cost the manpower.
7. To assist productivity bargaining.
8. To assess future accommodation requirement.
9. To study the cost of overheads and value of service functions.
10. To decide whether certain activity needs to be subcontracted, etc.
HRP exists as a part of planning process of business. This is the activity
that aims to coordinate the requirements for the availability of the
different types of employers. The major activities are the forecasting,
(future requirements), inventory (present strength), anticipating
(comparison of present and future requirements) and planning (necessary
program to meet the requirements).
The HR forecasts are responsible for estimating the number of people and
the jobs needed by an organization to achieve its objectives and realize its
plans in the most efficient and effective manner.
HR needs are computed by subtracting HR supplies or number of the
employees available from expected HR demands or number of people
required to produce a desired level of outcome. The objective of HR is to
provide right personnel for the right work and optimum utilization of the
existing human resources.
The objectives of human resource planning may be summarized as below:

Forecasting Human Resources Requirements:

HRP is essential to determine the future needs of HR in an organization.
In the absence of this plan it is very difficult to provide the right kind of
people at the right time.

19
Human Resource
Management
Effective Management of Change:
Proper planning is required to cope with changes in the different aspects
which affect the organization. These changes need continuation of
allocation / reallocation and effective utilization of HR in organization.

Realizing the Organizational Goals:

In order to meet the expansion and other organizational activities the
organizational HR planning is essential.

Promoting Employees:
HRP gives the feedback in the form of employee data which can be used
in decision-making in promotional opportunities to be made available for
the organization.

Effective Utilization of HR:

The data base will provide the useful information in identifying surplus
and deficiency in human resources. The objective of HRP is to maintain
and improve the organizational capacity to reach its goals by developing
appropriate strategies that will result in the maximum contribution of HR.

2.4 NEED FOR HRP IN ORGANIZATIONS

Major reasons for the emphasis on HRP at the Macro level:
1. Employment-Unemployment Situation: Though in general the
number of educated unemployment is on the rise, there is acute shortage
for a variety of skills. This emphasizes on the need for more effective
recruitment and employee retention.
1. Technological Change: The changes in production technologies,
marketing methods and management techniques have been extensive and
rapid. Their effect has been profound on the job contents and job contexts.
These changes have caused problems relating to redundancies, retention
and redeployment. All these suggest the need to plan manpower needs
intensively and systematically.
2. Demographic Change: The changing profile of the work force in
terms of age, sex, literacy, technical inputs and social background has
implications for HRP.
3. Skill Shortage: Unemployment does not mean that the labour market
is a buyer’s market. Organizations generally become more complex and
require a wide range of specialist skills that are rare and scarce. A problem
arises in an organization when employees with such specialized skills
leave.

20
4. Governmental Influences: Government control and changes in Human Resource Planning
legislation with regard to affirmative action for disadvantages groups,
working conditions and hours of work, restrictions on women and child
employment, causal and contract labour, etc. have stimulated the
organizations to be become involved in systematic HRP.
5. Legislative Control: The policies of “hire and fire” have gone. Now
the legislation makes it difficult to reduce the size of an organization
quickly and cheaply. It is easy to increase but difficult to shed the fat in
terms of the numbers employed because of recent changes in labour law
relating to lay-offs and closures. Those responsible for managing
manpower must look far ahead and thus attempt to foresee manpower
problems.
6. Impact of the Pressure Group: Pressure groups such as unions,
politicians and persons displaced from land by location of giant
enterprises have been raising contradictory pressure on enterprise
management such as internal recruitment and promotion, preference to
employees’ children, displace person, sons of soil etc.
7. Systems Approach: The spread of system thinking and advent of the
macro computer as the part of the on-going revolution in information
technology which emphasis planning and newer ways of handling
voluminous personnel records.
8. Lead Time: The log lead time is necessary in the selection process
and training and deployment of the employee to handle new knowledge
and skills successfully.

2.5 IMPORTANCE OF HRP

HRP is the subsystem in the total organizational planning. Organizational
planning includes managerial activities that set the company’s objective
for the future and determines the appropriate means for achieving those
objectives. The importance of HRP is elaborated on the basis of the key
roles that it is playing in the organization.
1. Future Personnel Needs: Human resource planning is significant
because it helps to determine the future personnel needs of the
organization. If an organization is facing the problem of either surplus or
deficiency in staff strength, then it is the result of the absence of effecting
HR planning. All public sector enterprises find themselves overstaffed
now as they never had any planning for personnel requirement and went
of recruitment spree till late 1980’s. The problem of excess staff has
become such a prominent problem that many private sector units are
resorting to VRS ‘voluntary retirement scheme’. The excess of labor
problem would have been there if the organization had good HRP system.
Effective HRP system will also enable the organization to have good
succession planning.
2. Part of Strategic Planning: HRP has become an integral part of
strategic planning. HRP provides inputs in strategy formulation process in
21
Human Resource
Management
terms of deciding whether the organization has got the right kind of
human resources to carry out the given strategy. HRP is also necessary
during the implementation stage in the form of deciding to make resource
allocation decisions related to organization structure, process and human
resources. In some organizations HRP play as significant role as strategic
planning and HR issues are perceived as inherent in business
management.
3 Creating Highly Talented Personnel: Even though India has a great
pool of educated unemployed, it is the discretion of HR manager that will
enable the company to recruit the right person with right skills to the
organization. Even the existing staff hope the job so frequently that
organization face frequent shortage of manpower. Manpower planning in
the form of skill development is required to help the organization in
dealing with this problem of skilled manpower shortage.
4 International Strategies: An international expansion strategy of an
organization is facilitated to a great extent by HR planning. The HR
department’s ability to fill key jobs with foreign nationals and
reassignment of employees from within or across national borders is a
major challenge that is being faced by international business. With the
growing trend towards global operation, the need for HRP will as well
will be the need to integrate HRP more closely with the organizations
strategic plans. Without effective HRP and subsequent attention to
employee recruitment, selection, placement, development, and career
planning, the growing competition for foreign executives may lead to
expensive and strategically descriptive turnover among key decision
makers.
5 Foundation for Personnel Functions: HRP provides essential
information for designing and implementing personnel functions, such as
recruitment, selection, training and development, personnel movement
like transfers, promotions and layoffs.
6 Increasing Investments in Human Resources: Organizations are
making increasing investments in human resource development
compelling the increased need for HRP. Organizations are realizing that
human assets can increase in value more than the physical assets. An
employee who gradually develops his / her skills and abilities become a
valuable asset for the organization. Organizations can make investments in
its personnel either through direct training or job assignment and the rupee
value of such a trained, flexible, motivated productive workforce is
difficult to determine. Top officials have started acknowledging that
quality of work force is responsible for both short term and long term
performance of the organization.
7 Resistance to Change: Employees are always reluctant whenever they
hear about change and even about job rotation. Organizations cannot shift
one employee from one department to another without any specific
planning. Even for carrying out job rotation (shifting one employee from

22
one department to another) there is a need to plan well ahead and match Human Resource Planning
the skills required and existing skills of the employees.
8 Uniting the Viewpoint of Line and Staff Managers: HRP helps to
unite the viewpoints of line and staff managers. Though HRP is initiated
and executed by the corporate staff, it requires the input and cooperation
of all managers within an organization. Each department manager knows
about the issues faced by his department more than anyone else. So
communication between HR staff and line managers is essential for the
success of HR Planning and development.
9 Succession Planning: Human Resource Planning prepares people for
future challenges. The’ stars’ are picked up, trained, assessed and assisted
continuously so that when the time comes such trained employees can
quickly take the responsibilities and position of their boss or seniors as
and when situation arrives.

Other Benefits:

 HRP helps in judging the effectiveness of manpower policies and

programmes of management.

 It develops awareness on effective utilization of human resources for

the overall development of organization.

 It facilitates selection and training of employees with adequate

knowledge, experience and aptitudes so as to carry on and achieve the
organizational objectives.

 HRP encourages the company to review and modify its human

resource policies and practices and to examine the way of utilizing the
human resources for better utilization.

2.6 FACTORS AFFECTING HRP

HRP is influenced by several factors. The most important of the factors
that affect HRP are explained below:
Type and Strategy of the Organization: Type of the organization
determines the production processes involve, number and type of staff
needed and the supervisory and managerial personnel required. HR need
is also defined by the strategic plan of organization. If the organization has
a plan for organic growth then organization need to hire additional
employees. On the other hand If the organization is going for mergers and
acquisition, then organization need to plan for layoffs, as mergers can
create, duplicate or overlap positions that can be handled more efficiently
with fewer employees.
Organization first decides whether to be reactive or proactive in HRP.
Organizations either carefully anticipate the needs and systematically plan
to fill the need in advance (proactive) or can simply react to the needs as
they arise (reactive).
23
Human Resource
Management
The nature of HR plan is also decided upon the formality of the plan. It
can decide to have an informal plan that lies mostly in the minds of the
managers and personnel staff or can have a formal plan which is properly
documented in writing.
The nature of HR plan is also depended upon the flexibility that is
practiced in the organization. HR plan should have the ability to anticipate
and deal with contingencies. Organizations frame HRP in such a way that
it can contain many contingencies, which reflect different scenarios
thereby assuring that the plan is flexible and adaptable.

Fig. 2.1: Factors Affecting HRP.

Figure2.1 summarizes the five factors that influencean organization while
framing its strategic HRP.
Organizational Growth Cycles and Planning: All organizations pass
through different stages of growth from the day of its inception. The stage
of growth in which an organization is, determines the nature and extends
of HRP. Small organizations in the earlier stages of growth may not have
well defined personnel planning. But as the organization enters the growth
stage they feel the need to plan its human resource. At this stage
organization gives emphasis upon employee development. But as the
organization reaches the mature stage it experience less flexibility and
variability resulting in low growth rate. HR planning becomes more
formalized and less flexible and less innovative and problem like
retirement and possible retrenchment dominate planning.
24
Environmental Uncertainties: Political, social and economic changes Human Resource Planning
affect all organizations and the fluctuations that are happening in these
environments affect organizations drastically. Personnel planners deal
with such environmental uncertainties by carefully formulating
recruitment, selection, training and development policies and programmes.
The balance in the organization is achieved through careful succession
planning, promotion channels, layoffs, flexi time, job sharing, retirement,
VRS and other personnel related arrangements.
During the declining stage of the organization HRP takes a different focus
like planning to do the layoff, retrenchment and retirement. In declining
situation planning always becomes reactive in nature towards the financial
and sales distress faced by the company.
Time Horizons: HR plans can be short term or long term. Short term
plans spans from six months to one year, while long term plans spread
over three to twenty years. The extent of time period depends upon the
degree of uncertainty that is prevailing in an organizations environment.
Greater the uncertainty, shorter the plan time horizon and vice versa.

Table 2.1: Degree of Uncertainty and Length of Planning Period

Short Planning period- Long planning period- certainty/

uncertainty/ instability stability
Many new competitors Rapid Strong competitive position
changes in social and economic Evolutionary, rather than rapid
conditions social, political and technological
change
Unstable product/ service Stable demand patterns
demand patterns
Small organizational size, poor Strong management practices.
management practices (crisis
Management)

Source: Elmer H. Burack and Nicholas J. Mathis, Human Resource

Planning- A Pragmatic approachto manpower Staffing and development,
Illinosis, Brace- Park Press, 1987, p. 129.
Type and Quality of information: The information used to forecast
personnel needs originates from a multitude of sources. The forecast
depends to a large extent upon the type of information and the quality of
data that is available to personnel planners. The quality and accuracy of
information depend upon the clarity with which the organizational
decision makers have defined their strategy, structure, budgets, production
schedule and so on.

25
Human Resource
Management
Table 2.2: Levels of HRP Information

General Specific
Strategic Organizational Information Necessary
Information Information for HRP
Job analysis
Product mix Organizational structure Skills inventories
Customer mix Information flows
Competitive Management inventories
emphasis Operating and capital
budgets
Functional area
objectives
Geographic limits Production schedules Available training
of market Distribution channels and
development
programmes
Sales territories Recruitment sources
Production processes

Level of technology
Planning horizons Labour market analysis
Compensation
programmes
Constitutional
provisions
and labour laws
Retirement plans
Turnover data.

Source: Leap & Crino, Personnel/ Human Resource Management,

p. 161.
Nature of Jobs Being Filled: Personnel planners need to be really careful
with respect to the nature of the jobs being filled in the organization.
Employees belonging to lower level who need very limited skills can be
recruited hastily but, while hiring employees for higher posts, selection
and recruitment need to be carried out with high discretion. Organization
need to anticipate vacancies far in advance as possible, to provide
sufficient time to recruit suitable candidate.
Outsourcing: Several organizations outsource part of their work to
outside parties in the form of subcontract. Outsourcing is a regular feature
both in the public sector as well as in the private sector companies. Many
of the organizations have surplus labour and hence instead of hiring more
people they go for outsourcing. Outsourcing is usually done for non
26
critical activities. Outsourcing of non critical activities through Human Resource Planning
subcontracting determines HRP.

2.7 HRP PROCESS

HRP effectively involves forecasting personnel needs, assessing personnel
supply and matching demand – supply factors through personnel related
programmes. The HR planning process is influenced by overall
organizational objectives and environment of business.

Fig. 2.2: The HRP Process

Following are the important steps in the process of HRP:
Environmental Scanning:
It refers to the systematic monitoring of the external forces influencing the
organization. The following forces are essential for pertinent HRP -
1. Economic factors, including general and regional conditions.
2. Technological changes
3. Demographic changes including age, composition and literacy,
4. Political and legislative issues, including laws and administrative
rulings Social concerns, including child care, educational facilities and
priorities.
By scanning the environment for changes that will affect an organization,
managers can anticipate their impact and make adjustments early.

27
Human Resource
Management  Organizational Objectives and Policies:
HR plan is usually derived from the organizational objectives. Specific
requirements in terms of numbers and characteristics of employees should
be derived from organizational objectives.
Once the organizational objectives are specified, communicated and
understood by all concerned, the HR department must specify its objective
with regard to HR utilization in the organization.
 HR Demand Forecast:
Demand forecasting is the process of estimating the future quantity and
quality of people required to meet the future needs of the organization.
Annual budget and long-term corporate plan when translated into activity
into activity form the basis for HR forecast.
For e.g. in the case of a manufacturing company, the sales budget will
form the basis for production plan giving the number and type of products
to be produced in each period. This will form the basis upon which the
organization will decide the number of hours to be worked by each skilled
category of workers. Once the number hours required is available
organization can determine the quality and quantity of personnel required
for the task.
Demand forecasting is influenced by both internal factors and external
factors: external factors include-competition, economic climate, laws and
regulatory bodies, changes in technology and social factors whereas
internal factors are budget constraints, production level, new products and
services, organizational structure and employee separations.
Demand forecasting is essential because it helps the organization to:
1. Quantify the jobs, necessary for producing a given number of goods,
2. Determine the nature of staff mix required in the future,
3. Assess appropriate levels in different parts of organization so as to
avoid unnecessary costs to the organization,
4. Prevent shortages of personnel where and when, they are needed by
the organization.
5. Monitor compliances with legal requirements with regard to
reservation of jobs.
Techniques like managerial judgment, ratio trend analysis, regression
analysis, work study techniques, Delphi techniques are some of the major
methods used by the organization for demand forecasting.
 HR Supply Forecast:
Supply forecast determines whether the HR department will be able to
procure the required number of workers. Supply forecast measures the
number of people likely to be available from within and outside an
organization, after making allowance for absenteeism, internal movements
and promotions, wastage and changes in hours, and other conditions of
work.
28
Supply forecast is required because it: Human Resource Planning

1. Helps to quantify the number of people and positions expected to be

available in future to help the organization realize its plans and meet
its objectives.
2. Helps to clarify the staff mixes that will arise in future.
3. It assesses existing staffing in different parts of the organization.
4. It will enable the organization to prevent shortage of people where and
when they are most needed.
5. It also helps to monitor future compliance with legal requirements of
job reservations.
Supply analysis covers the existing human resources, internal sources of
supply and external sources of supply.
 HR Programming:
Once an organization’s personnel demand and supply are forecasted the
demand and supply need to be balanced in order that the vacancies can be
filled by the right employees at the right time.
 HR Plan Implementation:
HR implementation requires converting an HR plan into action. A series
of action are initiated as a part of HR plan implementation. Programmes
such as recruitment, selection and placement, training and development,
retraining and redeployment, retention plan, succession plan etc when
clubbed together form the implementation part of the HR plan.
 Control and Evaluation:
Control and evaluation represent the final phase of the HRP process. All
HR plan include budgets, targets and standards. The achievement of the
organization will be evaluated and monitored against the plan. During this
final phase organization will be evaluating on the number of people
employed against the established (both those who are in the post and those
who are in pipe line) and on the number recruited against the recruitment
targets. Evaluation is also done with respect to employment cost against
the budget and wastage accrued so that corrective action can be taken in
future.
2.8 REQUISITES FOR SUCCESSFUL HRP
 HRP must be recognized as an integral part of corporate planning
 Support of top management is essential
 There should be some centralization with respect to HRP
responsibilities in order to have co-ordination between different
levels of management.
 Organization records must be complete, up to date and readily
available.

29
Human Resource
Management  Techniques used for HR planning should be those best suited to the
data available and degree of accuracy required.
 Data collection, analysis, techniques of planning and the plan
themselves need to be constantly revised and improved in the light of
experience.
2.9 BARRIERS TO HRP
Human Resource Planners face significant barriers while formulating an
HRP. The major barriers are elaborated below:
1. HR practitioners are perceived as experts in handling personnel
matters, but are not experts in managing business. The personnel plan
conceived and formulated by the HR practitioners when enmeshed
with organizational plan, might make the overall strategic plan of the
organization ineffective.
2. HR information often is incompatible with other information used in
strategy formulation. Strategic planning efforts have long been
oriented towards financial forecasting, often to the exclusion of other
types of information. Financial forecasting takes precedence over
HRP.
3. Conflict may exist between short term and long term HR needs. For
example, there can be a conflict between the pressure to get the work
done on time and long term needs, such as preparing people for
assuming greater responsibilities. Many managers are of the belief that
HR needs can be met immediately because skills are available on the
market as long as wages and salaries are competitive. Therefore, long
times plans are not required, short planning are only needed.
4. There is conflict between quantitative and qualitative approaches to
HRP. Some people view HRP as a number game designed to track the
flow of people across the department. Others take a qualitative
approach and focus on individual employee concerns such as
promotion and career development. Best result can be achieved if
there is a balance between the quantitative and qualitative approaches.
5. Non-involvement of operating managers renders HRP ineffective.
HRP is not strictly an HR department function. Successful planning
needs a co-ordinate effort on the part of operating managers and HR
personnel.
2.10 SUMMARY
Today, human resource planning is viewed as the way management comes
to grasp the ill-defined and tough-to-solve human resource problems
facing an organization. Human resource planning is the process of
determining the human resources required by the organization to achieve
its goals. Human resource planning also looks at broader issues relating to
the ways in which people are employed and developed, in order to
improve organizational effectiveness. HRP is a decision making process
that combines activities such as identifying and acquiring the right number

30
of people with the proper skills, motivating them to achieve high Human Resource Planning
performance and creating interactive links between business objectives are
resource planning activities. HRP sets out requirements in both
quantitative and qualitative terms. Accurate manpower plan is a dream. A
common error of many managers is to focus on the organization’s short
term replacement needs. Any human resource plan, if it is to be effective,
must be derived from the long term plans and strategies of the
organization. The various approaches to human resource planning under
which a number of major issues and trends in today’s work plan that will
affect organization and employees are (1) Examine external and internal
issues, (2) Determining future organizations capabilities, (3) Determining
future organizational needs, and (4) Implementing human resources
programmes to address anticipated problems. Although change is
occurring very rapidly in the work world it is important for both
organizations and employees to monitor issues and events continuously
and consider their potential effects.
2.11 SELF ASSESSMENT QUESTIONS
1. Describe the various forecasting techniques and how these techniques
are being used in human resource planning.
2. Explain the role of HR professional in human resource planning
process in organizations.
3. Explain the barriers to HRP. Bring out the requisites for effective
planning.
4. Define HRP. Explain the need and importance of HRP.
5. Discuss in detail the process of HRP.
6. Elaborate the factors affecting on HRP.
7. Write note on:
 Objectives of HRP
 Importance of HRP
 Need of HRP



31
 3
JOB ANALYSIS
Unit Structure
3.0 Objectives
3.1 Introduction
3.2 Job Analysis Defined
3.3 Important of Job Analysis
3.4 Steps in Job Analysis
3.5 Methods for Collecting Job Analysis Data
3.6 Job Description
3.7 Writing Job Description
3.8 Job Specification
3.9 Job Design
3.10 Methods of Job Design
3.11 Summary
3.12 Self Assessment Questions

3.0 OBJECTIVES
After completing this unit, you will be able to:

 Define job analysis.

 Understand the basic steps in a Job analysis.

 Identify the major methods of collecting Job analysis data.

 Recognize the major elements of job descriptions

 Explain how to prepare job descriptions and job specification and their
use.

 Point out and explain job design and its various methods

 Distinguish between job enlargement and job enrichment.

32
 Job Analysis
3.1 INTRODUCTION
Manpower planning is concerned with determination of quantitative and
qualitative requirements of manpower for the organization. Determination
of manpower requirements is one of the most important problems in
manpower planning. Job analysis and job design, provide this knowledge.
Before going through the mechanism of job analysis and job design, it is
relevant to understand the terms which are used in job analysis and job
design.
Job: A job may be defined as a “collection or aggregation of tasks, duties
and responsibilities which as a whole, are regarded as a regular assignment
to individual employees,” and which is different from other assignments,
In other words, when the total work to be done is divided and grouped into
packages, we call it a “job.” Each job has a definite title based upon
standardized trade specifications within a job; two or more grades may be
identified, where the work assignment may be graded according to skill,
the difficulty of doing them, or the quality of workmanship. Thus, it may
be noted that a position is a “collection o tasks and responsibilities
regularly assigned to one person;” while a job is a “group of position,
which involve essentially the same duties, responsibilities, skill and
knowledge.” A position consists of a particular set of duties assigned to an
individual.
Decenzo and P. Robbins defines other terms as follows:
Task: It is a distinct work activity carried out for a distinct purpose.
Duty: It is a number of tasks.
Position: It refers to one or more duties performed by one person in an
organization, There are at least as many positions as there are workers in
the organization; vacancies may create more positions than employees.
Job: It is a type of position within the organization.
Job Family: It is group of two or more jobs that either call for similar
worker characteristics or contain parallel work tasks as determined by job
analysis.
Occupation: It is a group of similar jobs found across organizations.
Career: It represents a sequence of positions, jobs, or occupations that a
person has over his working life.

3.2 JOB ANALYSIS DEFINITION

Developing an organizational structure, results in jobs which have to be
staffed. Job analysis is the procedure through which you determine the
duties and nature of the jobs and the kinds of people (in terms of skills and
experience) who should be hired for them.’ It provides you with data on
job requirements, which are then used for developing job descriptions
(what the job entails) and job specifications (what kind of people to hire
33
Human Resource for the job). Some of the definitions of job analysis ate given as follows, to
Management understand the meaning of the term more clearly:
According to Michael L. Jucius, “Job analysis refers to the process of
studying the operations, duties and organizational aspects of jobs in order
to derive specifications or as they called by some, job descriptions.”
According to DeCenzo and P. Robbins, “A job analysis is a systematic
exploration of the activities within a job. It is a basic technical procedure,
one that is used to define the duties, responsibilities, and accountability of
a job.”
According to Herbert G Herman “A job is a collection of tasks that can
be performed by a single employee to contribute to the production of some
product or service provided by the organization. Each job has certain
ability requirements (as well as certain rewards) associated with it. Job
analysis process used to identify these requirements.”
Flippo has offered a more comprehensive definition of job analysis as,
“Job analysis is the process of studying and collecting information relating
to the operations and responsibilities of a specific job. The immediate
products of the analysis are job descriptions and job specifications”
Thus, job analysis involves the process of identifying the nature of a job
(job description) and the qualities of the likely job holder (job
specification).

3.3 IMPORTANCE OF JOB ANALYSIS

The job analysis is used as a basis of several interrelated personnel
management activities. Following points elaborates the importance of Job
Analyses:

 Achievement of Goals:
Weather and Davis have stated, “Jobs are at the core of every
organization’s productivity, if they are designed well and done right, the
organization makes progress towards its objectives. Otherwise,
productivity suffers, profits fall, and the organization is less able to meet
the demands of society, customer, employees, and other with a stake in its
success.”

 Organizational Design:
Job analysis will be useful in classifying the jobs and the interrelationships
among the jobs. On the basis of information obtained through job analysis,
sound decisions regarding hierarchical positions and functional
differentiation can be taken and this will improve operational efficiency.

34
 Job Analysis
 Organization and Manpower Planning:
It is helpful in organization planning, for it defines labour in concrete
terms and co-ordinates the activities of the work force, and clearly divides
duties and responsibilities.

 Recruitment and Selection:

Job analysis provides you with information on what the job entails and
what human requirements are required to carry out these activities. This
information is the basis on which you decide what sort of people to recruit
and hire.

 Placement and Orientation:

Job analysis helps in matching the job requirements with the abilities,
interests and aptitudes of people. Jobs will be assigned to persons on the
basis of suitability for the job. The orientation programme will help the
employee in learning the activities and understanding duties that are
required to perform a given job more effectively.

 Employee Training and Management Development:

Job analysis provides the necessary information to the management of
training and development programmes. It helps in to determine the content
and subject matter of in training courses. It also helps in checking
application information, interviewing test results and in checking
references.

 Job Evaluation and Compensation:

Job evaluation is the process of determining the relative worth of different
jobs in an organization with a view to link compensation, both basic and
supplementary, with the worth of the jobs. The worth of a job is
determined on the basis of job characteristics and job holder
characteristics. Job analysis provides both in the forms of job description
and job specification.

 Performance Appraisal:
Performance appraisal involves comparing each employee’s actual
performance with his or her desired performance. Through job analysis
industrial engineers and other experts determine standards to be achieved
and specific activities to be performed.

 Health and Safety:

It provides an opportunity for identifying hazardous conditions and
unhealthy environmental factors so that corrective measures may be taken
to minimize and avoid the possibility of accidents.

35
Human Resource  Employee Counseling:
Management
Job analysis provides information about career choices and personal
limitation. Such information is helpful in vocational guidance and
rehabilitation counseling. Employees who are unable to cope with the
hazards and demands of given jobs may be advised to opt for subsidiary
jobs or to seek premature retirement.

3.4 STEPS IN JOB ANALYSIS

The six steps of job analysis are explained below:

 Determine the Use of the Job Analysis Information: Start by

identifying the use to which the information will be put, since this will
determine the type of data you collect and the technique you use to collect
them.

 Collection of Background Information: According to Terry, “The

make-up of a job, its relation to other jobs, and its requirements for
competent performance are essential information needed for a job
evaluation. This information can be had by reviewing available
background information such as organization charts (which show how the
job in question relates to other jobs and where they fit into the overall
organization); class specifications (which describe the general
requirements of the class of job to which the job under analysis belongs);
and the existing job descriptions which provide a starting point from
which to build the revised job description”.

 Selection of Jobs for Analysis: To do job analysis is a costly and

time consuming process. It is hence, necessary to select a representative
sample of jobs for purposes of analysis. Priorities of various jobs can also
be determined. A job may be selected because it has undergone
undocumented changes in job content. The request for analysis of a job
may originate with the employee, supervisor, or a manager.
When the employee requests an analysis it is usually because new job
demands have not been reflected in changes in wages. Employee’s salaries
are, in part, based upon the nature of the work that they perform. Some
organizations establish a time cycle for the analysis of each job. For
example: A job analysis may be required for all jobs every three years.
New jobs must also be subjected to analysis.

 Collection of Job Analysis Data: Job data on features of the job,

requited employee qualification and requirements, should be collected
either from the employees who actually perform a job; or from other
employees (such as foremen or supervisors) who watch the workers doing
a job and there by acquire knowledge about it; or from the outside persons,
known as the trade job analysis who are appointed to watch employees
performing a job. The duties of such a trade job analyst are:

 To outline the complete scope of a job and to consider all the physical
and mental activities involved in determining what the worker does.
36
 To find out why a worker does a job; and for this purpose he studies Job Analysis
why each task is essential for the overall result; and

 To increase the skill factor which may be needed in the worker to

differentiate between jobs and establish the extent of the difficulty of any
job.

 Processing the Information: Once job analysis information has been

collected, the next step is to place it in a form that will make it useful to
those charged with the various personnel functions. Several issues arise
with respect to this. First, how much detail is needed? Second, can the job
analysis information be expressed in quantitative terms? These must be
considered properly.

 Preparing Job Descriptions and Job Classifications: Job

information which has been collected must be processed to prepare the job
description form. It is a statement showing full details of the activities of
the job. Separate job description forms may be used for various activities
in the job and may be compiled later on. The job analysis is made with the
help of these description forms. These forms may be used as reference for
the future.

 Developing Job Specifications: Job specifications are also prepared

on the basis of information collected. It is a statement of minimum
acceptable qualities of the person to be placed on the job. It specifies the
standard by which the qualities of the person are measured. Job analyst
prepares such statement taking into consideration the skills required in
performing the job properly. Such statement is used in selecting a person
matching with the job.

3.4 METHODS FOR COLLECTING JOB ANALYSIS

DATA
As discussed earlier, information is to be collected for job analysis. Such
information may be collected by the trained job analysis, superiors
concerned and job holders themselves. Job information is collected
through the following methods:

 Participant Diary/Logs: Workers can be to keep participant

diary/long or lists of things they do during the day. For every activity he or
she engages in, the employee records the activity (along with the time) in a
log. This can provide you with a very comprehensive picture of the job,
especially when it’s supplemented with subsequent interviews with the
worker and his or her supervisor. This method provides more accurate
information if done faithfully. However, it is quite time consuming.
Further, each job holder may maintain records according to his own way
which presents problems in analysis at later stage. Therefore, it has limited
application.

 Interview: There are three types of interviews you can use to collect
job analysis data: individual interviews with each employee; group
37
Human Resource interviews with groups of employees having the same job; and supervisor
Management interviews with one or more supervisors who are thoroughly
knowledgeable about the job being analyzed. The group interview is used
when a large number of employees are performing similar or identical
work, since this can be a quick and inexpensive way of learning about the
job. As a rule, the worker’s immediate supervisor would attend the group
session; if not, you should interview the supervisor separately to get that
person’s perspective on the duties and responsibilities of the job.

 Critical Incidents: In this method, job holders are asked to describe

incidents concerning the job on the basis of their past experience. The
incidents so collected are analyzed and classified according to the job
areas they describe, A fairly picture of actual job requirements can be
obtained by distinguishing between effective and ineffective behaviors of
workers on the job. However, this method is time consuming. The analyst
requires a high degree of skill to analyze the contents of descriptions given
by workers.

 Technical Conference Method: This method utilizes supervisors

with extensive knowledge of the job. Here, specific characteristics of a job
are obtained from the “experts.” Although it is a good data gathering
method, it often overlooks the incumbent worker’s perception about what
they do on their job.

 Job Performance: Under this method, the job analyst actually

performs the job under study to get first-hand experience of the actual
tasks, and physical and social demands of the job. This method can be
used only for jobs where skill requirements are low and can be learnt
quickly and easily. This is a time-consuming method and is not
appropriate for jobs requiring extensive training.

 Functional Job Analysis: Functional job analysis (FJA) is employee-

oriented analytical approach of job analysis. This approach attempts to
describe the whole person on the job. The main features of FJA include
the following:

 The extent to which specific instruction are necessary to perform the

task.

 The extent to which reasoning and judgment are required to perform the
task.

 The mathematical ability required to perform the task.

 The verbal and language facilities required to perform the task.

 Observation Method: Using this method, a job analyst watches

employees directly on the job. Observations are made on various tasks,
activities, the pace at which tasks are carried out, and the way different
activities are performed. This method is suitable for jobs that involve
manual, standardized, and short job cycle activities. This method also

38
requires that the entire range of activities be observable; possible with Job Analysis
some jobs.

 Questionnaires: The method is usually employed by engineering

consultants. Properly drafted questionnaires are sent out to job-holders for
completion and are returned to supervisors. However, the information
received is often unorganized and incoherent. The idea in issuing
questionnaire is to elicit the necessary information from job holders so that
any error may first be discussed with the employee and, after corrections,
may be submitted to the job analyst.

Questionnaire for Job Analysis

1. Your Name ………..………..………..………..………..………..…
2. Title or Designation of your job ……………………………………
3. Regular or Extra ……………………………………………………
4. Your Department ……………………………………………………

 To whom do you report directly (Name and Title):-------------------

 Description of work:

 Daily Duties:

 Periodical Duties:

 Occasional Duties:

 Your knowledge Requirements:

 Store Procedure and Methods:

 Merchandise:

 What Equipment do you use?

 What Materials do you work with or sell?

 If you supervise the work of others, state how many and what their
jobs are.

 To what job would you normally expect to be promoted?

 From what job were you transferred to your present job?

This technique is time consuming and generally does not yield satisfactory
results because many employees do not complete the questionnaire or
furnish incorrect information because of their own limitations. The use of
questionnaire is recommended only in case of those technical jobs where
the job contents are not completely known to the supervisor or the
operation is too complex to observe.

39
Human Resource There are certain standardized questionnaires developed by a few agencies
Management which are used by various organizations for job analysis. Most of these
questionnaires are of two types: Position Analysis Questionnaire and
Management Position Description Questionnaire that are described as
follows:

 Position Analysis Questionnaire. Position analysis questionnaire

(PAQ) is a highly specialized instrument for analyzing a job in terms of
employee activities. The PAQ developed by Purdue University is a
comprehensive questionnaire for collecting information for job analysis.
In this questionnaire, various job elements have been grouped into six
categories with each category containing relevant job elements resulting
into 195 elements as shown in Table 3.1.

Position Analysis Questionnaire

Job Aspects No. of

Information input-Where and how do employee get elements
information to do their job? 35
Mental processes-what reasoning, planning,
organizing, and decision making is done? 14

Work output-what physical activities, tools and

machines are used? 49

Relationships-what contact with other people, both

in the company and outside is maintained or
developed? 36
Job context- what is the physical and social context
in which the job is maintained? 19

Other job characteristics-what other activities,

conditions or Characteristics not covered by the
categories are relevant? 42

The advantage of PAQ is that it provides a quantitative score or profile of

any job in terms of how that job rates on the basic activities. The PAQ’s
real strength is, thus, in classifying jobs. PAQ’s results can be used to
compare the jobs relative to one another and pay levels can be assigned for
each job.
The major problem with PAQ is the time it takes for a job analyst to fill
out the ratings. However, PAQ has been widely researched and tested and
appears to be both reliable and valid.

 Management Position Description Questionnaire: Management

position description is a highly structured questionnaire containing 208
40
items relating to managerial responsibilities, restrictions, demands and Job Analysis
other miscellaneous position characteristics. W.W. Tomov and P.R. Pinto
have developed the following Management position Description factors:
The above methods are the most popular ones for gathering job analysis
data. They all provide realistic information about what job incumbents
actually do. They can thus be used for developing job descriptions and job
specifications.

3.5 JOB DESCRIPTION

Job description is the immediate product of job analysis process; the data
collected through job analysis provides a basis for job description and job
specification.
Job Description: is a written record of the duties, responsibilities and
requirements of a particular job. It is concerned with the job itself and not
with the job holders. It is a statement describing the job in such terms as
its title, location, duties, working conditions and hazards.
Flippo has Defined Job Description as, “A job description is an
organized, factual statement of duties and responsibilities of a specific job.
In brief, it should tell what is to be done. How it is done why. It is a
standard of function, in that defines the appropriate and authorized content
of a job.
According to Pigors and Myres, “Job description is a pertinent picture
(in writing) of the organizational relationships, responsibilities and
specific duties that constitutes a given job or position. It defines a scope of
responsibility and continuing work assignments that are sufficiently
different form that of other jobs to warrant a specific title.”
According to Zerga, who analyzed 401 articles on job description about
30 years ago. A job description helps us in:
1. Job grading and classification.
2. Transfers and promotions.
3. Adjustments of grievances.
4. Defining and outlining promotional steps.
5. Establishing a common understanding of a job between employers and
employees.
6. Investigation accidents.
7. Indicating faulty work procedures or duplication of papers.
8. Maintaining, operating and adjusting machinery.
9. Time and motion studies.
10. Defining the limits of authority.
11. Indicating case of personal merit.

41
Human Resource 12. Studies of health and fatigue.
Management
13. Scientific guidance.
14. Determining jobs suitable for occupational therapy.
15. Providing hiring specifications.
16. Providing performance indicators.
“Job description” is different from “performance assessment.” The former
concerns such functions as planning, co-ordination, and assigning
responsibility; while the latter concerns the quality of performance itself.
Though job description is not assessment, it provides an important basis
establishing assessment standards and objectives.

3.6 WRITING JOB DESCRIPTION

A Job description is a written statement of what the job holder actually
does, how he or she does it, and under what conditions the job is
performed. This information is in turn used to write a job specification.
This lists the knowledge, abilities, and skills needed to perform the job
satisfactorily. While there is no standard format you must use in writing a
job description, most descriptions contain at least sections on:
Job Identification: It includes the job title, alternative title, department,
division, and plant and code number of the job. The job title identifies and
designates the job properly, the department, division, etc., indicate the
name of the department where it is situated – whether it is the maintenance
department, mechanical shop etc. Location gives the name of the place.
This portion of job description gives answer to two important questions: to
what higher level job is this job accountable. And who is supervised
directly.
Job Summary: Job summary describes the contents of the jobs in terms
of activities or tasks performed. Job summary should clear the nature of
the job. Primary, secondary and other duties to be performed on the job
should clearly be indicated separately.
Duties and Responsibilities: This is the most important phase of job
description and should be prepared very carefully. It describes the duties
to be performed along with frequency of each major duty. Responsibilities
concerning custody of money, supervision and training of staff etc. are
also described in this part.

Example of a Job Description

Job Title: Record Clerk Job No. 011
Supervisor: Record Supervisor Job Grand –III
Supervises: None Date: 2/21/12
Job Summary: Originate, process, and maintain comprehensive records;
implement required controls; collect and summarize data as requested.
42
Job Duties and Responsibilities: Job Analysis

Review a variety of documents, listings, summarizes, etc, for

completeness and accuracy.
Check records against other current sources such as reports or summaries;
investigate differences and take required action to ensure that records are
accurate and up to date; compile and summarize data report format as
required.
Implement controls or obtaining, preserving, and supplying a variety of
information. Prepare simple requisitions, forms, and other routine
memorandum.
Provide functional guidance to lower level personnel as required.
Working Conditions: Normal working conditions. But visits sites on
average twice a week. Eight hours per day.
Relationships: With equivalent officers in other departments.
Maintains formal and social contacts with local officials.
Job Characteristics: Skilled operation of computer, calculating machine,
or key punch machine is not necessarily a requirement of this job.
The above information is correct and approved by:
(Signed) (Signed)
Job Analyst In charge Manager
Supervision: Under it is given number of persons to be supervised along
with their job titles, and the extent of supervision involved general,
intermediate or close supervision.
Relation to Other Jobs: It describes the vertical and horizontal
relationships of work flow. It also indicates to whom the job holder will
report and who will report to him. It gives an idea of channels of
promotion.
Machine, tools and equipment define each major type or trade name of
the machines and tools and the raw materials used.
Working Conditions: The working environment in terms of heat, light,
noise, dust and fumes etc, the job hazards and possibility of their
occurrence and working conditions should also be described. It will be
helpful in job evaluation.
Social Environment: It specifies the social conditions under which the
work will be performed. In this part the size of work group, interpersonal
interactions required to perform the job and development facilities are
mentioned

43
Human Resource 3.7 JOB SPECIFICATION
Management
The job specification states the minimum acceptable qualifications that the
incumbent must possess to perform the job successfully. Based on the
information acquired through job analysis, the job specification identifies
the knowledge, skills, and abilities needed to do the job effectively.
Individuals possessing the personal characteristics identified in the job
specification should perform the job more effectively than individuals
lacking these personal characteristics. The job specification, therefore, is
an important tool in the selection process, for it keeps the selector’s
attention on the list of qualifications necessary for an incumbent to
perform the job and assists in determining whether candidates are
qualified.
According to Dale Yoder, “The job specification, as such a summary
properly described is thus a specialized job description, emphasizing
personnel requirement and designed especially to facilitate selection and
placement.”
Flippo has defined job specification as, “Job specification is a statement
of the minimum acceptable human qualities necessary to perform a job
properly. It is a standard of personnel and designates the qualities required
for acceptable performance.”
In is clear from the above definitions that job specification is a statement
of summary of personnel requirements for a job. It may also be called
“standard of personal for the selection”

A Job Specification should include:

Physical characteristics: which include health, strength, endurance, age,
height, weight, vision, voice, eye, hand and foot co-ordination, motor co-
ordination, and colour discrimination.
Psychological and social characteristics: such as emotional stability,
flexibility, decision making ability, analytical view, mental ability,
pleasing manners, initiative, conversational ability etc.
Mental Characteristics: such as general intelligence, memory, judgment,
ability to concentrate, foresight etc.
Personal Characteristics such as: sex, education, family background, job
experience, hobbies, extracurricular activities etc.
All these characteristics must be classified into three categories:
1. Essential attributes which a person must possess.
2. Desirable attributes which a person ought to posses.
3. Contra indicators which will become a handicap to successful job
performance.

44
 Job Analysis
3.8 JOB DESIGN
Job design is of comparatively recent origin. The human resource
managers have realized that the design of a job has considerable influence
on the productivity and job satisfaction; poorly designed jobs often result
in boredom to the employees, increased turnover, job dissatisfaction, low
productivity and an increase in overall costs of the organization. All these
negative consequences can be avoided with the help of proper job design.
According to Jon Werner and DeSimone, “Job design is the
development and alteration of the components of a job (such as the tasks
one performs, and the scope of one’s responsibilities) to improve
productivity and the quality of the employees’ work life.”
Job design has been defined by Davis (1966) as: “The specification of the
contents, methods, and relationships of jobs in order to satisfy
technological and organizational requirements as well as the social and
personal requirements of the job-holder.”
Milkovich and Boudreau defined job design as, “Job design integrates
work content (tasks, functions, and relationships), the rewards (extrinsic
and intrinsic) and the qualifications required (skills, knowledge, abilities)
for each job in a way that meets the needs of employees and the
organization.”
Michael Armstrong has defined job design as “the process of deciding
on the content of a job in terms of its duties and responsibilities, on the
methods to be used in carrying out the job, in terms of techniques, systems
and procedures, and on the relationships that should exist between the job
holder and his superiors, subordinates and colleagues.”
Job design is an attempt to create a match between job requirements and
human attributes. It involves organizing the components of the job and the
interaction patterns among the members of a work group. It helps in
developing appropriate design of job to improve efficiency and
satisfaction.

PRINCIPLES OF JOB DESIGN:

Principles are the bases of the approach used in job design. Robertson
and Smith (1985) have suggested the following five principles of job
design:
1. To influence skill variety, provide opportunities for people to do
several tasks and combine tasks.
2. To influence task identity, combine tasks and from natural work units.
3. To influence task significance, form natural work units and inform
people of the importance of their work.
4. To influence autonomy; give people responsibility for determining
their own working systems.
45
Human Resource 5. To influence feedback; establish good relationship and open feedback
Management channels.

3.9 METHODS OF JOB DESIGN

The various techniques of job design and redesign are discussed below:
Job Simplification: In job simplification, the complete job is broken
down into small subparts; this is done so that employee can do these jobs
without much specialized training. Moreover, small operations of the job
can also be performed simultaneously so that the complete operation can
be done more quickly. For job simplification, generally time and motion
studies are used.
Job Rotation: Another technique designed to enhance employee
motivation is job rotation, or periodically assigning employees to
alternating jobs or tasks.
Bumpers to vehicles and the following two weeks making final checks of
the chassis. During the next month, the same employee may be assigned to
two different jobs. Therefore, the employee would be rotated among four
jobs. The advantage of job rotation is that employees do not have the same
routine job day after day. Job rotation only addresses the problem of
assigning employees to jobs of limited scope; the depth of the job does not
change. The job cycle of the actual daily work performed has not been
lengthened or changed. Instead, employees are simply assigned to
different jobs with different cycles.
Because job rotation does not change the basic nature of jobs, it is
criticized as nothing more than having an employee perform several
boring and monotonous jobs rather than one. Some employees dislike job
rotation more than being assigned to one boring job because when they are
assigned to one job they know exactly where to report and what work to
expect each day. Workers quickly realize that job rotation does not
increase their interest in their work.
Although it seldom addresses the lack of employee motivation, it give
manages a means of coping with frequent absenteeism and high turnover.
Thus when absenteeism or turnover occurs in the work force, managers
can quickly fill the vacated position because each employee can perform
several jobs.
Job rotation is often effectively used as a training technique for new,
inexperienced employees. At higher organizational levels, rotation also
helps to develop managerial generalists because it exposes them to several
different operations.

Advantage of Job Rotation Technique:

1. The employee experiences variety of work, workplace and peer group.
Job rotation helps to broaden the knowledge and skills of an employee.

46
2. The main advantage of job rotation is that it relieves the employee Job Analysis
from the boredom and monotony of doing the same job.
3. With the help of this method, people become more flexible. They are
prepared to assume responsibility especially at other positions.
4. Job rotation broadens the work experience of employees and turns
specialists into generalists. It is beneficial for the management also as
the management gets employees who can perform a variety of tasks to
meet the contingencies.
5. This method improves the self image and personal worth of the
employee.

Disadvantage of Job Rotation Technique:

1. Job rotation also creates disruptions. Members of the work group have
to adjust to the new employee.
2. Productivity is reduced by moving a worker into new position just
when his efficiency at the prior job was creating organizational
economies.
3. Training costs are increased.
4. The supervisor may also have to spend more time answering question
and monitoring the work of the recently rotated employee.
5. It can de-motivate intelligent and ambitious trainees who seek specific
responsibilities in their chosen specialty.
Job Enlargement: Another means of increasing employee’s satisfaction
with routine jobs is job enlargement, or increasing the number of tasks
performed (i.e. increasing the scope of the job). Job enlargement, like job
rotation, tries to eliminate short job cycles that create boredom. Unlike job
rotation, job enlargement actually increases the job cycle. When a job is
enlarged, either the tasks being performed are enlarged or several short
tasks are given to one worker. Thus, the scope of the job is increased
because there are many tasks to be performed by the same worker. Job
enlargement programs change many methods of operation in contrast to
job rotation, in which the same work procedures are used by workers who
rotate through work stations. Although job enlargement actually changes
the pace of the work and the operation by reallocating tasks and
responsibilities, it does not increase the depth of a job.
The focus of designing work for job enlargement is the exact opposite of
that for job specialization. Instead of designing jobs to be divided up into
the fewest of tasks per employee, a job is designed to have many tasks for
the employee to perform. An enlarged job requires a longer training period
because there are more tasks to be learned. Worker satisfaction should
increase because is reduced as the job scope is expanded. However, job
enlargement programs are successful with jobs what have increased scope;

47
Human Resource such workers are less prone to resort to absenteeism, grievances,
Management slowdowns and other means of displaying job dissatisfaction.
Enlargement is done only on the horizontal level. Thus, the job remains
the same, but becomes of a larger scale than before. In the words of
Geroge Strauss and L.R. Sayles “Job enlargement implies that instead of
assigning one man to each job, a group of men can be assigned to a group
of jobs and then allowed to decide for themselves how to organize the
work. Such changes permit more social contacts and control over the work
process.”

Job enlargement has the following advantages:

1. Increase in diversity of jobs.
2. Job satisfaction
3. Provides wholeness and identity with the task and increases the
knowledge necessary to perform it.
4. Provides variety of skills.
5. Reduces tension and boredom.
6. Trains and develops more versatile employees.
Despite these advantages this is not a completely satisfactory method of
job design as it does not increase the depth of a job. Enlarged jobs require
longer training period as there are more tasks to be learned.
Job Enrichment: The concept of job enrichment has been derived from
Herzberg’s two-factor theory of motivation in which he has suggested that
job content is one of the basic factors of motivation. If the job is designed
in such a manner that it becomes more interesting and challenging to the
job performer and provides him opportunities for achievement,
recognition, responsibility, advancement and growth, the job itself
becomes a source of motivation to the individual.
According to Richard W. Beatty and Graig Eric. Schneider, “Job
enrichment is a motivational technique which emphasizes the need for
challenging and interesting work. It suggests that jobs be redesigned so
that intrinsic satisfaction is derived from doing the job. In its best
applications it leads to a vertically enhanced job by adding function from
other organizational levels, making it contain more variety and challenge
and offer autonomy and pride to the employee.”
According to P. Robbins,” Job enrichment refers to the vertical expansion
of the jobs. It increases the degree to which the worker controls the
planning, execution and evaluation of his work.”
In the words of Robert Albanese, “Job enrichment sometimes called.
“Vertical job leading’ is a job redesign strategy that focuses on job depth.”

48
According to Mondy. Holmes, and Flippo, “Job enrichment refers to Job Analysis
basic changes in the content and level of responsibility of a job so to
provide for the satisfaction of the motivation needs of personnel.
Rebert Ford, who was associated with designing of jobs to make them
more enriched, has provided some bases (though not exhaustive) for job
enrichment as shown in Table 3.3.

Job Enrichment Bases

Tasks Motivator involved

Assign specific or specialized Responsibility, growth,
task to individuals enabling them advancement
to become expert
Making periodic reports directly Internal recognition
available to the individual himself
rather than to the supervisor.
Giving a person a whole, natural Responsibility, achievement,
unit of work (module, exchange recognition
district, division, area, etc.)
Increasing the accountability of Responsibility, recognition
individuals for own work

Techniques of Job Enrichment:

In order to enrich the jobs the management should adopt the following
measures:
1. Freedom in decisions
2. Assign a natural work unit to an employee. Encouraging participation
3. Allow the employee to set his own standards of performance.
Minimize the controls to provide freedom to the employees Make an
employee directly responsible for his performance.
4. Encourage participation of employees in deciding organizational goals
and policies. Expand job vertically
5. Introducing new, difficult and creative tasks to the employees. Sense
of achievement.

Advantages of Job Enrichment:

The advantages of job enrichment are as follows:
1. It enriches the role.
2. Job enrichment is the most widely used of job design as it provides a
meaningful learning to employees.

49
Human Resource 3. It makes the work interesting and employee get motivated.
Management
4. It helps in reducing the rate of labour turnover and absenteeism.
5. It increases skills of the employees.
6. It increases morale and performance. Reduce Boredom and
dissatisfaction.
7. Increase in output both qualitative and quantitative.

Disadvantages of Job Enrichment:

Dunham and Newstrom state, “Even the strongest supporters of job
enrichment readily admit that there are limitations in its application.”
Newstrom and Keith Davis also write, “Employees are the final judges
of what enriches their jobs. All that management can do is to gather
information about what tends to enrich jobs, try these changes in the job
system, and then determine whether employees feel that enrichment has
occurred.”
A few limitations of or problems with job enrichment are as follows:
1. Increase cost
2. Need more employee counseling, training, and guidance.
3. Not applicable to all jobs.
4. Negative impact on personnel. Imposed on people.
5. Objected by unions Pay dissatisfaction

JOB ENLARGEMENT vs. JOB ENRICHMENT

Job enlargement and job enrichment are both important forms of job
design in order to enhance productivity and satisfaction of the employees.
They differ from each other in the following respects:
Nature of Job: The major difference between job enrichment and
enlargement lies in the nature of additions to the job. Enlargement
involves a horizontal loading or expansion, or addition of tasks of the
same nature. Enrichment involves vertical loading of tasks and
responsibility of the job holder; it improves the quality of the job in terms
of its intrinsic worth.
Purpose: The purpose of job enlargement is to reduce the monotony in
performing repetitive jobs by lengthening the cycle of operation. On the
other hand, the purpose of job enrichment is making the job lively,
challenging and satisfying. It satisfies the higher level needs such as ego
satisfaction, self expression, sense of achievement and advancement of
Job holders.

50
Skill Requirement: Job enlargement may not necessarily require the use Job Analysis
of additional skills which the job holder was using in performing the job
before the enlargement. This is due to similarity of additional tasks.
Enrichment calls for development and utilization of higher skills,
initiative, and innovation on the part of the job holder in performing the
job.
Direction and Control: Job enlargement requires direction and control
from external sources, say supervisor. In fact, the job holder may require
more direction and control because of enlargement of his responsibility.
Enrichment does not require external direction and control as these come
from the job holder himself. He requires only feedback from his
supervisor.

3.10 SUMMARY
The purpose of an organization is to give each person a separate distinct
job and to ensure that these jobs are coordinated in such a way that the
organization accomplishes its goals.
Developing an organization structure results in jobs that have to be staffed.
Job analysis is the procedure through which you find out (1) what the job
entails, and (2) what kinds of people should be hired for the job. It
involves six steps: (1) determine the use of the job analysis information;
(2) collection of background information; (3) selection of jobs for
analysis; (4) collection of job analysis data; (5) processing the
information; (6) preparing job descriptions and job classifications; and (7)
developing job specifications.
Techniques of job analysis are – observation method, questionnaires,
participant diary/logs, interview, critical incidents, technical conference
method, and job performance.
Job description and job specification are products of job analysis. Job
description should indicate: duties to be performed by the job holder and
the manner he should complete the tasks. Job specification: answer the
question “what human traits and experience are necessary to do the job.
Job design is an attempt to create a match between job requirements and
job attribute. Job rotation implies transfer to a job of same level and status.
Job simplification enables the employees to do the without much
specialized training.
Job enlargement is the process of increasing the scope of job of a
particular by adding more tasks to it. And job enrichment implies
increasing the contents of a job or the deliberate upgrading of
responsibility scope and challenge in work.
Job enlargement and job enrichment are both important forms of job
design in order to enhance the productivity and satisfaction of the job
holders.

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Human Resource 3.11 SELF ASSESSMENT QUESTIONS
Management
1. What do you understand by job analysis? What is its importance in the
management of human resources?
2. What is job analysis? What steps are involved in the preparation of job
analysis?
3. What are the byproducts of job analysis? Discuss the techniques used
for collecting data for job analysis?
4. What is job description? How is it prepared?
5. Define job specification? How is it different from job description?
6. Write notes on:
i. Job Rotation
ii. Job Simplification
iii. Distinguish between:
iv. Job description and job specification
v. Job enlargement and job enrichment
vi. “Job analysis is the most basic personnel management function.”
Discuss.
vii. Clearly define and discuss the relationship among job analysis, job
description and job specification.




52
 4
RECRUITMENT AND SELECTION PART I
Unit Structure
4.0 Objectives
4.1 Introduction
4.2 Recruitment: Meaning and Definition
4.3 Process of Recruitment
4.4 Recruitment Policy
4.5 Factor Affecting Recruitment
4.6 Sources of Recruitment
4.7 Methods of Recruitment
4.8 Philosophies of Recruitment
4.9 Summary
4.10 Self Assessment Questions

4.0 OBJECTIVES
After completing this unit, you will be able to:

 Define recruitment.

 Cite the steps in recruitment process.

 Understand the prerequisites of a good recruitment policy.

 Describe the various sources of recruitment.

 Understand the methods through which prospective candidates may be

recruited.

 Point out the various factors affecting recruitment.

4.1 INTRODUCTION
Successful human resource planning should identify our human resource
needs. Once we know these needs, we will want to do something about
meeting them. The next step in the acquisition function, therefore, is
recruitment. This activity makes it possible for us to acquire the number

53
Human Resource
Management
and types of people necessary to ensure the continued operation of the
organization.
Hallett says, “It is with people that quality performance really begins and
ends.” Robert Heller also says, “If people of poor caliber are hired,
nothing much else can be accomplished and Gresham’s law will work: the
bad people will drive out the good or cause them to deteriorate.”
Recruiting is the discovering of potential candidates for actual or
anticipated organizational vacancies. Or, from another perspective, it is a
linking activity bringing together those with jobs to fill and those seeking
jobs.

4.2 RECRUITMENT: MEANING AND DEFINITION

 DEFINITION
Recruitment forms a step in the process which continues with selection
and ceases with the placement of the candidate. It is the next step in the
procurement function, the first being the manpower planning. Recruiting
makes it possible to acquire the number and types of people necessary to
ensure the continued operation of the organisation. Recruiting is the
discovering of potential applicants for actual or anticipated organisational
vacancies.
According to Edwin B. Flippo, “Recruitment is the process of searching
for prospective employees and stimulating them to apply for jobs in the
organisation.”
According to Lord, “Recruitment is a form of competition. Just as
corporations compete to develop, manufacture, and market the best
product or service, so they must also compete to identify, attract and hire
the most qualified people. Recruitment is a business, and it is a big
business.”
In the words of Dale Yoder, “Recruiting is a process to discover the
sources of manpower to meet the requirements of the staffing schedule
and to employ effective measures for attracting that manpower in adequate
numbers to facilitate effective selection of an efficient working force.”
According to Werther and Davis, “Recruitment is the process of finding
and attracting capable applicants for employment. The process begins
when new recruits are sought and ends when their applications are
submitted. The result is a pool of applicants form which new employees
are selected.”
Dales S. Beach writes, “Recruitment is the development and maintenance
of adequate manpower resources. It involves the creation of a pool of
available labour upon whom the organisation can depend when it needs
additional employees.”

54
Thus, recruitment process is concerned with the identification of possible Recruitment and Selection
Part I
sources of human resource supply and tapping those sources. In the total
process of acquiring and placing human resources in the organisation,
recruitment falls in between different sub processes.

 NEED FOR RECRUITMENT

According to Scott, Clothier and Spriegel the need for recruitment
arises out of the following situations:

 Vacancies created due to expansion, diversification, and growth of

business.

 An increase in the competitive advantage of certain concerns,

enabling them to get more of the available business than formerly.

 An increase in business arising from an upswing during the recovery

period of a business cycle.

 Vacancies created due to transfer, promotion, retirement,

termination, permanent disability or death.

 The normal population growth, which requires increased goods and

services to meet the needs of the people.

 A rising standard of living, which requires more of the same goods

and services as well as the creation of new wants to be satisfied.

4.3 PROCESS OF RECRUITMENT

Recruitment process passes through the following stages:
Recruitment process begins when the personnel department receives
requisitions for recruitment from any department of the company, The
personnel requisitions contain details about the position to be filled,
number of persons to be recruited, the duties to be performed,
qualifications expected from the candidates, terms and conditions of
employment and the time by which the persons should be available for
appointment etc.
Locating and developing the sources of required number and type of
employees. Identifying the prospective employees with required
characteristics.
Developing the techniques to attract the desired candidates. The goodwill
of an organisation in the market may be one technique. The publicity
about the company being a good employer may also help in stimulating
candidates to apply. There may be others of attractive salaries, proper
facilities for development etc. Evaluating the effectiveness of recruitment
process.

55
Human Resource
Management
According to Famularo, personnel recruitment process involves five
elements, viz., a recruitment policy, a recruitment organisation, a forecast
of manpower, the development of sources of recruitment, and different
techniques used for utilising these sources, and a method of assessing the
recruitment programme.

The steps in the process of recruitment are explained below:

 Recruitment Policy: It specifies the objectives of recruitment and

provides a framework for the implementation of the recruitment
programme. It also involves the employer’s commitment to some
principles as to find and employ the best qualified persons for each
job, to retain the most promising of those hired, etc. It should be based
on the goals, needs and environment of the organisation.

 Recruitment Organisation: The recruitment may be centralised like

public sector banks or decentralised. Both practices have their own
merits. The choice between the two will depend on the managerial
philosophy and the particular needs of the organisation.

 Sources of Recruitment: Various sources of recruitment may be

classified as internal and external. These have their own merits and
demerits.

 Methods of Recruitment: Recruitment techniques are the means to

make contact with potential candidates, to provide them necessary
information and to encourage them to apply for jobs.

 Evaluation of Recruitment Programme: The recruitment process

must be evaluated periodically. The criteria for evaluation may consist
of cost per applicant, the hiring ratio, performance appraisal, tenure of
stay, etc. After evaluation, necessary improvements should be made in
the recruitment programme.

4.4 RECRUITMENT POLICY

 Areas covered by the Recruitment Policy
As Yoder et al observe recruitment policy spells out the objectives of the
recruitment and provides a framework for implementations of the
recruitment programme in the form of procedures. It may involve a
commitment to broad principles such as filling vacancies with the best
qualified individuals. The recruitment policy may embrace several issues
such as the extent of promotion from within, attitudes of enterprise in
recruiting old, handicapped, and minor individuals, minority group
members, part time employees and relatives of present employees. In
addition, the recruitment policy may also involve the organisation system
to be developed for implementing the recruitment programme and
procedures to be employed. Explicitly, an organisational system is a
function of the size of an enterprise. In smaller enterprises, there may be
merely informal recruiting procedures and the line official may be
56
responsible to handle this function along with their usual responsibilities. Recruitment and Selection
Part I
On the other hand, in larger organisations, there is usually a staff unit
attached with personnel or an industrial relations department designated as
employment or recruitment office. This specialisation of recruitment
enables staff personnel to become highly skilled in recruitment techniques
and their evaluation. However, recruitment remains the line responsibility
as far as the personnel requisition forms are originated by the line
personnel, who have also the final word in the acceptance or rejection of a
particular applicant. Despite this, the staff personnel have adequate
freedom in respect of sources of manpower to be tapped and the procedure
to be followed for this purpose.

Recruitment policy covers the following areas:

 To prescribe the degree of emphasis inside the organisation or outside

the organisation.

 To provide the weightage that would be given to certain categories of

people such as local population, physically handicapped personnel,
personnel from scheduled castes/tribes and other backward classes.

 To prescribe whether the recruitment would be centralised or

decentralised at unit levels.

 To specify the degree of flexibility with regard to age, qualifications,

compensation structure and other service conditions.

 To prescribe the personnel who would be involved in recruitment

process and the role of human resource department in this regard.

 To specify the budget for meeting the expenditures incurred in

completing the recruitment process.
According to Yoder, “the recruitment policy is concerned with quantity
and qualifications of manpower.”It establishes broad guidelines for the
staffing process.
According to Yoder generally the following factors are involved in a
recruitment policy:

 To provide each employee with an open road and encouragement in

the continuing development of his talents and skills;

 To provide individual employees with the maximum of employment

security, avoiding, frequent lay-off or lost time;

 To avoid cliques which may develop when several members of the

same household or community are employed in the organisation;

 To carefully observe the letter and spirit of the relevant public policy
on hiring and, on the whole, employment relationship;
57
Human Resource
Management  To assure each employee of the organisation interest in his personal
goals and employment objective; To assure employees of fairness in
all employment relationships, including promotions and transfers;

 To provide employment in jobs which are engineered to meet the

qualifications of handicapped workers and minority sections; and

 To encourage one or more strong, effective, responsible trade unions

among the employees.

 Prerequisites of a Good Recruitment Policy:

The recruitment policy of an organisation must satisfy the following
conditions:

 It should be in conformity with its general personnel policies.

 It should be flexible enough to meet the changing needs of an

organization.

 It should be so designed as to ensure employment opportunities for its

employees on a long-term basis so that the goals of the organisation
should be achievable; and it should develop the potentialities of
employees.

 It should match the qualities of employees with the requirements of

the work for which they are employed.

 It should highlight the necessity of establishing job analysis.

4.5 FACTOR AFFECTING RECRUITMENT

The factors affecting recruitment can be classified as:

 Internal Factors

 External Factors.

 Internal Factors:
The internal factors are:

 Wage and salary policies;

 The age composition of existing working force;

 Promotion and retirement policies;

 Turnover rates;

 The nature of operations involved the kind of personnel required;

 The level and seasonality of operations in question;

58
  Future expansion and reduction programmes; Recruitment and Selection
Part I
 Recruiting policy of the organisation;

 Human resource planning strategy of the company;

 Size of the organisation and the number of employees employed;

 Cost involved in recruiting employees;

 Growth and expansion plans of the organisation.

 External Factors:
The external factors are:

 Supply and demand of specific skills in the labour market;

 Company’s image perception of the job seekers about the company.

 External cultural factors: Obviously, the culture may exert

considerable check on recruitment. For example, women may not be
recruited in certain jobs in industry.

 Economic factors: such as a tight or loose labour market, the

reputation of the enterprise in the community as a good pay master or
otherwise and such allied issues which determine the quality and
quantity of manpower submitting itself for recruitment.

 Political and legal factors also exert restraints in respect of nature and
hours of work for women and children, and allied employment
practices in the enterprise, reservation of Job for SC, ST and so on.

4.6 SOURCES OF RECRUITMENT

After the finalisation of recruitment plan indicating the number and type
of prospective candidates, they must be attracted to offer themselves for
consideration to their employment. This necessitates the identification of
sources from which these candidates can be attracted. Some companies try
to develop new sources, while most only try to tackle the existing sources
they have. These sources, accordingly, may be termed as internal and
external.

 Internal Sources
It would be desirable to utilise the internal sources before going outside to
attract the candidates. Yoder and others suggest two categories of internal
sources:
1. Review of the present employees
2. Nomination of candidates by employees.
59
Human Resource
Management
Effective utilisation of internal sources necessitates an understanding of
their skills and information regarding relationships of jobs. This will
provide possibilities for horizontal and vertical transfers within the
enterprise eliminating simultaneous attempts to lay off employees in one
department and recruitment of employees with similar qualification for
another department in the company. Promotion and transfers within the
plant where an employee is best suitable improves the morale along with
solving recruitment problems. These measures can be taken effectively if
the company has established job families through job analysis
programmes combining together similar jobs demanding similar employee
characteristics. Again, employees can be requested to suggest promising
candidates. Sometimes, employees are given prizes for recommending a
candidate who has been recruited. Despite the usefulness of this system in
the form of loyalty and its wide practice, it has been pointed out that it
gives rise to cliques posing difficulty to management. Therefore, before
utilising this system attempts should be made to determine through
research whether or not employees thus recruited are effective on
particular jobs. Usually, internal sources can be used effectively if the
numbers of vacancies are not very large, adequate, employee records are
maintained, jobs do not demand originality lacking in the internal sources,
and employees have prepared themselves for promotions.

Merits of Internal Sources:

The following are the merits of internal sources of recruitment:

 It creates a sense of security among employees when they are assured

that they would be preferred in filling up vacancies.

 It improves the morale of employees, for they are assured of the fact
that they would be preferred over outsiders when vacancies occur.

 It promotes loyalty and commitment among employees due to sense of

job security and opportunities for advancement.

 The employer is in a better position to evaluate those presently

employed than outside candidates. This is because the company
maintains a record of the progress, experience and service of its
employees.

 Time and costs of training will be low because employees remain

familiar with the organisation and its policies.

 Relations with trade unions remain good. Labour turnover is reduced.

 As the persons in the employment of the company are fully aware of,
and well acquainted with its policies and know its operating
procedures, they require little training, and the chances are that they
would stay longer in the employment of the organisation than a new
outsider would.

60
 It encourages self-development among the employees. It encourages Recruitment and Selection
Part I
good individuals who are ambitious.

 It encourages stability from continuity of employment.

 It can also act as a training device for developing middle and top-level
managers.

Demerits of Internal Sources:

However, this system suffers from certain defects as:

 There are possibilities that internal sources may “dry up”, and it may
be difficult to find the requisite personnel from within an organisation.

 It often leads to inbreeding, and discourages new blood from entering

and organisation.

 As promotion is based on seniority, the danger is that really capable

hands may not be chosen. The likes and dislikes of the management
may also play an important role in the selection of personnel.

 Since the learner does not know more than the lecturer, no innovations
worth the name can be made. Therefore, on jobs which require
original thinking (such as advertising, style, designing and basic
research), this practice is not followed.

 This source is used by many organisations; but a surprisingly large

number ignore this source, especially for middle management jobs.

 External Sources
DeCenzo and Robbins remark, “Occasionally, it may be necessary to
bring in some ‘new blood’ to broaden the present ideas, knowledge, and
enthusiasm.” Thus, all organisations have to depend on external sources of
recruitment. Among these sources are included:

 Employment agencies.

 Educational and technical institutes. and

 Casual labour or “applicants at the gate” and nail applicants.

 Employment Agencies:
Public and private employment agencies play a vital role in making
available suitable employees for different positions in the organisations.
Besides public agencies, private agencies have developed markedly in
large cities in the form of consultancy services. Usually, these agencies
facilitate recruitment of technical and professional personnel. Because of
61
Human Resource
Management
their specialisation, they effectively assess the needs of their clients and
aptitudes and skills of the specialised personnel. They do not merely bring
an employer and an employee together but computerised lists of available
talents, utilising testing to classify and assess applicants and use advanced
techniques of vocational guidance for effective placement purposes.

 Educational and technical institutes:

These institutes also form an effective source of manpower supply. There
is an increasing emphasis on recruiting student from different
management institutes and universities commerce and management
departments by recruiters for positions in sales, accounting, finance,
personnel and production. These students are recruited as management
trainees and then placed in special company training programmes. They
are not recruited for particular positions but for development as future
supervisors and executives. Indeed, this source provides a constant flow of
new personnel with leadership potentialities. Frequently, this source is
tapped through on-campus interview with promising students. In addition,
vocational schools and industrial training institutes provide specialised
employees, apprentices, and trainees for semiskilled and skilled jobs.
Persons trained in these schools and institutes can be placed on operative
and similar jobs with a minimum of in-plant training. However,
recruitment of these candidates must be based on realistic and differential
standards established through research reducing turnover and enhancing
productivity.

 Casual labour or “applicants at the gate” and nail applicants

Frequently, numerous enterprises depend to some extent upon casual
labour or “applicants at the gate” and nail applicants. The candidates may
appear personally at the company’s employment office or send their
applications for possible vacancies. Explicitly, as Yoder and others
observe, the quality and quantity of such candidates depend on the image
of the company in community. Prompt response to these applicants proves
very useful for the company. However, it may be noted that this source is
uncertain, and the applicants reveal a wide range of abilities necessitating
a careful screening. Despite these limitations, it forms a highly
inexpensive source as the candidates themselves come to the gate of the
company. Again, it provides measures for good public relations and
accordingly, all the candidates visiting the company must be received
cordially.

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 Recruitment and Selection
 Recruiting Sources Used by Skill and Level
Part I

Skill/Level Recruiting Source Percentage of Use

Unskilled and Informal contacts 85
Semiskilled
Walk-ins 74
Public Employment
Agencies 66
Want Ads 52
Skilled Informal Contacts 88
Walk-ins 66
Public Employment
Agencies 55
Want Ads 55
Professional Internal Search 94
Employees
Informal Contacts 92
Walk-ins 71
Public Employment
Agencies 52
Want Ads 48
Private Employment
Agencies 22

Managerial Level Internal Search 100

Informal Contacts 71
Walk-ins 31
Private Employment
Agencies 20
Want Ads 17
Public Employment
Agencies 12

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Human Resource
Management
Source: Adapted from Stephen L. Mangum, “Recruitment and job
Search: The Recruitment Tactics of Employers. “Personnel
Administrator, June 1982, p. 102.

 Trade Unions:
As Jucius observes, trade unions are playing an increasingly important
role in labour supply. In several trades, they supply skilled labour in
sufficient numbers. They also determine the order in which employees are
to be recruited in the organisation. In industries where they do not take
active part in recruitment, they make it a point that employees laid off are
given preference in recruitment.

 Application Files:
Application files also forms a useful source of supply of work force.
Attempts may be made to review the application to determine jobs for
which the candidates filed for future use when there are openings in these
jobs. The candidates may be requested to renew their cards as many times
as they desire. All the renewed cards may be placed in “active” files and
those not renewed for considerable time may be placed in “inactive” file
or destroyed. Indeed, a well-indexed application file provides utmost
economy from the standpoint of a recruiting budget.
Efficacy of alternative sources of supply of human resources should be
determined through research. Attempts may be made to relate the factor of
success on the job with a specific source of supply. Alternative sources
can also be evaluated in terms of turnover, grievances and disciplinary
action. Those sources which are significantly positively related with job
performance and significantly negatively related with turnover, grievances
and disciplinary action, can be effectively used in recruitment
programmes. The assessment should be periodically performed in terms of
occupations. It may be that source “A” is most effective for technical
workers, while source “B” for semiskilled workers.

Advantages of External Recruitment:

External sources of recruitment are suitable for the following reasons:

 It will help in bringing new ideas, better techniques and improved

methods to the organisation.

 The cost of employees will be minimised because candidates selected

in this method will be placed in the minimum pay scale.

 The existing employees will also broaden their personality.

 The entry of qualitative persons from outside will be in the interest of

the organisation in the long run.

 The suitable candidates with skill, talent, knowledge are available

from external sources.

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 The entry of new persons with varied expansion and talent will help in Recruitment and Selection
Part I
human resource mix.

Disadvantages of External Sources:

 Orientation and training are required as the employees remain

unfamiliar with the organisation. It is more expensive and time
consuming.

 Detailed screening is necessary as very little is known about the

candidate.

 If new entrant fails to adjust himself to the working in the enterprise, it

means yet more expenditure on looking for his replacement.

 Motivation, morale and loyalty of existing staff are affected, if higher

level jobs are filled from external sources. It becomes a source of
heart-burning and demoralisation among existing employees.

4.7 METHODS OF RECRUITMENT

Methods of recruitment are different from the sources of recruitment.
Sources are the locations where prospective employees are available. On
the other hand, methods are way of establishing links with the prospective
employees. Various methods employed for recruiting employees may be
classified into the following categories:

 Direct Methods:
These include sending recruiters to educational and professional
institutions, employees, contacts with public, and manned exhibits. One of
the widely used direct methods is that of sending of recruiters to colleges
and technical schools. Most college recruiting is done in co-operation with
the placement office of a college. The placement office usually provides
help in attracting students, arranging interviews, furnishing space, and
providing student resumes.
For managerial, professional and sales personnel campus recruiting is an
extensive operation. Persons reading for MBA or other technical diplomas
are picked up in this manner. For this purpose, carefully prepared
brochures, describing the organisation and the jobs it offers, are
distributed among students, before the interviewer arrives. Sometimes,
firms directly solicit information from the concerned professors about
students with an outstanding record. Many companies have found
employees contact with the public a very effective method. Other direct
methods include sending recruiters to conventions and seminars, setting
up exhibits at fairs, and using mobile offices to go to the desired centers.

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Human Resource
Management  Indirect Methods:
The most frequently used indirect method of recruitment is advertisement
in newspapers, journals, and on the radio and television. Advertisement
enables candidates to assess their suitability. It is appropriate when the
organisation wants to reach out to a large target group scattered
nationwide. When a firm wants to conceal its identity, it can give blind
advertisement in which only box number is given. Considerable details
about jobs and qualifications can be given in the advertisements. Another
method of advertising is a notice-board placed at the gate of the company.

 Third-Party Methods:
The most frequently used third-party methods are public and private
employment agencies. Public employment exchanges have been largely
concerned with factory workers and clerical jobs. They also provide help
in recruiting professional employees. Private agencies provide consultancy
services and charge a fee. They are usually specialised for different
categories of operatives, office workers, salesmen, 55 supervisory and
management personnel. Other third-party methods include the use of trade
unions. Labour- management committees have usually demonstrated the
effectiveness of trade unions as methods of recruitment.
Several criteria discussed in the preceding section for evaluating sources
of applicants can also be used for assessing recruiting methods. Attempts
should be made to identify how the candidate was attracted to the
company. To accomplish this, the application may consist of an item as to
how the applicant came to learn about the vacancy. Then, attempts should
be made to determine the method which consistently attracts good
candidates. Thus, the most effective method should be utilised to improve
the recruitment programme.

4.8 PHILOSOPHIES OF RECRUITMENT

 Philosophies of recruitment
There are basically two philosophies of recruitment:

 Traditional Philosophy:
The traditional philosophy is to get as many people as possible to apply
for the job. As a result of this, a large number of job seekers apply for the
job, which makes the final selection process difficult and can often result
in the selection of wrong candidates. Wrong selection can, in turn, lead to
employee dissatisfaction and turnover in the long run.

 Realistic Philosophy:
In realistic philosophy, the needs of the organisation are matched with the
needs of the applicants, which enhance the effectiveness of the
recruitment process. In realistic approach, the employees who are

66
recruited will stay in the organisation for a longer period of time and will Recruitment and Selection
Part I
perform at higher level of effectiveness.

 Difference between Traditional and Realistic Job Preview

Traditional Job Preview Realistic Job Preview

Setting unrealistic and high job Setting realistic job expectations.
expectations.
Job is viewed by the candidates as Attractiveness of job is evaluated
highly attractive in the light of realistic job
expectations
High rate of acceptance of job Some accept and some reject job
offers. offers.
High expectation belied by actual Expectations are confirmed by job
job experience experience.
Creations of dissatisfaction,
frustration and thoughts for leaving Creation of satisfaction in the light
the job of job expectations.
High rate of personnel turnover High rate of personnel retention
and lower rate of job survival and
high rate of job survival

4.9 SUMMARY
Recruitment forms a step in the process which continues with selection
and ceases with the placement of the candidate. It is the next step in the
procurement function, the first being the manpower planning. Recruiting
makes it possible to acquire the number and types of people necessary to
ensure the continued operation of the organisation. Thus, recruitment
process is concerned with the identification of possible sources of human
resource supply and tapping those sources.
Recruitment process involves five elements, viz., a recruitment policy, a
recruitment organisation, the development of sources of recruitment, and
different techniques used for utilising these sources, and a method of
assessing the recruitment programme. After the finalisation of recruitment
plan indicating the numbers and type of prospective candidates, they must
be attracted to offer themselves for consideration to their employment.
This necessitates the identification of sources from which these candidates
can be attracted. Some companies try to develop new sources, while most
only try to tackle the existing sources they have. These sources,
accordingly, may be termed as internal and external.

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Human Resource
Management
Methods of recruitment are different from the sources of recruitment.
Sources are the locations where prospective employees are available. On
the other hand, methods are way of establishing links with the prospective
employees. Various methods employed for recruiting employees may be
classified into direct methods, indirect methods and third party methods.

4.10 SELF ASSESSMENT QUESTIONS

1. Define recruitment and identify the various factors which affect
recruitment.
2. Discuss the steps of recruitment process. How will you reconcile the
internal and external sources of recruitment?
3. Discuss various sources of recruitment.
4. What is realistic job preview? How does it differ from traditional job
preview?
5. What do you mean by recruitment policy? Explain the prerequisites of
a good recruitment policy.
6. Write short notes on following -
(i) Advantages and disadvantages of internal sources of recruitment.
(ii) Advantages and disadvantages of external source of recruitment.
(iii) Explain the direct, indirect and third party methods of
recruitment.




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 5
RECRUITMENT AND SELECTION
PART II
Unit Structure
5.0 Objectives
5.1 Introduction
5.2 Definition of Selection
5.3 Selection Procedure
5.4 Placement of Orientation
5.5 Induction
5.6 Summary
5.7 Self Assessment Questions

5.0 OBJECTIVES
After completing this unit, you will be able to:

 Understand and define selection and its process.

 Understand the selection process so as to make it effective.

 Understand in brief about placement and orientation.

 Explain the term ‘Induction’ and the objectives of induction.

5.1 INTRODUCTION
Human resource selection is the process of choosing qualified individuals
who are available to fill positions in an organization. In the ideal
personnel situation, selection involves choosing the best applicant to fill a
position. Selection is the process of choosing people by obtaining and
assessing information about the applicants with a view to matching these
with the job requirements. It involves a careful screening and testing of
candidates who have put in their applications for any job in the enterprise.
It is the process of choosing the most suitable persons out of all the
applicants. The purpose of selection is to pick up the right person for
every job.

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Human Resource
Management

5.2 DEFINITION OF SELECTION

MEANING AND DEFINITION
It can be conceptualised in terms of either choosing the fit candidates, or
rejecting the unfit candidates, or a combination of both. Selection involves
both because it picks up the fits and rejects the unfits. In fact, in Indian
context, there are more candidates who are rejected than those who are
selected in most of the selection processes. Therefore, sometimes, it is
called a negative process in contrast to positive programme of recruitment.
According to Dale Yoder, “Selection is the process in which candidates
for employment are divided into two classes-those who are to be offered
employment and those who are not”.
According to Thomas Stone, “Selection is the process of differentiating
between applicants in order to identify (and hire) those with a greater
likelihood of success in a job”.
In the words of Michael Jucius, “The selection procedure is the system
of functions and devices adopted in a given company for the purpose of
ascertaining whether or not candidates possess the qualifications called for
by a specific job or for progression through a series of jobs.”
According to Keith Davis, “Selection is the process by which an
organisation chooses from a list of screened applicants, the person or
persons who best meet the selection criteria for the position available.”
Thus, the selection process is a tool in the hands of management to
differentiate between the qualified and unqualified applicants by applying
various techniques such as interviews, tests etc. The cost incurred in
recruiting and selecting any new employee is expensive. The cost of
selecting people who are inadequate performers or who leave the
organisation before contributing to profits proves a major cost of doing
business. Decenzo and Robbins write, “Proper selection of personnel is
obviously an area where effectiveness choosing competent workers who
perform well in their position can result in large saving.” According to
them, selection has two objectives: (1) to predict which job applicants
would be successful if hired and (2) to inform and sell the candidate on the
job and the organization. Satisfaction of employee needs and wants as
well as the fullest development of his potential are important objectives of
selection.
Dale Yoder says, “Selection has long held a high rank in the priority of
problem areas in management. Investments in good people produce a very
high rate of return. A good choice of people can provide a basis for long,
sustained contributions.”

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 Recruitment and Selection
Part II
DIFFERENCE BETWEEN RECRUITMENT AND SELECTION:
Difference between recruitment and selection has been described by
Flippo as, “Recruitment is a process of searching for prospective
employees and stimulating and encouraging them to apply for jobs in an
organisation. It is often termed positive as is stimulates people to apply for
jobs, selection on the other hand tends to be negative because it rejects a
good number of those who apply, leaving only the best to be hired.”
Recruitment and selection differs in following manner:
Difference in Objective: The basic objective of recruitment is to attract
maximum number of candidates so that more options are available. The
basic objective of selection is to choose best out of the available
candidates.
Difference is Process: Recruitment adopts the process of creating
application pool as large as possible and therefore. It is known as positive
process. Selection adopts the process through which more and more
candidates are rejected and fewer candidates are selected or sometimes
even not a single candidate is selected. Therefore, it is known as negative
process or rejection process.
Technical Differences: Recruitment techniques are not very intensive,
and not require high skills. As against this, in selection process, highly
specialised techniques are required. Therefore, in the selection process,
only personnel with specific skills like expertise in using selection tests,
conducting interviews, etc., are involved.
Difference in Outcomes: The outcome of recruitment is application pool
which becomes input for selection process. The outcome of selection
process is in the form of finalising candidates who will be offered jobs.

5.3 SELECTION PROCEDURE

The selection procedure is concerned with securing relevant information
about an applicant. This information is secured in a number of steps or
stages. The objective of selection process is to determine whether an
applicant meets the qualification for a specific job and to choose the
applicant who is most likely to perform well in that job. Selection is a long
process, commencing from the preliminary interview of the applicants and
ending with the contract of employment (sometimes).
The selection procedure consists of a series of steps. Each step must be
successfully cleared before the applicant proceeds to the next. The
selection process is a series of successive hurdles or barriers which an
applicant must cross. These hurdles are designed to eliminate an
unqualified candidate at any point in the selection process. Thus, this
technique is called “Successive Hurdles Technique”. In practice, the
process differs among organisations and between two different jobs within
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Human Resource
Management
the same organisation. Selection procedure for the senior managers will be
long drawn and rigorous, but it is simple and short while hiring lower
level employees.
The major factors which determine the steps involved in a selection
process are as follows:
1. Selection process depends on the number of candidates that are
available for selection.
2. Selection process depends on the sources of recruitment and the
method that is adopted for making contact with the prospective
candidates.
3. Various steps involved in as selection process depend on the type of
personnel to be selected.
All the above factors are not mutually exclusive, rather these operate
simultaneously. In any case, the basic objective of a selection process is to
collect as much relevant information about the candidates as is possible so
that the most suitable candidates are selected. A comprehensive selection
process involves the various steps.

The steps are explained below:

Application Pool:
Application pool built-up through recruitment process is the base for
selection process. The basic objective at the recruitment level is to attract
as much worthwhile applications as possible so that there are more options
available at the selection stage.

Preliminary Screening and Interview

It is highly no economic to administer and handle all the applicants. It is
advantageous to sort out unsuitable applicants before using the further
selection steps. For this purpose, usually, preliminary interviews,
application blank lists and short test can be used. All applications received
are scrutinised by the personnel department in order to eliminate those
applicants who do not fulfill required qualifications or work experience or
technical skill, his application will not be entertained. Such candidate will
be informed of his rejection.
Preliminary interview is a sorting process in which the prospective
candidates are given the necessary information about the nature of the job
and the organisation. Necessary information is obtained from the
candidates about their education, skills, experience, expected salary etc. If
the candidate is found suitable, he is elected for further screening. This
courtesy interview; as it is often called helps the department screen out
obvious misfits. Preliminary interview saves time and efforts of both the
company and the candidate. It avoids unnecessary waiting for the rejected
candidates and waste of money on further processing of an unsuitable

72
candidate. Since rejection rate is high at preliminary interview, the Recruitment and Selection
Part II
interviewer should be kind, courteous, receptive and informal.

Application Blank or Application Form:

An application blank is a traditional widely accepted device for getting
information from a prospective applicant which will enable the
management to make a proper selection. The blank provides preliminary
information as well as aid in the interview by indicating areas of interest
and discussion. It is a good means of quickly collecting verifiable (and
therefore fairly accurate) basic historical data from the candidate. It also
serves as a convenient device for circulating information about the
applicant to appropriate members of management and as a useful device
for storing information for, later reference. Many types of application
forms, sometimes very long and comprehensive and sometimes brief, are
used.

Information is generally taken on the following items:

Biographical Data: Name, father’s name, data and place of birth, age,
sex, nationality, height, weight, identification marks, physical disability, if
any, marital status, and number of dependants.
Educational Attainment: Education (subjects offered and grades
secured), training acquired in special fields and knowledge gained from
professional/technical institutes or through correspondence courses.
Work Experience: Previous experience, the number of jobs held with the
same or other employers, including the nature of duties, and
responsibilities and the duration of various assignments, salary received,
grades, and reasons for leaving the present employer.
Salary and Benefits: Present and expected.
Other Items: Names and addresses of previous employers, references,
etc. An application blank is a brief history sheet of an employee’s
background and can be used for future reference, in case needed.
The application blank must be designed from the viewpoint of the
applicant as well as with the company’s purpose in mind. It should be
relatively easy to handle in the employment office.

Application form helps to serve many functions like:

 Its main usefulness is to provide information for reference checking,

good interviewing, and correlation with testing data.

 It helps to weed out candidates who are lacking in education,

experience or some other eligibility traits.

 It helps in formulating questions to be asked in the interview.

 Data contained in application form can be stored for future reference.

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Human Resource
Management  It also tests the candidate’s ability to write, to organize his thoughts,
and to present facts clearly and succinctly.

 It indicates further whether the applicant has consistently progressed

to better jobs. It provides factual information.

Weighted Application Blanks

Some organisations assign numeric values or weights to the responses
provided by the applicants. This makes the application form more job
related. Generally, the items that have a strong relationship to job
performance are given higher scores. For example, for a sales
representative’s position, items such as previous selling experience, area
of specialisation, commission earned, religion, language etc. The total
score of each applicant is then obtained by adding the weights of the
individual item responses. The resulting scores are then used in the final
selection. WAB is best suited for jobs where there are many employees
especially for sales and technical jobs. It can help in reducing the
employee turnover later on.
However, there are several problems associated with WAB:

 It takes time to develop such a form.

 The WAB would have to be updated every few years to ensure that the
factors previously identified are still valid products of job success.

 The organisation should be careful not to depend on weights of a few

items while finally selecting the employee.

Selection Tests:
Many organisations hold different kinds of selection tests to know more
about the candidates or to reject the candidates who cannot be called for
interview etc. Selection tests normally supplement the information
provided in the application forms. Such forms may contain factual
information about candidates. Selection tests may give information about
their aptitude, interest, personality, which cannot be known by application
forms. Types of tests and rules of good of testing have been discussed in
brief below:

TYPES OF TEST:
Aptitude Tests: These measure whether an individual has the capacity or
talent ability to learn a given job if given adequate training. These are
more useful for clerical and trade positions.
Personality Tests: At times, personality affects job performance. These
determine personality traits of the candidate such as cooperativeness,
emotional balance etc. These seek to assess an individual’s motivation,
adjustment to the stresses of everyday life, capacity for interpersonal
relations and self-image.

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Interest Tests: These determine the applicant’s interests. The applicant is Recruitment and Selection
Part II
asked whether he likes, dislikes, or is indifferent to many examples of
school subjects, occupations, amusements, peculiarities of people, and
particular activities.
Performance Tests: In this test the applicant is asked to demonstrate his
ability to do the job. For example, prospective typists are asked to type
several pages with speed and accuracy.
Intelligence Tests: This aim at testing the mental capacity of a person
with respect to reasoning, word fluency, numbers, memory,
comprehension, picture arrangement, etc. It measures the ability to grasp,
understand and to make judgement.
Knowledge Tests: These are devised to measure the depth of the
knowledge and proficiency in certain skills already achieved by the
applicants such as engineering, accounting etc.
Achievement Tests: Whereas aptitude is a capacity to learn in the future,
achievement is concerned with what one has accomplished. When
applicants claim to know something, an achievement test is given to
measure how well they know it.
Projective Tests: In these tests the applicant projects his personality into
free responses about pictures shown to him which are ambiguous.

RULES OF GOOD TESTING

1. Norms should be developed for each test. Their validity and reliability
for a given purpose should be established before they are used.
2. Adequate time and resources must be provided to design, validate, and
check tests.
3. Tests should be designed and administered only by trained and
competent persons.
4. The user of tests must be extremely sensitive to the feelings of people
about tests.
5. Tests are to be used as a screening device.
6. Reliance should not be placed solely upon tests in reaching decisions.
7. Tests should minimize the probabilities of getting distorted results.
8. They must be ‘race-free’.
9. Tests scores are not precise measures.
10. They must be assigned a proper weightage.

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Human Resource
Management
Interview:
An interview is a procedure designed to get information from a person and
to assess his potential for the job he is being considered on the basis of
oral responses by the applicant to oral inquiries by the interviewer.
Interviewer does a formal in-depth conversation with the applicant, to
evaluate his suitability. It is one of the most important tools in the
selection process. This tool is used while interviewing skilled, technical,
professional and even managerial employees. It involves two-way
exchange of information. The interviewer learns about the applicant and
the candidate learns about the employer.

OBJECTIVES OF INTERVIEWS:
Interview helps:

 To obtain additional information from the candidate.

 Facilitates giving to the candidate information about the job, company,

its policies, products etc. To assess the basic suitability of the
candidate.

 The selection interview can be:

 One to one between the candidate and the interviewer:

 Two or more interviewers by employers representatives- sequential;

 By a panel of selections, i.e. by more than representative of the

employer.

 The sequential interview involves a series of interviews; each

interviewer meeting the candidate separately. The panel interview
consists of two or more interviews meeting the candidate together.

TYPES OF INTERVIEWS:
Interviews can be classified in various ways according to:

 Degree of Structure

 Purpose of Interview

 Content of Interview

Degree of Structure:
Unstructured or non directive: in which you ask questions as they come
to mind. There is no set format to follow.
Structured or directive: in which the questions and acceptable responses
are specified in advance. The responses are rated for appropriateness of
content.

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Structured and non-structured interviews have their pros and cons. In Recruitment and Selection
Part II
structured interviews all applicants are generally asked all required
questions by all interviewers. Structured interviews are generally more
valid. However structured interviews do not allow the flexibility to pursue
points of interests as they develop.

Purpose of Interview:
Selection interview: This is a type of interview designed to predict future
job performance, on the basis of applicant’s responses to the oral
questions asked to him.
Stress interview: It is a special type of selection interview in which the
applicant is made uncomfortable by series of awkward and rude questions.
The aim of stress interview is supposedly to identify applicant’s low or
high stress tolerance. In such an interview the applicant is made
uncomfortable by throwing him on the defensive by series of frank and
often discourteous questions by the interviewer.

Content of Interview:
Job Related Interviews: The content of interview can be of a type in
which individual’s ability to project a situation is tested. This is a situation
type interview. In job related interview, interviewer attempts to assess
the applicant’s past behaviours for job related information, but most
questions are not considered situational.
Behaviour interview: In this type of interview a situation in described
and candidates are asked how they behaved in the past in such a situation.
While in situational interviews candidates are asked to describe how they
would react to situation today or tomorrow. In the behavioural interview
they are asked to describe how they did react to the situation in the past.

PRINCIPLES OF INTERVIEWING
To make the interview effective, it should be properly planned and
conducted on certain principles. Edwin Flippo has described certain rules
and principles of good interviewing to this end:

 Provide proper surroundings. The physical setting for the interview

should be both private and comfortable.

 The mental setting should be one of rapport. The interviewer must be

aware of non-verbal behaviour. Plan for the interview by thoroughly
reviewing job specifications and job descriptions.

 Determine the specific objectives and the method of the interviewing.

 Inform yourself as much as possible concerning the known

information about the interviewee. The interviewer should possess and
demonstrate a basic liking and respect for people.

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Human Resource
Management  Questions should be asked in a manner that encourages the
interviewee to talk. Put the applicant at ease.

 Make a decision only when all the data and information are available.
Avoid decisions that are based on first impressions.

 Conclude the interview tactfully, making sure that the candidate leaves
feeling neither too elated nor frustrated.

 Maintain some written record of the interview during or immediately

after it. Listen attentively and, if possible, protectively.

 Questions must be stated clearly to avoid confusion and ambiguity.

Maintain a balance between open and overtly structured questions.

 ‘Body language’ must not be ignored.

 The interviewer should make some overt sign to indicate the end of the
interview.

 Interviewing is largely an art, the application of which can be

improved through practice.

Background Investigation:
The next step in the selection process is to undertake an investigation of
those applicants who appear to offer potential as employees. This may
include contacting former employers to confirm the candidate’s work
record and to obtain their appraisal of his or her performance contacting
other job related and personal references, and verifying the educational
accomplishments shown on the application.
The background investigation has major implications. Every personnel
administrator has the responsibility to investigate each potential applicant.
In some organization, failure to do so could result in the loss of his or her
job. But many managers consider the background investigation data
highly biased. Who would actually list a reference that would not give
anything but the best possible recommendation? The seasoned personnel
administrator expects this and delves deeper into the candidate’s
background, but that, too, may not prove to be beneficial. Many past
employers are reluctant to give any information to another company other
than factual information (e.g., date of employment).
Even though there is some reluctance to give this information, there are
ways in which personnel administrators can obtain it. Sometimes, for
instance information can be obtained from references once removed. For
example, the personnel administrator can ask a reference whose name has
been provided on the application form to give another reference, someone
who has knowledge of the candidate’s work experience. By doing this, the
administrator can eliminate the possibility of accepting an individual
based on the employee’s current employer’s glowing recommendation

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when the motivation for such a positive recommendation was to get rid of Recruitment and Selection
Part II
the employee.

Physical Examination:
After the selection decision and before the job offer is made, the candidate
is required to undergo physical fitness test. Candidates are sent for
physical examination either to the company’s physician or to a medical
officer approved for the purpose. Such physical examination provides the
following information.
Whether the candidate’s physical measurements are in accordance with
job requirements or not? Whether the candidate suffers from bad health
which should be corrected?
Whether the candidate has health problems or psychological attitudes
likely to interfere with work efficiency or future attendance?
Whether the candidate is physically fit for the specific job or not?
Policy on these physical exams has changed today. Dale Yoder writes,
“Modem policy used the physical examination not to eliminate applicants,
but to discover what jobs they are qualified to fill. The examination should
disclose the physical characteristics of the individual that are significant
from the standpoint of his efficient performance of the job he may enter or
of those jobs to which he may reasonably expect to be transferred or
promoted. It should note deficiencies, not as a basis for rejection, but as
indicating restrictions on his transfer to various positions also.”

Approval by Appropriate Authority:

On the basis of the above steps, suitable candidates are recommended for
selection by the selection committee or personnel department. Though
such a committee or personnel department may have authority to select
the candidates finally, often it has staff authority to recommend the
candidates for selection to the appropriate authority. Organisations may
designate the 65 various authorities for approval of final selection of
candidates for different categories of candidates. Thus, for top level
managers, board of directors may be approving authority; for lower levels,
even functional heads concerned may be approving authority.

Final Employment Decision:

After a candidate is finally selected, the human resource department
recommends his name for employment. The management or board of the
company offers employment in the form of an appointment letter
mentioning the post, the rank, the salary grade, the date by which the
candidate should join and other terms and conditions of employment.
Some firms make a contract of service on judicial paper. Usually an
appointment is made on probation in the beginning. The probation period
may range from three months to two years. When the work and conduct of
the employee is found satisfactory, he may be confirmed. The personnel
department prepares a waiting list and informs the candidates. In case a
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person does not join after being selected, the company calls next person
on the waiting list.

Evaluation:
The selection process, if properly performed, will ensure availability of
competent and committed personnel. A period audit, conducted by people
who work independently of the human resource department, will evaluate
the effectiveness of the selection process. The auditors will do a thorough
and the intensive analysis and evaluate the employment programme.

5.4 PLACEMENT AND ORIENTATION

MEANING OF PLACEMENT:
After an employee has been recruited he is provided with basic
background information about the employer, working conditions and the
information necessary to perform his job satisfactorily. The new
employee’s initial orientation helps him perform better by providing him
information of the company rules, and practices.
According to Pigors and Myers, “Placement consists in matching what
the supervisor has reason to think the new employee can do with what the
job demands (job requirements), imposes (in strain, working conditions,
etc.), and offers (in the form of pay rate, interest, companionship with
other, promotional possibilities, etc.)” They further state that it is not easy
to match all these factors for a new worker who is still in many ways an
unknown quantity. For this reason, the first placement usually carries with
it the status of probationer.
A few basic principles should be followed at the time of placement of an
employee on the job. These may be enumerated as below:

Principles of Placement:

 The job should be offered to the man according to his qualifications.

The placement should neither be higher nor lower than the
qualifications.

 While introducing the job to the new employee, an effort should be

made to develop a sense of loyalty and cooperation in him so that he
may realise his responsibilities better towards the job and the
organisation.

 The employee should be made conversant with the working conditions

prevailing in the industry and all things relating to the job. He should
also be made aware of the penalties if he commits a wrong.

 Man should be placed on the job according to the requirements of the

job. The job should not be adjusted according to the qualifications or
requirements of the man. Job first; man next, should be the principle of
placement.
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 The placement should be ready before the joining date of the newly Recruitment and Selection
Part II
selected person.

 The placement in the initial period may be temporary as changes are

likely after the completion of training. The employee may be later
transferred to the job where he can do better justice.

MEANING OF ORIENTATION:
In the words of John M. Ivancevich, “Orientation orients, directs, and
guides employees to understand the work, firm, colleagues, and mission. It
introduces new employees to the organisation, and to his new tasks,
managers, and work groups.”
According to John Bernardin, “Orientation is a term used for the
organizationally sponsored, formalized activities associated with an
employee’s socialisation into the organisation.”
Billimoria has defined orientation as, “Induction (orientation) is a
technique by which a new employees rehabilitated into the changed
surroundings and introduced to the practices, policies, and purposes of the
organisation.”
Orientation is one component of the new employee socialization process.
Socialization is the ongoing process of instilling in all new employees
prevailing attitudes, standards, values, patterns of behaviour that are
expected by the organisation and its departments.
Thus, orientation is a process through which a new employee is introduced
to the organisation. It is the process wherein an employee is made to feel
comfortable and at home in the organisation. The new employee is handed
over a rulebook, company booklets, policy manuals, progress reports and
documents containing company information which are informational in
nature. It is responsibility of the human resource department to execute the
orientation programme.

5.5 INDUCTION
Induction is the important part of HR management and Development
because after the appointments, it is the prime duty of an organization to
make their newly employees acquainted with work place and
environment. It is but obvious that they are curious as well as nervous
initially. To reduce their anxiety and tension, induction training should be
given to each and every newly appointed entrant. It makes them
comfortable at work place and they get adapted to the work accordingly.
So in this unit we shall study about induction and related issues of it.

Meaning:
Every organization has a recruitment policy by which many people are
appointed time to time. These newly appointed employees are new to the
job place and for them everything is strange. The environment, people,
work system is new for them. They may feel nervous or stressed due to
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this all. So it is very essential to introduce them with the organization, its
mission, vision, culture, system etc. every organization has to provide
training to their new entrants.
It is known as induction. It is the next step after selection and placement.
It helps newly joined employees to adjust him or her to the work in the
organization and to make him or her feel at home with his co-workers. So
in easy words, we can say that introducing new entrants with the
organization and its people is induction.
It is must for the organizational as well as individual point of view.
Induction is welcoming a new employee to the organization. In other
words, it is a well orchestrated event to socialize the new entrant with the
people and the work environment in a particular organization.
According to Michael Armstrong: “Induction is the process of receiving
& welcoming an employee when he first joins a company & giving him
basic information he needs to settle down quickly & happily & start
work.”

OBJECTIVES OF INDUCTION:

 To help new employees not to feel strange being a part of the

organization after appointment.

 To make employees familiar with the people, work culture, duties and
responsibilities to be performed.

 To make them enable to adapt the new environment and feel stress
free.

 To reduce exploitation by the unscrupulous co – workers.

 To make him feel confident at the work place and work without
anxiety and tension

PHASES / TYPES OF INDUCTION PROGRAMME:

Induction is not an immediate activity but it is a process an itself. Its
stages are:

 General Induction

 Specific Induction

 Follow – up Induction
This first phase of induction is General considered by the HR department.
Here the new employees are made aware about the mission, philosophy
and vision of the organization. The very purpose of the organization is
made clear while introduction them with organization. The new
employees is also briefed about his service condition, pay & perks,
promotion procedure, personnel policies & grievance handling
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mechanisms practiced in the organization. This type of induction is given Recruitment and Selection
Part II
accordingly. No time is fixed for it. It may be given for a week or for
many weeks.

Specific Induction
This induction is given by the new employee’s supervisor or boss. The
focus is on the overall exposition of the new employee of the new
employee to his job. the employee is introduced to the job, shown place of
work & around the premises, introduced to the job. He is introduced to his
colleagues & informed about the procedure of work, rules and
conventions to be followed etc. This helps the new employee adjust with
his work environment. It also improves the relationship between superior
and subordinates.

Follow – up Induction
This type of induction is carried to know whether the new entrant is
capable to carry his duties or not or if he understood the organizational
related issues. This induction is given by the employee’s supervisor or a
qualified specialist on industrialist psychology. It is more psychological in
nature and concluded with the effectiveness of induction training provided
already.
PROCEDURE FOLLOWED WHILE CARRYING INDUCTION
PROGRAMME.
Welcoming new entrants
The new employees need to be welcomed by the organization. It makes
them well confident and starts feeling that they are being considered as a
part of the organization. It creates a sense of belongingness among them.
From the day of their joining, they should be treated with care.

Determining the information:

In this stage it should be considered what the new entrants need to know.
What exactly they are interested to know. Of course the basic information
should be provided to them. It is also not necessary that everything should
be informed at a time or load their minds with the information. They
should be given time to adapt themselves with the organizational
environment.

Method of providing information:

At this stage, decision should be taken regarding how to provide the
information to the employees. Most of the time through power point
presentations is used in the classroom to train the new employees. But
until otherwise employees are physically making acquainted with the
organization, it will difficult to get mixed with everyone.

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Right Instructor:
It is expected that the induction training should be provided by the
experienced staff or most of the time superior. It is very important because
the mind of the new employee is full off questions and doubts. So the
instructor should be a man of knowledge and motivated himself to help
the new entrants come out of anxiety.

Evaluation of the induction:

It is the last step of induction programme where attempts are made to
understand to what extent the induction training has been useful to the
employees. There are many methods of evaluating the effectiveness of
induction programme. It helps HR department to bring new ideas in the
area of induction training.

 IMPORTANCE OF INDUCTION
Easy entry:
Due to the induction training, newly appointed employees feel happy on
the introduction with existing employees and the work environment. So
induction helps them to get oriented with the everything within the
organization.

High morale:
Being made introduced with the organization, newly appointed employees
feel highly motivated and their moral gets boosted. They fell satisfied
doing work at right place and being trained formally, they get adapted the
organizational environment easily.

Role clarity:
Duplication work is avoided here by ensuring newly appointed employees
what they are expected to do. They are made clearly understood with the
work assigned and overcome with ambiguity.

Satisfaction of the job:

Today most of the job skipping or turnover is observed because new
entrants are not happy with job or they are not provided with proper
training. If the induction is properly provided and they are introduced well
with the organization, they feel contented and do the job at their best.

Less absenteeism and turnover:

Most of the time an employee remains absent if he is not happy with the
work place or do not many things at the work place. So if they are
provided proper induction, they do not remain absent and also do not
leave an organization. But stay connected for long.

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Goodwill Recruitment and Selection
Part II
Companies with good image in the market never compromise with any
problem. They provide induction training to their entire entrant
considering them an asset of the organization. It increases their goodwill
or brand in the market.

5.6 SUMMARY
Selection is the process of picking up individuals out of the pool of the job
applicants with requisite qualifications and competence to fill jobs in the
organisation. Proper selection can minimize the costs of replacement and
training, reduce legal challenges, and result in a more productive work
force. The discrete selection process would include: Application Pool,
Preliminary Screening and Interview, Application Blank or Application
Form, Selection Tests, Interview Background Investigation, Physical
Examination, Approval by Appropriate Authority, Final Employment
Decision and Evaluation.
Selection process involves mutual decision making. The organisation
decides whether or not to make a job offer and how attractive the job offer
should be. The candidate decides whether or not the organisation and the
job offer is according to his goals and needs. Selection of proper personnel
helps the management in getting the work done by the people effectively.
To be an effective predictor, a selection device should be Reliable, Valid
and Predict a relevant criterion
In India the selection process on hiring skilled and managerial personnel
are fairly well defined and systematically practical.

5.7 SELF ASSESSMENT QUESTIONS

1. What do you understand by selection process? Discuss various steps
involved in it.
2. What is application blank? What purpose does it serve? Explain the
contents of an application blank.
3. Discuss the characteristics of a good test. Explain various types of
tests used in the selection process.
4. What is an interview? What purpose does it serve? Discuss various
types of interviews.
5. Discuss various guidelines to be followed for an interview.
6. Explain various steps involved in the selection of personnel.
7. What do you understand by placement and orientation?
8. What is induction training? What are the objectives of such training?
9. What are the stages or phases of carrying induction?
10. What are the various phases of induction?
11. Explain the importance and significance of induction.

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 6
PERFORMANCE APPRAISAL
Unit Structure
6.0 Objectives
6.1 Introduction
6.2 Meaning of Performance Appraisal
6.3 Need and Importance of Performance Appraisal
6.4 Objectives of Performance Appraisal
6.5 Methods of Performance Appraisal
6.6 The Performance Appraisal Process
6.7 Factors Affecting Performance Appraisal
6.8 Benefits of Performance Appraisal
6.9 Problems of Performance Appraisal
6.10 Performance Appraisal Practices in India
6.11 Effective Performance Appraisal
6.12 Summary
6.13 Self Assessment Questions

6.0 OBJECTIVES
After completing this unit, you will be able to:

 Understand the concept of performance appraisal.

 State the meaning and importance of performance appraisal.

 Discuss the benefits and problems of appraisal.

 Enumerate the steps in performance appraisal process.

 Outline the objectives of performance appraisal

 Describe various appraisal methods.

 Outline few performance appraisal practices in India.

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 Performance Appraisal

6.1 INTRODUCTION
In a casual sense, performance appraisals as old as mankind itself. In an
official sense, performance appraisal of an individual began in the Wei
dynasty (AD. 261-265) in China, where an Imperial Rater appraised the
performance of the official family’.
In 1883, the New York City Civil Service in USA introduced an official
appraisal programme shortly before World War. However, official
appraisal of employees’ performance is thought to have been started for
the first time during the First World War, when at the instance of Walter
Dill Scott, the US Army: adopted the “Man-to- man’ rating system for
evaluating personnel. For being fair and unbiased, in judging the
employee it is necessary to review the performance of the person in the
organization. This is now done in a systematic way in most countries of
the world. The evaluation of an individual’s performance in the
organization is called Performance Appraisal.
The, system of performance appraisal compels the management to have a
promotion policy within the organization. It also gives motivation to those
employees who are efficient and are capable of working in a best way. It
is also described as merit rating in which one individual is ranked as better
or worse in comparison to others. The basic purpose in this merit rating is
to determine an employee’s eligibility for promotion. However,
performance appraisal is a broad term and it may be used to ascertain the
need for training and development, salary increase, transfer, discharge,
etc. besides promotion.
In simple terms, performance appraisal may be understood as the review
of an individual’s performance in an orderly way, the performance is
measured by considering factors like job knowledge, quality and quantity
of output, initiative, leadership abilities, supervision, dependability, co-
operation, judgment, versatility, health, and the like. Evaluation should not
be restricted to past performance alone but, the future performances of the
employee should also be assessed.

6.2 MEANING OF PERFORMANCE APPRAISAL

Performance appraisal system has been defined in many ways. The easiest
way to understand the meaning of performance appraisal is as follows:
It is the systematic assessment of an individual with respect to his or her
performance on the job and his or her potential for development in that
job. Thus, performance appraisal is a systematic and objective way of
evaluating the relative worth or ability of an employee in performing his
job. The two aspects of performance appraisal considered to be important
are:

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Human Resource
Management  Systematic Aspect:
The appraisal is said to be systematic when it evaluates all performances
in the same manner, by applying the same approach, so that appraisal of
different persons are comparable. Such an appraisal is taken from time to
time according to plan; it is not left to probability. Thus, both raters’ and
rates know the system of performance appraisal and its timing.

 Objective Aspect:
Appraisal has objectivity also. It’s important is that it attempts at precise
measurement by trying to remove human biases and prejudices.
According to Flippo, a prominent personality in the field of Human
resources, “performance appraisal is the systematic, periodic and an
impartial rating of an employee’s excellence in the matters pertaining to
his present job and his potential for a better job.”
In the words of Yoder, “Performance appraisal refers to all formal
procedures used in working organizations to evaluate personalities and
contributions and potential of group members.” Thus performance
appraisal is a formal programme in an organization which is concerned
with not only the contributions of the members who form part of the
organization, but also aims at spotting the potential of the people.”
It is a systematic way of judging the relative worth of an employee while
carrying out his work in an organization. It also helps recognize those
employees who are performing their tasks well and also who are not
performing their tasks properly and the reasons for such (poor)
performance.
According to International Labor Organization, “A regular and
continuous evaluation of the quality, quantity and style of the performance
along with the assessment of the factors influencing the performance and
behavior of an individual is called as performance appraisal.”
In short, we can say that performance appraisal is expected to result in an
assessment of: development potential of the employees, training needs for
the employees; capabilities of employees being placed in higher posts,
behavior and obedience of the employees; and the need of the
organization to evolve a control mechanism.

6.3 NEED AND IMPORTANCE OF PERFORMANCE

APPRAISAL
Performance is always measured in terms of outcome and not efforts.
Performance Appraisal is needed in most of the organizations in order:

 To give information about the performance of employees on the job

and give ranks on the basis of which decisions regarding salary
fixation, demotion, promotion, transfer and confirmation are taken.

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 To provide information about amount of achievement and behavior of Performance Appraisal
subordinate in their job. This kind of information helps to evaluate the
performance of the subordinate, by correcting loopholes in
performances and to set new standards of work, if required.

 To provide information about an employee’s job-relevant strengths

and & weaknesses.

 To provide information so as to identify shortage in employee

regarding ability, awareness and find out training and developmental
needs.

 To avoid grievances and in disciplinary activities in the organization.

 It is an ongoing process in every large scale organization.

Performance appraisals in an organization provide employees and
managers with an opportunity to converse in the areas in which employees
do extremely well and those in which employees need improvement.
Performance appraisals should be conducted on a frequent basis, and they
need not be directly attached to promotion opportunities only.

It is important because of several reasons such as:

 Personal Attention: Performance appraisal evaluation, gives

employee to draw personal concern from supervisor and talk about
their own strengths and weaknesses.

 Feedback: Employees on a regular basis get feedback of their

performances and issues in which they lack, which needs to be
resolved on a regular basis.

 Career Path: It allows employees and supervisors to converse goals

that must be met to grow within the company. This may encompass
recognizing skills that must be acquired, areas in which improvement
is required, and additional qualification that must be acquired.

 Employee Accountability: Employees are acquainted that their

evaluation will take place on a regular basis and therefore they are
accountable for their job performance.

 Communicate Divisional and Company Goals: It not only

communicates employees’ individual goals but provides an
opportunity for managers to explain organizational goals and in the
manner in which employees can contribute in the achievement of those
goals.

6.4 OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal in any organization is undertaken to meet certain
objectives which may be in the form of salary increase, promotion,
recognizing training and development needs, providing feedback to
employees and putting stress on employees for better performance.
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An employee in an organization may think that performance appraisal is
basically used by the organization to blame employees and to take
corrective actions, in such a case well thought out performance appraisal
may results into failure. Therefore the objective of performance appraisal
should be clear and specific. Thus including objectives into the appraisal
system may draw attention to areas for improvement, new directions and
opportunities.

 Salary Increase: Performance appraisal plays an important role in

making decision about increase in salary. Increase in salary of an
employee depends on how he is performing his job. Evaluation of an
employee takes place on a continuous basis which may be formally or
informally. In a large as well as in small organizations performance
appraisal takes place but it may be in a formal or informal way. It shows
how well an employee is performing and to what extent a hike in salary
would take place in comparison to his performance.

 Promotion: Performance appraisal gives an idea about how an

employee is working in his present job and what his strong and weak
points are. In comparison to his strength and weaknesses it is decided
whether he can be promoted to the next higher position or not. If
necessary what additional training is required? Similarly it could be used
for demotion, discharge of an employee and transfer.

 Training and Development: Performance appraisal gives an idea

about strengths and weaknesses of an employee on his present job. It gives
an idea about the training required by an employee for overcoming the
limitations that an employee is having for better performance in future.

 Feedback: Performance appraisal gives an idea to each employee

where they are, how they are working, and how are they contributing
towards achievement of organizational objectives. Feedback works in two
ways. First, the person gets view about his performance and he may try to
conquer his weaknesses which may lead to better performance. Second,
the person gets satisfied after he relates his work with organizational
objectives. It gives him an idea that he is doing a meaning full work and
can also contribute in a better way.

 Pressure on Employees: Performance appraisal puts a sort of stress

on employees for better performance. If the employees are aware that they
are been appraised in comparison to their performance and they will have
positive and acceptable behaviour in this respect

6.5 METHODS / TECHNIQUES OF PERFORMANCE

APPRAISAL
Performance appraisal methods are categorized in two ways traditional
and modern methods. Each organization adopts a different method of
performance appraisal according to the need of organization. In small
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organization, it may be on an informal basis where personal opinion of a Performance Appraisal
superior about his subordinates may consider for appraisal.

Table: Methods of Performance Appraisal

Traditional Methods Modern Methods

Ranking method Management by Objectives (MB0)

Paired comparison Behaviorally anchored rating scales
Grading method Assessment centers
Forced distribution method 360-degree appraisal
Forced choice method Cost accounting method
Checklist method
Critical incidents method
Graphic scale method
Essay method
Field review method

TRADITIONAL METHODS
Ranking Method:
It is the oldest and simplest method of performance appraisal in which
employees’ are ranked on certain criteria such as trait or characteristic.
The employee is ranked from highest to lowest or from worst to best in an
organization. Thus if there are seven employees to be ranked then there
will be seven ranks from 1 to 7.
Rating scales offer the advantages of flexibility comparatively easy use
and low cost. Nearly every type of job can be evaluated with the rating
scale, the only condition being that the Job performance criteria should he
changed’. In such a way, a large number of employees can be evaluated in
a shorter time period.
The greatest limitation of this method is that differences in ranks do not
indicate how much an employee of rank 1 is better than the employee
whose rank is last.
Paired Comparison: In method is comparatively simpler as compared to
ranking method. In this method, the evaluator ranks employees by
comparing one employee with all other employees in the group. The rater
is given slips where, each slip has a pair of names, the rater puts a tick
mark next those employee whom he considers to be the better of the two.
This employee is compared number of times so as to determine the final
ranking.

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This method provides comparison of persons in a better way. However,
this increases the work as the large number of comparisons has to be
made.
Grading Method: In this method, certain categories are defined well in
advance and employees are put in particular category depending on their
traits and characteristics. Such categories may be defined as outstanding,
good, average, poor, very poor, or may be in terms of alphabet like A, B,
C, D, etc. where A may indicate the best and D indicating the worst. This
type of grading method is applied during Semester pattern of
examinations. One of the major limitations of this method is that the rater
may rate many employees on the better side of their performance.
Forced Distribution Method: This method was evolved to abolish the
trend of rating most of the employees at a higher end of the scale. The
fundamental assumption in this method is that employees’ performance
level conforms to a normal statistical distribution. For example, 10 per
cent employees may be rated as excellent, 40 per cent as above average,
20 per cent as average, 10 per cent below average, and 20 per cent as poor.
It eliminates or minimizes the favoritism of rating many employees on a
higher side. It is simple and easy method to appraise employees. It
becomes difficult when the rater has to explain why an employee is placed
in a particular grouping as compared to others.
Forced-choice Method: The forced-choice rating method contains a
sequence of question in a statement form with which the rater checks how
effectively the statement describes each individual being evaluated in the
organization. There may be some variation sin the methods and statements
used, but the most common method of forced choice contains two
statements both of which may be positive or negative. It may be both the
statement describes the characteristics of an employee, but the rater is
forced to tick only one i.e. the most appropriate statement which may be
more descriptive of the employee. For example, a rater may be given the
following two statements:

 The employee is hard working.

 The employee gives clear instructions to his subordinates.

Though both of them describe the characteristics of an employee, the rater
is forced to tick only one which appears to be more descriptive of the
employee. Out of these two statements, only one statement is considered
for final analysis of rating. For example, a rater may be given the
following two statements:

 The employee is very sincere.

 Employee gives clear and fast instructions to his subordinates.

Both of the above statements are positive but the rater is supposed to rate
only one which is more appropriate of subordinate’s behavior. For ranking
only one statement is considered. As the rater is not aware about the
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statement to be considered the result would be free from bias. This method Performance Appraisal
may be more objective but it involves lot of problems in framing of such
sets of statements.
Check-list Method: The main reason for using this method is to reduce
the burden of evaluator. In this method of evaluation the evaluator is
provided with the appraisal report which consist of series of questions
which is related to the appraise. Such questions are prepared in a manner
that reflects the behavior of the concerned appraise. Every question has
two alternatives, yes or no, as given below:

 Is he/she respected by his/her subordinates? Yes/No

 Is he/she ready to help other employees? Yes/No

 Does her behavior remain same for everyone in the organization?

Yes/No
The concerned rater/evaluator has to tick appropriate answers relevant to
the appraises.
When the check list is finished, it is sent to the personnel department to
prepare the final scores for all appraises based on all questions based on
yes or no. While preparing question effort is made to establish the level of
consistency of the rater by asking the same question twice but in a
different manner. This method is considered to be easy if questions are
framed properly for different categories of employees.
However, one of the disadvantages of the checklist method is that it is
very difficult to accumulate, analyze and evaluate a number of statements
about employee characteristics and contributions. It is even costly method
with lot of time and efforts required by the organization.
Critical Incidents Method: This method is very useful for finding out
those employees who have the highest potential to work in a critical
situation. Such an incidence is very important for organization as they get
a sense, how a supervisor has handled a situation in the case of sudden
trouble in an organization, which gives an idea about his leadership
qualities and handling of situation. It is also said to be continuous
appraisal method where employees are appraised continuously by keeping
in mind the critical situation. In this method, only the case of sudden
trouble and behavior associated with these incidents or trouble are taken
for evaluation.
This method is categorized in three steps. First, a list of notable (good or
bad) on-the-job behavior of specific incidents or sudden trouble is
prepared. Second, selected experts would then assign weightage or score
to these incidents according to how serious a particular incident is and
their degree of willingness to perform a job. Third, finally a check-list
indicating incidents that illustrate workers as good or “bad” is formed.
Then, the checklist is given to the rater for evaluating the workers.

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The strong point of critical incident method is that it focuses on behaviors
and, thus, judge’s performance rather than personalities.
Its drawbacks are that too frequently they need to write down the critical
incidents which are very time consuming and burdensome for evaluators,
i.e., managers. Generally, negative incidents are more noticeable than
positives.
Graphic Scale Method: It is one of the simplest and most popular
techniques for appraising performances of employee. It is also known as
linear rating scale. In graphic rating scale the printed appraisal form is
used to appraise each employee.
Such forms contain a number of objectives, and trait qualities and
characters to be rated like quality of work and amount of work, job know
how dependability, initiative, attitude, leadership quality and emotional
stability.
The rater gives an estimate the extent to which subordinates possess each
quality. The extent to which quality is possessed is measured on a scale
which can vary from three points to several points. In general practice five
point scales is used. Some organizations use numbers in order to avoid the
propensity of the rater to tick mark central points. It may be numbered or
defined. Thus numbers like 5, 4, 3, 2 and 1 may denote points for various
degrees of excellent-poor, high-low, or good-bad, and so on. Such
numbers may be expressed in terms like excellent, very good, average,
poor and very poor; or very high, high, average, low and very low.
Graphic scale method is good for measuring various job behaviors of an
employee. But, it is bound to limitations of rater’s bias while rating
employee’s behavior at job.
Essay Method: In this method, the rater writes a detailed description on
an employee’s characteristics and behavior, Knowledge about
organizational policies, procedures and rules, Knowledge about the job,
Training and development needs of the employee, strengths, weakness,
past performance, potential and suggestions for improvement. It is said to
be the encouraging and simple method to use. It does not need difficult
formats and specific training to complete it.
Field Review Method: In this method of appraisal direct superior is not
going to appraise an employee but appraised by another person, usually,
from personnel department. The rater, in such a case, appraises the
employee on the basis of his past records of productivity and other
information such as absenteeism, late coming, etc. It is more suitable in a
situation where an organization wants to provide promotion to an
employee. It also gives information for comparing employees from
different locations and units. It reduces partiality to some extent as
personnel department person is supposed to be trained in appraisal
mechanism. This method suffers from two limitations:

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As employees are not rated by immediate boss, the rater from other Performance Appraisal
department may not be familiar with the conditions in an employee’s work
environment which may hamper his ability and work motivation to
perform.
The rater from other department do not get a chance to scrutinize the
employee’s behavior or performance with different time interval and in a
variety of situations, but only in an unnaturally structured interview
situation which is for a very short period of time.

MODERN METHODS
Management by Objectives (MB0): The concept of ‘Management by
Objectives’ (MBO) was coined by Peter Drucker in 1954. It is a process
where the employees and the superiors come together to identify some
goals which are common to them, the employees set their own goals to be
achieved, the benchmark is taken as the criteria for measuring their
performances and their involvement is there in deciding the course of
action to be followed.
The basic nature of MBO is participative, setting their goals, selecting a
course of actions to achieve goals and then taking decision. The most
important aspect of MBO is measuring the actual performances of the
employee with the standards set by them. It is also said to be a process that
integrates organizational objectives into individual objectives.

Steps in MBO:
Entire programme of MBO is divided in four major steps i.e. Setting up of
goal, Action Planning, Comparison and Timely Review.
Setting up of goal: In goal setting superior and subordinate together set
certain goals, i.e. the expected outcome that each employee is supposed to
achieve.
Action Planning: In action planning, the manner in which goals could be
achieved is determined i.e. identifying the activities which are necessary
to perform; to achieve or determined goals or standards. When the
employees start with their activities, they come to know what is to be
done, what has been done, and what remains to be done and it also gives
an idea about the resources to be achieved.
Timely Review: In this third step, the goals set by the individual
employee are compared with the actual goals achieved. It gives an idea to
the evaluator as why there is a variation in desired outcome and actual
outcome. Such a comparison helps create need for training so as to
enhance employees’ performance. Finally, in the timely review step,
corrective actions are taken so that actual performances do not deviates
from standards established in beginning.
The main reason for conducting reviews is not to humiliate the performer
but to assist him in better performances in future.

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Advantages of MBO:
Few advantages of MBO are:

 It is an outcome oriented method.

 It coordinates the planning and control functions and provides

motivation.

 Employees are clear about the task that they are expected to perform
and also how they may be evaluated.

Limitations of MBO:
MBO do have certain limitations such as:

 It is time consuming process.

 Employees and the superiors jointly setting the goals may lead to
conflict as employee would always like to set lower goal and the
superior would like to set it on the higher side.

 Lack of confidence in employee by management.

Behaviorally Anchored Rating Scales: This method is a combination of
traditional rating scales and critical incidents methods. It consists of preset
critical areas of job performance or sets of behavioral statements which
describes the important job performance qualities as good or bad (for e.g.
the qualities like inter personal relationships, flexibility and consistency,
job knowledge etc). These statements are developed from critical
incidents.
These behavioral examples are then again translated into appropriate
performance dimensions. Those that are selected into the dimension are
retained. The final groups of behavior incidents are then scaled
numerically to a level of performance that is perceived to represent. A
rater must indicate which behavior on each scale best describes an
employee’s performance. The results of the above processes are
behavioral descriptions, such as anticipate, plan, executes, solves
immediate problems, carries out orders, and handles urgent situation
situations.

Advantages:
This method has following advantages:

 It reduces rating errors as the behavior is assessed over traits.

 It gives an idea about the behavior to the employee and the rater about
which behaviors bring good Performance and which bring bad
performance.
Assessment Centers: It is a method which was first implemented in
German Army in 1930. With the passage of time industrial houses and
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business started using this method. This is a system of assessment where Performance Appraisal
individual employee is assessed by many experts by using different
technique of performance appraisal. The techniques which may be used
are role playing, case studies, simulation exercises, transactional analysis
etc.
In this method employees from different departments are brought together
for an assignment which they are supposed to perform in a group, as if
they are working for a higher post or promoted. Each employee is ranked
by the observer on the basis of merit. The basic purpose behind
assessment is to recognize whether a particular employee can be
promoted, or is there any need for training or development.

Advantages:
This method has certain advantages such as it helps the observer in
making correct decision in terms of which employee has the capability of
getting promoted.

Disadvantages:
It has certain disadvantages also it is costly and time consuming,
discourages the poor performers etc.
360 Degree Performance Appraisals: This method is also known as
‘multi-rater feedback’, it is the appraisal in a wider perspective where the
comment about the employees’ performance comes from all the possible
sources that are directly or indirectly related with the employee on his job.
In 360 degree performance appraisal an employee can be appraised by his
peers, managers (i.e. superior), subordinates, team members, customers,
suppliers, vendors anyone who comes into direct or indirect contact with
the employee and can provide necessary information or feedback
regarding performance of the employee the “on-the- job”.
The four major component of 360 degree performance appraisal are

 Employees Self Appraisal

 Appraisal by Superior

 Appraisal by Subordinate

 Peer Appraisal.
Employee self appraisal gives an option to the employee to know his own
strengths and weaknesses, his achievements, and judge his own
performance. Appraisal by superior forms the traditional part of the 360
degree performance appraisal where the employees’ responsibilities and
actual performance is judged by the superior.

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Appraisal by subordinate gives a chance to evaluate the employee on the
basis of communication and motivating abilities, superior’s ability to
delegate the work, leadership qualities etc. It is also known as internal
customers; the correct opinion given by peers can aid to find employees’
who are co-operative, employees who ready to work in a team and
understanding towards others.
Cost Accounting Method: In this method performance of an employee is
evaluated on the basis of monetary returns the employee gives to his or
her organization. A relationship is recognized between the cost included in
keeping the employee in an organization and the benefit the organization
gets from him or her. The evaluation is based on the established
relationship between the cost and the benefit.
The following factors are considered while evaluating an employee’s
performance:

 Interpersonal relationship with others.

 Quality of product produced or service given to the organization.

 Wastage, damage, accidents caused by the employee.

 Average value of production or service by an employee.

 Overhead cost incurred.

6.6 THE PERFORMANCE APPRAISAL PROCESS

The performance appraisal system of one organization may vary from
other organizations, though some of the specific steps that an organization
may follow are as follows:
Establish Performance Standards: It begins by establishing
performance standards i.e. what they expect from their employee in terms
of outputs, accomplishments and skills that they will evaluate with the
passage of time. The standards set should be clear and objective enough to
be understood and measured. The standards which are set are evolved out
of job analysis and job descriptions. Standards set should be clear and not
the vague one. The expectation of the manager from his employee should
be clear so that it could be communicated to the subordinates that they
will be appraised against the standards set for them.
Communicating the Standards set for an Employee: Once the
standards for performance are set it should be communicated to the
concerned employee, about what it expected from them in terms of
performance. It should not be part of the employees’ job to estimate what
they are expected do. Communication is said to be two ways street, mere
passing of information to subordinate does not mean that the work is done.
Communication only takes place when the information given has taken
place and has been received and understood by subordinate. If necessary,

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the standards may be tailored or revised in the light of feedback obtained Performance Appraisal
from the employees.
Measuring of the Actual Performances: It is one of the most crucial
steps of performance appraisal process. It is very important to know as
how the performance will be measured and what should be measured, thus
four important sources frequently used by managers are personal
observation, statistical reports, oral reports, and written reports. However,
these resources give more reliable information. What we measure is
probably more critical to the evaluation process than how we measure.
The selection of the incorrect criteria can result in serious consequences.
What we measure gives an idea about what people in an organization will
attempt to achieve. The criteria which are considered must represent
performance as stated in the first two steps of the appraisal process.
Comparing Actual Performance with Standards Set in the Beginning:
In this step of performance appraisal the actual performance is compared
with the expected or desired standard set. A comparison between actual or
desired standard may disclose the deviation between standard performance
and actual performance and will allow the evaluator to carry on with the
discussion of the appraisal with the concerned employees.
Discussion with the Concerned Employee: In this step performance of
the employee is communicated and discussed. It gives an idea to the
employee regarding their strengths and weaknesses. The impact of this
discussion may be positive or negative. The impression that subordinates
receive from their assessment has a very strong impact on their self esteem
and, is very important, for their future performances.
Initiate Corrective Action: Corrective action can be of two types; one is
instant and deals primarily with symptoms. The other is basic and deals
with the causes. Instant corrective action is often described as “putting out
fires”, where as basic corrective action gets to the source from where
deviation has taken place and seeks to adjust the differences permanently.
Instant action corrects something right at a particular point and gets things
back on track. Basic action asks how and why performance deviated. In
some instances, managers may feel that they do not have the time to take
basic corrective action and thus may go for “perpetually put out fires.
Thus the appraisal system of each organization may differ as per the
requirement of that Organization.

6.7 FACTORS AFFECTING PERFORMANCE

APPRAISAL
There are various factors which may influence the performance appraisal
system in any organization. There are some factors which introduce bias
whereas; some other factors hinder purposeful assessment. Such factors
are as follows:
Value System of Evaluator: The task of evaluator is to assess the work
of subordinate and write reports of the same. They are projected to do this
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for some purposeful assessment. It happens that evaluator sometime
judges the performance on the basis of their own value system. Each
person has his own value system and socio cultural environment. Mostly,
it is found that the reports are influenced by the evaluator value-system.
This subjective element has lot of impact on final report.
Dominant Work Orientation: The performance Appraisal Report of a
subordinate is prepared by a superior is found to have an impact by the
dominant work orientation of the superior officer. Sometimes there is
more emphasis on certain aspect of the work as compared to other aspect
which may be equally important by the superior. It introduces subjectivity
performance appraisal system.

 Inclination for work of dynamic nature.

 Liking for routine work and strict maintenance of.

 Importance on inter-personal relations and rank.

 Emphasis on qualities which do not have much functional utility; and

 Emphasis on consistency to some philosophy.

These elements bring subjectivity in the process of evaluation, influence
the judgment of the superior and distort the evaluation of performance of
the subordinates.
Loyalty: It plays a vital role in evaluating employee. An Employee shows
loyalty due to many reasons such as common values, objectives,
emotional needs, interests, caste, religion, language or region. Loyalty
brings the superior and the loyal subordinate closer and closer to each
other, and creates distance between those employees who are not loyal to
their superior. This makes assessment of superior to be biased.
Level of Achievement: Subordinates evaluation may also depend on the
level of achievement of the superior. If there is a vast difference between
the level of achievement of the superior and Subordinate, then it can
create problems of adjustment and purpose for which evaluation is done is
not achieved.
Factors Hindering Objective Assessment: There are various factors
which obstruct the objective appraisal of the performance of the
subordinates. These factors are as follows:
Superiority complex of the superior reporting officer.
 Overall performance assessment does not take place only certain
incidences are assessed.
 Past record of the subordinate.
 Personality of the subordinate.
 Ability of the subordinate to exercise influence at higher level.

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6.8 BENEFITS OF PERFORMANCE APPRAISAL
An effective performance appraisal system can be of benefit to three
parties they are for organization, for appraiser and for appraisee.

For the Organizations:

Following are the benefits to an organization:

 It leads to better performance throughout the organization, due to

successful communication of the objectives and values of the
organizations, sense of being close to the organization, loyalty and
improved relationships between managers and staff.

 Overall improvement in the duties performed by each employee of the

organization.

 Due to performance appraisal of employee new ideas for improvement

in their work is generated. Long term plans can be generated.

 The need for training and development can be identified more clearly.

 A tradition of nonstop improvement and success in the organization

can be formed and maintained. Career development plans can be
chalked out for capable employee to enhance their performance in
future.

For the appraiser:

Following are the benefits to the appraiser:

 It gives an opportunity to the appraiser to develop a general idea of

individual jobs and departments. For every new or difficult situation
new idea is generated for improvement or for overcoming that
problem.

 It gives an opportunity to integrate team and individual objectives and

targets with departmental and organizational objectives.

 It gives an opportunity to explain the amount of work expected by

manager from teams and individuals.

 It gives an opportunity to focus more on targets.

 It enables to form more productive relationship with staff based on

mutual trust and understanding.

For the Appraisee:

Following are the benefits for the appraisee:

 Increased motivation.

 Increased job satisfaction.

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Management  Increased sense of personal value. Increase in morale of an employee.

 It gives an opportunity to know their strength and weaknesses. It gives

an idea about areas of their improvement.

 There will be a chance to subordinate to express his views even after

performance appraisal An employee should express his emotional
needs and his value system which is considered to be important today.

6.9 PROBLEMS/LIMITATIONS OF PERFORMANCE

APPRAISAL
Performance appraisal technique is very beneficial for an organization for
taking decisions regarding salary fixation, demotion, promotion, transfer
and confirmation etc. But, it is not free from problems. Some of these
problems are as follows:

Problems with Performance Appraisal are:

Leniency Error
Typically some raters have a tendency to avoid conflict with their
employees and project themselves as ‘good managers’. In an effort to
avoid conflict, the rater has the tendency to be overly generous in
judgment. They assign higher rating to an employee’s performance than
warranted by his actual level of performance.
Strictness Error:
Strictness error refers to the tendency of raters to be overly harsh while
judging performance of employees. This may be a case where the
standards of performance may be too high or unrealistic or the manager’s
personality characteristics or experience may be the cause. Such strictness
results in lower rating of all employees under the rater and cause
frustration and anger in good performers. Leniency or severity on the part
of a rater defeats the very purpose of performance appraisal. Depending
on rater’s own mental make up at the time of appraisal, rater may rate
strictly or leniently. Holding raters accountable for the accuracy of their
ratings, especially when ratings are for administrative purposes, may be an
effective strategy for reducing leniency error. (Ami B. et al. 2005)

Spill over Effect

A spillover effect takes place when past performance appraisal ratings
unjustifiably influence current ratings. Past ratings, good or bad, result in
similar rating for current appraisal although demonstrative behavior does
not deserve the ratings, good or bad.

Bias Effect
This effect to allow individual differences such as sex, race, and age to
affect the appraisal ratings employee receive. The interpersonal affect, a
like dislike relationship between a supervisor and his/her subordinate, has
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traditionally been conceptualized as a source of bias in performance Performance Appraisal
appraisals. However, some researchers have argued that the interpersonal
affect may not be a bias, especially where it develops as a result of past
performance.

Halo Effect
In halo effect, the appraiser / manager draws on one specific
characteristics / accomplishment to excessively influence performance
review or applies favourable ratings to all job duties based on impressive
performance in one area. For example, if an employee is accurate in work
but lacks initiative.
This error takes place when one aspect of an individual’s performance
affects the appraisal of his entire performance. In an organisation halo
error occurs when an employee who works late constantly might be rated
high on productivity and quality of output as well as on motivation.

Horn Effect
Highly critical bosses have tendency to compare performance of their
subordinates with negative attitude.

Rater Effect
High or low ratings are given to certain individuals or groups based on
rater’s attitude towards the ratee not on actual performance or output. This
includes stereotyping, favouritism and hostility.
Recent performance appraisal research has highlighted the important role
played by contextual and individual factors in shaping rating behavior
such as personality factors or beliefs, systematically affect rating behavior.
The effects of these context and rater factors are reflected in ratings
accuracy, ratings discrimination among raters/dimensions, and rating
elevation. ( Aharon Tziner et. Al 2005). According to the findings of a
study attitudes and beliefs account for substantial variance in rater’s
likelihood of giving high or low ratings, willingness to discriminate good
from poor performers, and willingness to discriminate among various
aspects of job performance when completing actual performance ratings.
(Aharon Tziner et al. 2001)

Status Effect
The employees working at higher level jobs are overrated whereas
employees working at lower level jobs underrated.

Latest behaviour
Sometimes, the appraisal is influenced by the most recent behaviour,
ignoring the common behaviour of an individual during the entire period.

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Shifting Standards
Performance appraisal should be based on uniform and fair standards. If
the standards are changed then employees might get confused and
organisation might not be able to promote right candidate. For e.g. last
year quality was the criteria for appraisal but boss decides to judge them
this year on the basis of quantity.

First impression
Raters may form an overall impression of a candidate based on some
specific qualities or behaviour in first meeting and carry it forward. At the
time of appraisal rater rates a candidate with same impression.

Poor appraisal forms

The appraisal process might also be influenced by certain factors relating
to appraisal forms such as vague and unclear rating scale, irrelevant
performance dimension, long and complex contents in the form etc.

Situational factors:
Theory and research suggest that both person and situation influence
observed performance. System or situational factors can either enhance or
constrain performance. If raters do not compensate for the influence of
situational factors, ratings will be contaminated with situational influences
and will fail to validly reflect the true level of performance (I.M. Jawahar,
2005)

Political Purposes
There is evidence that performance ratings are often manipulated for
political purposes. The study examined the effects of employees’
perceptions of political motives in performance appraisal on their job
satisfaction and intention to quit results indicated that when employees
perceived performance ratings to be manipulated because of raters’
personal bias and intent to punish subordinates they expressed reduced job
satisfaction that, in turn, led to greater intentions to quit their jobs.
Manipulations of ratings for motivational purposes, however, had no
effect on job satisfaction and turnover intention. (June M.L. Poon, 2004)

6.10 PERFORMANCE APPRAISAL PRACTICES IN

INDIA
The systematic study of performance appraisal practices in India is very
limited. According to few studies in India the performance appraisal is
mainly undertaken for three objectives such as (i) to determine increments
in salary; (ii) to assist organizational planning, placement, or suitability;
and (iii) for training and development purposes. Other objectives of
appraisal were: informing employee where they stand in organization,
follow up interviews, etc.

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Every company uses different criteria to evaluate their employees. There

are basically three groups of criteria being used for appraisal purpose:

 Evaluation of qualitative characteristics, such as, intelligence,

reliability, honesty, leadership and attitudes, abilities, etc.,

 Evaluation of actual performance- qualitatively and quantitatively; and

 Evaluation of development and future potential and development by

an employee during the period under consideration.
Evaluation criteria vary from company to company. There is vast
deviation in periodicity of appraisal of employees. Few companies
appraise annually, some appraise half yearly, and a few quarterly;
however, annual appraisal is most common among many.
The emergence of following trends related to Performance appraisal
practices can be seen in the global scenario: 360 degree feedback, Team
performance appraisal, Rank and yank strategy.

 360 Degree Feedback: It is also known as ‘multi-rater feedback’,

where the feedback about the employees’ performance comes from all
the sources that come in contact with the employee on his job.

 Team Performance Appraisal: In this method each employee

performance is measured as a team member as well as individually.

 Rank and Yank Strategy: It is also known as up or out policy where

the performance appraisal model is prepared in which best-to-worst
ranking methods are used to identify and separate the poor performers
from the good performers. Then certain plans are chalked out for
improvement. Some of the organizations following this strategy are
Ford, Microsoft and Sun Microsystems.

6.11 EFFECTIVE PERFORMANCE APPRAISAL

The performance appraisal system is always questioned in terms of its
effectiveness and the problems of reliability and validity. It is always
difficult to know whether what is appraised is what was supposed to be
appraised. As long as subjective judgment is there this question cannot be
answered perhaps, the following steps can help improve the system.

 The supervisors should be told that they themselves will be evaluated

on the basis of how seriously they are performing their duties.

 To perform assigned task of evaluation in a better way superior should

be provided with better training of writing report.

 To carry out job evaluation studies and prepares job descriptions/roles

and prepares separate forms for various positions in the organization.

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Management  The system should be designed in such a way that it is neither difficult
to understand nor impossible to practice.

 The supervisor should monitor whether the improvement in

performance in the areas found weak is taking place or not and, if not,
help the employee to achieve the required improvement.

Characteristics of an Effective Performance Appraisal System

According to Watson and Wyatt Survey (2002), “organisations need
strategic support of employees in new economy. People are more
important than ever, people are the only sustainable source of competitive
advantage”. Thus, performance appraisal assumes significance for every
business organisation. A good appraisal system possesses the following
characteristics:

 It is based on evidence

 It is highly individualized

 It is a joint activity

 It strives for understanding.

 It creates commitment

 It maximizes self-analysis and self-discovery

 It results in improved performance

The essential characteristics of an effective performance appraisal system
are as follows:

 Simple rating system: The rating system should be simple and based
on job analysis for ensuring accuracy and fairness of performance
evaluation of employees.

 Training in appraisal system: All employees, including managers,

should be trained to use the appraisal system so that they understand
the objectives, methodology and purpose of performance appraisal.

 Quantifying performance: Performance appraisal should be based on

accurate up-to-date job descriptions and ratings be made on observable
performance.

 Freedom from biases: Evaluations should be done under standard

conditions and should be free from adverse impact arising due to
personal biases and gender discrimination. A biased appraisal system
is worse than having no appraisal system as it damages the motivation,
morale and productivity of employees and impairs performance
oriented behaviour.

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 Participative: Preliminary results of performance appraisal should be Performance Appraisal
shared with the employee to develop confidence of employees in the
system and to provide opportunities for discussions.

 Reviewing officer: There must be some upper level reviews with

appeal provision so that appraisal ratings are normalized and
employees have an opportunity to speak against unfair treatment by
their immediate superiors.

 Performance feedback: Performance counselling and feedback

should be provided to employees for creating joint action plans for
rectifying deficiencies in performance and seeking means and
measures for improving performance in future.

 Combining absolute and relative standards: Appraisal should be

carried out by combining absolute and relative performance standards
so that job performance expectations are relative and achievable.

 Using behavior based measures: Behavioural based measures should

be used to correct and develop appropriate employee attitudes,
motivation and behavior for directing and controlling employee efforts
and outcomes.

 Identification of performance goals: Performance appraisal of

employees should also be based upon agreed performance goals and
targets for ensuring that employees are rated for the level of
performance expected from them.

 Training & Development: Performance should be used for employee

development purposes so that gaps in skills and competencies are
addressed and removed for better performance and productivity.

 Recognize and reward achievement: Appraisals should recognize,

reward, reinforce and publicize employee achievements to motivate
and serve as a role model for others to emulate.

 Identifying improvement areas: Appraisal should identify areas

where performance is good and when it can be improved.

 Confidence and acceptability of employees: Performance appraisal

process should be carried out in such a way that employees response
trust and confidence in the system. Without employee acceptance,
performance appraisal shall serve no organisational purposes and will
get reduced to a mere ritual on paper.

 Documentation: Appraisal process should ensure that performance

goals and specific activities for developing performance of employees
are documented for further reference and as legal backup.
Finally, reviewing, the appraisal systems every now and then help
updating it, and making appropriate changes in it. This is the most
important factor in making performance appraisal effective, with the
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passage of time necessary changes in tasks, abilities and skills to perform
has to be made. If changes in the format are not considered the reports
may not generate the kind of result needed to satisfy appraisal objectives.

6.12 SUMMARY
In the organizational context performance appraisal is an evaluation of
personnel in a systematic way by superiors or others familiar with their
performance. It is also described as merit rating in which one individual is
ranked as better or worse in comparison to others. The basic purpose in
this merit rating is to determine an employee’s eligibility for promotion.
However, performance appraisal is a broad term and it may be used to
ascertain the need for training and development, salary increase, transfer,
discharge, etc. besides promotion. It is the systematic assessment of an
individual with respect to his or her performance on the job and his or her
potential for development in that job.
Performance appraisals should be conducted on a frequent basis, and they
need not be directly attached to promotion opportunities only. It is
important because of several reasons such as: Personal Attention,
Feedback, Career Path, Employee Accountability, Communicate
Divisional and Company Goals. Thus, objectives into the appraisal system
may draw attention to areas for improvement, new directions and
opportunities. The methods of performance appraisal are categorized in
two ways traditional and modern methods. Each organization adopts a
different method of performance appraisal according to the need of
organization, with each method having its own advantages and drawbacks.
The performance appraisal system of one organization may vary from
other organizations; this may lead to few changes in appraisal process.
Some of the problems faced in appraising employees are biasness of rater
which may include: (a)halo effect, (b) central tendency error, (c) the
leniency and strictness biases, (d) personal prejudice, and (e) the recent
effect etc.
The systematic study of performance appraisal practices in India is very
limited. Few innovative performance appraisal practices are: 1)
Managerial personnel are allowed to challenge or appeal appraisal
decisions made by evaluator.2) Employee management skills are
important in performance appraisal.3) Personnel department gives a clear
instruction of policy and its implementation. 4) Evaluation to be made
only on the basis of performance of employee at work.5) It has also
enhanced role clarity in the Organization.
The latest mantra being followed by organizations across the world being
– “get paid according to what you contribute” – the focus of most of the
organizations is turning to performance management and specifically to
individual performance. It is always questioned in terms of its
effectiveness and the problems of reliability and validity exist which could
be improved if the supervisors are told that they themselves will be
evaluated on the basis of how seriously they are performing their duties,
To perform assigned task of evaluation in a better way superior should be
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provided with better training of writing report. Thus, performance Performance Appraisal
appraisal is the technique which is essential for every organization

6.13 SELF ASSESSMENT QUESTIONS

1. “Performance appraisal is the systematic evaluation of the individual
with respect to his performance on the job and his potential for
development’’. What are the options open to you in the design of a
performance appraisal system to achieve this goal?
2. Explain the Performance Appraisal System. Either suggests
improvements to an existing appraisal system in your organization or
design an appraisal system which would meet the objectives outlines
in this chapter.
3. Does current thinking indicates that appraisal for training should be
conducted separately from appraisal for promotion?
4. Explain in detail the process of performance appraisal.
5. Write short notes of:

 Management by objectives

 Behaviorally Anchored Rating Scale

 Field Review Method

 Critical Incident Method

6. Explain the methods of performance appraisal in detail.
7. “Performance appraisal is not only for appraisal but is for
achievement and improvement of performance”. Explain.
8. According to you what should be done to have an effective
performance appraisal system in your organization.



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 7
ETHICS ON PERFORMANCE APPRAISAL
Unit Structure
7.0 Objectives
7.1 Need of Ethics
7.2 Sources of Ethics
7.3 How to Manage Ethics at Workplace
7.4 Five Sources of Ethical Standards
7.5 Self Assessment Questions

7.0 OBJECTIVES
After completing this unit, you will be able to:

 Understand the need of business ethics.

 Know the sources of business ethics.

 Discuss How to manage ethics.

7.1 NEED OF ETHICS ON PERFORMANCE

APPRAISAL
Ethics refers to the study of good and evil, right and wrong, and just and
unjust actions of business people. Business ethics is the same as the
generally accepted norms of good or bad practices. Human resource
management (HRM) is the science of managing people systematically in
organizations. The unique individual actor in the organization a given
executive, manager, line worker is not the focus of HRM, rather, human
resources practices and policies concerning recurring cycles of staffing,
reward and compensation, and performance management inform how any
person or group of people is introduced into the organization, managed
while there, and exited from the organization. When these three
overarching aspects of human resource management are designed
effectively, the organization benefits from a management system that
enhances the sustained competitive advantage of the organization. A
critical part of designing these aspects effectively requires consideration
of ethical concerns at each stage.

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The need of business ethics can be explained with the help of the Ethics on Performance
Appraisal
following points:-

 Introducing Socialism in Business: This means the gains of business

must be shared by all concerned and not just by owner of business. Profit
is the result of group efforts and hence all concerned must share the same.
In other words, the concept of socialism in business say that workers,
shareholders, consumers all others who contribute to the success of the
business must share its gain.

 Interest of Industry: Business ethics are required to protect the

interest of small business firms. Big firms normally try to dominate and
eradicate small firms. If industry follows code of conduct, small firms can
fight for their existence and stay in the business for long.

 Buyers Market: In recent times, structural changes have taken place

in the concept of business. In case of many products, sellers market has
been converted into buyers market. Under such changed business
conditions business ethics is needed to stress the importance of consumer
satisfaction and service orientation in place of profit orientation.

 Better Relations with Society: Code of conduct results in better

relations between business and society. It will reconcile conflicting
interest of various sections of the society such as workers, shareholders,
consumers, distributors, suppliers, competitors and government.

7.2 SOURCES OF ETHICS

HR managers in every society are influenced by three repositories of
ethical values-religion, culture and law. These repositories contain unique
systems of values that exert varying degrees of control over managers. A
common thread idea of reciprocity or mutual help runs through all the
value systems. This idea reflects the central purpose of all ethics-which is
to bind the vast majority of individuals in the society into a cooperative
whole. Ethical values constitute a mechanism that controls behavior in HR
situations and in other walks of life. Ethics driven restraints are more
effective than restrictive controls such as police, law suits or economic
incentives. Ethical values channelize the individual energies into pursuits
that are benign to others and beneficial to the society.
It is a code of conduct that is supposed to align behaviors within an
organization and the social framework. But the question that remains is,
where and when did business ethics come into being?
It is for this reason we do not have uniform or completely similar
standards across the globe. These three factors exert influences to varying
degrees on humans which ultimately get reflected in the ethics of the
organization. For example, ethics followed by Infosys are different than
those followed by Reliance Industries or by Tata group for that matter.
Again ethical procedures vary across geographic boundaries.

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Human Resource
Management  Religion
It is one of the oldest foundations of ethical standards. Religion wields
varying influences across various sects of people. It is believed that ethics
is a manifestation of the divine and so it draws a line between the good
and the bad in the society. Depending upon the degree of religious
influence we have different sects of people; we have sects, those who are
referred to as orthodox or fundamentalists and those who are called as
moderates. Needless to mention, religion exerts itself to a greater degree
among the orthodox and to lesser extent in case of moderates.
Fundamentally however all the religions such as Hinduism, Buddhism,
Christianity, Islam, Judaism and Confucianism, operate on the principle of
reciprocity towards ones fellow beings.

 Culture
Culture is a pattern of behaviors and values that are transferred from one
generation to another, those that are considered as ideal or within the
acceptable limits. No wonder therefore that it is the culture that
predominantly determines what is wrong and what is right. It is the culture
that defines certain behavior as acceptable and others as unacceptable.
Culture determines what is ethical and what is not. Cultural norms play
important role in determining values because individuals anchor their
conduct in the culture of the group in which they belong.
Human civilization in fact has passed through various cultures, wherein
the moral code was redrafted depending upon the epoch that was. What
was immoral or unacceptable in certain culture became acceptable later on
and vice versa.
During the early years of human development where ones who were the
strongest were the ones who survived. Violence, hostility and ferocity
were thus acceptable. Approximately 10,000 year ago when human
civilization entered the settlement phase, hard work, patience and peace
were seen as virtues and the earlier ones were considered otherwise. These
values are still pt in practice by the managers of today.
Still further, when human civilization witnessed the industrial revolution,
the ethics of agrarian economy was replaced by the law pertaining to
technology, property rights etc. Ever since a tussle has ensued between the
values of the agrarian and the industrial economy.

 Law
Laws are procedures and code of conduct that are laid down by the legal
system of the state. They are meant to guide human behavior within the
social fabric. The major problem with the law is that all the ethical
expectations cannot be covered by the law and specially with ever
changing outer environment the law keeps on changing but often fails to
keep pace. In business, complying with the rule of law is taken as ethical
behavior, but organizations often break laws by evading taxes,
compromising on quality, service norms etc.
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 Ethics on Performance
7.3 HOW TO MANAGE ETHICS AT WORKPLACE Appraisal

The effective management of ethics is sound business practice.

Employees’ morale is raised; bottom-line performance is improved, your
corporate image is enhanced; and customers choose to form business
relationships with companies that adhere to high standards of ethical
conduct. One of your key management tasks is to persuade employees to
accept your organization’s ethical values.
Following are some points to consider in managing ethics:

Understand the Benefits of Ethical Conduct.

All key parties benefit from ethical conduct within the organization.
Employees who have confidence in their management contribute to their
organization’s prosperity. Conversely, in an unethical climate, employee
productivity declines, creativity is channeled into seeking ways to profit
personally from the business, loyalty diminishes, and absenteeism and
staff turnover increase. Customers prefer to be associated with and remain
loyal to companies that adhere to codes of ethical behavior. Shareholders
derive up to fifteen time’s greater return from companies with a dedicated
commitment to ethical conduct.

Focus on Ethical Conduct.

When referring to codes of behavior, the term ’ethical conduct’ is more
comprehensive and more meaningful than ’ethics’. The best ethical values
and intentions are relatively meaningless unless they generate fair, just,
and observable behaviors in the workplace. Ethical conduct focuses on
demonstrated behavior doing, not just saying.

Develop a Code of Ethical Conduct.

The best way to handle ethical dilemmas is to avoid their occurrence in
the first place. The process involved in developing a code of ethical
conduct helps to sensitize employees to ethical considerations and
minimizes the likelihood that unethical behavior will occur.

Promote Process.
When it comes to managing ethics and, in particular, developing a code of
ethical conduct, the journey is just as important as the destination. Codes,
policies, procedures, and budgets are important. So, too, is the process of
reflection and dialogue that produces those deliverables. Where possible
use group decision making to actively involve participation in, and
ownership of, the final outcome.

Link Ethics to Other Management Practices.

The development of a code of ethical conduct should not occur in
isolation. The creation of a values statement, for example, should occur as
part of a strategic planning process. A link to ethical conduct fits ideally

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with this process. Similarly, any discussion about personnel policies could
also reflect ethical values as they apply to the organization’s culture.

Demonstrate Ethical Practices.

The best way for an organization to gain a reputation for operating
ethically is to demonstrate that behavior the most important way to remain
ethical is to be ethical. And the best advertisement your ethics
management program can have is everyone’s commitment to it. Be
prepared for an increase in the number of ethical issues to be dealt with.
As staff becomes increasingly aware of the importance of ethics
management, it is to be expected that more issues will be identified. ’The
most damaging thing is for management to come out with a code of ethics,
or a value statement, and model a different type of behavior.’

Allocate Roles and Responsibilities.

The approach will vary according to the organization, but an appropriate
structure could include the following:
An ethics management committee, representing the entire organization,
with responsibilities to include implementing and administering an ethics
management program. The creation and monitoring of a code of ethical
conduct would be part of that overall program.
An ethics officer who ideally should be a senior executive but not from
HR or the Legal Department. He or she must be trained in matters of
ethics in the workplace and have ultimate responsibility for managing the
program.
Demonstrated involvement and support of top management. Staff and
Board must see that senior management takes ethical conduct seriously.

Identify and Model Industry Benchmarks.

An increasing number of companies strive to match practices with
espoused values. The Soul of a Business, for example, is an account of the
way in which ethical considerations guided the day-to-day operations of
the American company, Tom’s of Maine. One of the company’s stated
values was its commitment to the health of the environment. The
company, therefore, used glass containers instead of plastic, even though
plastic was cheaper to purchase, label, and ship. Tom’s of Maine was also
committed to supporting its regional economy. Only when it couldn’t
purchase a resource in its local area would Tom’s go farther afield. This
demonstrated commitment to espoused values contributed to the
company’s growth and profitability and inspired others to follow its lead.

7.4 FIVE SOURCES OF ETHICAL STANDARDS

The Utilitarian Approach
Some ethicist emphasize that the ethical action is the one that provides the
most good or does the least harm, or, to put it another way, produces the
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greatest balance of good over harm. The ethical corporate action, then, is Ethics on Performance
Appraisal
the one that produces the greatest good and does the least harm for all who
are affected customers, employees, shareholders, the community, and the
environment. Ethical warfare balances the good achieved in ending
terrorism with the harm done to all parties through death, injuries, and
destruction. The utilitarian approach deals with consequences; it tries both
to increase the good done and to reduce the harm done.

The Rights Approach

Other philosophers and ethicist suggest that the ethical action is the one
that best protects and respects the moral rights of those affected. This
approach starts from the belief that humans have a dignity based on their
human nature per se or on their ability to choose freely what they do with
their lives. On the basis of such dignity, they have a right to be treated as
ends and not merely as means to other ends. The list of moral rights -
including the rights to make one’s own choices about what kind of life to
lead, to be told the truth, not to be injured, to a degree of privacy, and so
on is widely debated; some now argue that non-humans have rights, too.
Also, it is often said that rights imply duties in particular, the duty to
respect others’ rights.

The Fairness or Justice Approach

Aristotle and other Greek philosophers have contributed the idea that all
equals should be treated equally.
Today we use this idea to say that ethical actions treat all human beings
equally or if unequally, then fairly based on some standard that is
defensible. We pay people more based on their harder work or the greater
amount that they contribute to an organization, and say that is fair. But
there is a debate over CEO salaries that are hundreds of times larger than
the pay of others; many ask whether the huge disparity is based on a
defensible standard or whether it is the result of an imbalance of power
and hence is unfair.

The Common Good Approach

The Greek philosophers have also contributed the notion that life in
community is a good in itself and our actions should contribute to that life.
This approach suggests that the interlocking relationships of society are
the basis of ethical reasoning and that respect and compassion for all
others especially the vulnerable are requirements of such reasoning. This
approach also calls attention to the common conditions that are important
to the welfare of everyone. This may be a system of laws, effective police
and fire departments, health care, a public educational system, or even
public recreational areas.

The Virtue Approach

A very ancient approach to ethics is that ethical actions ought to be
consistent with certain ideal virtues that provide for the full development

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Management
of our humanity. These virtues are dispositions and habits that enable us to
act according to the highest potential of our character and on behalf of
values like truth and beauty.
Honesty, courage, compassion, generosity, tolerance, love, fidelity,
integrity, fairness, self-control, and prudence are all examples of virtues.
Virtue ethics asks of any action, "What kind of person will I become if I
do this?" or "Is this action consistent with my acting at my best?"

Putting the Approaches Together

Each of the approaches helps us determine what standards of behavior can
be considered ethical. There are still problems to be solved, however.
The first problem is that we may not agree on the content of some of these
specific approaches. We may not all agree to the same set of human and
civil rights.
We may not agree on what constitutes the common good. We may not
even agree on what is a good and what is a harm.
The second problem is that the different approaches may not all answer
the question "What is ethical?" in the same way. Nonetheless, each
approach gives us important information with which to determine what is
ethical in a particular circumstance. And much more often than not, the
different approaches do lead to similar answers.

Making Ethical Decisions

Making good ethical decisions requires a trained sensitivity to ethical
issues and a practiced method for exploring the ethical aspects of a
decision and weighing the considerations that should impact our choice of
a course of action. Having a method for ethical decision making is
absolutely essential. When practiced regularly, the method becomes so
familiar that we work through it automatically without consulting the
specific steps.
The more novel and difficult the ethical choice we face, the more we need
to rely on discussion and dialogue with others about the dilemma. Only by
careful exploration of the problem, aided by the insights and different
perspectives of others, can we make good ethical choices in such
situations.

7.5 SELF ASSESSMENT QUESTIONS

1. Define the term Ethics. Trace the sources of ethics. Why is ethics
important?
2. Explain how to manage ethics at work place.



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 8
TRAINING AND DEVELOPMENT
Unit Structure :
8.0 Objectives
8.1 Introduction
8.2 Meaning and objectives of training
8.3 Need and importance of training
8.4 Difference between Training and Development
8.5 Management Development Programme (MDP)
8.6 Essentials of Success of Management Development
8.7 Training Practices / Facilities in India
8.8 Process of Designing A Training Programme
8.9 Methods of Training
8.10 Techniques of Evaluation of Training
8.11 Summary
8.12 Questions

8.0 OBJECTIVES
After studying the unit student will be able to:

 Understand Meaning and nature of Training and Development

 Know the objectives of Training

 Study the needs and importance of Training

 Understand the concept of Training and Development

 Know Management Development Programme (MDP)

 Understand the requisites for the Success of Management

Development Programme (MDP)

 Study Training Practices in India

 Make and evaluation of Training Facilities

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Human Resource
Management 8.1 INTRODUCTION
Training is an organised activity for increasing the knowledge and skills
of people for a definite purpose. It involves systematic procedures for
transferring technical know-how to the employees so as to increase their
knowledge and skills for doing specific jobs with proficiency. In other
words, the trainees acquire technical knowledge, skills and problem
solving ability by undergoing the training programme.

8.2 MEANING AND OBJECTIVES OF TRAINING

 MEANING
According to Edwin B. Flippo, ― “Training is the act of increasing the
knowledge and skills of an employee for doing a particular job”. Training
involves the development of skills that are usually necessary to perform a
specific job. Its purpose is to achieve a change in the behavior of those
trained and to enable them to do; their jobs better. Training makes newly
appointed workers fully productive in the minimum of time. Training is
equally necessary for the old employees whenever new machines and
equipment are introduced and/or there is a change in the techniques of
doing the things. In fact, training is a continuous process. It does not stop
anywhere. The managers are continuously engaged in training their
subordinates.
They should ensure that any training programme should attempt to bring
about positive Changes in the (i) Knowledge, (ii) skills, and (iii) attitudes
of the workers. The purpose of training is to bring about improvement in
the performance of work. It includes the learning of such techniques as are
required for the better performance of definite tasks.
The main objective of training is to achieve a change in the behaviour of
those trained. In the industrial situation, this means that the trainees
acquires new techniques skills, problems solving abilities and develop
proper, work attitude. The trainees apply the newly acquired knowledge
on the job in such a way as to keep them in the achievement of
organisational goals and targets. Training is a necessary activity in all
organisations, It plays a large part in determining the effectiveness and
efficiency of the organisation. Training is must for all. A training
programme enables the trainee to achieve the reasonable level of
acceptable performance. To achieve improved performance and increase
in productivity, quality and profitability. Change Organisational climate
and culture, to improve health and safety and possibility and personal
growth and development.
Training generally is intended to provide training experiences that help
people perform efficiently in their present and future jobs. Training is a
process in which abilities are developed into specific required skills
knowledge or attitudes.

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Thus managing the training process can go a long way towards enhancing Training and Development
its effectiveness. If training programs are well conceived and well
executed, both the organisation and its employees benefit. A
comprehensive process helps managers ensure that the objectives of the
training program are met.
Training enables the employees to get acquainted with jobs and also
increase, their aptitudes and skills and knowledge. It makes newly
recruited employees fully productive in the minimum of time. Even for the
old workers, it is necessary to refresh them and to enable them to keep up
with new methods and techniques as well as new machines and
equipments for doing the work. Thus, training is not a one-step process‘,
but it is a continuous or never ending process because it increases the
knowledge and skills of new employees in performing their jobs and
serves as a refresher course for the old employees. Training job will never
be finished as long as the organization remains in operation. At any given
time, the different phases of training programme will be found at
practically every stage of progress. Men may be learning by their own
experiences and by trial and error methods. Training does not disappear
from any organisation merely because its presence is ignored. The purpose
of training is to bring about improvement in the performance of workers.
It includes the learning of such techniques as are required for the
intelligence performance of definite task.
There is a growing realisation about the importance of training in Indian
organisations, especially after globalisation. This has posed a lot of
challenges to Indian industries. Without efficiency, effectiveness and
competency, it would be impossible to survive and to be internationally
competitive, all out efforts are required. Quality innovation, technology
upgradation, cost reduction and productive work culture, have thus
become the slogans of every industry, which no organisation will be able
to achieve without continuously training its human resources. Justifiably,
therefore, there is an upward trend in investment in training in many
organisations. But increasing the investment in training and hiking
training budgets is not going to achieve desired results. There are certain
fundamentals and basic in training which must be given due importance if
investments have to bring in returns.

NATURE OF TRAINING AND DEVELOPMENT:

Training is the most important component of Human Resource
Development (HRD) but HRD training is must in an organisation which
aspires to grow must be in tune with the changing needs of the society.
Training becomes relevant in the context since it is only through training
that the gap between performance of the organization and the felt need of
a changing society can be neutralised Training reduces the gap by
increasing employees knowledge, skill, ability and attitude.
Training makes a very important contribution to the development of the
organisation‘s human resources and hence to the achievement of its aims
and objectives. To achieve its purpose, training needs to be effectively
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Management
managed so that the right training is given to the right people, in the right
form, at the right time and at the right costs. Following points explains the
nature of Training:

 The term training‘ indicates the process involved in improving the

aptitudes, skills and abilities of the employees to perform specific jobs.
Training helps in updating old talents and developing new ones.

 Training is a vital phase of management control. It helps in reducing

accidents, eliminating wastages and increasing, the quality of work.

 Training and Development are terms which are sometimes used

interchangeably. Development was seen as an activity associated with
managers, In contrast training has a more immediate concern and has been
associated with improving the knowledge and skill of non-managerial
employees in the present job.

 Training and development may be regarded interactive, each

complementing the other. The logical step for the organisation is to
produce a plan for human resource development (i.e. training and
development) which will dovetail into the employee resourcing plan (i.e.
selection) and the organisation’s overall strategic plan.

 Objectives of Training
The primary objective of training is to prepare employees – both new and
old, for promotions to positions which require added skill and knowledge.
This means that the training may range from highly specific instruction as
to steps in the performance of a given job to very general information
concerning the economy and society. Therefore, it is necessary to establish
the goals of training very cautiously.
The objectives of training are as follows:

 To impart to new entrants the basic knowledge and skill they need for
an intelligent performance of definite tasks;

 To assist employees to function more effectively in their present

positions by exposing them to the latest concepts, information and
techniques and developing the skills, they will need in their particular
fields;

 To build up a second line of competent officers and prepare them to

occupy more responsible positions;

 To broaden the minds of senior managers by providing them with

opportunities for an inter-change of experiences within and outside with a
view to correcting the narrowness of the outlook that may arise from over
specialisation;

 To impart customer education for the purpose of meeting the training

needs of Corporations which deal mainly with the public.
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In a nutshell, the objectives of training are to bridge the gap between Training and Development
existing performance ability and desired performance.

 NEED AND IMPORTANCE OF TRAINING

Since training is a continuous process and not a one shot affair, and it
consumes time and entails much expenditure, it is necessary that a training
programme or policy should be prepared with great thought and care.
Moreover, it must guard against over- training, use of poor instructors, too
much training on skills which are unnecessary for a particular job,
imitation of other company training programmes, misuse of testing
techniques, inadequate tools and equipment, and overreliance on one
single technique for e.g., on slides, pictures on lecturers and not enough on
practice.
Following points explains the importance of training:

 Increasing Productivity: Instruction can help employees increase

their level of performance on their present job assignment. Increased
human performance often directly leads to increased operational
productivity and increased company profit. Again, increased performance
and productivity, because of training, are most evident on the part of new
employees who are not yet fully aware of the most efficient and effective
ways of performing their jobs.

 Improving Quality: Better informed workers are less likely to make

operational mistakes. Quality increases may be in relationship to a
company product or service, or in reference to the intangible
organisational employment atmosphere.

 Helping a Company Fulfill its Future Personnel Needs:

Organisations that have a good internal educational programme will have
to make less drastic manpower changes and adjustments in the event of
sudden personnel alternations. When the need arises, organisational
vacancies can more easily be staffed from internal sources if a company
initiates and maintains and adequate instructional programme for both its
non-supervisory and managerial employees.

 Improving Organisational Climate: An endless chain of positive

reactions results from a well-planned training programme. Production and
product quality may improve; financial incentives may then be increased,
internal promotions become stressed, less supervisory pressures ensue and
base pay rate increases result. Increased morale may be due to many
factors, but one of the most important of these is the current state of an
organisation‘s educational endeavour.

 Improving Health and Safety: Proper training can help prevent

industrial accidents. A safer work environment leads, to more stable
mental attitudes on the part of employees. Managerial mental state would
also improve if supervisors now that they can better themselves through
company-designed development programmes.

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Human Resource
Management  Obsolescence Prevention: Training and development programmes
foster the initiative and creativity of employees and help to prevent
manpower obsolescence, which may be due to age, temperament or
motivation, or the inability of a person to adapt himself to technological
changes.
Personal Growth: Employees on a personal basis gain individually from
their exposure to educational experiences. Again, Management
development programmes seem to give participants a wider awareness, an
enlarged skin, an enlightened altruistic philosophy, and make enhanced
personal growth possible.
It may be observed that the need for training arises from more than one
reason those are:

 An increased use of technology in production.

 Labour turnover arising from normal separations due to death or

physical incapacity, from accidents, disease, superannuation, voluntary
retirement, promotion within the organisation and change of occupation or
job.

 Need for additional hands to cope with an increased production of

goods and services.

 Employment of inexperienced, new or badli labour requires detailed

instruction for an effective performance of a job;

 Old employee need refresher training to enable them to keep abreast of

the changing methods, techniques, and use of sophisticated tools and
equipment;

 Need for enabling employees to do the work in a more effective way,

to reduce learning time, reduce supervision time reduce waste and
spoilage of raw material and produce quality goods, and develop their
potential.

 Need for reducing grievances and minimising accident rates;

 Need for maintaining the validity of an organisation a whole and

raising the moral of its employees.

8.4 DIFFERENCE BETWEEN TRAINING AND

DEVELOPMENT
Though training and education differ in nature and orientation, they are
complementary. An employee, for example, who undergoes training, is
presumed to have had some formal education. Furthermore, no training
programme is complete without an element of education. In fact, the
distinction between training and education is getting increasingly blurred
now-a-days. As more and more employees are called upon to exercise
judgment and to choose alternative solutions to the job problem training
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programmes seek to broaden and develop the individual through Training and Development
education. For instance, employees in well-paid jobs and or employees in
the service industry may be required to make independent decisions
regarding their work and their relationships with clients. Hence,
organisations must consider elements of both education and training while
planning their training programmes.
Training is the systematic modification of behavior through learning
which occurs as a result of education, instruction development and
planned experience. Training is the increasing knowledge and skill of an
employee for doing a particular job; Training is a short term process
utilizing a systematic and organised procedure by which trainees learn
technical knowledge and skill for a definite purpose. Training is a process
of learning a sequence of programmed behavior. It implies application is a
process of learning a sequence of programmed behaviour. It implies
application of rules and procedures to guide their behaviour thereby
improve their performance.
Training is a systematic programme to increase the knowledge, skills,
abilities and aptitudes of employees to perform specific jobs. Training is
concerned with increasing the knowledge and understanding of the total
environment. Development is concerned with the growth of an employee
in all respects. Development programmes seek to develop skills and
competence for future jobs while training programmes are directed toward
maintaining and improving job performance. Thus training is a process by
which the aptitudes, on the one hand skills, abilities of employees to
perform specific jobs are increased. On the other hand, education is the
process of increasing the general knowledge and understanding of
employees.
Development refers to those learning opportunities designed to help
employee grow. Development is not primarily skills-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.

8.5 MANAGEMENT DEVELOPMENT PROGRAMME

(MDP)
Management development programmes, aim systematically to identify
talent, improve skills, widen experience and help people to grow in their
ability to accept greater responsibility.
The subject matter of a course for Management Development Programme
(MDP) may comprise:

 Company or Organisation:
The Management Development Programme (MDP) relating company or
organisation may contain the following sub-areas:
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Human Resource
Management  Objective and philosophy of company;

 Policies, procedures and practices of an organisation;

 Products and services;

 Organisational structure and organisation dynamics;

 Plant facilities;

 Financial aspects such as investment planning, financial planning and

control capital budgeting;

 Labour management relations etc.

 Management Techniques and Principles:

Under this main area the following sub-areas may be included:

 Organisation principles;

 Financing, planning and management;

 Cost analysis and control;

 Operations research and data processing;

 Marketing management, Marketing research;

 Production planning and control;

 management and administration;

 Decision-making.

 Human Relations:
In this constituent the below mentioned sub-areas may be included:

 Motivation;

 Understanding human behaviour;

 Group dynamics;

 Discipline;

 Complaints and grievances;

 Collective bargaining;

 Counseling and suggestion scheme;

 Selection methods and procedures;

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 Attitudes, training and development; Training and Development

 Job evaluation and performance appraisal;

 Labour economics;

 Supervisory responsibilities.

 Technical Knowledge and Skills:

Under this main area the following sub-areas may be included:

 Computer technology;

 PERT/CPM;

 Linear programming;

 Materials handling;

 Inventory control;

 Adequate understanding of technology, products, processes.

 Personnel Skills:
It contains the following sub-areas:

 Speaking;

 Report writing;

 Conference leadership;

 Learning through listening;

 Reading improvement.

 Economic, Social, and Political Environment:

It contains the following sub-areas:

 Business;

 Economic system;

 Relations with the state;

 Community relations;

 Political systems;

 Legal framework of business;

 Social responsibilities of the corporation and business

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Human Resource
Management 8.6 ESSENTIALS OF SUCCESS OF MANAGEMENT
DEVELOPMENT
PROGRAMME:
While administering the programme, we should have to give the following
considerations:

 Systematic Career Planning:

A Management Development Programme should support a systematic
career planning for managerial personnel otherwise the frustrated trainees
might seek opportunities elsewhere and the whole investment made in
training programmes would go waste.

 Structured Course:
Management Development must follow a series of structured courses.
There should also be an active interaction between the trainees and
management.

 Indiscriminate Approach:
The training programme should cover as far as possible, every manager,
capable of showing potential for growth. It should be free from
discrimination. Peter Drucker pointed out that the right men out of every
ten who were not included in the programme will understandably feel
slighted. They may end of by welcoming less effective, less productive,
less willing to do new thing.

 Properly Planned:
The entire programme should be properly planned. The trainee should
take part in it. An individual may stay out, but it should be made clear that
he does so at some risk to his future promotion. The company should not
normally allow any manager to opt out of a training programme.

Essentials of Success of Management Development Programme

(MDP) :
The following are the essentials for the success of Management
Development Programme (MDP):

 Circulate the Materials to Participants:

The following materials should be distributed among the participants to
make the programme more successful:

 News letter conveying information about corporate affairs;

 Copies of talks given by management personnel;

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 Excerpts from well-written and informative articles; Copies of minutes Training and Development
of meeting distributed among those who were not present.
When these materials are discussed by a group, new plans and improved
procedures will be formulated.

 Programme should be prepared well in advance:

The programme should be prepared well in advance and should contain
decisions about instructional methods and development approaches to be
used and have a provision of expertise and the necessary support system.
It should be based on the policy of promoting a proper utilisation of
trained executives, their knowledge and techniques in the improvement of
the operations of an organisation.

 Training division should have smart and successful executives:

The training division should not be a dumping ground for people found to
be unsuitable for other jobs; it mannered by a group of smart and
successful executives drawn from various functional areas and disciplines.
A multi-disciplinary approach should be emphasised in training
programmes rather than the purely personal favour that is often found in
them.

 Programme should be for all not the weak ones:

A management programme should not only be looked upon as something
meant for the limping horses in the organisation; it should be for the high
fliers as well. In view of knowledge explosion and the consequent threat
of management obsolescence, such programmes should be meant for
everyone in an organisation and not just for the weak ones.

 Management Development Programme (MDP) should be based on

a definite strategy:
The MDP should be based on a definite strategy, which should spell out
the type, coverage and objectives of the programme. The multitier
supervisory and management development programme should start from
the first line supervisor and go all the way up to the top management.

 Top Management should Accept Responsibility:

The top management should accept responsibility for getting the policy of
development executed. To do so, a senior officer may be placed in charge
to initiate and implement the MDP.

 Management Development is a “Line Job”:

It is essentially a line job. It takes place on the job and involves both the
man and his boss.

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Human Resource
Management  Selection of the Right Materials:
Management development starts with the selection of the right materials
for managerial ranks. It is essential to ensure that really good material is
led into the programme at the entry level.

 Realistic Time Table is Required:

There should be realistic time table in accordance with the needs of a
company. This time table should take into account the needs for
managerial personnel over a sufficiently long period and the resources
which are available and which will be required.

 It should fulfill the needs of the Company:

Management development must be geared to the needs of the company
and the individual.

 Developing Managers is the Responsibility of All Managers:

Every manager must accept direct responsibility for developing managers
under his control on the job, and a high priority should be given to his
task.
Thus, for the development of management, it is essential for the top
management to promote a culture for:

 learning and gaining knowledge

 the quest of excellence

 tolerance of mistakes

 striving to maintain a balance and an equity

 the discovery of self and others; and

 enabling a subordinate to become aware of his superiors’ interest in

his development and mental growth.

8.7 TRAINING PRACTICES / FACILITIES IN INDIA

Different types of training facilities available in India, are as follows:

 Worker’s Training: This type of training had become very popular

after the world war II. But the real progress in the direction was made. The
following type of training are given to the workers in our country:

 Apprentice Training Act, 1961: During 1961 the Apprentice Training

Act was passed. About 550 Industrial Training Institutes were opened.
More than 300 centres were set up established for Apprenticeship
Training. There is an Advanced Training Institute in Chennai and Kolkata
has the Central Staff Training and Research Institute. There is the
Foreman Training Institute in Bangalore. The Director General of
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Employment and Training, Government of India had established Training Training and Development
Centres under Craftsman Training Scheme. The National Apprenticeship
Training Scheme was extended to other industrial houses also. Child
Training Schemes were developed under Apprenticeship Scheme and now
this has been extended to many new works.

 Private Sector: Normally the private sector has not introduced any
formal training programme to its workers. But many business organisation
have an induction programme to their new workers aimed at informing
and educating them about the company, its products policies and
management, etc. These programmes are generally conducted by their
personnel department with the help of the supervisory staff. Now, may
well- established private firms are conducting programmes in company
based on their workers’ needs and job requirements.

 Public Sector Undertakings: The public sector companies use their

internal training facilities for training their non supervisory employees. In
some cases, employees are also encouraged to avail of the external
training facilities. Sometimes they sponsor their candidature and meet the
costs also.

 Supervisors Training

 General Education: Normally supervisors are recruited either by

promotion from ranks or by direct recruitment. The latter is the more
widely followed practice in our country. But promotion from ranks is
more common in western countries. Illiteracy and poor educational
background very much limit the possibility of promotion to supervisory
jobs from the ranks in India. The problem of supervisory training has,
therefore, to be talked at the root and in order to bridge the gap between
the potentiality of a worker for supervisory work and the post itself the
level of general education needs to be raised. Many organisation have
successfully undertaken training of junior and senior hands in
Mathematics, Elements of Sciences etc. through regular routine classes
during working hours.

 Training Institutes: The Central Training Institute for Instructors has an

additional course meant for supervisors which covers meant for
supervisors which covers non-technical subject such as leadership,
foundations for good relations, handling of problems, induction of new
entrants, effective communication, and so on. Some institutes of new
entrants, effective communication, and so on. Some institutes particularly
Small Industries Service Institute, NITE etc., organise short-term training
programme for supervisors.

 Training within Industry (TWI) : Training Within Industry was

formally introduced in India with the help of ILO experts. Many
organisation, both in public and private sectors, have had persons trained
by TWI Centre staff, so that they undertake supervisory training in their
respective organisations. These programmes have had mixed results. The
managements who have realised the importance of training for
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Human Resource
Management
supervisors, and have not been led into complacency by the simplicity of
TWI have obtained highly successful results and the programmes.

 Management Training :
The management training and development has attracted the greatest
attention of both practicing managers and academicians in this field. This
is due to the fact that management has every much lagged behind the
imperative demand of the country. The major gap in the developing
countries is managerial competence has to be homegrown to suit the ethos,
temper and needs for our society.
There are two types of facilities for training development of practicing
managers:

 Business Organisation: These organistions are employing managerial

personnel to impart such training either through their own Management
Training institutes or through organising lectures, instructors being their
own line and staff managers or faculty being taken from outside in some
cases. These organisations recruit fresh management trainees. They are
put through training process while working in the organisation, Hindustan
Machine and Tools Ltd., Hindustan Steel Ltd., LIC, Commercial Banks,
Fertilizer Corporations and many other organisations in public sector
Hindustan lever Ltd. TISCO, Reliance Ltd. and others in private sector
have their own Management Training Institutes.

 Management Institutes: There are many management institutes,

associations and other bodies which organise short-term management
development programmes. Prominent among these are Administrative
Staff College, Hyderabad, IIMs., All India Management Association, and
its local chapters, National Productivity Council, Indian Institute of Bank
Management. Indian Institute of Personnel management, National Institute
for Training in Industrial Engineering (NITIE). These bodies organised
management development programmes ranging from 2 days to 12 weeks.

8.8 PROCESS OF DESIGNING A TRAINING

PROGRAMME:
Training programmes are costly propositions. They are time and energy
consuming too. Hence, the training programmes should be framed with
great care and caution. The following steps should be taken while
developing a training programme. These steps usually involve a
considerable amount of dialogue between personnel department
professionals and other supervisors and managers. Ordinarily, the flows or
sequences of these steps are approximately as follows but the various
steps are independent and in some cases may be done simultaneously.

 Determining the need and Priorities for Training:

The very first step in designing a training programme is to determine the
organisation‘s need for such programme. If the organisation does not
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accurately determine its need, the training process will be inappropriately Training and Development
undertaken.
Mc-Guhee and Thayer have recommended the following three steps
approach in order to determine training need:

 Organisational Analysis: This analysis basically determines where

training emphasis should be placed in the organisation.

 Man Analysis: It is used to determine who needs training and what

skills and knowledge or attitudes should be augmented or improved.

 Operational Analysis: It assists to decide what the training should

consist of, requiring a study of what a person should be taught if he is to
perform his task with maximum effectiveness.
Some of the popular methods to assess the training needs of employees in
a company include observation and analysis of job performance. In each
company, the management should analyse organistation needs, job
specifications and the present skill levels of the employees. The analysis
of organisational needs should focus on the number of employees with
various combinations of skills needed at each level and in every part of the
firm for specific periods. Regarding job specifications, many organisations
have written job specifications that define the skills needed for each job in
the firm. By carefully examining these specifications, the human resources
staff can obtain a clear idea of the nature of skills needed for each job.
Then, an analysis of worker skills and qualifications from his personal file
can assist in determining training needs. Similarly training needs can be
assessed for a group of employees.

Translating needs into Objectives and Establishing Training Goals:

Once the training needs have determined, the next important step is to
translate the skills needed into specific training objectives or desired
outcomes of training objectives. These training objectives or goals are
then used to determine the specific courses that will be offered. Training
objectives should include such matters as specific skills to be taught, the
number of people to be trained and from which units and the period within
which such training should take place. Objectives for training programme
that do not relate directly to specific job skills should also be considered
for example, employee health and safety guidelines, promotion
opportunities and self-study opportunities. Training objectives include the
general content of the training to be given. The most frequently adopted
objectives or training subjects by the companies are: new employee
orientation, performance appraisal, leadership, selection process,
interpersonal skills, word processing, new equipment operation, team
building, delegation skills, and listening skills. Sometimes, orientation
regarding company policy and practices can be particularly important,
especially for new employers.

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Human Resource
Management  Selecting Trainees:
Selecting individuals or groups for training is a very complex decision for
the firm and the individuals chosen. From the firm‘s perspective,
providing the right training to the right people can help to create and
maintain a well-trained and stable work force. To impart training for
individuals with limited performance partial or lack of interest is simply a
waste of time, effort, and money. Overlooking individuals with ambition
and potential represents a lost opportunity and can contribute to higher
employee turnover. It should be assumed that ambition and potential are
widespread in the firm and exist at all age levels. There are at least four
important considerations important in selecting trainee: (i) legal
requirements and formalities (ii) employee needs and motivation (iii)
skills obsolescence and retraining, and (iv) multi-skilling. Employee needs
and motivation can be determined with the help of previous performance
evaluations as well as interviews performance evaluations as well as
interviews with individual employees and owner supervisors. The rapidly
change in technology is requiring that all segments of the society give
higher priority to worker retraining. This also means that individual
workers themselves must seek out training opportunities to avoid having
their skills become obsolete. Similarly, numerous companies have moved
in the direction of training their employees to have multiple skills, called
multi-skilling. In particular, multi-skilling is relevant where self-managed
teams are utilised. Everyone is encouraged to learn all of the jobs of the
team and employees are usually paid according to the number of skills that
they have developed.

 Making the Curriculum and Choosing Training Methods:

After deeming training objectives and translating into specific course
areas, the trainees are identified and evaluated, management will be in a
position to decide the overall curriculum, i.e., the arrangement of courses
to be offered. The curriculum is a sort of grand plan of what training is to
be presented and with what frequency. However, a part which must be
added to this grand plan is the matter of training methods. Will the
training be on the job, off the job, prior to employment, or prior to a
formal assignment? Will it be done by lecture computer assisted, or
carried out by some other method? Will it be long-term or short-term?

 Preparation of training budget:

Preparing a training budget will be an interactive process with the other
steps in formulating a training program. Budget constraints may limit the
human resource manager’s alternatives and must, therefore, considered
during all phases of the development process. Costs that must be included
in the training budget are: staff planning time, trainees’ wages, trainers’
salary, and expenses such as cost of training materials, travels,
accommodations, and meals. If the desired training programme does not
fit within budget constraints, the human resource manager must consider
modification such as fewer trainees, different trainees, different training
techniques, and a different training location.
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 Selecting trainers and providing training to trainers: Training and Development

An effective training programme can be developed only when effective

trainers are available. Firms have the option of using staff trainers or of
seeking contract trainers outside, or of having both, types of trainers. Staff
trainers may be full-time specialists on the pay role of organisation or may
be part-time trainers. After their selection, they must be provided with the
information regarding the persons who are to be strained. The trainers
should be engaged after careful evaluation of their suitability and
effectiveness so as to ensure quality training.

 Using selected training technique.

To conduct the training is a significant aspect of training process. Under
this step, the trainers speaks, demonstrate, and illustrates in order to put
over the new knowledge, skills, and operations. Besides, he suggests the
trainee to be at ease, without any stress and strain, and explains to him the
necessity of the training programme and creation of trainee’s personal
interest in training. The trainer tells the sequence of the entire job, the
need for each step in the job, the relationship of the job to the total work-
flow, the nature of interpersonal behaviour required at the job, and so on.
All key points should be covered and emphasised. Audio- visual aids
should be used to demonstrate and illustrate. To ensure follow-up by the
trainee, he should be asked to repeat the operations, and encouraged to ask
questions for further classifications and understanding.

 Performance or learning tryout:

As the training continues, it is important that the progress of trainees
should be monitored. This may be accomplished by periodic skill or
knowledge tests or periodic assessments by the personnel department. The
trainee may be asked to do the job several times. His mistakes, if any, are
corrected and complicated steps should be explained again. As soon as the
trainee demonstrates that he can do the job rightly, he is put at his own job
and the training is said to be over.

 Evaluation system of training programme:

In order to generate adequate feedback, some key purposes of conducting
this evaluation are:
 Determining whether a programme meets its objectives or goals.
 Identify strengths and weaknesses in the training process.
 Calculate the cost-benefit ratio of a programme.
 Determine who benefited the most from a programme and why
 Establish a data base for further decision about the programme.
Training programmes can be evaluated with a variety of methods. The
most popular method involves analysis of questionnaires filled out by the
trainees either at the end of the training session or within a few weeks.
Although in some situations employees can accurately evaluate the quality
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Human Resource
Management
of the training programme, in other situations their subsequent
performance or degree of improvement is a more valid measure. After
specific performance measurement, the results are compared with the
objectives for the training programme. If the training objectives have
been met, the training is said to be successful.

8.8 METHODS OF TRAINING

The following methods are generally used to provide training:

 On-the-Job Training Methods:

This type of training is imparted on the job and at the work place where
the employee is expected to perform his duties. It enables the worker to
get training under the same working conditions and environment and with
the same materials, machines and equipments that he will be using
ultimately after completing the training. This follows the most effective
methods of training to the operative personnel and generally used in most
of the individual undertaking.

 On Specific Job: On the job training methods is used to provide

training for a specific job such as electrician, motor mechanic, pluming
etc.

 Experience: This is the oldest method of on-the-job training. Learning

by experience cannot and should not be eliminated as a method of
development, though as a sole approach, it is a wasteful, time consuming
and inefficient. In some cases, this method has proved to be very efficient
though it should be followed by other training methods to make it more
meaningful.

 Coaching: On-the-Job coaching by the superior is an important and

potentially effective approach is superior. The technique involves direct
personnel instruction and guidance, usually with extensive demonstration.

 Job Rotation: The major objective of job rotation training is the

broadening of the background of trainee in the organisation. If trainee is
rotated periodically from one job to another job, he acquires a general
background. The main advantages are: it provides a general background to
the trainee, training takes place in actual situation, competition can be
stimulated among the rotating trainees, and it stimulates a more co-
operative attitude by exposing a man to other fellow problem and view-
points.

 Special Projects: This is a very flexible training device. The trainee

may be asked to perform special assignment; thereby he learns the work
procedure. Sometime a task-force is created consisting of a number of
trainees representing different functions in the organisation.

 Apprenticeship: Under this method, the trainee is placed under a

qualified supervisor or instructor for a long period of time depending upon
the job and skill required. Wages paid to the trainee are much less than
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those paid to qualified workers. This type of training is suitable in Training and Development
profession, trades, crafts and technical areas like fitter, turner, electrician,
welders, carpenters etc.

 Vestibule Training: Under this method, actual work conditions are

created in a class room or a workshop. The machines, materials and tools
under this method is same as those used in actual performance in the
factory. This method gives more importance to learning process rather
than production.

 Multiple Management: Multiple management emphasizes the use of

committees to increase the flow of ideas from less experience managers
and to train them for positions of greater responsibility. The McCormick
& Company of Baltimore, U.S.A. developed the programme. The
company claims that the plan has increased employee efficiency, reduced
labour turnover and absenteeism, and enabled the company to pay higher
wages than those prevailing in the area and industry. In this method; a
junior board authorized to discuss any problem that the senior board may
discuss, and its members are encouraged to put their mind to work on the
business a whole, rather than too concentrate to their specialized areas.

 Off-the-job Training Methods

Following are the off the job training techniques:

 Special Courses and Lectures: Lecturing is the most traditional form

of formal training method Special courses and lectures can be established
by business organizations in numerous ways as a part of their
development programmes. First, there are courses, which the
organizations themselves establish to be taught by members of the
organizations. Some organizations have regular instructors assigned to
their training and development such as Tata and Hindustan Lever in
private sector; Life Insurance Corporation. State Bank of India and other
nationalized commercial banks, Reserve Bank, Hindustan Steel, Fertilizer
Corporation and many others in public sector. A second approach to
special courses and lectures is for organizations to work with universities
or institutes in establishing a course or series of course to be taught by
instructors by these institutes. A third approach is for the organizations to
send personnel to programmes established by the universities, institutes
and other bodies. Such courses are organized for a short period ranging
from 2-3 days to a few weeks.

 Conferences: This is also an old method, but still a favorite training

method. In order to escape the limitations of straight lecturing many
organizations have adopted guided, discussion type of conferences in their
training programmes. In this method, the participants pools, their ideas
and experience in attempting to arrive at improved methods of dealing
with the problems, which are common subject of discussion; Conferences
may include buzz sessions that divide conferences into small groups of
four or five intensive discussion. These small groups then report back to

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Human Resource
Management
the whole conference with their conclusions or questions. Conference
method allows the trainees to look at the problem from a prouder angle.

 Case Studies: This technique, which has been developed, popularized

by the Harvard Business School, U.S.A is one of the most common form
of training. A case is a written account of a trained reporter of analyst
seeking to describe an actual situation. Some causes are merely
illustrative; others are detailed and comprehensive demanding extensive
and intensive analytical ability. Cases are widely used in variety of
programmes. This method increases the trainee power of observation,
helping him to ask better questions and to look for broader range of
problems.

 Brainstorming: This is the method of stimulating trainees to creative

thinking This approach developed by Alex Osborn seeks to reduce
inhibiting forces by providing for a maximum of group participation and a
minimum of criticism. A problem is posed and ideas are invited. Quantity
rather quality is the primary objective. Ideas are encouraged and criticism
of any idea is discouraged.
Chain reactions from idea to idea often develop. Later these ideas are
critically examined. There is no trainer in brainstorming and it has been
found that the introduction of known experts into it will reduce the
originality and practicability of the group contribution, Brainstorming
frankly favours divergence, and this fact may be explained why
brainstorming is so little used as yet in developing countries where no
solutions ought to carry the highest premium.

 Laboratory Training: Laboratory training adds to conventional

training by providing situations in which the trains themselves experience
through their own interaction some of the conditions they are talking
about. In this way, they more or less experiment on themselves.
Laboratory training is more concerned about changing individual
behaviour and attitude. There are two methods of laboratory training:
simulation and sensitivity training.

 Simulation:
An increasing popular technique of management development is
simulation of performance. In this method, instead of taking participants
into the field, the field can be simulated in the training session itself
Simulation is the presentation of real situation of organisation in the
training session. It covers situations of varying complexities and roles for
the participants. It creates a whole field organisation, relates participants,
through key roles in it, and has them deal with specific situations of a kind
they encounter in real life.
There are two common simulation methods of training:

 Role-playing: Role-playing is a laboratory method, which can be used

rather easily as a supplement of conventional training methods. Its
purpose is to increase the trainee skill in dealing with other people. One of
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its greatest use, in connection with human relations training, but it is also Training and Development
used in sales training as well. It is spontaneous acting of a realistic
situation involving two or more persons, under classroom situations.
Dialogue spontaneously grows out of the situation, as the trainees
assigned to it develop it. Other trainees in the group serve as observers or
critics. Since people take rules even day, they are somewhat experienced
in the art, and with, a certain amount of imagination they can protect
themselves into roles other than their own. Since a manager is regularly
acting roles in his relationship with other it is essential for him to have
role awareness and to do role thinking so that they can size up each size
up each relationship and develop the most effective interaction position.

 Gaming: Gaming has been devised to simulate the problems of

running a company or even a particular department. It has been used for a
variety of training objectives from investment strategy, collective
bargaining techniques to the morale of clerical personnel. It has been used
at all the levels, from the executives for the production supervisors.
Gaming is a laboratory method in which role-playing exists but its
difference is that it focuses attention on administrative problems, while
role-playing tend to emphasis mostly feeling and tone between people in
interaction. Gaming involves several terms, each of which given a firm to
operate for a number of periods. Usually the periods is short one year or
so. In each period, each-team makes decisions on various matters such as
fixation of price, level of production inventory level, and so forth.

 Sensitivity Training:
Sensitivity training is the most controversial laboratory training method.
This method is about making people understand about themselves and
others reasonably, which is done by developing in them social sensitivity
and behavioral flexibility.
Social sensitivity in one word is empathy. It is ability of an individual to
sense what others feel and think from their own point of view. Behavioral
flexibility is ability to behave suitably in light of understanding.
Training is essential for the smooth, economic, timely and efficient
production, work or service in any organisation. To get work
accomplished well from a worker or employee, it is a must that he is given
proper training in methods of work. Training is the organized producer by
which people learn knowledge and skill for a definite purpose
management cannot make a choice as between ‘training’ or ‘ no training’.
On the other hand, it is a must. The only choice lies in the method of
training.

8.9 TECHNIQUES OF EVALUATION OF TRAINING

Several techniques of evaluation are being used in organisations.

 Evaluation by using experimental and control groups: One

approach towards evaluation is to use experimental and control groups.

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Human Resource
Management
Each group is randomly selected, one to receive training (experimental)
and the other not to receive training (control).
The random selection helps to assure the formation of groups quite similar
to each other. Measures are taken of the relevant indicators of success
(e.g. words typed per minute, quality pieces produced per hour, wires
attached per minute) before and after training for both groups. If the gains
demonstrated by the experimental group are better than those by the
control group, the training programme is labeled as successful.

 Longitudinal or time-series analysis: Another method of training

evaluation involves longitudinal or time series analysis. Measurements are
taken before the programme begins and are continued during and after the
programme is completed. These results are plotted on a graph to determine
whether changes have occurred and remain as a result of the training
effort. To further validate that change has occurred as a result of training
and not due to some other variable, a control group may be included.

 Sending questionnaire to the trainees after the completion of the

programme: One simple method of evaluation is to send a questionnaire
to the trainees after the completion of the programme to obtain their
opinions about the programme‘s worth. Their opinions could also be
obtained through interviews. A variation of this method is to measure the
knowledge and/or skills that employees possess at the commencement and
completion of training. If the measurement reveals that the results after
training are satisfactory, then the training may be taken as successful.
In order to conduct a thorough evaluation of a training programme, it is
important to assess the costs and benefits associated with the programme.
This is it difficult task, but· is useful in convincing the management about
the usefulness of training.

8.10 SUMMARY
The challenges associated with the changing nature of work and the
workplace environment requires training. Rapid change requires a skilled,
knowledgeable workforce with employees who are adaptive, flexible, and
focused on the future. It is the responsibility of any business concern is to
develop its staff as per the changing environment. The Philosophy of
Human Resources Management states that the development of human
resources is possible only by providing adequate training.
Training and development refers to the practice of providing training,
workshops, coaching, mentoring, or other learning opportunities to
employees to inspire, challenge, and motivate them to perform the
functions of their position to the best of their ability and within standards
set by local, state, Tribal, Federal and licensing organization guidelines.
Training and development activities provide all involved system of care
parties with the tools they need to develop professionally, increase their
knowledge, effectively work with families, and build their capacity to
perform the tasks associated with their positions within the system of care.
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 Training and Development
8.11 QUESTIONS
1. Define Training and Development. What is the difference between
Training and Development?
2. Examine the objectives, need and purpose of training.
3. What are the requisites for the success of MDP?
4. Elaborate the different methods generally used for training of the
employees.
5. Examine the techniques of evaluation of training prorammes.
6. Write short notes:
i. Nature of Training
ii. On-the-job training
iii. Off-the-job training
iv. Simulation

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 9
MANAGEMENT OF ORGANIZATIONAL
CHANGE
Unit Structure
9.0 Objectives
9.1 Introduction
9.2 Concept of Organizational Change
9.3 Forces of Organizational Change
9.4 Why do people resists Organizational Change
9.5 Practice of Managing Resistance to Organizational Change
9.6 Organizational Development
9.7 Practice of Organizational Development
9.8 OD Interventions
9.9 Summary

9.0 OBJECTIVES
After studying the unit student will be able to:
 Undersand what is Organizational Change
 How to manage Organizational Change
 Strategies to overcome the resistance to change
 The importance of continuous efforts towards OD
 Analytical insight related to application of OD interventions
9.1 INTRODUCTION
Change is called the law of life. It is constant, inevitable and consistent. In
every walk of human life, we witness many changes. Uncertainty and
complex nature of businesses due to growing competition and customers
expectation, compelling organizations to introduce changes. Manager’s
job is becoming difficult and challenging. If change is introduced, it is a
tendency of a human being to resist change. They think of losing
something.
Proper planning, communication and implementation is required to
introduce change. Change management is a systematic approach in

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dealing with organizational change. Change management is a process in Management of
Organizational Change
which the changes are introduced in a planned and systematic way in an
organization.
Dealing with the change involves the perspective of an organization as
well as an individual. Predefined models are proved to be helpful in
successfully implementing change in an organization.
When a manager plans for change, communicate the need of change to the
people, assure them about the positive aspects of change and implement
the same with the support of the people. This process is called change
management. It is like managing those things which are inevitable,
consistent and create fear in the mind of the people. The concept of
change management plays a vital role in any organization. The task of
managing change is not an easy task.
Standardized methods, strategies and processes that are beneficial to bring
change are used by the managers for the successful implementation of
change in an organization. It is important to communicate the need for
change. Introducing change is a problem and communication of the need
for change and its successful implementation later on is the solution.
Change management deals with the people's side of the change.

Fig. 9.1 Conceptual Framework of Change Management

It is important to understand the three important elements of change
management:
 Change must be planned in advance.
 It must be communicated in advance.
 One must implement the change by involving needs.
One more important dimension is the need for change. Change is going to
give an impact to a few people or to the whole organization. If the need of
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the change is communicated clearly, the people will adopt it freely.
Though, there will be few who will resist change.

9.2 ORGANIZATIONAL CHANGE

Change is inevitable in nature. This is the common line used to introduce
the concept of change. Change is something which denotes a transition
from one state to another. The fact of being replaced or changed creates
fear in the mind of the people. In an organization, translating change into
an action is challenging if it is not communicated properly. People feel
change is a never ending process where responses to it will be in the form
of readjustment or readaptation.
It is introduced in an organization to make structural adjustments, project,
initiative or solution to improve the way of work. Planned change is
something an organization should introduce. Planned change reflects
proper understanding of the need for change and communication to the
people. The purpose is to change employee behavior towards change in a
positive way and to improve the ability of the organization to adapt
changes in the new environment. It is not that easy to introduce change.
People resists due to many reasons. That’s why, management of change is
a concept which one must understand as far as the organizational
perspective is concerned.

9.3 NATURE OF ORGANIZATIONAL CHANGE

To understand the concept of change management, it is important to know
the nature of change management. With the help of the diagram given
below, one can understand the nature of management of change:

Fig. 9.2 Nature of Organizational Change

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 Management of
9.4 WHY DO PEOPLE RESIST CHANGE? Organizational Change

Change is inevitable in nature. Although, people resist change. There may

be numerous reasons as human behavior is caused. Whatever we do, there
is a reason behind that. Resistance to change can be a source of functional
conflict. Some evidence of resistance to change is very destructive. To
further understand this topic, the reasons for resistance to change are
divided into two categories.

Fig.9.3 Why do People Resist Change

 Organizational Resistance
The main reason people resist change is uncertainty of its impact. The
organizational structure itself also resists change. Every kind of change
involves resistance to change. Let's have a look on the reasons of
organizational resistance to change:

Fig.9.4 Reasons of Organizational Resistance

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Human Resource
Management  Organizational Inertia
Making significant internal changes in the face of external changes is
known as organizational inertia. It depends upon the organization's ability
to make changes. People react when they feel the changes are occurring
gradually. On the basis of their past experience, they resist change.

 System Relationships
It is one of the important features of change that one change brings
another change. It has a domino effect. Due to the changes which arise in
one subsystem lead to changes in other subsystems also. The change in
one department may bring the change in another department as well.
That's why organizations resist change.

 Lack of Clarity
When organizations lack clarity about the incidence and gravity of
change, they resist. The organizational structure itself also resists change.
Most changes have the power to disrupt things. Lack of clarity brings
more confusion and fear about the change.

 Sunk Costs and Vested Interest

Sunk costs are those costs which are used in investments. Investments in
fixed assets like machinery, land and building are treated as sunk costs.
Any new change can create a disruption in his system. Vested interests of
an individual involve commitment of an individual towards resources,
programmes, policies of the organization. Organizations resist change
when the things related to abandonment arise.

 Structural Rigidness
Organizations resist change due to structural rigidness also. Many changes
have the capacity to disrupt the structural rigidness. It affects the power
structure as well. Decentralization of authority can be often seen as threats
to the power of superiors when it comes to delegation and granting power
is concerned.

 Individual Resistance
Individuals resist change due to multiple factors. The main factor which is
considered is fear. They fear losing power, status, responsibilities and
post.

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Organizational Change

Fig.9.5 Reasons of Individual Resistance

 Fear
The most common reason for people resisting change is fear. Fear of the
unknown, uncertainty and ambiguity are some of the reasons. Fear of
learning something new is also one of the reasons that compel people to
resist change.

 New Learning
New learning is also one of the reasons. New learning requires effort and
energy. For doing new work and tasks, one requires to learn new methods,
a new technology etc. learning something new can be exciting if a person
is willing to learn. Few people may find it unattractive to learn and that's
why they resist change.

 Lack of Trust
The relation between management and labor is a sensitive one. Labor if
not communicated properly about the change may suspect the reason for
change and try to oppose the decision taken in favor of the change against
the management. Lack of trust is also considered as one of the reasons.

 Habits
Human beings are slaves of habit. Changes create challenges for the
people who believe in routine work and do not like the concept of
newness. Rapid changes in organizations can disturb the routine of their
work nature. Such people find resistance easy rather than accepting
change.

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Human Resource
Management  Lack of Information
Providing information about the change is a fundamental step of
introducing change. Lack of information about the change can create fear
of the unknown and it can disrupt the stable relationships and work culture
of the same to organizations.

9.5 PRACTICES OF MANAGING RESISTANCE TO

ORGANIZATIONAL CHANGE
Managing resistance to change is a key to management of change.
Through the following ways, an organization can effectively manage
resistance of change:

Fig. 9.6 Management of Resistance of Change

 Participation
Taking participation of employees in the change process can help
organizations and managers to implement change. It is observed that
individuals find it difficult to resist a change in decision in which they
participate. It can involve all employees and those employees who resist
change. They can be brought into the decision process.

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 Management of
 Communication
Organizational Change
Communication is the best way to bring change. Communication is a
powerful force for change in ambiguous situations. Giving communication
about the need for change is an effective tool to facilitate change.
Communicating the process of change to employees helps them to accept
change.

 Coercion
This can be taken as the last resort to implement change. After taking into
consideration all the measures, as a last tactic organization can apply
direct threats on the resisters to make them understand and accept the
change. Coercion in the form of demotion, transfer, loss of promotion,
ineffective performance appraisal can be used against the resistor.

 Facilitation
Facilitating change is an easy process to make employees understand the
gravity of change. Providing empathy to those employees who have
trouble in dealing with change is another important strategy. Managing
change through facilitation is a kind of help extended to the person who is
facing trouble in accepting change.

 Support
One of the important strategies for managing resistance to change is
providing support to the employees. The persons who are facing trouble in
accepting change, they must be provided proper and needed support like
skill training, knowledge about the work, counseling and therapy etc.

 Co optation
Co optation means an act of co optating something in order to take over
something. The people who resist are invited to get their endorsement
regarding change. The technique of co optation is less expensive and
simple. Through this method, a manager can seek the support of the
resistors in an organization. They are being tricked for undertaking
change. Manipulation and co optation covert attempts to influence.

 Education
Providing details to employees about the change and its need is one of the
best methods to manage resistance to change. Employees can be educated
about the change. Methods like discussions, memos, notices, groups
discussion can be used to educate the employees about the change and its
nature.

9.6 ORGANIZATIONAL DEVELOPMENT

In a changing business climate, it is important to understand the structural,
cultural and strategic reality of work. To facilitate organizational success,
organizational development plays an important role. Organizational
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development deals with planned change. The nature of Organizational
development is complex as it tries to understand how to manage planned
change in organizations. Through the application of knowledge of the
behavioral sciences, OD helps to facilitate the planned change for the
improvement of organization.
The concept of organizational development helps organizations to build
their capacity to bring change by integrating and developing the strategies,
structures and processes of the organization. It is a systematic, integrated
and planned approach to improve the effectiveness of the organization.
The culture of change is developed through the utilization of behavioral
science, research, theories, laws and technology. The approach of
organizational development is evidence based and structural. It aims at
organizational effectiveness.
In simple words, organizational development is an objective based
methodology used to initiate a change of system in an entity. It is achieved
through supporting organizational structure and proper communication.
Change is inevitable in nature. Due to multiple reasons, there are a number
of changes occurring frequently.

DEFINITION
According to Burk and Hornstien "Organization development is a
process of planned change. Change of an organization's culture from one
which avoids an examination of social processes (especially decision
making, planning and communication) to one which institutionalizes and
legitimizes this examination".
According to Warren Bennis - "Organization development is a response
to change, a complex educational strategy intended to change the beliefs,
attitudes and structure of organization so that they can better adapt to new
technologies, markets and challenges".

CHARACTERISTICS OF OD
The concept of organizational development is adaptive, flexible, modern
and evolving. To understand the concept of organizational development
better, let's have a look in the characteristics of OD:

 OD is a systematic, planned and integrated approach to change.

 It involves the application of knowledge.

 It advocates that for organizations to change, individuals must change.

 The process of OD is goal oriented.

 It is designed to solve the problems of the organization.

 It aims at building capacity and achieving effectiveness.

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 It is managed from the top in order, Management of
Organizational Change
 It is a modern approach to the management of change.

 OD interventions lead to improved organization performance.

 OD increases innovation through employee involvement and

engagement.

9.7 PRACTICES OF ORGANIZATIONAL

DEVELOPMENT
The goal of organizational development is to achieve organizational
effectiveness. The effectiveness of OD must be fully supported by
theories. Fields like psychology, HR practices, management techniques
and various other disciplines can help to find out how to best implement
change and development. The following are the practices that must be
undertaken for the functioning of organizational development in an
enterprise:

Fig. 9.7 OD Practices

Company Culture
Achievement of organizational goals is an important element for
organizational effectiveness. Company’s culture should be built in such a
way that the managers must support and motivate employees to take
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Management
responsibility for achieving group and organizational goals. Suggestions,
feedback, grievance redressal, supportive environment are some important
key elements which must be taken into consideration while creating a
company’s culture.

Organization Structure
The organizational structure must be flexible and simple. It must allow the
procedures within an organization to change when needed. Organizations
need to eliminate issues and practices that limit progress. The action plan
should be realistic, doable and must support the stakeholders of the
organization.

Strategic Goals
The interventions taken for the organizational development must be in
alliance with the strategic goals of the organization. The problem
identification, its measurement and the solution is an important part of the
whole process.

Client Willingness
Determining the client’s willingness or readiness is an important factor.
Are they willing or ready to accept change is an important question that
need to be asked while going for organizational development

Collaboration
Working with the right people at the right time is essential for
organizational development. People who work in collaboration are said to
bring more positive and fruitful results for the organization.

Feedback Mechanism
Feedback is an essential element of organizational development. For every
change, a feedback mechanism should be run one to one to allow people
to express their views and how are they able to perceive change.

9.8 OD INTERVENTIONS
Bringing OD in an organization is a complex task. Through OD
interventions, the structural activities can be proved helpful to bring and
maintain organizational effectiveness. According to French & Bell, “OD
intervention refers to the range of planned, programmatic activities client
and consultant participate in during the course of OD program.”

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The following interventions can be undertaken to bring about OD: Management of
Organizational Change

Fig. 9.8: OD Interventions

Individual focused Interventions:
Interventions that are targeted towards individuals are known as
individual-focused interventions. The individual-focused interventions
include skill training, job redesign, career planning and role negotiations.
We will discuss this points one by one:

 Skill Training: It refers to increasing the knowledge, skills and

abilities of an employee to perform or do a specific job more
effectively. It is imparted in the classroom or on the job.

 Job Redesign: It alters jobs to improve the balance between the

individual skills and the demands of the job.

 Career Planning: It is a measure through the organizations, through

various activities, to identify strengths, weaknesses and goals of the
employees. Counseling is also an important part of career planning.

 Role Negotiation: It is a simple technique through which

employees/individuals meet and clarify their job roles. The
expectations of both the parties are clarified and negotiated.

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Management

Fig. 9.9 Organization and Group-focused Interventions

These interventions are organizational and group-focused. They aimed at
changing the organization or work-groups within the organization. The
interventions include management by objective, quality of work life,
survey feedback, team building and process consultation.

Techno structural Interventions:

Techno Structural interventions refers to the programs which are aimed at
changing the technology and structure of the organization. With rapidly
changing markets, these interventions are becoming increasingly relevant
and important.
These interventions includes:
Organizational Structure: Organizational structure deals with the
functioning of the organization. It includes functional structure, divisional,
matrix, process, customer centric, and network. It also includes the design
or restructuring in the form of downsizing and reengineering.
Total Quality Management: Total quality management is a philosophy.
It is not a technique. It states that every employee should work towards the
improvement of the organization. To ensure a continuous success, the
employees should contribute in improving the work culture, work
efficiency, services, systems and processes. It is mainly concerned with
continuous improvements in all the areas of organization.

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Job Enrichment and Work Design: Job enrichment means enriching the Management of
Organizational Change
new dimensions to the job. As the name suggests, it seeks to enrich and
improve the existing job of the employee. While, work design deals with
designing work in a way that leads to optimum productivity. Both can be
considered as an attempt to motivate employees by enriching and
enhancing their jobs.
Strategic Change Interventions: These interventions can bring the
development changes in an organization. Strategic change interventions
are those interventions which focus on the change processes that can
shake the organizations. These interventions are for the long-term.
The following can be considered as the strategic change interventions:
Continuous Change: Continuous change deals with the changes which
occur gradually. These changes are improving by the time and are
continuing in nature. By making small incremental changes, an
organization can improve slowly.
Transformational Changes: As the name suggests, transformational
changes include mergers, acquisitions, alliances, joint ventures etc. These
changes can bring changes in the whole organization.

9.9 SUMMARY
Change is something which denotes a transition from one state to another.
The fact of being replaced or changed creates fear in the mind of the
people. In an organization, translating change into an action is challenging
if it is not communicated properly. People feel change is a never ending
process where responses to it will be in the form of readjustment or
readaptation.
The purpose of organizational changes is to change employee behavior
towards change in a positive way and to improve the ability of the
organization to adapt changes in the new environment. It is not that easy
to introduce change. People resists due to many reasons.
People resist change. There may be numerous reasons as human behavior
is caused. Whatever we do, there is a reason behind that. Resistance to
change can be a source of functional conflict. Some evidence of resistance
to change is very destructive.
Managing resistance to change is a key to management of change. It can
be managed through various ways.
Organizational development is an objective based methodology used to
initiate a change of system in an entity. It is achieved through supporting
organizational structure and proper communication. Change is inevitable
in nature. Due to multiple reasons, there are a number of changes
occurring frequently.

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Human Resource
Management
Bringing OD in an organization is a complex task. Through OD
interventions, the structural activities can be proved helpful to bring and
maintain organizational effectiveness.

9.10 QUESTIONS
1. What is meant by organizational change? Why is change considered as
inevitable in nature?
2. What are the major external and internal forces for change in
organization?
3. “People resist change and it's a completely normal part of the process”
Comment.
4. How can resistance to change be prevented and managed? Explain its
various techniques or measures.
5. Write a note on practices of management of change.
6. What is OD? How is it undertaken by the organizations?
7. Discuss the various OD interventions. Which OD intervention is most
effective?
8. Explain the various practices that can be adopted to develop
organization.
9. What topics can be included in designing a new intervention for
organizational effectiveness?

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 10
HRD STRATEGIES FOR LONG-TERM
PLANNING AND GROWTH
Unit Structure
10.0 Objectives
10.1 Introduction
10.2 Human Resource Development
10.3 Framework of HRD
10.4 HRD Interventions
10.5 HRD Strategies for Long-term Planning and Growth
10.6 Implementing HRD Strategies
10.7 Summary
10.8 Questions

10.0 OBJECTIVES
 Understand the importance of HRD

 How is HRD an important part of HRM

 Long term benefits of HRD at various levels

 HRD Strategies and their implications and challenges

10.1 INTRODUCTION
The concept of human resource development is different from the concept
of human resource management. Human resource development helps
organizations to develop their workforce. Development is the main focus
area while human resource management deals with acquiring, training and
managing people in an organization. The subject area of human resource
management is mainly concerned with the managing part including their
development. Human resource development is an important part of human
resource management.
The human resources of the companies must be managed and developed
in terms of the current strategic orientation of the company. The subject
area of human resource development covers the development of skills,

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Management
knowledge, abilities and capacities of the employees and managers.
Through the framework of human resource development, employees can
develop their skills, knowledge and abilities. It helps them to work more
efficiently.
Within human resource management, human resource development can be
a stand alone function. It is the training and development of a company’s
workforce. The role of HRD managers is very important.

Fig. 10.1: HRM. HRD and OB

The concept of organizational behavior deals with human behavior at
work. It is the study and application of knowledge about how people
behave or act in an organization as far as their individual or group
behavior is concerned. The subject area of OB is concerned with
understanding, predicting and controlling human behavior in an
organization.
Through human resource development, organizations fulfills the training
and development needs of employees and managers respectively. It helps
to provide new opportunities to the young talent to work better for the
organization. The domain of human resource development is very vast and
comprehensive. Human resource development can be in the form of a
formal or informal way.

10.2 HUMAN RESOURCE DEVELOPMENT

Since the 1980s, the term ‘Human Resource Development’ has been in use
although the concept is much longer old. The development of human
resources is essential for any organization. The nature of human resource
development is dynamic, future oriented and growth oriented. Unlike
other resources, human resources are considered as the most valuable
resource of an organization. They have rather unlimited potential
capabilities and skills.

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By creating a development culture and practices, the abilities and HRD Strategies for Long-
Term Planning and Growth
knowledge of the employees can be increased in this challenging and
dynamic world. Human resource development aims at creating such a
climate. Based on certain principles and interventions, the concept of
human resource development is widening day by day.
Human resource development is a practice through which employees
develop their personal and organizational skills, abilities and knowledge.
Human resource development is developing the most superior workforce.
In simple words, HRD is a process by which the employees of an
organization are helped in a continuous and planned way. It helps
employees to understand their own capabilities.

 DEFINITION
According to M.M. Khan, "Human resource development is the cross of
increasing knowledge, capabilities and positive work attitudes of all
people working at all levels in a business undertaking."
According to Leonard Nadler, "Human resource development is a series
of organized activities, conducted within a specialized time and designed
to produce behavioral changes."

10.3 FRAMEWORK OF HRD

The development of human resources is essential for any organization.
The nature of human resource development is dynamic, future oriented
and growth oriented. Through the framework of human resource
development, employees can develop their skills, knowledge and abilities.
It helps them to work more efficiently.
Human resource development deals with the training and development of
employees and staff. Their development leads to community development.
With the help of the diagram given below, we can understand the
framework of human resource development -

Fig. 10.2: HRD Framework

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The framework of HRD is designed to serve the employees. Human
resource development is one of the forms of systems which helps
organizations to sustain and retain employees. Motivation plays an
important role in the whole process. Human resource development itself is
a framework designed to train, develop and motivate employees through
training and development by increasing their knowledge, skills and
abilities.
Human resource development framework is important because it provides
necessary training and support to the employees of the company. The most
efficient workforce is targeted first to accomplish the targeted goals while
serving the customers and society. The objective of the HRD framework is
to to develop and maintain the skills and competencies of the employee.
When the knowledge, skills and abilities of an employee increases, it leads
to a better, trained and skilled workforce. The assessment, design,
implementation and evaluation of the whole framework is important.
Assessment and prioritization of needs is another important part of the
whole process. Every framework deals with the following stages as far as
human resource development is concerned.

Fig. 10.3: Diagramatic representation of HRD Framework

 Assessment
This stage involves the assessment of the employees, job tasks and
organizational environment. What is needed and what we have is the
fundamental thing which will be considered by prioritizing needs,
understanding and examining the performance of the employees.
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 HRD Strategies for Long-
 Design
Term Planning and Growth
Designing the program of human resource development is an important
part. Defining objectives, developing course of action, lesson plan and
scheduling the program are some important elements of this stage.

 Implementation
The implementation deals with the practical stage of the whole process
which was planned earlier. It involves the successful delivery of the
assessment and design phase. with the help of various training and
development methods, the program will be implemented.

 Evaluation
The final step in the process is evaluation of the program. The
effectiveness of the HRD intervention is measured during this phase.
Evaluation plays a vital role. It helps organizations to follow the same
strategy if it goes successful.

 Modification/Continuation
If the framework proves to be successful, the organization will continue to
adopt the similar framework in future as well. If not, they can modify the
process as per the needs and criteria of the organization for developing
human resources.

10.4 HRD INTERVENTIONS

The programs and interventions used can be used to address a wide range
of issues and problems in the organization. Human resource development
is an important function within human resource management. There are
many sub-systems of human resource development. Interventions help
organizations to prioritize the needs of the organization. The following are
the important interventions of human resource development:

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Fig. 10.4 HRD Interventions

 Training and Development

Training refers to increasing the knowledge, skills and abilities of an
employee to do a particular job while development deals with the overall
improvement of a manager. Training word is used for employees while the
development word is used for managers. Through training and
development, the human resource development function can work
effectively.

 Performance Appraisal
Performance appraisal means to evaluate the performance or work of an
employee in an organization. It helps individuals manage their
performance by providing them with feedback. It is good for the
improvement of the employees. That's why it is considered as one of the
important interventions of human resource development.

 Communication
Communication is an act of passing information from one person to
another. Clear communication is a key for organizational effectiveness.
This is one of the most frequent HRD interventions used by the
organizations to promote growth and development of the employees.

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 Quality of Work Life
Term Planning and Growth
Quality of work life can be defined as the satisfaction level of an
employee related to his job and his/her thinking as far as the quality of
their work is concerned. If their satisfaction level is favorable, the quality
of work life is said to be positive. If it is unfavorable, the quality is said to
be compromised. Maintaining quality at the workplace is an essential
element of HRD.

 Job Enrichment and Job Enlargement

Job enrichment means the vertical expansion of a job by increasing the
knowledge, skills and abilities of an employee. Job enlargement means the
horizontal expansion of a job by adding more responsibilities and tasks.
These two things are considered as important interventions of human
resource development.

 Organizational Development
Organizational development is an objective based methodology used to
initiate a change of system in an entity. It is achieved through supporting
organizational structure and proper communication.
The concept of organizational development helps organizations to build
their capacity to bring change by integrating and developing the strategies,
structures and processes of the organization. It is a systematic, integrated
and planned approach to improve the effectiveness of the organization.
The culture of change is developed through the utilization of behavioral
science, research, theories, laws and technology. The approach of
organizational development is evidence based and structural. It aims at
organizational effectiveness.

10.5 HRD STRATEGIES FOR LONG-TERM PLANNING

AND GROWTH
A human resource development strategy deals with managing and
developing its human resource to align with its business activities and
competitive world. The human resource development strategy is an
enterprise's overall plan for managing its human capital to align with its
commercial and business activities. The direction is set for all the main
areas of human resource. The key areas of human resource include human
resource planning, recruitment, selection, training and development,
performance appraisal and compensation.
The HRD strategies for long-term planning and growth dictates HR
practices throughout the organization. The terms ‘planning and growth’
denote the direction of every direction. The analysis of the organization
and external environment is required to prepare the strategies for HRD. It
takes longer than one year to implement HRD strategies for long-term
planning and growth.

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The activities of human resource management are shaped for the long
term to achieve the objectives and goals. It helps in the deployment and
allocation of money, time, personnel and organizational resources.
The proactive approach is required in today's fast changing, challenging
and competitive environment. With the help of these strategies, the
efficiency, performance and productivity can be achieved through growth
and development of human resources in an organization . The utilization
and maximization of creative opportunities and available environment
through acquisition of knowledge is important in this field. Along with
knowledge, skills and abilities are also necessary to be updated for
productive efforts.
The objective of long term growth and development can be planned and
achieved by inspiring and motivating the inspired group of employees.
Their core competencies can be utilized and modified to achieve the
objectives of the organization.
The HRD strategies for long-term planning and growth deals with the
overall functioning of the organization. The following elements are an
important part of HRD strategies:

Fig. 10.5 HRD strategies for long-term planning and growth

Communication is a key element. Without communication, no
organization can achieve this objective. The HRD strategies for long-term
planning and growth also advocates the clear communication between the
various departments and levels. The HR policies should be made in
accordance with the vision, missions and objectives of the organization. It
should be conveyed and communicated properly to the employees of the
organization.
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Maintaining quality in every aspect of the organization is a need of today. HRD Strategies for Long-
Term Planning and Growth
A quality strategy will ensure this element. Managing change is another
important challenge and properly taken care of.
Feedback mechanism is required to see whether the organization is able to
cope with the change or not. Feedback mechanism also ensures that the
HR policies are well communicated, quality strategies are well planned
and implemented. Employees are involved completely in the whole
communication process.
A good feedback mechanism ensures the greater participation of
employees in an organization.

10.6 IMPLEMENTING HRD STRATEGIES

In the previous topic, we have discussed the HRD strategies for long-term
planning and growth. In this topic, we will see how the HRD strategies are
implemented properly. HRD strategies are a plan that defines how the
human resources would be utilized in an organization. Growth and
development plays an important role while preparing and implementing
HRD strategies.
An organization by preparing and following the given steps can plan,
prepare and implement HRD strategies. -

Fig. 10.6 Steps Involved in the Implementation of HRD Strategies

Step I: Needs Assessment
The assessment of needs of the organization is a first step. This step is an
important step. The needs of the organization related to human resources
are identified in this step. Developing an effective human resource
strategy takes time and careful planning.
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Human Resource
Management
Step II: Preparing and Designing the Strategy
In this step, the strategies are prepared and designed. Once the focus is
clear, the next step is to work in that direction. The strategies are prepared
and designed by keeping in view the goals and objectives of the
organization.

Step III: Alignment

The third step involves the alignment of the HRD strategies with the
business objectives. Though, strategies are designed and prepared in that
way only. The objective is Every HR strategy has to support business
efforts.

Step IV: Implementation

Once the above steps are cleared, the strategies are implemented in this
step. Through team building and group efforts, the HRD strategies are
implemented to achieve the objectives of the organization related to
human resource.

Step V: Feedback
This step ensures the analysis of the whole process. Feedback mechanism
is required to see whether the organization is able to cope with the change
or not. Feedback mechanism also ensures that the HR policies are well
communicated, quality strategies are well planned and implemented.
Employees are involved completely in the whole communication process.

10.7 SUMMARY

 Human resource development helps organizations to develop their

workforce. Development is the main focus area while human resource
management deals with acquiring, training and managing people in an
organization. The subject area of human resource management is
mainly concerned with the managing part including their
development. Human resource development is an important part of
human resource management.

 Human resource development is a practice through which employees

develop their personal and organizational skills, abilities and
knowledge. Human resource development is developing the most
superior workforce.

 The framework of HRD is designed to serve the employees. Human

resource development is one of the forms of systems which helps
organizations to sustain and retain employees. Motivation plays an
important role in the whole process. Human resource development
itself is a framework designed to train, develop and motivate
employees through training and development by increasing their
knowledge, skills and abilities.

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 The programs and interventions used can be used to address a wide HRD Strategies for Long-
Term Planning and Growth
range of issues and problems in the organization. Human resource
development is an important function within human resource
management. There are many sub-systems of human resource
development like training and development, performance appraisal
etc.

 The HRD strategies for long-term planning and growth dictates HR

practices throughout the organization. The terms ‘planning and
growth’ denote the direction of every direction. The analysis of the
organization and external environment is required to prepare the
strategies for HRD. It takes longer than one year to implement HRD
strategies for long-term planning and growth.

 HRD strategies are a plan that defines how the human resources
would be utilized in an organization. Growth and development plays
an important role while preparing and implementing HRD strategies.

10.8 QUESTIONS

1. What is Human Resource Development? Explain the role of HRD in

developing and implementing strategies.
2. Write a note on the framework of HRD.
3. Why are companies focusing more on human resource development?
Support your answer with the help of some examples.
4. Explain the concept of HRD strategies for long-term planning and
growth.
5. What are the Steps Involved in the Implementation of HRD
Strategies.




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 11
SUCCESSION PLANNING
Unit Structure:
11.0 Objectives
11.1 Introduction
11.2 Meaning and Definition
11.3 Steps / Elements of Succession Planning
11.4 Need and Importance of Succession Planning
11.5 Need of Succession Planning to Family Oriented Enterprises
11.6 Issues in Succession Planning and Solutions
11.7 Problem in Succession Planning
11.8 Measures to The Solve Problems in Succession Planning
11.9 Grievance Handling
11.10 Grievance Procedure
11.11 Summary
11.12 Self Assessment Questions

11.0 OBJECTIVES
After studying the unit the students will be able to:

 Define the meaning of Succession Planning.

 Explain the steps in the process of Succession Planning.

 Understand the importance of Succession Planning

 Know the issues related to Succession Planning

 Elaborate how to face the issues of Succession Planning

 Discuss about the term Grievances handling and the process of

Grievances Handling.

11.1 INTRODUCTION
Survival, growth and efficient continuous existence of an organization
require a succession of people to fill various important jobs. The purpose
of succession planning is to identify, develop and make the people ready
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to occupy higher level jobs as and when they fall vacant. Higher level jobs Succession Planning
fall vacant due to various reasons like retirement, resignation, promotion,
death, creation of new position and new assignments.
Succession may be from internal employees or external people.
Succession from internal employees is advantageous to the organization as
well as to the internal employees. Organization can buy the employees
loyalty and commitment, belongingness, shared feeling of development
along with the organization by promoting the internal employees.
Employees get the benefits of growth in the organization. The
organizations mostly prefer to encourage the growth and development of
its employees and as such tend to prefer succession from within.
Organizations, appraise employees potentialities, identify training gaps for
future vacancies, develop them for higher and varied jobs. The scope of
succession plan would be more when the organization grows steadily and
employees have potentialities to take up higher responsibilities.
Professionally run organizations ask their managers to identify the internal
employees having potentialities and develop them in order to occupy their
positions as and when they fall vacant.
However, it is necessary to allow the inflow of new blood also. Hence,
organizations should also search for outside talent in certain cases like
when competent internal people are not available, when expansion,
diversification and growth plans are in offing, complete dependence on
either internal source or external source is not advisable to any
organization. Hence, a judicial balance between these two sources should
be maintained.

11.2 MEANING AND DEFINITION

“Succession Planning is a process to ensure continued effective
performance of an organization, division, department, or work group by
making provision for the development, replacement, and strategic
application of key people over time.”
In order to prepare potential leaders, the gap between what they are ready
for now and what preparation they need to be ready for the job when it is
available needs to be determined.
By considering their past performance as a volunteer, past experience, fit
with the organizational culture, and other members' acceptance of them as
a potential leader, the best fit can be determined.

Succession planning is a systematic approach to:

 Building a leadership pipeline/talent pool to ensure leadership

continuity

 Developing potential successors in ways that best fit their strengths

 Identifying the best candidates for categories of positions

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Human Resource
Management  Concentrating resources on the talent development process yielding a
greater return on investment.
Succession planning recognizes that some jobs are the lifeblood of the
organization and too critical to be left vacant or filled by any but the best
qualified persons. Effectively done, succession planning is critical to
mission success and creates an effective process for recognizing,
developing, and retaining top leadership talent.

11.3 STEPS / ELEMENTS OF SUCCESSION PLANNING

The main steps/elements of succession planning are as follows:
It is important to acknowledge that succession planning will vary slightly
between organizations. Different resources, different organizational
designs and different attitudes all mean that succession planning should be
flexible and adaptable in order to accommodate varying needs and achieve
business continuity. However, there is a general framework that
departments can use as the basis and guide for their succession planning
activities.
This framework involves:
STEP 1: Identifying key positions or key groups (current and/or future)
 Identifying Key Positions or Key Groups:
A key position or occupational group can be defined in many different
ways, but two important criteria that should be considered are criticality
and retention risk. A critical position is one that, if it were vacant, would
have a significant impact on the organization’s ability to conduct normal
business. The significance of the impact could be considered in terms of
safety, operation of equipment, financial operation, efficiency, public
opinion, and so on. Retention risk refers to positions where the departure
of an employee is expected (e.g. retirement) or likely (e.g. history of
turnover). By examining these criteria on a low-to-high scale, an
organization can determine what positions require short or long-term
planning.
A gap analysis, as a part of workforce planning, can also be an invaluable
tool to identify key areas or occupational groups. Information that may
help identify key positions can include:
 Current and future strategic goals and objectives
 Retirement forecasts
 Turnover rates
 Current and expected vacancies
 Changes to existing programs and services
 Highly specialized function
In addition to the analysis of criticality, retention risk, and other workforce
data, it might be beneficial to consider the following types of questions:
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 What jobs, if vacant, have the potential to prevent the organization Succession Planning
from achieving goals and objectives?

 What jobs have a direct impact on the public?

 What jobs would be difficult to fill because of required expertise or

because the exiting incumbent possesses a wealth of unique and/or
corporate knowledge?

 Is there a projected labour market shortage for relevant job skills?

 Is there a need to plan for anticipated positions that do not currently

exist?
STEP 2: Identifying competencies

Identifying Competencies
All positions have a requisite set of knowledge, skills and abilities that are
expected of employees who are filling that function. Thus, knowing the
competencies of a job is a mandatory component of recruitment, serving
as a general baseline to measure against interested potential candidates.
However, succession planning provides an opportunity to review the
competencies traditionally associated with jobs, particularly with respect
to current goals and objectives. Several ways to determine and develop
required competencies include:

 Reviewing job descriptions, advertisements, and relevant merit

criteria

 Interviewing current and former job incumbents

 Interviewing supervisors, clients, and other stakeholders

 Conducting focus groups or surveys

 Reviewing any existing development programs (i.e. leadership

competencies)

 Reviewing organizational values

Although job descriptions offer a good starting point for the identification
of competencies, it is important to consider some of the other sources of
information listed above.
Current incumbents, for example, would have a good understanding of
which competencies are the most important to their job. Interviewing
these people may reveal knowledge, skills and abilities that are necessary
for the job, but are not currently identified in the job description. Given
the practical scope of any job, valid identification of competencies is
necessary for:

 Establishing minimum requirements for job success;

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Human Resource
Management  Creating a baseline for assessing interested potential candidates; and

 Identifying appropriate learning and development opportunities.

 Some questions to consider might include:

 What are the specific functional competencies that apply to a key job
or group?

 What competencies apply to all employees and groups? Are these

competencies aligned with the organization’s vision, mission and
values?
STEP 3: Identifying and assessing potential candidates

 Identifying and Assessing Potential Candidates

The key purpose of identifying and assessing employees against core job
competencies is to help focus their learning and development
opportunities in order to prepare them for future roles in the organization.
Traditional approaches to succession planning have the potential to result
in a one sided selection process, the organization identifies a key position,
and then executives select a high-potential individual for preparation or
training. Given the potential sensitivity around the decision-making
process in these situations, an employee might be advised about their
prospective opportunity for advancement in private. This process is not
transparent and can negatively impact the morale of other employees
(including the person chosen for succession) and their relationship with
the organization.
Modern approaches to succession planning suggest that transparency and
accountability are the best practices for an organization. Recruitment in
the public service is based on merit, fairness and respect, and these
concepts are maintained and supported by the succession planning
process. To demonstrate these values, succession planning must be:

 Objective and independent of personal bias;

 Merit-based;

 Communicated to and understood by all employees; and

 Transparent at all stages of the process.

Under these circumstances, self-identification is a useful starting point to
see which employees are interested in leadership roles, career
advancement or lateral moves that might not be easily attained without
focused training or other learning and development opportunities.

STEP 4: Learning and development plans

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 Learning and Development Plans Succession Planning

Once the relevant candidates have been identified, based on their interest
and potential for success in a key position, the organization must ensure
that these employees have access to focused learning and development
opportunities.
Some key points to remember when developing learning and development
plans are:

 Plans should focus on decreasing or removing the gap between

expected competencies and the current knowledge, skills and abilities
of candidates.

 Manage expectations – modern succession planning is based on

learning and development to fulfill employee potential, rather than
merely filling a vacancy.

 There are a wide range of learning and development opportunities to

consider, which can include:

 Job assignments that develop and/or improve a candidate’s

competencies;

 Job rotations; and

 Formal training.

 Ensure appropriate strategies are in place to support the transfer of

corporate knowledge to candidates for key jobs, which can include:

 Mentoring, coaching or job-shadowing;

 Documenting critical knowledge;

 Exit interviews; and

 Establishing communities of practice.

STEP 5: Implementation and evaluation

 Implementation and Evaluation

Evaluating succession planning efforts will help to ensure the
effectiveness of the process by providing information regarding:

 How the process operates – the relationship between inputs,

activities, outputs, and outcomes

 Impact of the process relative to stated goals and objectives

 Functional strengths and weaknesses

 Potential gaps in planning and assumptions

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Human Resource
Management  Cost-effectiveness and cost-benefit
Planning to collect and assess these types of information will ensure that
the organization monitors its succession planning activities, appropriately
measures success, and adjusts the process accordingly given sufficient
evidence. Some evaluative questions for departments to consider might
include:

 Have all key jobs been identified and do they have succession plans?

 What is the impact of succession plans on business continuity in key

positions?

 Are successful candidates performing well in their new roles?

 What is the impact of learning and development efforts? Are

employees ready to compete for a vacant key position?

 Is the candidate pool diverse and reflective of employment equity

values?

 What are the areas for improvement in the succession planning

process?
Once a succession plan has been established, monitoring its efficiency and
effectiveness will be essential. Thus, each succession plan should be
developed within an evaluation framework in order to measure progress
and success, as well as provide any evidence to support changes to the
succession planning process.

11.4 NEED AND IMPORTANCE OF SUCCESSION

PLANNING
Succession planning is an essential part of doing business. As the future of
any business is not certain and it seems that everything in the business
concern is going so well, in this case putting off planning may be the
wrong decision. Here is the time for the business concern to begin for
succession planning.
Following are some reasons why succession planning is essential:

Succession planning helps to face disaster.

No matter how good you and your staff are at revenue projections or
economic predictions, no one can truly plan for disaster. Whether it's an
unforeseen illness, a natural disaster, or a CEO's decision to suddenly
retire, the reasons for having a succession plan in place before it is needed
are endless. So while you can't plan for disaster, you can put into place a
series of contingencies that will help your company stay afloat if, in fact,
catastrophe occurs.

Succession planning helps to build strong leadership:

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Just as business practices have evolved over the years, succession Succession Planning
planning has also grown and changed. It's no longer a plan that can only
be accessed when leadership is going to change; a succession plan can be
used before its "real" intent is necessary. It can be used to build strong
leadership, help a business survive the daily changes in the marketplace,
and force executives to review and examine the company's current goals.

Succession planning gives your colleagues a voice:

If you're running a family business, the process of succession planning
will give family members an opportunity to express their needs and
concerns. Giving them that voice will also help create a sense of
responsibility throughout the organization, which is critical for successful
succession planning. Resist the temptation to solely carry the entire weight
of creating and then sustaining a plan.

A succession plan can help sustain income and support expenses:

Talking about money should be a priority. People generally don't want to
work for free and things don't pay for themselves. A succession plan can
provide answers as to what you and your staff will need for future income,
as well as what kind of expenses you may incur once you step out of the
main leadership role. Ask yourself questions about your annual income
and other benefits including health and dental insurance for you and your
dependents, life insurance premiums paid for by the company, your car,
professional memberships, and other business related expenses.
Succession planning gives you a big picture.
Some companies mistakenly focus solely on replacing high level
executives. A good succession plan can go further, however, and force
you to examine all levels of employees. The people who do the day-to-day
work are the ones keeping the business going. Neglecting to add them to
the succession planning mix could have dire consequences. As you
develop your plan, incorporate all layers of management and their direct
reports.

Succession planning strengthens departmental relationships.

When regular communication occurs between departments you are more
likely to experience synergy, which breeds a culture of strength. Make
sure that you link your succession planning activities with human
resources. After all, HR is about people. By including HR in succession
planning, you can incorporate elements like the employee evaluation
process, which can help when deciding whether to fill vacancies with
internal candidates.

Succession planning keeps the mood buoyant.

Change a major component of a succession plan is exciting and can bring
a company unforeseen rewards. Still, change can be a source of
tremendous stress, especially when people's livelihoods are at stake. As
you put your succession plan together, consider its positive effects on the
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Management
business. Planning for the future is exciting and, if done correctly, can
inspire your workers to stay involved and maintain company loyalty. It's
true that a plan is often put into place to avert catastrophe, but it's also a
company's way of embracing the future —a business strategy that is
essential for survival.

11.5 NEED OF SUCCESSION PLANNING TO FAMILY

ORIENTED ENTERPRISES
Due to the complexities surrounding the transfer of ownership of family
businesses from one generation to another, specific resources have been
developed for family business owners planning for this transition. Among
these resources is the McCabe Arch which is a visualization and planning
tool for the American business owner. It offers practical solutions for
planning the orderly consumption and distribution of financial and
emotional wealth.
The process, like the construction of an arch, begins with two solid
cornerstones, the business owner who is willing to plan for his or her
eventual departure from the business, and the willing successor.
However, the unique aspect of an arch was that we continually build it
from two sides. For a succession planning model to work, we needed
commitment from the owner and the protégé. It was imperative that both
sides complete their assignments with the ultimate goal of the finding and
resolving the key issues that were represented by the various blocks. Harry
McCabe (Author of Pass It On: The Entrepreneur's Succession Planning
book).
Each building block on each side of the arch represents a step in the 7
Steps to Succession, which provides a time table and road map for Family
Business Succession Plans.

11.6 ISSUES IN SUCCESSION PLANNING AND

SOLUTIONS
There is a compelling argument that gifting family businesses to the next
generation destroys businesses and family relationships. When family
members purchase shares in a family business they are required to assess
their own skills and ability to generate wealth from the business. Families
that skip this step, families that gift ownership encourage children to work
in and often lead family businesses for all the wrong reasons
If the employees retire or exit for other reasons, the ethos and dynamics of
the business will inevitably change. If the value of the business is to be
maintained or enhanced, it is imperative that these changes are carefully
controlled.

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The first step is to formally decide precisely what difference their Succession Planning
departure will make. If the retiring directors/managers were responsible
for sales dynamism, strict financial control, key account customer loyalty
or engineering innovation, for example, these are the critical skill gaps
which will need to be seemlessly filled.
The assumption is companies will need to recruit externally to fill
operational gaps arising as they undergo change. This is not necessarily
the case.
External HR professionals can be brought in to work as change managers.
They can identify current or anticipated gaps in managers' range of skills
and employees' competencies and then develop the most cost efficient
ways to fill these gaps.
But there is more to succession planning. Rather than just being a way of
averting the dangers of a foreseeable motivational and engagement
vacuum, it can be an opportunity to refresh, revitalise or reposition a staid
enterprise in a rapidly changing world.
Businesses can move forward by optimising the contribution of their
existing management, staff and workforce. It is highly likely existing
personnel will have undiscovered capabilities and talents. But the fact
these attributes have not become apparent in their existing roles is
probably more to do with habit and complacency than a failure to invest in
employee development. It might be the case they have simply not been
invited to extend themselves in an unfamiliar direction or take on wider
responsibilities. It is definitely the case that uncovering unsung talent in
existing staff is less costly than recruiting and introducing new personnel.
Job rotations can sometimes reveal these hidden reservoirs of ability.
Perhaps someone on your sales force has the potential to become an
outstanding marketer perhaps someone from your shop floor or office has
the potential to be an outstanding sales generator. An operative might have
innate interpersonal skills which earmark him or her for development into
line management.
In some instances, the skills shortfalls can be filled by job rotation. Skills
shortfalls in one department can be overcome by importing them from
another where a competent individual's ability is being under utilised.
There are huge savings to be made by offering coaching, mentoring or
further job training to existing staff.

11.7 PROBLEM IN SUCCESSION PLANNING

Leadership, implementation and industry related competencies:
To combat the MEGO (my eyes glaze over) factor, we first distinguished
industry related skills such as risk analysis or sales skills from other
competencies. We then grouped the remainder under either
implementation competencies or leadership competencies.

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Human Resource
Management
“Implementation” refers to how one gets things done, while “leadership”
refers to competencies that are often, in effect, personal attributes.
In the Bible, Noah demonstrated the differences among these three types
of competencies. God told Noah that it was going to rain and that he
wanted Noah to build an ark and put all kinds of animals on it. Therefore,
Noah knew what the industry risks were (it’s going to rain) and what
should be done about it (build an ark and put the animals on it). However,
knowledge of what the risks are, and what should be done about them,
doesn’t get the job done.
But Noah, starting with the limited instruction on ark building provided by
God, did get the ark built on time and today we would say on budget
demonstrating that he had the implementation skills needed to take action
and manage risk.
Noah’s implementation skills can be distinguished from his leadership
skills. He demonstrated leadership skills by convincing all those animals
to board the ark and not eat each other up during the voyage.

Grouping competencies into subgroups:

We have found that leadership, implementation and industry related
competencies can each be further subdivided. We have about 10 such
competencies for each of these three categories. With these additional
subdivisions, linkage can be made to the competencies needed for the
strategic plan. For example, our methodology subdivides “leadership” into
competencies such as: Strategic Agility (including Vision), Integrity &
Trust, and Developing Subordinates. It divides “implementation” into
competencies such as: Flexibility & Adaptability, Communications Skills,
and Results Orientation. Industry related skills, in addition to professional
competencies, include: Industry Knowledge, Client Focus and Global
Perspective. Russell Reynolds Associates has developed a methodology in
our executive search practice that allows us to predict if people are likely
to have the needed competencies. In our executive assessment practice we
have identified ‘Flexibility & Adaptability’ as a key competency for the
personal development needed to progress in leadership training, and
hence, succession.
Does this sound like motherhood? We don’t think so. We did a search for
a large Canadian financial institution that had worked through a
competency framework similar to ours and had identified the
competencies that were needed in all of their senior officers, in addition to
any specific industry related skills needed for each job. Their list of key
competencies was as follows: Dealing with Ambiguity, Strategic Agility,
Integrity and Trust, Managerial Courage, Decision Quality, Results
Orientation, and Client Focus. We would call the first five “leadership”
competencies, the second- to last an “implementation” competency, and
the last an “industry- related” skill. We were able to match our
competency framework to theirs, and therefore, our methodology to their
competencies. As a result, we presented them with candidates most likely
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to meet both their leadership and implementation needs as well as industry Succession Planning
related requirements.

Building competencies into the strategic plan:

This is where a key part of the strategic planning process should include a
review of the competencies that will be needed to fulfill a firm’s strategic
plan. Mapping the industry related competencies such as “customer focus
skills” or “chemical engineering expertise” is relatively obvious.
However, even here, commonly held views need to be established.
Building a commonly held institutional view of key leadership
competencies is harder. However, the executive management team can
achieve this goal by comparing competencies listed as leadership
competencies above to the firm’s current culture, and then determining
what needs to change at the leadership level in order to get to where the
firm wants to go. One firm summarized their current competencies as
subsets of; “This is how we do things around here,” and then went on to
say, “This is how we will have to do things around here in the future.”
Executives prefer quantitative benchmarks. Leadership as a concept is just
too subjective for many people. In the absence of using specific leadership
competencies such as those described in Section C (above), our
experience tells us that decisions about people will tend to be based on
industry-related skills rather than on leadership competencies. Our
methodology makes executives more comfortable in assessing leadership
because it has been broken down into meaningful concepts such as;
“Developing Subordinates”, “Results Orientation” and “Client Focus”.

Using training to improve leadership skills:

We also believe that people can improve not just their industry skills, but
that they can also improve their implementation and leadership skills. At
the Toronto International Leadership Centre for Financial Sector
Supervision (Toronto Centre), we were seeking to strengthen the
leadership skills of the government officials who supervise the financial
services sector in emerging market countries. It was our theory that, like
Noah, these officials knew what the financial sector risks were when
financial markets are liberalized. However, many lacked the experience to
know how to build the ark and get the animals on it.
During one session at the Toronto Centre, we wished to use role-playing
to demonstrate the use of “persuasion” in an environment where officials
believed that simply giving an order would actually cause things to be
done. Concerned about the loss of face in role-play situations, we invited
participants to state what they would say if they were to role-play, rather
than actually engage in the role-playing. The first rapporteur, who was a
senior official from the central bank of an advanced eastern European
country, exceeded instructions and role-played his response. The second
rapporteur was the deputy governor of one of the most important central
banks in Africa. He agonized over the potential loss of face he would
suffer from engaging in role-playing on the one hand, or the loss of face
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Human Resource
Management
by not matching the performance of the previous rapporteur. Opting for
the second risk, he reached back to his skills as an Oxford University
debater and brilliantly rolled out his argument. By doing so, he made the
leap of applying his Oxford debating skills to using persuasion rather than
giving orders as a means of getting things done in his central bank.
Thus, while some people do seem to be born leaders, others can be helped
along the path. In short, while one cannot turn a sow’s ear into a silk
purse, it is possible to turn a sow’s ear into a pigskin purse. That may be
sufficient to help someone become better at what they do.

Identifying the leadership pool:

Having said that, there will still be those who are not able, or not willing,
to make the sacrifices demanded of leaders. For example, early in my
career, I “Peter-Principled’ a sound technical officer. Soon, we were both
nervous wrecks. One day he came to me and said that I had over promoted
him, that he was happier in his previous job, and that he wished to have it
back. I readily agreed. Years later, long after my wings had melted from
flying too close to the sun, he was still there, fulfilling his technical
responsibilities, until he retired with full pension at the end of his career.
When the executive assessment competency testing is done, the employee
pool will be divided between those who are in the leadership pool and
those who are not. There should still be senior technical positions
available in most companies for non leadership candidates. One does not
have to be part of the leadership pool to be an outstanding derivatives
trader or a key nuclear physicist. Some of these people will be among the
highest paid in the firm. The rest, who are neither the leadership
candidates nor the technical stars, are the backbone of the company. They
are the much needed foot soldiers who make the roll out of the strategic
plan into a desired experience for the firm’s customers through direct
service or by supporting the employees who provide that service.
Those who are not in the leadership pool should be told that this is so and
the results of the competency testing should be shared with them. At
Russell Reynolds Associates, we believe that it is even better to make the
results available to each person. These employees should be given the
opportunity to elect to stay in technical or operational roles if they are
performing well, or to leave and seek a leadership position with another
firm where their leadership competencies are more closely aligned. We
understand that it takes managerial courage to communicate this split.
Creating a training program for those who wish to try and acquire the
needed competencies alleviates part of this problem.
We have seen cases where executive management has skipped executive
assessment and decided to provide leadership training for the entire senior
management team. The advantages of doing so are that it builds morale
and helps senior managers learn what is happening in other parts of the
business, thereby increasing the opportunities for cross selling. We believe
that there are cheaper ways of doing this. The disadvantage is that not all
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senior managers are leaders or potential leaders. Their involvement makes Succession Planning
the leadership training program less effective. It is therefore a
misallocation of strategic resources. Moreover, some junior employees,
who are potential leaders, are excluded from the leadership pool until they
are promoted into the eligible ranks.

Candidate selection:
It is improbable that all of the skills needed to achieve the strategic
objectives will be found within the organization. In those circumstances,
recruitment from outside the organization will be needed to augment the
leadership pool. Recruitment that emphasizes the firm’s core leadership
competencies as well as the needed industry related skills reduces the risk
of recruitment failure.
We believe that a healthy mix of internal promotions and external hires
creates both a foundation of continuity and an infusion of new ideas.
There is an opportunity to test the candidates in the company before they
take on the most senior management positions if intake is at least a layer
or two below the CEO.

Experience:
Conventional wisdom for succession planning says that leadership
candidates should be given experience in different parts of the company.
We agree, but the purpose isn’t solely to learn how to run those
businesses; it’s also to learn which questions to ask, and to learn to listen
to the answers. When I became Treasurer at CIBC, I was for the first time
faced with accountability for a discipline that was outside my area of
expertise, taxation. Desperate to cling on to something I knew, I asked to
retain responsibility for tax, even as I assumed my new responsibilities.
But my boss, who wanted nothing to do with the taxation line reporting
through him, said: “You have so many questions to ask that you won’t
have time to retain responsibility for the taxation function.” He was
correct.

Training and development:

Corporate training falls into three general groupings -

 Training for product knowledge and selling skills,

 Training in management or implementation skills, and

 Leadership development.
Teaching product knowledge and selling skills improves customer sales
and service. It does not do much for leadership development. Teaching
management or implementation skills is often billed as leadership training.
To the extent that it teaches people to work more effectively together, to
communicate better, or to be more persuasive, such programs do add
value in leadership training.

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At the leadership training level, there are credible firms that can help
executives strengthen leadership skills such as “strategic agility” and
“developing subordinates.” There’s not much you can do for “integrity
and trust” if a person doesn’t have them by the time they are, say, 20 years
of age. Beyond such programs, making coaches available for personal
counseling and attending Outward Bound type programs to build trust can
be employed. We have seen good successes and some failures with both.
It makes sense to use a coaching framework for more than training on
particular subjects. Some companies, like GE, set aside a day several
times throughout a leader’s career with the firm to thoroughly and
professionally review the strengths and needs of the individual. This
creates a framework both for personal development and for corporate
decisions on future assignments.

Know your exit strategies:

Depending on the firm’s makeup, the path to retirement can vary.
Research your options, set exit rules for partners, and seek an expert
adviser. At Keiter, for example, equity partners have mandatory retirement
at age 65. “It just puts the firm in the driver’s seat as far as what’s in the
best interest of the firm,” Hall said.

Develop your staff:

It’s difficult to have an inside successor or successors if that talent isn’t
given proper training. Allow your firm’s stars to take on more
responsibility. David Jentho, CPA, a partner at Ratliff & Jentho CPAs in
Baytown, Texas, said a critical part of his firm’s succession plan was
“developing our staff and trying to put them in a position to where we can
begin to pass the responsibility for clients onto them and help them build
the same type of personal relationships that we have with those clients.”

Evaluate your rates and clients:

Your PCA will be easier to implement if your practice is in line with the
firm that could take over. Now is a good time to examine your client list
and what you’re charging. Many smaller firms “have not maintained
market billing rates,” Cingoranelli said. “It’s going to make it difficult to
transition clients to another firm with higher rates. That’s going to be
some real sticker shock for their clients.”

Strengthen client relationships:

Focus ore attention on top clients. Don’t be afraid to shed marginal clients
(e.g., the ones who regularly pay late) or recommend another firm for
them.

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11.8 MEASURES TO THE SOLVE PROBLEMS IN
SUCCESSION PLANNING
With an aging workforce, planning for the inevitability of your leaders
exiting your organization is becoming more and more necessary by the
day. Succession planning isn’t just a buzzword: it’s a developmental
strategy that’s extremely relevant to how we plan to run our businesses in
current year and beyond.
You may have previously put it off due to some common problems that
may include a) identification, development, and retention of possible
successors, and b) budget constraints. While you may consider mentoring
as a solution for these issues in your organization, before you go any
further, you must first discard the idea of succession planning as
“replacement” planning.
Your organization may have a plan for what happens if and when a top
level employee leaves but chances are it’s more of a crisis/contingency
plan.
Let me ask you this: is the planned replacement ready to take on that new
role? Are they able to do it while transitioning from their current role and
handing off their responsibilities? If they had to do it in the next two
weeks, could they do it? If the answer is “no,” it’s probably because no
one’s invested in their development and transition into that new role.
Successors Are Not Replacements:
The critical difference between the concepts of replacement planning and
succession planning is the development invested in the intended successor.
Bear in mind that no one likes to be a replacement: the word
“replacement” itself connotes “second rate/second best/I’m not ecstatic
with the current state but it’ll have to do”.
Alternatively, take this more proper definition: “a person or thing that
takes the place of another” (Oxford English Dictionary). But as we all
know when we’re talking about human beings and the complex ranges of
their skills, capabilities, personalities, and methodologies, you can never
simply substitute person A, entire, for person B, and assume that business
will run as it always has.
Business will not run as it always has; and no, that’s not necessarily a bad
thing so long as you accept it and plan for it. Change is inevitable. Ignore
it at the risk of having a replacement that everyone sees as second best as
a best case scenario. When things go wrong in leadership, after all, they
tend to really go wrong for the whole business.
But when you give someone the tools and development and investment to
advance beyond “second rate/second best”, know the territory they’re
inheriting, and perform well within it, they’re able to become a true
successor. And that person is ready to take on their new role. Mentoring
Solutions for Succession Planning and Development like I said before, if
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you’ve been hesitant before about implementing a succession plan in the
past, here’s how mentoring can be a solution:
Make the most of a limited budget:
Your mentors (the people who currently hold the leadership role) and
mentees (their successors) come from within your organization, which
means two things for you: 1) You don’t incur coaching or training costs
otherwise associated with developing employees, and 2) you optimize
transfer of practical, cultural, and institutional knowledge.
Identify:
You may find that your mentors are uniquely suited to help you do
identify potential successors.
Develop:
The structure of a formal mentoring program is inherently developmental
because it a) is mentee driven b) offers practical experience to mentees, c)
offers mentee’s first-hand knowledge pertaining to their roles and/or
future roles.
Retain:
Formal mentoring programs also help retain identified successors by
investing in not only their development, but their integration with the
culture and their new territory.
The “Success” in Succession. One final note: ultimately when you’re
looking at succession planning, you aren’t just looking at developing
individual leaders you’re looking at developing the entire company. And
that’s really the key to formal mentoring programs. Each mentor/mentee
pair’s goals and objectives must be their own and tailored to the mentee’s
developmental needs, yes but at the same time, they must tie back to
organizational objectives; and formal mentoring programs, if structured
and administered correctly, allow for exactly this.

11.9 GRIEVANCE HANDLING

Meaning of grievance:
According to Michael Julius, “A grievance can be any discontent or
dissatisfaction, whether Expressed or not, whether valid or not, and arising
out of anything connected with the company That an employee thinks,
believes, or even feels as unfair, unjust, or inequitable.”
“A grievance means a dispute concerning terms and conditions of
the employment arising from any administrative decision which the
employee claims is in violation of Rights under, or a failure to apply,
established University personnel regulations, policies, or practices, or
which results from a misinterpretation or misapplication thereof “.

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An item that would not be considered as a "grievance" would be an

employee not receiving what he/she wanted or thought he/she deserved as
a salary.
GUIDELINES FOR HANDLING GRIEVANCES

 A grievance redressal cell must be constituted.

 All grievances should be considered important.

 The aggrieved party should be met in person and should be allowed

to express his grievance fully.

 A time frame should be laid for resolving the grievance.

 It must be ensured that all procedural formalities relating to

grievance redressal have been complied with.

 All grievances should be put forth in writing.

 The redressal which the aggrieved employee is seeking must be

understood.

 The law pertaining to the grievance must be studied.

 A positive environment where the aggrieved employee may not

hesitate to air his grievance must be created.

 Organisations must have suggestion boxes at different places.

 All facts pertaining to the issue should be gathered in order to

understand the implication of the grievance.

Identification of grievance:
It is so beautifully described that good management redresses grievances
as they arise; Excellent management anticipates and prevents them from
arising. An effective manager thus has to be proactive. A manager can
know about the problems even before they turn into actual Grievances
through several means such as:

Directive observation:
Knowledge of human behavior is requisite quality of every good manager.
From the changed behavior of employees, he should be able to snuff the
causes of grievances. This he can do without its knowledge to the
employee. This method will give general pattern of grievances. In addition
to normal routine, periodic interviews with the employees, group meetings
and collective bargaining are the specific occasions where direct
observation can help in unfolding the grievances

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Grip boxes:
The boxes (like suggestion boxes) are placed at easily accessible spots to
most employees in the organization. The employees can file anonymous
complaints about their dissatisfaction in these boxes. Due to anonymity,
the fear of managerial action is avoided. Moreover management’s interest
is also limited to the free and fair views of employees.

Open door policy:

Most democratic by nature, the policy is preached most but practiced very
rarely in Indian organizations. But this method will be more useful in
absence of an effective grievance procedure; otherwise the organization
will do well to have a grievance procedure. Open door policy demands
that the employees, even at the lowest rank, should have easy access to the
chief executive to get his grievances redressed.

Exit interview:
Higher employee turnover is a problem of every organization. Employees
leave the organization either due to dissatisfaction or for better prospects.
Exit interviews may be conducted to know the reasons for leaving the job.
Properly conducted exit interviews can provide significant information
about the strengths and weaknesses of the organization and can pave way
for further improving the management policies for its labor force.

Opinion Survey:
The management can be proactive by conducting group meetings,
Periodical interviews with employees, collective bargaining sessions etc.
through which one can get information about employees’ dissatisfaction
before it turns into a grievance.

11.10 GRIEVANCE PROCEDURE

Grievance procedure is a formal communication between an employee
and the management designed for the settlement of a grievance. The
grievance procedures differ from organization to organization.
Generally, grievance handling procedure involves a six-stage procedure,
which is stated as follows

Resolving by Immediate superior:

The aggrieved employee presents his grievance to his immediate superior.
The superior may take suitable action, if his is empowered to do so. If the
superior is not empowered to take appropriate action, he may take
permission from higher authorities to take suitable action to redress the
grievance.
Normally, the grievance is to be redressed within 48 hours (2 days) of the
presentation of the grievance. If the employee is satisfied with the action

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taken by the superior, the grievance is over. If he is not satisfied, he may Succession Planning
resort to the second stage.

Submit to department head:

If the concerned appointed person does not answer in stipulated time ore if
the aggrieved person is unsatisfied with the decision, he can approach the
departmental head who is supposed to answer within three days.

Grievance Committee:
On getting an unsatisfactory response from the departmental head the
aggrieved person can approach grievance committee which has to
communicate its recommendation within three days.

Appeal for Revision:

If the decision of the management is not communicated to the aggrieved
employee within the stipulated period of 3 days, or if the management
decision is unsatisfactory, the employee has the right to appeal to the
management for revision. The management may review its decisions and
communicate its decision to the employee within 7 days of the
presentation of employee’s appeal for revision.

Voluntary Arbitrator:
The grievance may subsequently be referred to voluntary arbitrator if the
aggrieved party is not satisfied with the decision of the management. The
arbitrator is appointed with the mutual consultation between the
management and workers union. Both the parties may agree that the
decision of the arbitrator will be binding on both the parties. i.e.
management and the employee.

Final decision:
The arbitrator goes through the grievance and the decision taken at the
earlier stages. He will hold deliberations with the management and the
workers union. Finally the arbitrator gives his ruling, which is normally
final and binding on both the parties.
Many grievances can be resolved quickly by correcting a
misunderstanding, or with a simple negotiation. In this case the grievance
procedure saves time, money, and the relationship between the parties.
Having the issue handled by those immediately involved is a benefit as
well, as they know more about the problem at hand than do people at
higher levels.

11.11 SUMMARY
Succession Planning is concerned with the preparing people to fill up
successive jobs. The purpose of succession planning is to develop people
to replace current incumbents in key positions for a variety of such

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reasons as: superannuation, resignation, promotion, growth,
diversification, creation of new positions, etc.
Succession Planning focuses on preparing people to fill execution
positions. Succession planning is concerned with the examining
development needs of a firm’s strategic plans. Informally, it means high-
level managers identifying and developing their own replacements. The
employees having managerial attitude and potential may be considered for
development programme that will help prepare them for the executive
jobs.
Your employer's grievance procedure may have more than three steps, but
it must include a written statement, meeting and appeal meeting.

11.12 SELF ASSESSMENT QUESTIONS

1. What is Succession Planning? How do the organizations plan for the
succession of the employees?
2. Explain the issues involved in the implementation of Succession
Planning? Can they be resolved? Give Examples.
3. Discuss the various elements of succession planning? Is there any
mechanism of justifying the elements applied in the process of
succession planning?
4. Do the Indian Business Houses apply succession planning as the core
system to achieve the target of growth, expansion and diversification?
Explain giving examples.
5. Define the term Grievance Handling. Discuss the procedure of
Grievance Handling.



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 12
HEALTH AND SAFETY ASPECTS OF
HRM
Unit Structure:
12.0 Objectives
12.1 Introduction
12.2 Meaning and Significance of Employee Health and Safety
12.3 The Importance of Health and Safety
12.4 Summary
12.5 Self Assessment Questions

12.0 OBJECTIVES
After studying the unit the students will be able to:

 Know the meaning and significance of Employees’ health and safety.

 Explain the importance of health and safety.

 Explain the Role of the organization towards health and safety.

 Discuss about the procedure to prepare the health and safety

programmme.

 Know the safety programmes in the organization.

12.1 INTRODUCTION
Since large number of employees spend great deal of their time in work
place, their work environment is not always good for their healthy life.
Stress, Strains, Mental and Psychological Conditions, Poor working
conditions, Long hours of work, Poor ventilation, Insanitation,
Malnutrition etc spoil their health. Efficiency in work place is possible
only when an employee is healthy on the other hand industry exposes
workers to certain hazards which affect his health. The symptoms of bad
health are high rate of absenteeism and turnover, industrial discontent and
indiscipline, poor performance and low productivity. Modern industry is
characterized by complicated mechanisms, intricate job requirements, and
fast moving production lines. One of the important consequences of all
this is increased dangers to human life, through accidents. To avoid this
safety programmes like industrial health programmes are introduced, both
for employers and employees benefit.

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Human Resource
Management 12.2 MEANING AND SIGNIFICANCE OF EMPLOYEE
HEALTH AND SAFETY
 MEANING AND DEFINITION

The W.H.O has defined health as “a state of complete physical, mental

and social well-being and not merely the absence of disease or infirmity.”
“Health and safety means safe working practices, following guidelines,
regulations and procedures, fire safety, and the maintenance of a safe
working environment”.
As defined by the World Health Organization (WHO) "occupational
health deals with all aspects of health and safety in the workplace and has
a strong focus on primary prevention of hazards."
Occupational health is a multidisciplinary field of healthcare concerned
with enabling an individual to undertake their occupation, in the way that
causes least harm to their health. Health has been defined as It contrasts,
for example, with the promotion of health and safety at work, which is
concerned with preventing harm from any incidental hazards, arising in
the workplace.
Industrial health refers to a system of public health and preventive
medicine which is applicable to industrial concerns.
According to the joint W.H.O Committee on Organisational Health,
industrial health is:

 the prevention and maintenance of physical, mental and well being of

workers in all occupations

 prevention among workers of ill-health caused by the working

conditions

 Protection of workers in their employment from risks resulting from

factors adverse to health, and

 Placing and maintenance of the worker in an occupational

environment adapted to his physical and psychological equipment.

 PHYSICAL HEALTH AND MENTAL HEALTH

Physical health implies prevention of disease or health conservation and
prevention of occupational disease. Health is the outcome of the
interaction between the individual and his environment. Health not only
depends on the employee but also on the environment. Efficiency in work
is possible when the worker is healthy physically and mentally.
Industries exposes employees to certain hazards which he would not meet
elsewhere and which may affect his health. Physical and mental health
both are essential for the satisfaction and improved morale, discipline,
performance and productivity of the employees.
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In India, the Royal Commission on Labour (1931), the Labour Health and Safety Aspects of
HRM
Investigation Committee (1946), the Health Survey and Development
committee (1943), the Labour Welfare Committee (1969) all emphasized
upon the “creation and maintenance of a healthy environment as possible,
in the homes of the people as well as in all places where they congregate
for work, amusement or recreation are essential”.

12.3 THE IMPORTANCE OF HEALTH AND SAFETY:

Following points explains the importance of Health and safety:
1. To overcome poverty: Healthy workers are productive and raise
healthy families; thus healthy workers are a key strategy in
overcoming poverty. Safe workplaces contribute to sustainable
development which reduces the level of poverty.
2. Pollution control and exposure reduction: Health and safety
measures include the processes of protecting workers, surrounding
communities and the environment for future generations. Pollution
and environmental exposures arise from industrial processes are
hazardous to health. That can be beneficially influenced by
occupational health and safety programmes.
3. Human loss and suffering is immeasurable: A serious injury or
death happened at the workplace changes lives of that particular
family, friends, communities, and coworkers forever. Occupational
injuries and illnesses can provoke major crises for the families in
which they occur. In addition to major financial burdens, they can
impose substantial time demands on uninjured family members.
Today, when many families are operating with very little free time,
family resources may be stretched to the breaking point.
4. Ensures that our beloved one is safe: We always think that beloved
one who leaves for work in the morning should expect to return
home at night in good health. Only the imagination of beloved one
will never be returning home or returning with any physical
disability is heart breaking for the family. When such thing happens
really it changes lives of the whole family forever. The Health and
Safety measures ensures that husbands return to their wives, wives to
their husbands, parents to their children, children to their parents and
friends to their friends in safe conditions. That is the most important
reason to create a safe and healthy work environment.
5. Reduces costs the business: If a worker is injured on the job, it
costs the company in lost work hours, increased insurance rates,
workers' compensation premiums and possible litigation.
Productivity is lost when other workers have to stop work to deal
with the injury. Even after the injured employee has been sent home
or taken to the hospital, other employees may be distracted or need
to take time off from work in the aftermath of the incident. Even a
single injury can have far reaching and debilitating effects on your

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Management
business. All these types of losses can be avoided by providing
health and safety environment to the employees.
6. Improves the employability of workers: Employee attrition and
absenteeism are the major obstacles in increasing productivity of the
business. When the employer provides safe and healthy environment
and safe workplace, it reduces the above issues on a great scale.
Such environment can be created in several ways like: Workplace
redesign, maintenance of a healthy and safe work environment,
training and retraining, assessment of work demands, medical
diagnosis, health screening and assessment of functional capacities
etc. By involving employees in safety decisions through reporting,
committees, walk troughs and meetings it has been showed that their
opinion matters to the company. By improving safety, the company
proves that it cares about their well-being. In such cases workers
typically respond by working harder, showing more pride in their
jobs and remaining loyal.
7. Safety improves quality: It has been proved that the companies that
put safety first turn out higher quality products. In some cases, that’s
because a safe workplace tends to be a more efficient one, free of
debris and tangles of cords. In other cases, it’s a matter of focus. By
working in a clean, efficient environment, workers are able to reduce
distractions and truly focus on the quality of what they do. It results
in better products that create customer loyalty, bigger margins and
increased sales.
Workplace safety creates the kind of productive, efficient, happy and
inspiring workplace we all want to be part of. It’s about creating a highly
profitable company. And that’s why it’s important.
Work Health and Safety Act 2011: As per the sections of this law a
person conducting a business or undertaking must ensure the health and
safety of workers at work in the business or undertaking, so far as is
reasonably practicable. This act defines “Health to mean physical and
psychological health”.
As per this act the employer’s duty of care includes providing:
1. a physical and psycho social work environment without risks to
health and safety
2. safe systems of work
3. Information, training, instruction or supervision necessary to protect
all persons from risks to their health and safety.
This act monitors the health of workers and conditions at the workplace to
prevent illness or injury.

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ORGANISATIONAL ROLE TOWARDS SAFETY AND HEALTH Health and Safety Aspects of
HRM
OF HUMAN RESOURCES
For the safety and health of human resource the organization has to take
proper decisions in the following cases:
1. To implement the safety and health management system: The
company has to have a system i.e. a policy, designate people and
clear procedures: to manage health and safety. The company having
more than five employees must set out a written health and safety
policy statement.

2. To provide appropriate financial, human, and organizational

resources: Every reasonable effort must be made to provide
adequate funding to protect the workplace safety and health of
employees. It may be necessary to prepare documentation to justify
expenses associated with hazard abatement. In addition, long term
planning and expert advice may be required. Costs can be minimized
with proper planning and research. Remember that financial
commitment to safety and health is a strong indicator of
management's overall commitment.

3. To issue a written safety and health policy as a core value of the

organization: A written safety and health policy clearly states the
company’s commitment to effective safety and health management
and in providing a safe and healthy working environment.
Communicating the organization’s commitment is as important as
the company’s statement.
4. To define roles, assigning responsibilities, establishing
accountability and delegating authority: The company must be
able to show how it is planning, organising, controlling, monitoring
and reviewing the preventative measures.
5. To integrate: the safety and health goals/objectives into the
organization's business systems and processes.

6. To discuss safety and health processes and improvements

regularly during staff or employee meetings: Employee
involvement can help. When there are alternative ways to address a
hazard, effective managers have found that involving employees in
discussions of methods can identify useful prevention and control
measures, serve as a means for communicating the rationale for
decisions made, and encourage employee acceptance of the
decisions.
7. To ensure: management is held accountable for accident prevention
processes.
8. To assess the success of the safety and health processes
manually: Evaluation of the safety and health system is essential for
examining that the system is working against the goals and

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Management
objectives the company established. Evaluation seeks to assess the
safety and health activities, controls and procedures and determine if
goals are being met, hazards being corrected and other
improvements in the system are being made. Evaluations should be
conducted annual.
9. To encourage: employees to take an active part in maintaining a
safe and healthy workplace An employer should ensure that all
employees understand the hazards to which they may be exposed
and how to prevent harm to themselves and others from exposure to
these hazards. A thorough understanding of the hazards and their
prevention will affect employee acceptance and use of established
safety and health protections. Training for this purpose is reinforced
by encouraging attempts to work safely and by positive recognition
of safe behavior.
10. To follow: established safety and health rules and procedures.
11. To discuss: openly safety and health issues with employees during
periodic tours or meetings or by visiting personally visiting the work
place. When employees notice that the manager “walking around”
them or discussing about their work, they realize that manager is
taking care of them.
12. To establish a system for effective communication: Every
organization’s approach to managing safety and health includes
verbal and written communication as a two-way process between
employer and employees. Regular safety and health communication
keeps employees informed and invites feedback and suggestions.
13. To recognize employees for their safety and health efforts:
Employees are a company’s most valuable asset, and top
management should recognize employees for their efforts. and
achievements. A recognition system provides a good counter balance
to a disciplinary system by focusing on the positive and motivates
employees to practice safety and health work habits. A recognition
system can be very simple and inexpensive.

ISSUES / FACTORS AND ROLE OF HR DEPARTMENT IN

EMPLOYS HEALTH AND SAFETY
Organizations frame many approaches to ensure health and safety of their
employees. But not all of the approaches focus on contribution of both
work design and employee behavior to safety. An organizational approach
to safety is effective only when both the work design and employee
behavior work in coordination towards it. Many organizational and
individual issues emerge in management of employee health and safety.

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They can be summarized as follows. Health and Safety Aspects of
HRM
1. Physical Work Settings: The physical settings of work affect the
performance of employees to a great extent. Some of these factors
include temperature, noise levels, and proper lighting affect job
performance. Other work setting factors include size of work area,
kinds of materials used, distance between work areas, cubicle
arrangement, etc.
2. Sick Building Syndrome: It is a situation in which employees
experience acute health problems and discomfort due to the time spent
in a building (particularly their workplace). Some factors that lead to
sick buildings include poor air quality, inadequate ventilation,
improper cleanliness, rodents, stench of adhesives and glues, etc.
3. Ergonomics: The term comes from the Greek word ergon, which
means “work,” and omics which means “management of.”
Ergonomics is the study of physiological, psychological, and
engineering design aspects of a job, including such factors as fatigue,
lighting, tools, equipment layout, and placement of controls. It is the
interface between men and machines. Ergonomics is taken into
consideration when designing the workstation for computer operators.
4. Problems of back ache, eye strain and headache arise due to long
working hours spent in front of computers.
5. Engineering of Work Equipments and Materials: Accidents can be
prevented in a way by proper placements of dangerous machines.
Moreover design of such machines and equipments also plays an
important role in safety. Providing safety guards and covers on
equipments, emergency stop buttons and other provisions help in
reducing the accidents considerably.
6. Cumulative Trauma and Repetitive Stress: Cumulative trauma
disorder occurs when same muscles are used repetitively to perform
some task. This results in injuries of musculoskeletal and nervous
system. Employees encounter high levels of mental and physical stress
also.
7. Accident Rates and Individuals: An individual approach to safe
environment helps in reducing the accident rates. This is generally
because more problems are caused by careless employees than by
machines or employer negligence. A positive attitude towards work
environment and other practices promotes employee safety.

EMPLOYEE HEALTH PROGRAM

The purpose of an occupational health program is to help to provide a safe
and healthy work environment. Working with laboratory animals presents
potential hazards or problems: some are inherent in all animal care related
activities and others result from the nature and design of the experimental
protocol.

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Physical hazards: include scratches, bites, injuries from lifting or
carrying heavy objects, needle sticks or injuries from other sharp objects,
and falling injuries.
Chemical hazards: include flammable agents, cleaning, disinfecting, and
sanitizing compounds, carcinogens, mutagens, teratogens, and radioactive
compounds.
Zoonotic hazards: include infectious agents (biohazards) individuals may
be exposed to when working with laboratory animals. Though fairly
uncommon, they represent potentially serious and fatal hazards to those
working with laboratory animals.

STEPS IN PREPARING THE SAFETY PROGRAMMES:

Step 1: Develop a plan of action that includes both management and
employee involvement.
It is important to develop a program that will meet the needs of both
management and employees. An elegant safety and health program
manual that describes protective measures that are seldom put into
practice serves no useful function. This is why MOSH encourages
management to involve employee representatives in the development of
the safety and health program and to encourage their continued
participation in company safety and health efforts.

Step 2: Designate a person to be responsible for safety and health.

In an effective safety and health program, the person responsible for the
safety and health program will have both the authority to do the job and
the respect of management and employees. The choice of the safety and
health director must be based on his or her knowledge of the facility and
of safety and health requirements. The person or persons designated to do
training must be credible, respected, and knowledgeable about the
operations and must be given the time, authority and resources to develop
an effective program.
Step 3: Determine the safety and health requirements for the specific
workplace and operations.
It is important to become familiar with the safety and health requirements
associated with the company’s physical location, operations, and
equipment. This information will be used to:
1. Develop a hazard assessment strategy
2. Pinpoint areas and procedures that historically have caused
significant injury or illness, and identify potential causes
3. Provide a background for correction and control strategy planning
Resources that will aid in the determination of your workplace safety
and health requirements include.

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Step 4: Conduct a hazard assessment of the workplace. Health and Safety Aspects of
HRM
An effective safety and health program will systematically identify and
prevent hazards. Develop an initial plan for assessing the workplace.
Conduct a safety and health self-inspection/survey of the workplace
according to the plan developed above. This survey permits a systematic
record of the hazards and potential hazards that can be recognized without
intensive analysis. It Identifies any situations that present hazards or are in
violation of law, regulations or standards.

Step 5: Correct identified hazards.

Hazards, once recognized, should be promptly abated or controlled.
Hazard abatement is an essential activity. Management action at this point
will determine the credibility of the company’s safety and health policy, as
well as the usefulness and effectiveness of the entire workplace safety and
health program.

Step 6: Keep the workplace hazard-free.

Once recognized hazards are corrected, take steps to ensure that the
workplace remains hazard-free.
1. Develop work practices, administrative controls, work rules and
emergency procedures.
2. Provide for facility and equipment maintenance to prevent hazardous
breakdowns.

Step 7: Train Employees in Safety and Health.

Most employers must provide some training for employees. An employer
also must inform and train employees about the company safety and
health program, how it is intended to benefit employees, and what is
expected of employees in order to make the program work. An employer
should ensure that all employees understand the hazards to which they
may be exposed and how to prevent harm to themselves and others from
exposure to these hazards. A thorough understanding of the hazards and
their prevention will affect employee acceptance and use of established
safety and health protections. Training for this purpose is reinforced by
encouraging attempts to work safely and by positive recognition of safe
behavior.

Step 8: Keep the program up-to-date and effective.

At this point, much of what an employer must do to implement an
effective program has been accomplished. The employer can now attend
to program maintenance: coordination of the program, documentation of
program details, addition of new work practices and hazard controls, and
continuation of enforcement. Each of these components may vary in detail
and formality, depending on the size and complexity of the workplace.

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Many of these items may have been completed during development of
other steps of the program.

DOCUMENTATION:
An important part of any safety and health program is documentation. It
provides:
1. An historical reference that can be reviewed to determine program
effectiveness.
2. An accessible document to which management and employees can
refer when unsure of proper procedures.
3. Evidence of the employer's efforts to provide a safe and healthful work
environment.
4. Employers also must maintain documentation if required by applicable
standards for the following procedures:
5. environmental monitoring, including noise and chemical sampling
6. exposure control programs required under many of the air contaminant
standards.
7. employee medical records as part of any medical surveillance
program.
8. records of employee testing for personal protective equipment
programs when respirators or hearing protection is required.
9. certifications for inspection programs for cranes and forklifts.
It is strongly recommended that the employer provide some level of
documentation for the following:
1. all employee training
2. safety rules and procedures for employees
3. workplace self-inspections
4. accident investigations
5. accident investigations
Refer to the applicable standard to determine what the documentation
must include, who must have access to the documentation, and how long
the records must be maintained.

CAUSES OF ACCIDENTS
Most of the research has concluded that 80 out of every 100 accidents are
the fault of the person involved in the incident. Unsafe acts cause four
times as many accidents as unsafe conditions. Accidents occur for many
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reasons. In many situations, people tend to look for “things” or reasons to Health and Safety Aspects of
HRM
blame when an accident happens. This seems to them to be easier than to
look for the “root” or basic reason for the incident to begin with. Below
are some of the reasons that accidents occur.
1. Taking Shortcuts: Every day we make decisions that we hope will
make a job go faster and more efficient. Often times when we think
we are saving time, we have to be careful that we aren’t jeopardizing
our health or the health of one of our employees. Shortcuts that
reduce the safety of the job aren’t shortcuts, but are items that might
increase our chances of injury.
2. Being overconfident: Confidence is a good thing. Overconfidence
to the point of arrogance is too much of a good thing. Also, the old
adage of “it can’t happen to me,” is an attitude that can lead to
improper methods of doing your work, using incorrect procedures or
sometimes the wrong tools. Any one of these items can cause an
injury to you or to a fellow worker.
3. Ignoring Safety Procedures: Ignoring safety procedures,
intentionally or unintentionally, can endanger you or other
employees. The university has safety policies in place and we are
supposed to observe them. Casual attitudes about safety can result
in a “casualty.”
4. Starting a Job with Incomplete Instructions: We know in order to
do a job safely and to do it right the first time, we need a complete
set of instructions. We’ve all seen situations where an employee
made a mess of a task or assignment because he didn’t have
sufficient instructions or the instructions weren’t clear. When you
are working on a job, don’t ever be afraid to ask questions or get
explanations for what is unclear to you. How many times have you
heard, “I’m afraid to ask questions.” It’s not dumb to ask, but dumb
not to ask.
5. Poor Housekeeping: Anytime that guests, friends, colleagues or
safety professionals come through your work site, whether it is the
maintenance shops, storage areas, offices, etc. the first impression
they get is sometimes the lasting one. If the office is unorganized or
dirty, the maintenance shops are cluttered and unorganized, it
portrays a sense of looseness and a lack of pride in the work site. On
the other side of the coin, if they enter and see it neat and orderly, a
sense of pride and quality of purpose is the attitude that they are
most likely to leave with.
6. Mental Distractions from Work: Bringing outside problems to
work can keep you from focusing on your job. If this happens, it can
be a hazard. Friends coming by while you are at work can cause a
distraction and can keep you from focusing on the task at hand. Both
of these incidents can put you into a hazardous situation. Don’t
become a statistic; stay focused on the task at hand.

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7. Failure to Pre-Plan your Work: In the office or in other fields of
work, it is important to pre-plan your work. First of all, it will
uncover unforeseen problems and give you the opportunity to solve
it and continue to work. Secondly, it will make the job go faster and
more efficiently because you thought out the processes in advance of
the start up.

HEALTH AND SAFETY MEASURES

Health and safety at work is one of the areas with a solid legal framework
covering the maximum number of risks with the minimum number of
regulations.
A safe and healthy work environment is the basic right of every worker.
However, the global situation falls far short of this right. The International
Labour Organisation (ILO) estimates that more than 125 million workers
are victims of occupational accidents and disease in a single year. Of these
approximately 220,000 workers die and about 10 million are seriously
disabled.
With world population increasing, the above figures are expected to rise
significantly if present conditions prevail. The situation is grim in the
Third World. About 75 percent of the global workforce lives and works in
Third World countries which have so many serious problems like poverty
and unemployment that the status of health and safety is very low.
SAFETY MEASURES
Safety measures deals with prevention of accidents and with minimizing
the resulting loss and damage to persons and property. Five basic
principles must govern the safety programme of an organisation. They are:
1. Factors resulting to accidents have to be traced out, analysed and
eliminated.
2. Identify potential hazards, provide effective safety facilities and
equipment take prompt remedial action.
3. The top management must continuously monitor the safety
performance.
4. All employees should be given thorough training in safe methods of
work and should receive continuing education and guidance on
eliminating safety hazards and on prevention of accidents.
There are three E’s of safety to prevent accidents, namely,
Engineering, Education and Enforcement of safety rules.
STATUTORY PROVISIONS FOR SAFETY IN INDIA
The Factories Act contain specific provision for the safety of workers.
1. When any part of the machinery is in motion, it is obligatory to fence
the machinery.
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2. Any examination, adjustment of any part of the machinery shall be Health and Safety Aspects of
HRM
carried out by trained male worker wearing tight fitting clothing.
3. No adolescent shall be allowed to work on any machinery which
poses danger.
4. Suitable devices for cutting off power in an emergency shall be
provided
5. Prohibition of employing women and children near cotton openers.
6. Precautions against dangerous fumes, use of portable electric lights.
Explosive or inflammable gas or dust, fire etc.

SAFETY PROGRAM
Every member of your company, from management on down, contributes
to a safe workplace, but getting everyone on board to create a safer place
to work can be a challenge. Safety Jackpot’s Workplace Safety Programs
provide the rewards – and excitement – to make it happen successfully.
The first goal of any Workplace Safety Program is to raise awareness of
behaviors and areas such as machine usage in a factory, which can create
hazardous situations. We provide information, ideas and articles that
discuss ways to prevent accidents. But what truly makes our innovative
workplace safety incentive plans effective are the lotto and other
interesting games that reward the changes in behavior that actually make
the workplace safer.
Our Workplace Safety Programs take a total quality management
approach, looking at every aspect of the workplace to improve safety.
Programs include methods to work directly with unions to enlist their
help, demonstrating the benefits of worker health and safety not only to
your company, but to the union as well.
We’ve found that creating a safer workplace not only reduces workers
comp claims, but it can boost morale and job satisfaction, which in turn
improves your relations with employees and their unions.
Requirements for the effective operating of the Safety and Health
programmes:

Safety committee:
Health and safety committees bring together workers and management to
assist in the development and review of health and safety policies and
procedures for the workplace.
The functions of the health and safety committee are:

 to facilitate co-operation between the person conducting a business

or undertaking (PCBU - the new term that includes employers) and
workers in instigating, developing and carrying out measures
designed to ensure the health and safety of workers
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Management  to assist in developing standards, rules and procedures relative to
health and safety

 such other functions prescribed by the regulations or agreed between

the PCBU (includes employers) and the committee.
The effective operation of a health and safety committee is dependent
upon everyone fulfilling their role.

Safety discipline:
The most common problem we see in trying to use discipline is
inconsistency. Remember discipline is punishment a consequence focused
on eliminating a behavior. We know that for a consequence to be effective
it must be certain. But in many organizations we see that an at risk
behavior is punished when it results in an injury, but the same behavior
goes unpunished when no injury occurs. What we’re really doing in this
case is punishing the injury, not the at risk behavior, and people will see
that. If this has any effect at all, it will be to teach people to hide injuries
so they avoid punishment.
A related issue is that of mixed messages. Suppose I’m a manager and I
tell people that safety is my highest concern. My crew then breaks a
production record, but in doing so takes shortcuts with safety procedures,
without having an injury, and my response is to heap praise on them and
buy pizza for everyone. I may not even realize that they took shortcuts,
but they know, and they know I rewarded the outcome without asking
about how they did it. What behavior have I reinforced? When they take
the same shortcuts next month and someone is injured and there is
discipline, I’ve again told my crew that the behavior that gets punished is
reporting an injury, and I’m really only giving safety lip service.
Feedback and incentives:
Feedback, in many ways, is perceived like spinach. People feel
uncomfortable telling someone that they have spinach in their teeth, and
people feel uncomfortable giving feedback at work.
The reality is that the majority of professionals cringe when it comes time
for evaluations, self assessments, and even everyday feedback.
Unfortunately, some managers communicate only when there is a
problem, so employees tend to view feedback in a negative light. Lack of
communication contributes to 80 percent of workplace issues. These
statistics show that constant communication and ongoing feedback are
critical to well-functioning and high-performing individuals, teams, and
organizations.
Believe it or not, feedback can be positive, worthwhile and even
enjoyable. The key is knowing how to communicate when delivering and
receiving feedback.

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Safety training: Health and Safety Aspects of
HRM
Training means helping people to learn how to do something, telling
people what they should or should not do, or simply giving them
information. Training isn’t just about formal ‘classroom’ courses.
Providing health and safety information and training helps you to:

 ensure that people who work for you know how to work safely and
without risks to health;

 develop a positive health and safety culture, where safe and healthy
working becomes second nature to everyone;

 meet your legal duty to protect the health and safety of your
employees.

Effective training:

 Will contribute towards making your employees competent in health

and safety;

 Can help your business avoid the distress that accidents and ill health
cause;

 Can help you avoid the financial costs of accidents and occupational
ill health, such as damaged products, lost production and
demotivated staff. Don’t forget that your insurance might not cover
all these costs. For information on business.

Employees involvement:
Employee involvement is creating an environment in which people have
an impact on decisions and actions that affect their jobs. Employee
involvement is not the goal nor is it a tool, as practiced in many
organizations. Rather, it is a management and leadership philosophy about
how people are most enabled to contribute to continuous improvement and
the ongoing success of their work organization.
How to involve employees in decision making and continuous
improvement activities is the strategic aspect of involvement and can
include such methods as suggestion systems, manufacturing cells, work
teams, continuous improvement meetings, Kaizen (continuous
improvement) events, corrective action processes, and periodic
discussions with the supervisor.

Safety device:
Safety devices are devices that work to help secure the safety of anyone
who is using them. There are different safety devices that can be found in
the market today. Some of these are geared for children, women, and
elderly. Some examples for these devices are corner edge protectors for
children, stun guns for women, and cell phones with emergency response
system for elderly.
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Proper maintenance:
In order to ensure work equipment does not deteriorate to the extent that it
may put people at risk, employers, the self employed and others in control
of work equipment are required by PUWER to keep it 'maintained in an
efficient state, in efficient order and in good repair'. Such effective
maintenance can not only help in meeting PUWER requirements but can
also serve other business objectives, such as improved productivity and
reduced environmental impact.
The frequency and nature of maintenance should be determined through
risk assessment, taking full account of:
1. the manufacturer's recommendations
2. the intensity of use
3. operating environment (eg. the effect of temperature, corrosion,
weathering)
4. user knowledge and experience
5. the risk to health and safety from any foreseeable failure or
malfunction
Safety critical parts of work equipment may need a higher and more
frequent level of attention than other aspects, which can be reflected
within any maintenance programme. Breakdown maintenance, undertaken
only after faults or failures have occurred, will not be suitable where
significant risk will arise from the continued use of the work equipment.
The manufacturer's instructions should describe what maintenance is
required to keep the equipment safe and how this can be done safely.
These instructions should always be followed, unless there are justifiable
reasons for not doing so (eg where more frequent maintenance is
necessary, due to intense use, adverse environmental conditions or when
other experience shows this need). Maintenance on a less frequent basis
than the manufacturer's recommendation should be subject to careful risk
assessment and the reasons for doing so should be reviewed at appropriate
intervals. For example, where there is already an inspection regime,
perhaps for lightly used equipment, less frequent maintenance may be
justified because of the condition monitoring already provided by the
inspection programme.
There is no requirement for you to keep a maintenance log, although it is
recommended for high-risk equipment. Maintenance logs can provide
useful information for the future planning of maintenance, as well as
informing maintenance personnel of previous action taken. However, if
you have a maintenance log, you must keep it up to date.

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Proper working conditions: Health and Safety Aspects of
HRM
Working conditions refers to the working environment and aspects of an
employee’s terms and conditions of employment. This covers such matters
as: the organisation of work and work activities; training, skills and
employability; health, safety and well- being; and working time and work-
life balance. Pay is also an important aspect of working conditions,
although Article 153 of the Treaty on the Functioning of the European
Union (TFEU) excludes pay from the scope of its actions in the area of
working conditions.
Improving working conditions is one of the goals of the EU. Article 151
TFEU states that: ‘The Union and the Member States… shall have as their
objectives the promotion of employment, improved living and working
conditions, so as to make possible their harmonisation while the
improvement is being maintained’. Further, Article 153 TFEU states that
‘the Union shall support and complement the activities of the Member
States’ in a range of social policy fields, including working conditions.

Safety engineering:
Oddly enough, personality issues can be paramount in a safety engineer.
They must be personally pleasant, intelligent, and ruthless with
themselves and their organization. In particular, they have to be able to
"sell" the failures that they discover, as well as the attendant expense and
time needed to correct them. They can be the messengers of bad news.
Safety engineers have to be ruthless about getting facts from other
engineers. It is common for a safety engineer to consider software,
chemical, electrical, mechanical, procedural, and training problems in the
same day. Often the facts can be very uncomfortable as many safety
related issues point towards mediocre management systems or worse,
questionable business ethics.

12.4 SUMMARY
Many industries around the world are showing an increasing interest in the
concept of ‘safety culture’ as a means of reducing the potential for large
scale disasters, and accidents associated with routine tasks. Financially
healthy organizations are likely to be those which are successful in
maintaining and retaining a workforce characterized by good physical,
psychological, and mental health. In drawing upon recent empirical
studies, this paper examines a wide range of issues including: factors
intrinsic to the job, corporate culture, managerial style, style of work
organization and physical layout, home/work interface, etc., which impact
on employee health and well-being, and so determine the financial health
and profitability of the organization. It also addresses the efficacy of
various intervention strategies in reducing employee stress, and their
implications for organizational practices and human resource policies.

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Management 12.5 SELF ASSESSMENT QUESTIONS
1. Give the importance of Organizational Health and safety. Explain
how safety measures can help in reducing industrial accidents.
2. Discuss about the requirements for the effective operating of the
Safety and Health programmes.
3. Explain in detail the steps in preparing the safety programmes.
4. Write short notes:

 Health and safety measures

 Causes o accidents

 Safety programmes in the organization.



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 13
MEANING AND CAUSES OF STRESS
Unit Structure:
13.0 Objectives
13.1 Introduction
13.2 Meaning and Definition of Stress
13.3 Sources of Stress
13.4 Coping with Stress
13.5 Effect of Stress
13.6 Meaning of Employee Welfare
13.7 Importance of Employee Welfare
13.8 Summary
13.9 Questions

13.0 OBJECTIVES
After studying the unit the students will be able to:

 Define the term stress.

 Explain the cases of Stress.

 Discuss the causes of reducing stress on the job.

 Elaborate the effects of Stress.

 Explain the concept Employee welfare and its importance.

13.1 INTRODUCTION
Stress is a state of mind that shows certain biochemical reactions in the
human body and is projected by a sense of anxiety, tension, depression,
frustration and irritation. Such reactions are caused when the demands of
the environmental forces or internal forces are not met by the resources
available to the person. Situations produce stress in the form of bio-
chemical, functional and structural changes in the human organism. These
situations could be fear, pain, fatigue, emotional arousal, humiliation,
frustration, lack of concentration, blood pressure, drugs, loss of loved one,
non-occurrence of an expected event and even unexpected successes that
require a change in the operational style. High level stress damages the
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physical and psychological well-being of a person and extremely low
levels of stress are equally undesirable for they cause boredom, and result
in lack of stimulation, innovation and challenges. Thus moderate level of
stress is necessary for higher level of performance. A potential for stress
exists when an environmental situation is perceived as presenting a
demand which threatens to exceed the person's capabilities and
resources for meeting it, under conditions where she/he expects a
substantial differential in the rewards and costs for meeting the demand
versus not meeting it.

13.2 MEANING AND DEFINITION OF STRESS

The term “Stress” refers to the body’s physical, mental, and chemical
reactions to circumstances that confuse, endanger, frighten or irritate the
individual.
According to Hans Selye Stress is defined “as the nonspecific response
of the body to any demand”.
Stress is a discrepancy between an employee’s perceived state and desired
state, when such a discrepancy is considered important by the employee.
Stress influences two behaviors - (1) the employee’s psychological and
physical well-being and (2) the employee’s efforts to cope with the stress
by preventing or reducing it.
S.P. Robbins defined stress as, “It is a dynamic condition in which an
individual is confronted with an opportunity, constraint or demand related
to what he or she desires and for which the outcome is perceived to be
both uncertain and important”.

Beehr and Newman defined job stress as, “A condition arising from
the interaction of people and their jobs and characterized by changes
within people that force them to deviate from their normal
functioning”.
“Stress is defined as an increased strain, an intense physical and / or
psychological type of tension. The body’s stress reaction causes one to
become ready for action in the shortest period of time. Stress releases a lot
of energies which give extraordinary strengths.”
Stress may be defined as "a state of psychological and/or physiological
imbalance resulting from the disparity between situational demand and the
individual's ability and/or motivation to meet those demands".

In many ways, this definition incorporates what most theorists see as

the main ingredients in stress, namely, subjective appraisal of a
demanding environment, a realisation that demands may outstrip
resources, and that the consequences of not coping are important. In the
absence of a universally agreed definition of stress, the widely accepted
protocol of describing environmental factors as "stressors", individual
responses as "strains", and the vast gamut of mediating activity in the
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form of cognitive processing and personality dispositions as Meaning and Causes of
Stress
"intervening variables" can usefully be adopted.
Stress is an adaptive response to an external situation that results in
physical, psychological and/or behavioural deviations for
organisational participants.
Stress can mean different things to different people Following points
explain the nature of stress:

 Stress is not simply nervous tension.

 Stress is not necessarily something damaging bad or to be avoided.

 Stress is not simply anxiety.

 For some it can threaten to take over their lives while for others, once
they are aware of its causes and effects, stress can add excitement and
challenge to their lives.

 Stress is often defined as a mismatch between the demands placed on

us and the way we cope with these demands.

 It can have a positive and a negative effect. Stress can be positive

when it motivates us to get things done which are important to us.
However, it can be negative when we constantly feel pressurized or
traumatised by too many demands.
We all have demands placed on us they come from our work or being
unemployed, from relationships, deadlines, financial problems, illness and
so on. We also have to deal with major changes like moving home,
changing jobs, getting married or coping with the death of a loved one.
The way we cope with these demands will depend on the way we think,
our personality and our previous life experiences.

13.3 SOURCES OF STRESS

There are two sources of stress namely organizational sources and
personal sources.

 ORGANIZATIONAL SOURCES
The extent and ratio of stress that people experience in job place are
influenced by the following factors:

 Nature of job
The nature of job itself can determine the type and degree of stress that
can be induced. Some jobs lead to more stress-related responses than
others. For example job of a police officer, or air traffic controller are
often considered to be low- stress jobs. In general high stress occupations
are those in which the employees have little control over their operations,
work under time constraints and have major responsibilities for human or
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financial resources. Persons working under adverse working conditions
such as temperature extremes, pollution, uncomfortable lighting and
ventilation and loud noise are also vulnerable to high stress.
According to a study, some of the high stress jobs are foreman, manager,
inspector, waitress or waiter and clinical laboratory technician. On the
contrary low stress jobs are college professor, personnel worker, craft
worker, farm labourer etc.

 Role Ambiguity
Role is the set of activities associated with certain position in the
organisation. When there is lot of uncertainity regarding job definitions or
job expectations, then people experience role ambiguity. Role ambiguity
is high in managerial jobs where responsibilities are more and role
definitions and task specifications are not clear.
Role ambiguity produce psychological strain and dissatisfaction, lead to
under-utilization of human resources and leads to feeling of futility on
how to cope with the organizational environment.

 Role Conflict
Role conflict occurs when two or more persons have different and
sometimes opposing expectations of a given individual. Role conflicts
occur when contradictory demands are at the same time placed before an
employee. For example, a building contractor may ask a carpenter to
something which is different to what the city building code is, thus
causing a role conflict. Similarly a father may know that his son has
committed a crime but does not inform the police.

 Responsibilities assigned to employee’s

Any type of responsibility can be a burden on an employee. Holding a
person responsible for anything going wrong can create stress and it can
be more if the manager has a limited degree of control over his
subordinates.

 Lack of Participation
When the employee’s are allowed to participate in the decision making
process of the organisation, the employee’s develop high morale, work
more efficiently and feel that they have control over the work environment
thereby reducing the extent of role conflict and role ambiguity which are
the causes of stress.

 Interpersonal Relations
The efficiency, performance and effectiveness of a organisation is mapped
by the degree of relations that the people enjoy in the work place.
Harmonious, cordial and congenial relations result in peace. When the
interpersonal relations are poor there is stress, tension and anxiety. Under

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such crisis full situation the superior and subordinate relations keep Meaning and Causes of
Stress
deteriorating.

 PERSONAL SOURCES

 Job concern
Job variables can become stressors when they become sources of concern,
anxiety and frustration to an individual. Lack of job security, prospect of
losing a job with family depending on the individual, job recession, low
status of job, lack of career progress are all factors resulting into stress.

 Relocation
Transfers or promotions resulting into change of place geographically,
disturbs the routine daily life of individual causing stress. Fear of working
in a new place, unpredictability of the new work environment, anxiety due
to fear of how to create new relations, getting away from spouse, children,
relatives or looking for new dwelling, school for children in new place can
be the result of uncertainty and a cause of stress.

 Change of life structure

Structure of life and process of living has many facets like socio-cultural
factors like religion, race, education, family. As a person grow older
responsibilities also grow up, and therefore stress develops. The extent of
stress is also determined by the ability to cope with stress

Symptoms of Stress:

Symptoms of stress are generally into the following two categories:

 Physiological Symptoms: Some of the physiological symptoms of

stress are:
i. Increase in blood pressure
ii. Increase of cholesterol
iii. Frequent cold and fever
iv. Increase of biochemical substances such as uric acid and
catecholamine.

 Psychological Symptoms: Psychological symptoms of stress are:

 Anger

 Frustration

 Irritation

 Depression

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Human Resource
Management  Fatigue

 Lower job satisfaction

 Loss of self-esteem
Causes Of Stress:
The isolation and loneliness are responsible for domestic stress and
mental illness. Dirt, smell, chemical pollution and cigarette smoke can
be stressful. The chemicals in our foods, drinks and drugs contribute to
stress. In modern times alcohol helps the body and mind relaxes but
taken in excess it acts, damaging the liver and impairing brain.
The various causes that led to stress are as follows:

 Extra-organizational Stressors:
It refers to factors outside the organization which lead to stress. These
factors do affect the organization and are affected by the organization
as well.
Some of these factors are as follows:

 Social and Technological Changes: The speed at which changes

are taking place results in stressful condition; It is difficult to get adjust
quickly to such rapid changes which make life disrupted.

 Financial Problems: In a city like Mumbai, where accommodation

is expensive and the standard of living is high, then financial problem
can be a cause of stress, wherein a person needs to earn extra money
for that needs to work additional or the wife has to earn some money,
which reduces domestic family life and increases the potential for
stress.

 Family Problems: Family problem may be something serious such

as strained relationship between the spouses or parents, and the
children. Another problem could be mentally retarded children,
handicapped child, etc.

 Race, Religion and Sex of a Person: Factors such, as sex, religion

can be stressors. Women have more stress than men because the world
is dominated by men.

 Civic Amenities: The area where one lives, the water supply, air
pollution, noise pollution, electricity supply etc. all these are extra-
organizatiohal factors which can cause stress.

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 Meaning and Causes of
 Organizational Stressors: Stress
Stressors inside the organization are:

 Occupational Demands: Some jobs are monotonous and complex;

some are highly repetitive and require constant vigilance is more
stressful. For example, job of a fire fighter, policeman air pilot etc.

 Personal v/s. Organizational Life: When the family and personal

needs interfere with organizational demands, it leads to stressful
conditions. For example, a manager is promoted and given prestigious
posting abroad but need to resume on duty immediately at the same
time one of the family members is very sick and needs him at home.

 Career Concern: If an employee is too much concerned about his

own career and feels that there are no opportunities for self-growth, he
might feel stagnant and experience stress.

 Role Conflict: Different people do have different expectation

which results in role conflict, i.e. a manager in the organization is a link
between management and workers and often faces role conflict.

 Role Ambiguity: Employees experienced stress when they are

provided with ambiguous idea or information about their work which
creates confusion in minds of the workers and results in stress.

 Work Overload and Under load: Work overload refers doing too
much of work in allotted time.
Work overload can be of two types:
 Quantitative Overload: In which the employee is asked to do
more work as compared to he can complete in a specific period of time.

 Qualitative Overload: Wherein employee feels that he do not

possess required skills or abilities to perform the job Work under load
refers to too little work to do can also result in stress.

 Responsibility for Others: It is observed that people who are

responsible for other people experience higher level of stress.

 Organizational Process: Office, politics, lack of information, poor

communication etc. results in organizational stress.

 Organizational Policies: Frequent transfers, inflexible rules, pay

inequity, work shift, unfair performance appraisals systems can also
cause stress.

 Working Conditions: Excessive heat or cold, distracting noise,

poor lighting, inadequate safety measures, unpleasant smells and such
conditions do affect the employees and lead to stress.
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Human Resource
Management  Lack of Cohesiveness and Social Support: Lack of togetherness
i.e. no unity between the members can result in stress. Lack of social
support within the members may also lead to stress.

13.4 COPING WITH STRESS

It is perhaps impossible to eliminate stress altogether, but by
controlling or reducing stress on the job, an organization can become a
more productive and healthy working place.

 ORGANIZATIONAL STRATEGIES
Organizations are also increasingly realizing that they should be involved
in managing their employees’ stress. There are two different rationales for
this view. One is that because the organization is at least partly
responsible for creating the stress, it should help relieve it. The other is
that workers experiencing lower levels of harmful stress will function
more effectively. Two basic organizational strategies for helping
employees manage stress are institutional programs and collateral
programs.

 Preventive management: Preventive management can be conducted

by surveys and employee/group interviews. Managers can identify
potential problems of serious stressors and take steps to reduce them.

 Maintaining a productive culture: Maintenance of positive

organizational environment and satisfied employees sets the right
direction. For releasing the stress organizations are adopting stress
management programs, health promotion programs, and other kinds of
programs. More and more companies are developing their own programs
or adopting existing programs of this type. Many firms today also have
employee fitness programs. These programs attack stress indirectly by
encouraging employees to exercise, which is presumed to reduce stress.

 Management by objectives: A management by objectives or similar

performance appraisal technique that identify employee goals, roles and
responsibilities and strengthen communication can reduce stress by
eliminating uncertainty in critical aspects of employee’s jobs.

 Controlling the physical environment: Reducing stress in the

physical environment requires that management undertake one or two
different strategies. First by reducing noise, better control of temperature,
second by protecting employees by improved safety equipment.
Appropriate working environment should be provided such as sufficient
lighting, ventilation facilities, adequate safety and security measures,
facilities for rest and recreation can be provided to reduce the impact of
stress.

 Change in Organizational Structure: The organization’s culture also

can be used to help manage stress. In some organizations, for example,
there is a strong norm against taking time off or going on vacation. In the
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long run, such norms can cause major stress. Thus, the organization Meaning and Causes of
Stress
should strive to foster a culture that reinforces a healthy mix of work and
non work activities. Proper means of communication, making rules that
are flexible, helps in combating stress.

 Decentralisation of Authority: Another strategy used is

decentralization of authority i.e. increasing the active participation of
subordinates in decision making and reducing the involvement of seniors.

 Changing the Nature of Job: Properly designed jobs and work

schedules can help ease stress. Shift work, in particular job can cause
major problems for employees, because they constantly have to adjust
their sleep and relaxation patterns. Thus, the design of work and work
schedules should be a focus of organizational efforts to reduce stress. The
redesigning of the nature of some job can helps to solve the problem of
stress i.e.

 Boosting employee morale and enhancing motivation of employee.

 Minimising work overload and under load.

 Removing unpleasant and risky elements from the organizations.

 Increasing qualitative features of the job.

 Encouraging the employees in active participation in decision making

PERSONAL STRATEGIES

 Meditation: Transcendental meditation gives mental and physical

relaxation. Meditation reduces anxiety and improves work performance
and gives job satisfaction.

 Exercise: One of the least expensive and effective stress reduction

strategies is exercise like jogging, sports, fitness classes, cycling,
swimming etc. This improves mental and physical health. More research
has suggested that people who exercise regularly feel less tension and
stress, are more self confident, and show greater optimism. People who do
not exercise regularly feel more stress, are more likely to be depressed,
and experience other negative consequences.

 Entertainment: Watching a favorite movie or listening to music can

release stress.

 Removing the cause of stress: Sometimes one can easily check the
cause of stress, for example, a confrontational supervisor, difficult support
staff, no possibility for advancement etc. Thus the key is to reduce or
lessen the cause.

 Seeking Counseling: Stress is a common psychological problem.

Counselors can offer helpful insights and stress reduction techniques that
may remove the problem.
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Human Resource
Management  Relaxation: It is related method of managing stress. Proper relaxation
is an effective way to adapt stress. Relaxation can take many forms. One
way to relax is to take regular vacations. People can also relax while on
the job. For example, it has been recommended that people take regular
rest breaks during their normal workday. A popular way of resting is to sit
quietly with closed eyes for ten minutes every afternoon.

 Behavioural Self-control: This strategy involves the individual to

control on the stressful situation instead of allowing the situation to
control him.

 Bio-feedback: It is a technique where a stress victim, under medical

guidance, learns to influence symptoms of stress such as headache.

 Time Management: Time management is often recommended for

managing stress. The idea is that many daily pressures can be eased or
eliminated if a person does a better job of managing time. One popular
approach to time management is to make a list every morning of the
things to be done that day. Then you group the items on the list into three
categories: critical activities that must be performed, important activities
that should be performed, and optional or trivial things that can be
delegated or postponed. Then, of course, you do the things on the list in
their order of importance. This strategy helps people get more of the
important things done every day. It also encourages delegation of less
important activities to others.

 Role Management: In role management the individual actively works to

avoid overload, ambiguity, and conflict. Another role management
strategy is to learn to say “no.” As simple as saying “no” might sound, a
lot of people create problems for themselves by always saying “yes.”
Besides working in their regular jobs, they agree to serve on committees,
volunteer for extra duties, and accept extra assignments. Sometimes, of
course, we have no choice but to accept an extra obligation. In many
cases, however, saying “no” is an option.

 Support Groups: It is also a good method for managing stress. Here

the individual have to develop and maintain support groups. A support
group is simply a group of family members or friends with whom a person
can spend time. Going out after work with a couple of coworkers.
Supportive family and friends can help people deal with normal stress on
an ongoing basis. Support groups can be particularly useful during times
of crisis. Gaining social support from family members and co-workers
often helps to reduce stress.
Workplace stress is hard to handle at the best of times, but when
unemployment is high, redundancies are common and competition for
promotions is so fierce it’s frightening, workplace stress levels go through
the roof. The problem with workplace stress is it is often hard to identify
other than a general feeling of ‘being stressed’. Being able to identify the
root cause of that stress means you can take steps to dry and deal with it.

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 Meaning and Causes of
Stress
13.5 EFFECTS OF STRESS
Some of the important effects of stress are described below:

 Effect on Individual: Stressful situations which are prolonged

produce serious physical and psychological disorders.

 Physical Health: Individual experiencing prolonged stress situation

suffers from heart disease. It also gives rise to high blood pressure, ulcers,
arthritis, headache etc. It has been found that more than 50% of the
physical illnesses are partly caused by stress.

 Psychological Health: Stress has an adverse effect on employee's

attitude and behaviour. It has effects such as anxiety, nervousness, anger,
depression, boredom etc. The change in employee's behaviour has an
adverse effect on job performance. It affects self-esteems, reduces job
satisfaction.

 Alcoholism and Drug Addiction: Many people get addicted to

alcohol or drug in order to escape from the ill effects of high level stress.
It may lead to negative effects on the health of that particular individual. It
may also lead to increased absenteeism, loss of production, increased
work accidents.

 Burnout: A syndrome of emotional, physical and mental exhaustion

resulting from prolonged exposure to intense stress. The symptoms of
burnout are loss of energy, a person looks tired, experiences frequent
headaches, nausea, back pain, sleeplessness, feeling of depression, holds
negative attitude towards job, loss of self-confidence.

Effect of Stress on Organization Behaviours:

 It affects the performance level of an employee.

 Person experiencing high level of stress result in low level of

performance, loss of self-confidence.

 It leads to increase in absenteeism and turnover.

 It leads to alcoholism, drug abuse, smoking etc.

13.6 MEANING OF EMPLOYEE WELFARE

Employee welfare is a term including various services, benefits and
facilities offered to employees by the employers. The welfare measures
need not be monetary but in any kind/forms. This includes items such as
allowances, housing, transportation, medical insurance and food.
Employee welfare also includes monitoring of working conditions,
creation of industrial harmony through infrastructure for health, industrial
relations and insurance against disease, accident and unemployment for
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Human Resource
Management
the workers and their families. Through such generous benefits the
employer makes life worth living for employees.
Employee welfare means “the efforts to make life worth living for
workmen.” According to Todd “employee welfare means anything done
for the comfort and improvement, intellectual or social, of the employees
over and above the wages paid which is not a necessity of the industry.”
However, the [International Labour Organization] ILO at its Asian
Regional Conference, defined labour welfare as a term which is
understood to include such services, facilities and amenities as may be
established in or in the vicinity of undertakings to enable the persons
employed in them to perform their work in healthy, congenial
surroundings and to provide them with amenities conducive to good health
and high morale.
Welfare includes anything that is done for the comfort and improvement
of employees and is provided over and above the wages. Welfare helps in
keeping the morale and motivation of the employees high so as to retain
the employees for longer duration. The welfare measures need not be in
monetary terms only but in any kind/forms. Employee welfare includes
monitoring of working conditions, creation of industrial harmony through
infrastructure for health, industrial relations and insurance against disease,
accident and unemployment for the workers and their families. Labor
welfare entails all those activities of employer which are directed towards
providing the employees with certain facilities and services in addition to
wages or salaries.

13.7 IMPORTANCE OF EMPLOYEE WELFARE

As a business, you have to provide various benefits to ensure your
employees' welfare. While this may increase your business expense and
negatively affect your bottom line, looking after your employees will
benefit you in other ways.
Compliance:
As an owner, you are required by law to provide certain benefits for the
welfare of your employees. You may have to match the Social Security
taxes your employees pay and obtain a worker's compensation insurance
policy. If you terminate an employee, you may have to funds to extend his
health insurance.

Hiring and Retention:

The benefits an employee receives from his employer for his welfare are
often a significant reason why he decides to accept a job offer. As such,
providing employee benefits allow you to compete with other businesses
to recruit and retain quality employees. If other employers offer better
benefits, good employees may choose to go there.

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Employees Motivation: Meaning and Causes of
Stress
By providing a plan that's good for employees' welfare, you show them
that you value them. This can help make them feel welcome and happy in
your company, motivating them to work harder. If your health plan has
wellness coverage and preventative care, employees are more likely to
stay healthy, cutting down on absenteeism and sick days.

Employees' Well-Being:
For companies that have a large base of employees working under
stressful conditions or living away from family, it is important to look at
fostering personal happiness and professional growth. Investing in
employees pays dividends in terms of higher productivity and greater
loyalty

Company Image:
Providing a good employee welfare plan reflects well on your business,
building a good company image. It may even earn you some press
coverage, giving you free publicity to improve awareness among potential
customers. This may boost your sales and increase your profits.

Classification of Employee Welfare

The welfare activities, may be classified as under:

 Statutory: Being a welfare state, every government has its statutory

obligation to provide welfare facilities to workers. The State
promotes the welfare of the workmen be safeguarding a social order
in which justice-social, economic, political conforms to all the
institutions of the natural life. For this purpose some essential acts
are passed. These acts are related to regular minimum wages,
working conditions, safety and sanitation etc. Such statutory
provisions have to be followed by every employer.

 Voluntary: Though these activities are not statutory they increase

the efficiency of workers. That is why, the employers provide them
for their workers at their own. Further, these welfare facilities are
necessary for maintaining industrial peace.

 Mutual: Mutual welfare activities are initiated by trade unions.

Trade unions are working for the betterment and safeguard of
welfare activities for their members. For this purpose, the unions
take initiative to provide welfare facilities to the workmen.

Sub-Classification

 Intro-mural Activities: These facilities have been provided by the

employer inside the mills, such as, sanitary conditions, medical
facilities, shelter, canteens etc.

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Human Resource
Management  Extra-mural Activities: These facilities have been provided by the
employers outside the mills, such as housing, education, medical
facilities, recreation etc.
In the Indian context, the welfare activities play an important role in
industrial sector. In India, most of the industrial workers are rural folk.
They have a migratory character. They often go to their villages, on
various occasions, like festivals, marriages, harvest, sickness etc. This
shows that the Indian industrial labour does not have stable life. In such
circumstances, the welfare facilities will increase the possibility of stable
labour force. Workers’ migratory character may be reduced by providing
them good and healthy welfare facilities.
Labour welfare activities may reduce the disparity in the real income. We
want to establish a socialistic pattern of society. This type of society
cannot be established without filling the gap between the rich and the
poor. Worker’s conditions may be improved by providing them welfare
facilities.

Welfare Activities
Various acts are available for providing welfare facilities to the workers.
The following welfare provisions are normally available to the workers.

Health Provisions
The Factories Act provides the following provisions regarding sanitary
conditions in the industrial units to take care of health of the workers.

Cleanliness of the factory:

 The factory shall be clean and free from effluvia arising from any
drain, privy or other nuisance and in particular.

 Accumulation of dirt and refuse shall be removed daily by sweeping.

 The floor shall be cleaned at least once in every week by washing,

using disinfectant.

 Where a floor is liable to become wet in the course of manufacturing

process to such an extent that it is capable of being drained, effective
means of drainage shall be provided and maintained.

 Walls and doors will be white washed or painted at regular intervals

as prescribed.
Disposal of Waste and Effluents: Every factory shall have effective
arrangements for the treatment of waster and effluents disposal.
Ventilation and Temperature: There is a provision that every factory
has to take effective measures for maintaining in every work room
adequate ventilation by the circulation of fresh air and such a temperature

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as will secure to workers therein reasonable conditions of comforts of Meaning and Causes of
Stress
prevent injury to health.
Dust: Every factory shall have effective arrangements for the prevention
of the inflation or accumulation in any work room of the dust or fume
given off by any manufacturing process being carried on or in that factory
which may be injurious to the health of the workmen.
Artificial Humidification: State Government has framed rules in this
regard. If artificial humidification is not done in the mill, water used for
the purpose should be effectively purified before it is used.
Drinking Water: In every mill effective arrangements shall be made to
provide and maintain at suitable points conveniently suitable for all
workers employed therein a sufficient supply of wholesome drinking
water. The water point shall not be established within 20 ft. of any
working place, urinal or latrine unless of a shorter distance is approved in
writing by the chief Inspector.
Over-crowding: Every factory must avoid over-crowding by providing
500 c. ft. area for every worker.
Lighting: There is a provision for providing suitable lighting in every part
of the work place.
Latrines and Urinals: Every factory must maintain sufficient latrines and
urinals accommodation of prescribed type separately for male and female
workers.
Spittoons: There shall be sufficient number of spittoons at convenient
place and they shall be maintained in clean / hygienic conditions.
Whoever spits otherwise than in spittoons shall be punishable.
However, it is observed that facilities are neither uniform nor satisfactory.

 Safety of the Workers

Safety provisions are also provided for workers according to the Factory
Act. The employer must see that the workers use all those guards which
are prescribed for their personal safety. Safety provision include fencing
of machinery, rules for work on or near machinery in motion, ban on
employment of younger workers on dangerous machines, striking gear and
devices for cutting off power, rules regarding revolving machinery,
pressure plants, hoists and lifts and precautions against dangerous fumes,
explosive or inflammable dust, gas etc. and precautions in case of fire.
In this connection, the National Commission on Labour recommended that
employers’ associations and trade unions should take more interest in
safety promotion. Safety committees should be set up in factory
employing hundred or more workers. The factory inspector should advise
and assist employers in drawing up induction and training programme in
safety.

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Human Resource
Management
Welfare of the Workers
The following are welfare facilities which should be provided to improve
the working conditions of the workmen by the management.

 Washing facilities: There should be adequate washing facilities

separately for the use of male and female workers.

 Facilities for storing and drying clothes: State Government may

direct factories to provide for suitable place for keeping clothing not
worn during working hours and for drying of wet clothing.

 Sitting Facilities: Every factory must maintain proper sitting

arrangement for all the workers who are obliged to work in a
standing position. So they may take rest at proper time.

 First Aid Facilities: The first and boxes / cupboards equipped shall
be provided by every factory with the prescribed contents. This will
be kept in charge of a separate person having a first aid treatment
certificate. For every one hundred and fifty workers one box must be
provided.

 Canteens: Rules may be imposed by the State Government

regarding the Canteen facilities where two hundred and fifty or more
workers are employed.

 Shelters, Rest Rooms and Lunch Rooms: Every factory (mill)

where one hundred and fifty or more workers are employed must
maintain adequate shelters or rest rooms and lunch rooms with
provisions of drinking water for the workers. A canteen shall be
regards as part of the requirement of the provision.

 Crèches: Where more than thirty women workers are employed

there shall be a suitable room for the use of children under the age of
six years of such women.

 Welfare Officer: A factory where more than five hundred workers

are employed must employ Welfare Officer. The State Government
will prescribe the qualifications, terms and conditions and duties for
such Welfare Officers. Under the Factories Act, 1948 employers are
under an obligation to appoint Welfare Officer in every factory. He
is often required to act as a go-between for management and labour.
He should have a good knowledge of psychology and an ability to
win the confidence of the workers.
Proper ventilation, reasonable temperature in work rooms and adequate
and suitable lighting in places of work are of prime necessity in any
industries. But in many industries these facilities are not available.

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Other Provisions Related to Welfare: Meaning and Causes of
Stress
Following are the main provisions of the Factories Act which are not
directly related to labour welfare activities but indirectly they affect the
workers welfare:
 Hours of Workers: A workman cannot be called upon for work for
more than forty eight hours a week and nine hours on any day.
National Commission on Labour recommended that the working
hours in the night shift should be even less than this and a credit of
ten minutes should be given for each hour work in the night shift.
Further it said that the reduction of working hours create additional
opportunity of employment and improves the health of the workers.
On the whole, the working hours should be less on the ground of
high labour productivity.
 Weekly Holiday: No worker will be called upon to work in the
company on the first day of the work unless he is given a full holiday
on one of the three days immediately before or after the said day.
Further, he shall not work in any case continuously for more than ten
days without a full day holiday.
 Compensatory Holiday: In case a worker is deprived of the weekly
holiday he shall be allowed within two following months
compensatory holidays of equal number to the holidays lost.
 Rest Intervals and Spread over of Working Hours: A worker
shall be given half an hour rest after doing five hours work and the
total working hours should not be more than ten and half hours on
any day including the rest intervals.
 Wages for Overtime: Payment of wages for overtime work will be
made on the rate twice ordinary rate of wages to a worker who has
worked in the factory for more than nine hours in any day or for
more than forty eight hour in any week.
 Employment of Women: The factory Act 1948 has provided for a
few provisions for women, such as:
 A woman worker shall not be required / allowed to work in any
factory for more than 48 hours in a week or 9 hours in a day.
 A woman shall not be employed in a factory except between 6:00
a.m. to 7:00 p.m.
 There shall be no change of shifts in the case of women except after
weekly or any other holiday.
 A woman worker shall not be allowed to clean, apply lubricant or
adjust any part of a prime mover or any transmission machinery
while it is motion.
 Any work which may be considered dangerous to the health of
woman worker is prohibited by the State Government.

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Human Resource
Management  Leave with Wages: A woman who has worked more than 240 day in
mill during a calendar year is entitled to leave with wages during the
subsequent year at the ratio of –
 one day for every 20 days for an adult worker, and
 one day for every 15 days for child worker.
 Payment of Wages in Advance: Every worker who has been allowed
leave for not less than four days in case of an adult and five days in
case of a child shall before his leave begins, be paid the wages due
for the period of the leave allowed.
Actually speaking, the role of employer’s and workers’ associations in the
field of labour welfare activities is not significant. No welfare activities
are being undertaken by these associations. Trade unions should educate
the workers. They should take steps to ensure that welfare facilities
provided by employers or by state are properly utilized by the workers.

13.8 SUMMARY
Stress is a state of psychological and/or physiological imbalance
resulting from the disparity between situational demand and the
individual's ability and/or motivation to meet those demands. However,
a prolonged presence of intense stress is certainly not beneficial to
individual as well as organization. There are outside forces which have
tremendous impact on the job. Like societal/technological change, the
family, relocation economic and financial conditions, race and class and
residential or community conditions. As well as Group Stressors are there
those divided into three areas. Lack of group cohesiveness or togetherness,
Lack of social support and Intra individual, interpersonal and intergroup
conflict. The element of perception indicates that human stress responses
reflect differences in personality, as well as differences in physical
strength or general health.

13.9 QUESTIONS
1. Define stress. Explain its nature and causes of stress.
2. Elaborate how to cope with stress.
3. Explain in detail the impacts of stress.
4. What is the meaning of Employee welfare? Explain the importance
of Employee welfare.
5. Write short notes:
 Organisational Strategies for coping with stress
 Personal Strategies for coping with stress
 Symptoms of stress

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 14
RECENT TRENDS IN HUMAN REOURCES
MANAGEMENT I
Unit Structure:
14.0 Objectives
14.1 Concept of Work-Life Balance
14.2 Concept of Corporate Social Responsibility
14.3 Scope of CSR
14.4 Advantage of CSR
14.5 Key Components of CSR
14.6 Corporate Restructuring
14.7 Downsizing
14.8 Summary
14.9 Questions

14.0 OBJECTIVES
After studying the unit the students will be able to:

 Understand the concept Work-life Balance.

 Explain the measures that encourage work-life balance.

 Define the Corporate Social Responsibility.

 Explain the scope and key elements of Corporate Social Responsibility

 Importance and advantages of Corporate Social Responsibility.

 Explain the concept organizational restructuring and downsizing.

14.1 CONCEPT OF WORK-LIFE BALANCE

 INTRODUCTION
Work life balance is a broad concept that encompasses prioritising
between work (including career and ambition) on one hand, and life
(including areas such as health, leisure, family, pleasure and spiritual
development) on the other. There are also two key concepts related to
work/life balance - achievement and enjoyment. Achievement can be
related to setting and achieving the goals we have in life i.e. buying a new
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Human Resource house, job satisfaction, further education etc. Enjoyment is related not just
Management to happiness, but also pride, satisfaction, celebration, love, and a sense of
well being. Life will often deliver the value and balance we desire when
we are achieving and enjoying something every day in all the important
areas of our lives. Therefore, a good working definition of work/life
balance is meaningful daily achievement and enjoyment in each of our
important life quadrants. These life quadrants will vary for each person but
may include, for example, work, family, friends and self (Work Life
Balance.com).
Work-life balance has been widely discussed since the launch of a major
government campaign in 2000 (Changing Patterns in a Changing World).
This initiative was aimed at encouraging employers to adopt flexible
working arrangements such as job sharing, flexi-time, compressed hours
and others, to help their employees to achieve a better balance between the
demands of paid employment and those arising from their private life. The
concept of work-life balance is based on the notion that paid work and
personal life should be seen less as competing priorities than as
complementary elements of a full life. The way to achieve this is to adopt
an approach that is “conceptualised as a two way process involving a
consideration of the needs of employees as well as those of employers”
(Lewis, 2000: p.105). In order to engage employers in this process it is
important to demonstrate the benefits that can be derived from
employment policies and practices that support work-life balance, and the
scope that exists for mitigating their negative effects on the management
of the business.
The case for work-life balance tends to be made on two counts. First, that
work-life balance improves individuals’ health, well being and job
satisfaction. Second, that business can benefit from work-life balance
because of these policies:
 improve productivity and worker commitment
 reduce sickness absence (from 12 per cent to 2 per cent according to
UNISON research)
 increase retention rates for talented workers and reduce replacement
costs
 allow organizations to recruit from a wider pool of talent
 enable organizations to offer services beyond usual business hours by
Employing workers on different shifts that fit in with caring
responsibilities.
 Measures for work-life balance:
The measures that encourage work-life balance among employees can be
categorized into:

 Flexible work options

 Support programmes
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 Recent Trends in Human
 Flexible Work Options
Reources Management I
Depending on the needs of the department, flexible work options may be
an alternative to a traditional work schedule that can help produce cost
savings, expand customer service hours, and provides work location
alternatives for that positively impact commuting and parking.
Flexible work options are possibilities, not entitlements. They are
constrained by factors such as the nature of the work to be performed,
productivity, federal and state laws, union contracts, restrictions of
funding sources, task interdependence, and other operational constraints.
Prior to implementing any flexible work option, managers should review
General Considerations carefully and consult with the appropriate Human
Resources representative.

 GENERAL CONSIDERATIONS

 Flexible Work Options are implemented at the discretion of

management, taking into consideration the needs of the department and
co-workers, health and safety consequences, equity, benefits issues,
performance management and productivity. Managers and administrators
need to be particularly sensitive to the audit process, legal liability issues
and funding source restrictions.

 When evaluating flexible work options, both the manager and the
employee should consult Benefits to examine any potential benefits
consequences, e.g., cost of benefits if FTE is below 75 percent and
potential impact on leave accrual.

 Implementation should come after careful review with the employee of

the specific option, expectations of performance, and the logistics of
transition.

 The employee, supervisor or manager and the local human resources

office should sign documents reflecting the arrangement and any
change.

 The local Human Resources office may consult with Employee and
Labor Relations before considering flexible work options to ensure
that:

 The agreement is recorded as required by State law

 The union agrees that the option is in accordance with any applicable
provisions in a collective bargaining agreement.

 A pilot period is strongly recommended with regularly scheduled

reviews with the affected staff.

 The arrangement should be carefully monitored at regular intervals to

ensure conformance with operational needs.

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Human Resource  Written documents should reflect both the university’s and the
Management employee’s ability to terminate the arrangement and the relevant
guidelines.

 TYPES OF FLEXIBLE WORK OPTIONS

 Flextime: A generic term referring to flexible work schedules that

permit variable starting and quitting times within limits set by
management. Typically, flexible periods are at either end of the work day
with a designated "core-time" set in the middle, during which all
employees must be present in the workplace.

 Alternative Work Schedule: Refers to a standard workweek (40

hours) that is condensed into fewer than five full days. A common
alternative workweek schedule is four 10-hour days. Refer to
Administrative (PDF), for details. Note: Alternative Work Schedules for
non-exempt (hourly) employees are governed by California State law.
There are specific requirements that must be followed before an
alternative work week may be implemented for non-exempt employees.
Please consult with human resources prior to proceeding with non- exempt
alternative work schedules.

 Flex place: Also called telecommuting or working from home, is a

mutual agreement between a supervisor and a staff member that some
part(s) of the staff member's work is done at home, or at another location
different from the employee's usual workplace.
Stanford University recognizes the importance to help an employee
achieve a balance between work and the employee's personal life.
However, under no circumstances should the flex place work arrangement
be used as a substitute for dependent care or for other non-business
reasons. If the flex arrangement is approved it is the employee's
responsibility to make the proper arrangements for dependent care and for
other personal obligations and to not let this interfere in performing the
required work.
Typically, the staff member will continue to work on-site the majority of
work hours. Flex place can include "occasional flex place" in which the
employee works at a different location when a specific task requires
uninterrupted time and privacy. Issues of appropriate supervision, the
nature of the work, and compliance with all legal requirements must be
carefully considered before such an arrangement is approved and the
arrangement must be carefully monitored on an ongoing basis.
The employee is responsible to inspect the designated workspace before
work from home begins, and on a periodically scheduled basis thereafter
(yearly minimum recommended), and whenever work area changes
introduce new potential workplace hazards. The department is to retain all
documentation (for one year minimum) regarding inspections, including
findings and corrective actions.

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 Support Programmes: The Government's action plan, issued in June Recent Trends in Human
Reources Management I
2014, aims to help older people stay in the workplace. It sets out a range
of measures including the appointment of a new Older Workers'
Employment Champion, new Job centre Plus pilot projects offering
tailored provision for older job seekers in some offices, a Job centre Plus
initiative to identify and understand particular barriers to employment for
careers with the aim of designing specific interventions to support them
into work, and the launch of a new Health and Work Service to provide
workers with long-term health problems the support they need to stay in or
return to work
 Support for careers:
 The Work Programme: Now replaces nearly all the previous
Government employment support schemes for those out of work and on
welfare benefits.
 Work Choice: Provides a tailored, coherent range of specialist
employment services which can respond more flexibly to the individual
needs of disabled people and their employers and make better use of
resources.
 Work Clubs: Is a Great Britain wide initiative which aims to support
the development of a network of locally led community based support for
the unemployed which will grow organically.
 Work Together: Is a Great Britain Job centre Plus initiative that
encourages unemployed people to volunteer to improve their skills and
employment prospects while they look for work.
 Government Employment Programmes: Is a 2012 information note
from the TUC setting out the main publicly funded employment
programmes for people out of work.
 The National Careers Service:
This new service was launched on 5 April 2012. The service operates in
England and replaces Next Step, which provided careers advice from
August 2010.
The new service offers telephone, face-to-face and online career
information and advice services. It also offers detailed sector by sector job
market information by area and a number of tools. It provides information
on funding sources and an online directory of all adult learning and
training programmes funded by the Skills Funding Agency in each area.

14.2 CONCEPT OF CORPORATE SOCIAL

RESPONSIBILITY
 INTRODUCTION
Traditionally, managers were focused on short to medium term profits and
driving the share price up. However, there has been a developing trend
that goes away from simply increasing the return for shareholders and
instead focuses on increasing the value of the business in terms of the
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Human Resource stakeholders. Stakeholders are the people who are affected by the actions
Management and performance of the business, and include both internal and external
parties. Business stakeholders include people such as consumers,
shareholders, associates, employees and business owners. Businesses that
are socially responsible aim to make decisions that are in the best interests
of their various stakeholders.
Corporate social responsibility is a key issue for any organisation aiming
for long term sustainability. Whilst it is a mostly voluntary concept, there
is increasing pressure on organisations to make a positive contribution to
society, or at the least, reduce their negative impact. Internationally,
governments are also moving towards the enforcement of certain elements
of corporate social responsibility, particularly in regards to the protection
of the environment. In fact when we look in the history, we will find that
India has a very old tradition of CSR yet there is need to make the Indian
entrepreneurs aware of CSR as an important segment of their business
activity. If this has been done then the CSR approach of corporate will be
in line with their attitudes mainstream business. The companies may set
clear objectives, undertaking potential investments, measuring and
reporting performance publicity.
Responsible businesses may not necessarily be able to measure the
positive impact their behaviour has on their performance, however,
irresponsible businesses are likely to notice the negative impact their
decisions have on their bottom line. Business sustainability now and in the
future depends on organisations taking into account the social and
environmental consequences of their decisions and actions.

 MEANING AND DEFINITION

What is generally understood by CSR is that the business has a
responsibility towards its stakeholders and society at large that extends
beyond its legal and enforceable obligations.
The triple bottom line approach to CSR emphasizes a company’s
commitment to operating in an economically, socially and
environmentally sustainable manner. The emerging concept of CSR
advocates moving away from a ‘shareholder alone’ focus to a ‘multi-
stakeholder’ focus. This would include investors, employees, business
partners, customers, regulators, supply chain, local communities, the
environment and society at large.

Definition:
Lord Holme & Richard Watts defines Corporate Social Responsibility
as “It is the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of
the work force and their families as well as of the local community and
society at large”.
“CSR is a concept whereby companies decide voluntarily to contribute to
a better society and a cleaner environment.”
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Corporate Social Responsibility (CSR) is a voluntary activity undertaken Recent Trends in Human
Reources Management I
by a business unit. It is the activity where business are managed to bring
about the overall impact (positive) on the communities, societies cultures
and the environmental factors in which business operates. It is company’s
commitment in which business operates. It is company’s commitment to
the values and benefits of society as well as stokes holders.
Corporate initiative to assess and take responsibility for the company's
effects on the environment and impact on social welfare. The term
generally applies to company efforts that go beyond what may be required
by regulators or environmental protection groups.
Corporate social responsibility may also be referred to as "corporate
citizenship" and can involve incurring short-term costs that do not provide
an immediate financial benefit to the company, but instead promote
positive social and environmental change.
Corporate social responsibility is the term used to describe the way that a
business takes into account the financial, environmental and social impacts
of decisions and actions it is involved in. It is an increasingly important
issue in business, as managers, consumers, investors and employees have
begun to understand how economic growth is linked to social and
environmental well-being.

14.3 SCOPE OF CSR

Scope of CSR means where we can implement this concept and works it
for the betterment of that area. In fact responsibility is an obligation so
business uses to shoulders its obligation in the following areas:

 Economics Responsibility:
It is related to financial or monetary aspect of the stake holders. So
business needs to satisfy their expectation by offering certain advantages
in terms of money, or economic gain. Generally following members or
stakeholders do expect their benefit in the following way.

 Customer: Here customers do expect that they should get product or

goods and services at the fair and reasonable prices.

 Shareholders: are vested with good rate of return and their wealth
maximization.

 Employees: are expecting good salaries / wages. They also do expect

some incentives.

 The government: expects that business as a part of social

responsibility should pay taxes and dues to the government on time so
that, these fund will be used for developmental work.

 Last but not last stockholders like suppliers, dealers and investors are
also having expects of their on time payment and other needs so it is
business responsibility to meet it property.
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Human Resource
Management
In this way business unit by giving appropriate responses to every
stakeholder use to shoulder its corporate social responsibility.

 Legal Responsibility:
Legal responsibility of business refers to legal compliance. As we know
business unit has different activities, and each activity is govern by
specific act or law. So when business applicable rule, regulations and law
should be strictly followed. If any amendment is there, it would be
considered and implemented for e.g. as per Company Act whose net profit
is more than Rs. 5000 crore, or net worth of Rs. 500 crore or revenue is
more than Rs.1000 crore should spent 2% of its net profit towards
corporate social responsibility.

 Ethical Responsibility:
Ethics means find out the good. Fair and piousness of the activity means
ethics. In other words while doing work sometimes business units by
going beyond the rule and regulations or laws, should of have to do
something good for society, for its betterment and development. Here
society expects the company’s pro- activeness for its goodness.

 Environmental Responsibility:
Environment is atmosphere, the existence of different components of the
air, which are helpful to all including that the business units. As per this
obligation it is expected that the business units should not dilute the air, by
giving up certain harmful gasses into the air. This may lead to create
health problems of living beings as well as non living beings may also
affects. For the sake of protection of environment businesses should
undertake corrective measures like do not use pollution creative material,
Refuse it. It is necessary then used it in very low quantity or use the same
material for creating low pollution, if possible etc.

 Law and order Responsibility:

Here business unit should support to Government to maintain law and
order. The business should not promote anti- social elements, it should not
give donations or certain fund to such groups so that they do not indulge in
anti-social activity.

 Upliftment of weaker sections:

In fact, it is discretionary responsibility of the business firms. But they
should have to come forward and give certain upliftment to weaker section
by providing reservation for some posts, giving helping hands to
physically challenged persons like blind, deaf and dumb etc.

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 Recent Trends in Human
 Philanthropic responsibility:
Reources Management I
It is also discretionary responsibility of the companies; however the
Company Act 2013 has made CSR compulsory to some companies, based
on its earnings or capital invested. Philanthropy means folk welfare. The
society does expect that the business should come forward and contribute
to some noble cause like education, health care, cultural and sport
development etc. Some of the Indian business fulfills this responsibility by
contributing to education, health care, earth quake rehabilitation, or any
other events which damages the common life.
The emerging concept of CSR goes beyond charity and requires the
company to act beyond its legal obligations and to integrate social,
environmental and ethical concerns into company’s business process.

14.4 ADVANTAGES OF CSR

Corporate social responsibility is an activity which benefits to the business
firm as well as society. Following are some of the advantages:

 Good public relations:

Good public relations mean having fair and cordial relations with people.
Every company tries to develop and maintain good relations with people
so that they have positive feeling towards business. This kind of relation
will be established with the help of CSR. Corporate social responsibilities
will be exposed off by the Medias and the Medias exposure spreads the
companies good work undertaken under social responsibility and gives
positive impact on people’s mind as they have done something good for
people. This leads to create and establish good public relation. For
example during 2001 to 2013, Azim Premji, the Wipro company’s owner
donated Rs. 26,000 crore for education. This has created a different impact
on peoples mind.

 Motivation to employees:
The companies, which are socially responsible, use to undertake different
activities as social responsibility are liked by workers. Most of the
employees feel proud and satisfied to work for such company. They
develops positive attitude towards organization. Their satisfaction leads
towards higher productivity, improved performances and ultimately
increased profit. So here we can conclude that CSR works as motivation to
employees.

 Customer satisfaction:
Customer’s satisfaction means customer’s happiness and delightness. It is
consumers’ positive attitude towards company. By the research it is found
that CSR improves consumers’ attitude towards company.

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Human Resource  Costs Reduction:
Management
The CSR initiatives may helps to reduce costs. For the sake of customers’
satisfaction company starts developing green products, water harvesting
etc. company use to use Refuse, Recycling, etc where cost cutting will be
done.

 Product differentiation:
Due to social responsibility business units have started manufacturing eco
friendly products. In market, these products are more demand. Though the
products are charged high price then to consumers use to purchase these
product so because of environmental friendly. These product are
differentiated that of the conventional products.

 Business expansion:
Corporate social responsibility Facilitates growth and expansion of
business. The introduction of CSR follows business ethics. This ethics
develops confidence trust among consumers’ employees, investors and
stakeholders, where business units gets greater support from all these
elements, it helps to grow business.

 Triple bottom line.

Triple bottom line means consideration of their major elements of business
for manufacturing and selling i.e. people, planet, and profit. CSR enable
business to achieve triple bottom line.
How it will be is explained as under:

 People: people means all those who are related to business. It includes
customers, employees and society in general. All these people do deserve
that they should get fair and beneficial practices from business. And this
will be given through Corporate Social Responsibility.

 Planet: here planet refers to sustainable environmental practices. Here

it is expected that the business unit should not create harmful products. It
should not damage environment by giving up toxic gases or chemicals in
to air and dilute pollution. The company should care for conservation of
natural resources and recycling of wastages. So all these activity can be
undertaken by company through CSR.

 Profit: profit means income over expenditure. Here company, as it has

good response in market use to able more products in the market and are
able to earn more profit. The profit is very essential to any business for its
survival and prospers.
Developing your understanding of corporate social responsibility and
implementing it into your business now may help you to get a step ahead
of your competitors. You can use it to gain a competitive edge and it
provides you with the opportunity to provide benefits to a wider range of
business stakeholders.
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14.5 KEY COMPONENTS OF CSR Reources Management I

The key components of CSR would therefore include the following:

 Corporate Governance: Within the ambit of corporate governance,

major issues are the accountability, transparency and conduct in
conformity with the laws. Good corporate governance policy would enable
the company to realize its corporate objectives, protect shareholder rights,
meet legal requirements and create transparency for all stakeholders.

 Business Ethics: Relates to value based and ethical business practices.

‘Business ethics defines how a company integrates core values such as
honesty, trust, respect, and fairness into its policies, practices, and decision
making. Business ethics also involves a company’s compliance with legal
standards and adherence to internal rules and regulations.’

 Workplace and labour relations: Human resources are most

important and critical to a company. Good CSR practices relating to
workplace and labour relations can help in improving the workplace in
terms of health and safety, employee relations as well as result in a healthy
balance between work and non work aspects of employees’ life. It can also
make it easier to recruit employees and make them stay longer, thereby
reducing the costs and disruption of recruitment and retraining.

 Affirmative action/good practices: Equal opportunity employer,

diversity of workforce that includes people with disability, people from
the local community etc. gender policy, code of conduct/guidelines on
prevention of sexual harassment at workplace, prevention of HIV/AIDS at
workplace, employee volunteering etc. are some of the good practices
which reflect CSR practices of the company.

 Supply Chain: The business process of the company is not just

limited to the operations internal to the company but to the entire supply
chain involved in goods and services. If anyone from the supply chain
neglects social, environmental, human rights or other aspects, it may
reflect badly on the company and may ultimately affect business heavily.
Thus, company should use its strategic position to influence the entire
supply chain to positively impact the stakeholders.

 Customers: The products and services of a company are ultimately

aimed at the customers. The cost and quality of products may be of
greatest concern to the customers but these are not the only aspects that
the customers are concerned with. With increased awareness and means of
communication, customer satisfaction and loyalty would depend on how
the company has produced the goods and services, considering the social,
environmental, supply-chain and other such aspects.

 Environment: Merely meeting legal requirements in itself does not

comprise CSR but it requires company to engage in such a way that goes
beyond mandatory requirements and delivers environmental benefits. It
would include, but not limited to, finding sustainable solutions for natural
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Human Resource resources, reducing adverse impacts on environment, reducing
Management environment-risky pollutants.

 Community: A major stakeholder to the business is the community in

which the company operates. The involvement of a company with the
community would depend upon its direct interaction with the community
and assessment of issues/risks faced by those living in the company
surrounding areas. This helps in delivering a community-focused CSR
strategy – making positive changes to the lives of the people and
improving the brand-image of the company. Involvement with the
community could be both direct & indirect – through funding and other
support for community projects implemented by local agencies.

14.6 CORPORATE RESTRUCTURING

 INTRODUCTION
Restructuring a corporate entity is often a necessity when the company has
grown to the point that the original structure can no longer efficiently
manage the output and general interests of the company. For example, a
corporate restructuring may call for spinning off some departments into
subsidiaries as a means of creating a more effective management model as
well as taking advantage of tax breaks that would allow the corporation to
divert more revenue to the production process. In this scenario, the
restructuring is seen as a positive sign of growth of the company and is
often welcome by those who wish to see the corporation gain a larger
market share.

 MEANING:
Corporate restructuring is the process of redesigning one or more aspects
of a company. The process of reorganizing a company may be
implemented due to a number of different factors, such as positioning the
company to be more competitive, survive a currently adverse economic
climate, or poise the corporation to move in an entirely new direction.

 STRATGIES OF CORPORATE RESTRUCTURING

International Mergers and Acquisition (IM&A) assists clients
experiencing liquidity or operating challenges in creating liquidity,
providing financial stability for operations and restoring confidence in the
company. These services are focusing on the following strategies.
Examine what options are there for certain company groups to
optimize their activities.
The current economic climate is forcing companies to increasingly focus
on efficiency measures to optimize financial performance, and both
conserve and raise cash. Frequently these measures involve restructuring,
which includes appropriate analysis, followed by operations realignment,
plant closings, mothballing, or divestiture of assets and business units.

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Structure company portfolio: Recent Trends in Human
Reources Management I
IM&A helps clients to structure and implement their portfolio strategy on
the basis of the strategic asset allocation. The process includes Asset
allocation, structuring asset allocation models, selecting an appropriate
asset mix and investment policy as per requirement.

Implement conversions before and after Acquisition:

Businesses can benefit from a variety of tax allowances and reliefs which
could cut their tax bill. They include capital allowances for investment in
equipment and premises, tax relief and credits for spending on research
and development and stamp duty relief on residential properties in
disadvantaged areas. It is up to IM&A to discover and present what
options are available for you and make suggestions as well.

Restructure product and portfolio structure if needed:

The current economic climate generates continual change of place and
direction between certain limits from all contributors of the market and it
requires special sense, knowledge and information to know when to make
the necessary structural changes and turn of directions to preserve your
status. IM&A helps to analyze your opportunities on these fields too.
Diversification and concentration alike.

Optimize Financial and Business Processes:

IM&A offers more than a decade of experience providing financial and
business analysis consulting services to our federal and commercial
clients. From enterprise wide budget automation solutions to strategic
planning and sophisticated project management, we systematically
enhance and optimize complex financial and budgeting processes to
improve accuracy, reduce manual errors, and better align and report
performance measures against planned goals and objectives.

 IM&A helps to reveal loss, deficit and unfold where the unnecessary
parallelisms are in a certain business operation, and gives a hand to handle
the issue by making the required changes and canceling out the spare
aspects.

 Budget rationalization: reduce costs and improve service with a

systematic approach. IM&A provides the basis for rationalizing budget
requests by enabling assessment of the value of alternative mixes of
operational, workforce, knowledge management, and capital investment
activities.

 Productivity by Systemic Rationalization. Revealing unnecessary

parallels, overloaded departments and organizational obscurities.

 Human Resource Effectiveness is the key to producing the optimum

performance out of a venture. Instead of adding more resources (like
labor, machines etc.), the concept emphasizes on better utilization of

235
Human Resource already employed resources. Various motivation systems are implemented
Management to increase effectiveness even more.

 Define strategies for market extension and expansion. IM&A assesses

current markets, identifies untapped markets, and seeks opportunities for
revenue growth through new market opportunities. The market expansion
step will result in estimates for delivering new capabilities to current
markets, and potential new markets for existing products. These estimates
include alternative industries and geographic areas. Through an extensive
market research examination, an equally careful strategy should be set up
for strengthening intense existence on market.

 Price Development, tactical and strategic price defining. Pricing/cost

experts ensure your price to be competitive and profitable. To determine
the winning price we start analyzing your overall cost structure and the
structure related to the specific bid, conducting competitive analyses,
developing pricing strategies.

 Strengthening financial control and implementing balanced scorecard

a fundamental tool to keep ITR focused; it consists of a methodology that
turns the strategy of the organization into operative terms, this enables the
process to emerge.

 Suggestions for image improvement and growing reputation (develop

your logo to exemplify your business, design your points of customer
contact to be consistent with your brand, attend industry trade shows &
local events to promote your business, create a marketing plan to build &
maintain your business's image, utilize internet marketing in addition to
traditional media to promote your business, promote your biz with press
releases that tie to your overall online marketing campaign, develop a
database of your current customers' information to cultivate for future
sales, connect with other non-competing related businesses and begin a
referral network)

14.7 DOWNSIZING
The word ‘downsizing’ was coined by Stephen Roach of International
Bank, by Morgan Stanley, USA. Downsizing was used as a strategy to
reduce the size of a business to make it more profitable.
The term downsizing was used in mega organizations in the USA with a
view to reduce the excess of man power and to reduce high labour cost.
Downsizing has been practised by corporate organizations for maintaining
a sizeable number of regular employees. It is an extreme step taken by
employers for wholesale reduction in the number of regular staff. Its key
objective is to improve financial performance and organizational
efficiency. The practice was popular during the recessionary period of
early 1990s. However, the practice continues even today in large
organizations, both PSUs and private organizations.

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The glaring success in the UK and the US organizations in reduction of Recent Trends in Human
Reources Management I
manufacturing costs, production cost the importance it had as a component
in the total value added. The main concern for cost reduction, therefore,
was highlighted outside the factory in all other areas, termed as overhead
costs, e.g. R&D, selling, distribution, finance and personnel and
marketing. As such, ruthless forms of business process re-engineering,
delaying and downsizing came into practice resulting in perceptible high
productivity.
In American industry, during June 1995 alone, a one half of the major
corporations cut down jobs, which on an average, constituted 8 per cent of
the organizational workforce. Downsizing, as such, implied corporate
strategy for terminating the jobs of a huge number of staff on regular
employment and also taking contingent workers from subcontractors or
foreign workers. This practice is very much in use in US corporation in the
aftermath of the terrorists’ attack in New York on 11th September, 2001,
although, the focus in discharging the excess regular employees has
shifted from American staff to foreigners.
The advocates of downsizing claim that downsizing helps meet an
organization’s commitment to its shareholders who own the
business/company. However, critics of downsizing feel it to be an
unpalatable face of capitalism, since it was being practised in various
forms, for example, plant closure, layoffs of workers, etc. These practices,
no doubt, apparently helped increase plant productivity and positively
impacted the bottom line of the corporates but these are all short-term
gains. And, they do not take into consideration the effect of the strategy on
people. As such, the approach is one-sided and only serves the purpose of
the capitalist. This is made clearer from the gains achieved in the US
companies, mentioned below.
Downsizing was actively implemented in 1995 in the USA, in reputable
companies like Mobil Oil Company. It cut down the company’s workforce
through layoff by 9.2 per cent and gained market value to the extent of 4
per cent. The company resorted to downsizing in spite of the
commendable high profits (19 per cent higher than the previous year) and
9 per cent higher divided payouts (19 per cent), and, the company chose to
continue cost cutting initiatives for higher growth and opportunities. These
are also other instances in the USA where corporations reduced the
number of jobs. USA eliminated more than 15.2 million while collar
workers during 1989-99 and thereafter, some 3.6 million of the redundant
staff got employment with 30 per cent less emoluments.
The organizations no doubt, made record profit of 13 per cent in 1993 and
10 per cent in 1994.
Downsizing has also been practised by employers in India as the most
convention tool for reducing manpower strength. Notable illustrative
examples have been Standard Chartered Bank, State Bank of India and
others. VRS also has been resorted to by many organizations.

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Human Resource Nature of Downsizing: Downsizing as a strategy may be practised for
Management long or a short period. In the short-term strategy, it reduces manpower
strength quickly. It is a costly activity. However, the organization may
devise a Voluntary Retirement Scheme (VRS) and pay high attractive
incentives to the staff offering early retirement.
A long-term downsizing may be resorted due to: (a) induction of faster
and new technologies/new work methods, (b) inadequacy of large number
of staff in higher age groups to cope with the new technologies, due to
lack of skill/knowledge, or (c) general resistance to the change which may
have been envisaged. Even, retraining of such staff is not possible and
change in the mindset is an absolute necessity.
However, in most of the cases of the ageing population redundancy is the
only appropriate answer. In such cases, even outplacement of the potential
staff, not needed in the organization, may be a costly affair. However,
retraining of those who are willing to be retrained, and are found
retrainable can be redeployed. But, for this to happen, a well planned and
systematic action plan is called for, to overcome the situation.
Strategy for Implementation of Downsizing:
Following strategy is used for effective implementation of downsizing:
 Advance Preparation: Advance preparation to involve people
through open communication to thwart grapevine rumors.
 Staff Feedback: Encourage staff feedback and impress the ultimate
need for downsizing with no alternative in management hands.
 Training: Train the managers for implementation of downsizing. This
is a painful experience for the managers as they have to take a decision for
termination of their own staff who gave them their best.
 Stages in Implementation: It is necessary to plan downsizing in
phases.
Downsizing may lead to lower overheads, faster decision making, lesser
bureaucracy, improved communication and entrepreneurial, executive
behaviour. But, the disastrous effects of downsizing cannot be neglected.
14.8 SUMMARY
Work life balance is a concept that supports the efforts of employees to
split their time and energy between work and the other important aspects
of their lives. Employees want to balance work with the rest of the
activities they wish to pursue in life. Work- life balance is a daily effort to
make time for family, friends, community participation, spirituality,
personal growth, self care, and other personal activities, in addition to the
demands of the workplace. In nutshell Work-Life Balance means the
maintenance of a balance between responsibilities at work and at home.
Work balance is especially important with which the employee may
become flustered of stressed. Employers are not responsible for providing
work balance for their employees, but they can assist the employees to
seek and maintain their own work balance. Optimistically, the decisions,
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policies, values, and expectations in your workplace support employees in Recent Trends in Human
Reources Management I
their work-life balance choices. Employers can assist employees to
experience work-life balance by offering such opportunities as flexible
work schedules, paid time off (PTO) policies, responsible time and
communication expectations, and company-sponsored family events and
activities.
Business cannot live in its isolation. It means it needs support from all
walks of the society. Because without societies or its elements, it cannot,
establish, survive or run. So as it takes support from society, in the same
way it is its responsibility to give something to society, for its
development. This has been realised by certain business units. Even before
and after industrialization and according as per the requirement they do
something for the good of the society. This is known as corporate social
responsibility. The basic of corporate social responsibility rest on the fact
that not only public policy but even corporate should be responsible
enough to address social issues. Therefore companies deal with certain
issues and challenges along with the public policy or state.
In today’s business climate, downsizing and plant closure have become
common and important strategic management activities to increase
competitiveness and eliminate redundant capacity. We should view
downsizing as a natural progression in the development of today’s
organisations, not an exceptional or unusual activity. However, from my
experience of working with organisations that have restructured, many do
not handle this process well and can suffer serious long term damage as a
result.

14.9 QUESTIONS
 “Achievement and enjoyment are the two key concepts related to
Work-life Balance”. Discuss.
 “Corporate social responsibility is a key issue for any organisation
aiming for long term sustainability”. Discuss.
 Define Corporate Social Responsibility. Explain the scope of CSR.
 What is Corporate restructuring? Elaborate the strategies of Corporate
Restructuring.
 Write note on:
 Flexible work options
 Support programmes
 Downsizing
 Optimize Financial and Business Processes.
 Key components of CSR
 Advantages of CSR

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 15
RECENT TRENDS IN HUMAN REOURCES
MANAGEMENT II
Unit Structure:
15.0 Objectives
15.1 Business Process Outsourcing
15.2 Need of BPO / Advantages of BPO
15.3 Services offered by BPO
15.4 Future Prospects of Business Process Outsourcing in India
14.5 Challenges and Threats of BPO
15.6 Career options in BPO
15.7 Concept of Knowledge Process Outsourcing
15.8 Future prospects of KPO in India
15.9 Career options in KPO
15.10 HRM issues relating to BPO/KPO
15.11 Employee Incentive Schemes
15.12 Summary
15.13 Questions

15.0 OBJECTIVES
After studying the unit the students will be able to:
 Define the term BPO.
 Realize the types of BPO
 Explain the need and importance of BPO
 Elaborate the challenges to the BPO industries.
 Define the concept KPO.
 Explain the need and importance of KPO.
 Understand the need of Employee incentive schemes.
 Explain the innovative incentive schemes.

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 Recent Trends in Human
15.1 BUSINESS PROCESS OUTSOURCING Reources Management II

 INTRODUCTION
Outsourcing of human resource activities is an innovative strategy in
Indian industry, just like in other advanced countries. It can be a tool for
companies, particularly, small ones for competing against the big players.
These are specialist HR service providing agencies with expertise to
provide professional assistance in matters of employee benefits
administration, recruitment and training, legal matters, etc.
Business process outsourcing is all about hiring the other businesses to
deliver the work to you, so that you can concentrate on the core activities
of your business. The core activities have been more important for
establishing a particular business in the field. After all, you are spending
so much to set up your business and missing out the core activities can
cast a bad spell on the growth of your business. It is for this reason that
big business houses, keep on outsourcing their non-core work, so that
proper time should be given to the profit generating aspects of the
business.
There are various things that have to be tackled in a particular business. If
you are running a business house and are getting worried about the
increasing load of the work, then outsourcing is the best option for you.
Usually, the concept of business process outsourcing has earned a wide
acclaim. This service providing division is slowly and slowly entering
every business house and is creating a special place for itself. The
professionals with outsourcing companies are skilled enough to manage
the tasks properly and complete the work on time.

 MEANING OF BPO
BPO stands for "business process outsourcing," which is simply another
term for outsourcing. This is when a company contracts an outside
provider for services or business processes. This might include
manufacturing or back-office functions such as accounting and human
resources. But BPO might also includes front-end services such as
customer care and technical support.
Business Process Outsourcing (BPO) is a contract whereby a firm
(outsourcer) transfers its processes along with the associated operational
activities and responsibilities to a third party (BPO operator), so that the
third party BPO operator provides the required services to firms
customers, for an agreed consideration. BOP services are included in retail
banking, insurance, travel and hospitality, automobiles, telecom, pharma,
finance, accounting and Human Resource.
In this way in BPO, the company does only the core activities and gives
less important work to third parties in exchange for a fee.

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Human Resource
Management  BPO is divided into two categories:

 Back Office Outsourcing: This includes internal business functions

such as billing, payroll, HR, or purchasing.

 Front Office Outsourcing: This includes customer related services

such as marketing, technical support or maintenance.
BPO is a contractual service to completely manage, deliver and
operate one or more business processes or functions.

 Parts or types of BPO

 Offshore outsourcing: BPO that is contracted outside a company’s

own country is sometimes called offshore outsourcing.

 Near-shore outsourcing: BPO that is contracted into a company’s

neighbouring country is sometimes called near- shore outsourcing.

 ITES: BPO is dependent on IT; hence it is also referred as

Information Technology Enabled Services or ITES.

 KPO: Knowledge Process Outsourcing (KPO) and legal process

outsourcing are some of the parts of BPO.
According to NASSCOM the top five Indian BPO exporters are Genpact,
WNS Global Services, Transworks Information Services, IBM Daksh and
TCS BPO.

 Objectives of BPO

 Business process outsourcing saves precious management time and

allows focus while building upon core competencies

 Scarce resources can be put to better use.

 BPO reduces cost of operations. It is cost friendly for the big business
houses

 Organisation can get specialised services.

 Organisation can strengthen strategic business relations with many

organisations.
There are various companies in foreign countries that keep on outsourcing
their work such as call centre work, accounting work and many others.
The company will not only save on the house rent allowances, bonuses,
cash advances and various other add-ons, but will also be able to cut down
on the huge salaries that a trained staff would demand.

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 Recent Trends in Human
15.2 NEED OF BPO / ADVANTAGES OF BPO Reources Management II

Following points explains the need or advantage of BPO:

 Flexibility: Outsourcing may provide a firm with increased flexibility

in its resource management. Most BPO services are offered for a fee basis.
This helps a company becoming more flexible by transforming fixed into
variable costs. Outsourcing will allow operations that have seasonal or
cyclical demands to bring in additional resources when you need them and
release them when you're done. For e.g. the accounting department that is
short-handed during tax season and auditing periods. Outsourcing these
functions can provide the additional resources for a fixed period of time at
a consistent cost.

 Core Activities: A company is able to focus on its core competencies.

Focusing on core activities may help a company to create a competitive
edge. Employees are relieved from performing non-core or administrative
processes and can invest more time in building firm’s core businesses. In
rapid growth periods, the back-office operations of a company will expand
also. This expansion may start to consume resources (human and
financial) at the expense of the core activities that have made your
company successful. Outsourcing those activities will allow refocusing on
those business activities that are important without sacrificing quality or
service in the back-office. For e.g. Company lands a large contract that
will significantly increase the volume of purchasing in a very short period
of time; Outsource purchasing.

 Cost And Efficiency Savings: Back-office functions that are

complicated in nature, but the size of your company is preventing you
from performing it at a consistent and reasonable cost, is another
advantage of outsourcing. Overhead costs of performing a particular back-
office function are extremely high. Consider outsourcing those functions
which can be moved easily. For e.g. Growth has resulted in an increased
need for office space. The current location is very expensive and there is
no room to expand. Outsource some simple operations in order to reduce
the need for office space.

 Speed of Business Processes: Using techniques such as linear

programming is a way to reduce cycle time and inventory level, which
increases the speed of business processes.

 Transform Organization: BPO helps to transform the bureaucratic

organisation into a very agile organisation. A company can help to
maintaining ambitious growth goals. Thus BPO allow firms to retain their
entrepreneurial speed and agility.

 Long Term Relationship with Customers: BPO employees are

generally professionally trained in customer relation, their approach and
attitude towards the customer can go a long way in building long term
relationships.

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Human Resource
Management  Operational Control: Operations whose costs are running out of
control must be considered for outsourcing. Departments that may have
evolved over time into uncontrolled and poorly managed areas are prime
motivators for outsourcing. In addition, an outsourcing company can bring
better management skills to your company than what would otherwise be
available. For e.g. IT department having too many projects, not having
enough people and a budget that far exceeds their contribution to the
organization can be replaced with a contracted outsourcing agreement will
force management to prioritize their requests and bring control back to
that area.

 Continuity & Risk Management: Periods of high employee turnover

will add uncertainty and inconsistency to the operations. Outsourcing
provides a level of continuity to the company while reducing the risk that
a substandard level of operation would bring to the company. For e.g.
suppose the HR manager is on an extended medical leave and the two
administrative assistants leave for new jobs in a very short period of time.
Outsourcing the HR function would reduce the risk and allow the
company to keep operating.

 Other Benefits: When done for the right reasons, outsourcing will
actually help the company to grow and save money. There are other
advantages of outsourcing that go beyond money.

 Operational Cost Control

 Cost Savings
 Improved HR
 Productivity Improvements
 Access to Expertise
 Establish and Develop Minority Suppliers
 Gain access to information technology tools without major investment
 Increased flexibility to meet changing business conditions
15.3 SERVICES OFFERED BY BPO
Following are the min services offered by the BPO units:

 Telemarketing Services: Telemarketing outsourcing services target

interaction with potential customers. The objective is to generate interest
in products and promote sales.

 Customer Support Services: This services manages customers

inquiries through multiple channels of voice, e-mail and chat.

 Technical Support Services: This services offers round the clock

technical support and problem solution to customer of computer hardware,
software and internet infrastructure manufacturing companies.

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 Desk Services: This services provides technical problem solution and Recent Trends in Human
Reources Management II
support for corporate employees.

 Insurance Processing Services: This service provides specialised

solutions to insurance sector.

 Medical Transcription Services: Medical Transcription accounts for

2% of total Indian Outsourcing Services.

15.4 FUTURE PROSPECTS OF BUSINESS PROCESS

OUTSOURCING IN INDIA
Business Process Outsourcing (BPO) is the fastest growing segment
within IT services. Global market for outsourcing is growing at the rate of
7%. IT is estimated at around 1.2 trillion dollars in 2007. 73% of
executives of US companies said their organisations have outsourced
some work. BPO industry is drawing significant attention in India by
virtue of its utility as an upcoming business.
It is estimated in 2008 India would have revenues of 11 billion US $ from
offshore BPO. India thus has a commanding 63% share of offshore BPO
services. other locations like Eastern Europe, Philippines, Morocco, Egypt
and South Africa have emerged to take a share of market. China is also
trying to grow from a very small base in this industry.

 BPO industry’s current size is about $ 26-29 billion.

 BPO sector in India employs over seven lakh people and accounts for
more than 35% of worldwide market.

 In last 3 years BPO sector is growing at over 35%.

 Total export BPO market opportunity is about $ 220-280 billion by

2012. While domestic BPO market provides additional opportunities
worth $ 15-20 billion.

 Technology, telecom, travel and transportation provide opportunity in

excess of $ 10 billion by 2012.

 Nassam has 1200 members, of which 40% are BPOs and over 50% of
them are located in southern states.
In comparison to American and European countries, India has vast pool of
skilled human resources ready to work at lower wages. India has largest
English speaking population after other western countries. This helps
BPOs to serve American clients by working at nights and helps in better
utilisation of resources. Certainly the future business of BPO looks bright
in India.

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Human Resource
Management 15.5 CHALLENGES AND THREATS OF BPO
Although BPO has many potential advantages there are a few stumbling
blocks, which could counter these advantages. A failure to meet service
levels, unclear contractual issues, changing requirements, unforeseen
changes etc. The outsourcer may become too dependent on BPO service
provider. A major drawback is related to risk involved.

Limitations of outsourcing are as follow:

 Loss of Control.
Outsourcing organization may be remote from business current location,
frequent visits are not possible and communication through reporting is
not sufficient to exercise control. Core activities should not be outsourced
unless impracticable to do in house. Any incompetency identified by
market can be threatening to the reputation of the business.

 Lack of Independence.
Business may became dependent on outsourcing organization, because of
loss of competency and resources in the business due to employees being
redundant or deployed elsewhere and assets are sold which now require
more investment to buy a gain. In case of breach, it will be difficult to
setup activities immediately. Delays to setup activities again can damage
reputation and cash flows.

 Employee Morale.
Employee may lose their skills overtime and resentment can happen if
outsourcing leads to forced redundancy. It can seriously impact
productivity because there will be little motivation regarding promotion
and growth. In extreme cases it may end up with strikes.

 Cost May Exceed Benefits.

There may be cost associated with employee redundancy payments, early
termination penalties of existing contracts and disposal cost of property,
plant and equipments. Benefits determined from outsourcing are future
expectations which may not come true. Like savings in step fixed costs of
energy and supervisory costs due to reduced activity level.

 Reaction of Stakeholders.
Stakeholders may react positively or negatively depends how they
perceive the impact of outsourcing on their interest in the business. Some
stakeholders may become happy while some may become sad. These
include shareholders who may sell their shares can affect the share price,
financiers who may demand repayment of the capital, customer who may
take their business elsewhere and supplier who may change their business
terms depending upon their perception of business future risk.

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 Recent Trends in Human
 Legislation.
Reources Management II
Legislation may limit dealing in foreign countries to protect its currency
value or dealing with rival countries. It may protect some stakeholder
rights by enforcing legislation e.g. imposing high import duty to protect
home industries or by imposing licensing requirements to business
operating in particular industry requiring some activities or standards
which are pre requisite to get a license.
Thus to achieve any benefits, risks and threats to outsourcing must be
managed.

15.6 CAREER OPTIONS IN BPO

It is expected that BPO sector will have to face man power shortage of
39% to 49% by the year 2009. Large population of educated English
speaking people and low cost are encouraging more and more companies
from abroad to outsource their call centres to India. Call centres jobs
require a high school diploma or even a college degree.

 Call Centre Operators: This is entry level in call centres. Here

general duties are answering telephone calls, taking down details of
caller’s query and logging information on a computer, giving advice, in
some cases, selling caller products etc.
In outbound call centre services such as tele-marketing, an operator also
needs to identify potential customers and make outgoing calls, marketing
products, follow-up calls, sending fax, e- mail etc. Duties of a call centre
operator depend on the type of product/service of that organisation.

 Centre Manager: He manages day-to-day operations of call centre. It

includes financial budgets, operations, communicating, coaching and
development of call centre. He has to set operational goals and objectives,
monitor and improve performance, have interactions with people outside
the call centre, manage all call centre support functions including training,
hiring, IT support and process improvement.

 Quality Monitor Agent: They see that all call centre procedures are
followed properly and give performance feedback about call handling to
coaches, training group and hiring manager.

 Process Specialist: He uses quality improvement techniques to create

environment of continuous quality improvement. A call centre experience
is useful for jobs in customer relation, sales jobs or insurance sector.

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Human Resource
Management 15.7 CONCEPT OF KNOWLEDGE PROCESS
OUTSOURCING
 INTRODUCTION AND MEANING
The success of BPO has encouraged many firms to start outsourcing their
high-end knowledge work as well. India has a large pool of knowledge
workers in various sectors ranging from Pharmacy, Medicine, Law,
Biotechnology, Education and Training, Engineering, Design and
Animation, Research and Development etc. This talent is soon being
discovered and tapped by leading businesses across the globe. Hence
Knowledge Process Outsourcing involves off-shoring of knowledge
intensive business processes that require specialised domain expertise.
Knowledge Process Outsourcing (KPO) is a contract between a company
(outsourcer) and a third party (KPO Operator). In this contract the
company transfers (gives) some of its knowledge or information related to
work to the KPO operator in exchange of fees. So KPO is like BPO. But
KPO does high end jobs and BPO does low end jobs. KPO is mostly used
by Pharmaceuticals, Biotechnology, Financial Services, Technology
Research and other companies who deal with knowledge and information.
KPO is a form of outsourcing in which knowledge and information related
work is carried out by workers in a different company or by a subsidiary
of the same organization. This subsidiary may be in the same country or in
an offshore location to save costs or other resources. Companies resort to
knowledge process outsourcing when they have a shortage of skilled
professionals and have the opportunity to hire skilled workers earning
lower wages in another location for a lower overall cost.
It is being claimed that KPO is one step extension of BPO because BPO
Industry is shaping into Knowledge Process Outsourcing because of its
favorable advantageous and future scope. But, let us not treat it only a 'B'
replaced by a 'K'. In fact, Knowledge process can be defined as high added
value processes chain where the achievement of objectives is highly
dependent on the skills, domain knowledge and experience of the people
carrying out the activity. And when this activity gets outsourced a new
business activity emerges, which is generally known as Knowledge
Process Outsourcing.
Knowledge Processing Outsourcing (popularly known as a KPO), calls for
the application of specialized domain pertinent knowledge of a high level.
The KPO typically involves a component of Business Processing
Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis
Proves Outsourcing (APO). KPO business entities provide typical
domain-based processes, advanced analytical skills and business expertise,
rather than just process expertise. KPO Industry is handling more amount
of high skilled work other than the BPO Industry. While KPO derives its
strength from the depth of knowledge, experience and judgment factor;
BPO in contrast is more about size, volume and efficiency.

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In fact, it is the evolution and maturity of the Indian BPO sector that has Recent Trends in Human
Reources Management II
given rise to yet another wave in the global outsourcing scenario: KPO or
Knowledge Process Outsourcing. The success achieved by many overseas
companies in outsourcing business process operations to India has
encouraged many of the said companies to start outsourcing their high-end
knowledge work as well. Cost savings, operational efficiencies,
availability of and access to a highly skilled and talented workforce and
improved quality are all underlying expectations in outsourcing high-end
processes to India.

 FORMS OF KPO

 Legal Process Outsourcing (LPO): LPO does a wide range of legal

work such as legal research, pre-litigation documentation, advising clients,
writing software licensing agreements etc. Thousands of lawyer’s jobs
will move from USA to countries like India in near future.

 Human Resource Outsourcing (HRO): Human Resource includes

payroll management, training, staffing, travel, retirement benefits, risk
management, compensation consulting etc. By outsourcing these
activities, the outsourcer can concentrate on important matters.

 Research Process Outsourcing (RPO): RPO is popular in biotech

industry. Biotech industry is a very high profit-making industry.

 Medical Business Process Outsourcing (MBPO): India is becoming

a main centre for medical treatment for westerners and middle-east
travelers. The chain of Apollo Hospitals is the first major hospital to be
get MBPO work.
 BENEFITS OF KPO
 Better quality of work.
 Increase in Profits.
 Uninterrupted Services.
 Savings in cost and time.
 Trained Professionals at Work
 Pool of In-house Experts.
 Standard Operational Efficiency.
 On-time delivery of Services.
 Recruitment of Larger Workforce without increasing costs.
 Flexibility in accommodating client’s orders.
 IMPORTANCE OF KPO

 Innovation and differentiation will be key factors in identifying KPO

companies and attracting business.

249
Human Resource
Management  KPO companies are professional services companies. Successful
KPOs have world-class people development as its foundation.

 KPOs have to recruit talented persons as the nature of work is

different. The selection of right person is half battle won.

 The objective of every KPO company is to deliver world-class quality

of work to the satisfaction of clients so that repeat orders are produced.

 KPO needs specialisation. Persons with specialised education are

always given preference in employment.

15.8 FUTURE PROSPECTS OF KPO IN INDIA

 FUTURE OF KPO
The future of KPO has a high potential as it is not restricted to only
Information Technology (IT) or Information Technology Enabled
Services (ITES) sectors and includes other sectors like Legal Processes,
Intellectual Property and Patent related services, Engineering Services,
Web Development application, CAD/CAM Applications, Business
Research and Analytics, Legal Research, Clinical Research, Publishing,
Market Research (Market research KPO ) etc.
In today's competitive environment, focus is to concentrate on core
specialization and core-competency areas and outsource the rest of the
activities. Many companies and organizations have come to realize that by
outsourcing non core activities, not only cost are minimized and
efficiencies improved but the total business improves because the focus
shifts to the key growth areas of the business activity.
India has become a preferred choice of outsourcing countries, Citigroup,
GE Capital and American Express have established their KPO companies
in India. With huge talent pool, India could emerge as a global KPO hub.
India enjoys cost advantage. More and more companies are turning to
India for off shoring KPO work as quality work gets done at cheaper rates.
Pharma giants Astra-Zeneca and Glaxo-Smithkline have set up drug
discovery centres at a low-cost destinations. Motorola, Philips, Nokia,
Intel, IBM and Cisco have established offshore design centres in India.
The future of KPO business in India presents an encouraging picture to
rejoice.

 According to a report, the Global Knowledge Process Outsourcing

Industry is expected to reach US $ 17 billion by 2010. From this US $ 12
billion with be outsourced to India.

 Indian KPO sector is expected to employ more than 2,50,000 KPO

professionals by 2010, compared to current figure of 25,000
employees.

 India will continue to remain as the top KPO destination.

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 Companies that are outsourcing to KPO’s are trying to balance their Recent Trends in Human
Reources Management II
risks.

 Large KPO providers are expected to move to multi-location delivery

centers.

 India will capture more than 70% of KPO outsourcing sector by 2010.

 KPO will have a compounded growth rate of 46% per year till 2010,
whereas BPO would grow only by 26% till 2010.

 CHALLENGES TO KPO

 High Staff Turnover.

 High cost of Training.

 Ensuring the security and confidentiality of information, especially

when privacy laws change from country to country.

 REASONS FOR GROWTH OF KPO’S

 KPOs are growing rapidly in India as India has large pool of

knowledge workers in various sectors.

 Indian education system gives great importance to higher education

and specialisation.

 The Indian Government has set up IITS (Indian Institute of

Technology) and IIMs (Indian Institute of Management) across the
country.

 India has more than 250 universities and engineering colleges.

 In all good educational institutions, medium of education is English,

this has resulted in large population of educated and qualified
professionals.

15.9 CAREER OPTIONS IN KPO

KPO provides companies an opportunity to tap into specialised knowledge
in various vertical business domains. KPO sector offers a good working
atmosphere with global exposure and an opportunity to develop skill sets
in a specialised field. Many are unaware of potential of this sector and
scope of future prospects. This sector also requires higher level of control,
confidentiality and enhanced risk management. A recent report indicates
that outsourcing of legal processes alone benefits about 700 Indian law
firms working in high-end areas.

 Legal Services: Writing legal documents does not require costly

professionals as the same can be done by a KPO firm in India. Now
KPO’s do patents, drafting, legal research, writing software etc.

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Human Resource
Management  Accounting Services: All accounting work from book keeping to
auditing is done by KPO firms. They provide trained professionals who
offer cheaper services with standard quality.

 Journalism and Content Development: This sector has recently

grown with the rise of content development firms. English speaking
trained writers from a KPO firm are good candidates to help newspapers
and journals with their editing and copy writing work.

 Architectural and Engineering Services: A large pool of trained

draftsmen can provide expert CAD/CAM services to clients.

 Financial Analytics and Equity Research: Analytical, Conceptual

and interdisciplinary thinking, Accountancy and financial analysis,
Fundamentals of finance, experienced in interpreting research reports.

 Other Key KPO Areas: KPOs provide opportunities to graduates in

engineering, management, law, statistics, economics, accounts and
biological sciences to name a few, apart from opening its doors to Arts,
Science and Commerce graduates.
The essential skills for a successful career in KPO are a good mix of
communication skills, analytical abilities and domain knowledge.
Candidates can expect a starting salary of Rs. 15,000 to Rs. 30,000 in
BPO’s or KPO’s. Promotions are performance- based. They can also
become CEO of BPO or KPO centre. Jobs of BPO and KPO are full of
stress, so the candidate must have the ability to handle pressure. He must
be cool and must perform well in all situations.

15.10 HRM ISSUES RELATING TO BPO/KPO

The HR issues that arise in BPO industry are as follows:
The burgeoning BPO industry has given rise to crucial questions and
doubts regarding the human resources employed with them. Moreover, the
nature and timing of work in these outsourcing units have given rise to
certain issues which are of extreme interest to the HR specialists. In
context of this ever increasing debate, an attempt has been made to
highlight the core HR issues that arise in BPO.

 Stress: Mental Health at Stake

Stress is a dynamic condition in which the individual is confronted with an
opportunity, constrain or demand, related to what he/she desires and for
which the outcome is perceived to be both uncertain and important. It is
beyond doubt that most of the employees in this industry report on stress
for their jobs. The monotonous and repetitive nature of job makes stress a
persistent factor in the work setting of BPO employees.
This issue is of extreme importance as it is the stress that adds up to
various human as well as work related problems in organizations. There is
emerging evidence that in some situations an organization can be held
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legally liable for the emotional and physical impact of stress on Recent Trends in Human
Reources Management II
employees. Thus, stress management of employees is one of the core
challenges confronting HR managers.

 Attrition: The Harsh Reality

Attrition or turnover refers to the voluntary or involuntary permanent
withdrawal from the organization. A BPO survey by Indo-American
Chamber of Commerce and Ernst and Young quoted that attrition rate
ranges between 40% and 25% between for voice and non-voice survey
respectively, clearly indicating the gravity of the problem.
This high rate of turnover can be attributed to factors such as repetitive
nature of work, frustration, lack of control and autonomy, limited career
growth, night shifts or better scope in other industries. High turnover rate
results in high recruitment, selection and training costs besides
inconsistency in job performance and organizational output. Clearly, the
statistics point out that the major problem plaguing Indian BPO industry
and obstructing its smooth transition into the next phase is high attrition.
Though the problem has been hovering for some time now, the steps taken
to manage attrition are yet not yielding appropriate results because of the
mismatch between the aspirations of the employees and the very nature of
a BPO job. How to bring down this alarming trend by developing
innovative strategies is a burning issue for the HR department of BPO’s.

 Health Issues: Imperative Side Effects of BPO Jobs

The inherent nature of the outsourcing jobs is such that the physical well-
being of employee is at constant risk. Most of the BPOs function in
different time-zones that are convenient for the outsourcing companies,
thus making the working hours odd for the employees.

The major health problems are:

 Sleeping disorder: Most common ailment as the BPO job disrupts the
normal biological cycle.

 Digestive system disorder: Sleeplessness and eating food supplied by

external caterers.

 Depression: Due to burnout and mental fatigue.

 Eyesight Problem: Continuous sitting in front of computer monitors.

Thus, health deterioration is a common symptom seen in BPO employees.
An unhealthy employee becomes more a liability than resource to the
organization and with majority of workforce in BPO’s being youngsters;
an unhealthy route becomes more of a challenging problem. So, this
emerging issue of catering to the physical well being of employees is
catching as a major HR concern in a BPO. Yoga, meditation, training,
recreational activities and other such initiatives being taken are an
outcome of this issue being raised.

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Human Resource
Management  Absenteeism: Failure to Report to Work
It is defined as inability to turn up on the job or being consistently
irregular for work. It can be because of many problems in organizations
and at times be a result of various other problems in the organization. This
again is an area of concern as absenteeism leads to loss of productivity,
reduced efficiency and effectiveness in organizations and over burdens
other employees. The workflow is disrupted and in the BPO’s the work
pressure is already so high that absenteeism directly disrupts day-to-day
functioning. However, not as grave as the above issues, absenteeism too is
an emerging challenge for HR managers since if not dealt properly in the
initial stages can lead to serious consequences both for the employee as
for well as the organization.

 Targets: The Exploitative Number Game

The employees in BPO are set with various targets which have to be
achieved in limited time. These targets could be attending particular
number of calls within stipulated time, achieving sales, redressing target
number of calls which may at times determine the performance of the
employees. Extreme target orientation in jobs on day-to-day basis leads to
frustration and continuous stress on the employee which leads to reduced
level of interest and compromise in the quality of performance. Under the
situations, where wrap up time is being monitored, and at the same time
the customers need to be kept satisfied, the employees may undergo
extreme pressures to achieve these two opposing target simultaneously.
Thus, targets simply intensify the stress produced by the quantity / quality
debate. A moderate target setting is a prerequisite for optimum
performance by employees but a rigid target can adversely affect the
output of the employee. For HR Managers in BPO a growing concern is to
figure out the requisite target level that ensures maximum productivity
while minimum pressure and burnout.

15.11 EMPLOYEE INCENTIVE SCHEMES

 INTRODUCTION AND DEFINITION
Incentive is an act or promise for greater action. It is also called as a
stimulus to greater action. Incentives are something which is given in
addition to wagers. It means additional remuneration or benefit to an
employee in recognition of achievement or better work. Incentives provide
a spur or zeal in the employees for better performance. It is a natural thing
that nobody acts without a purpose behind. Therefore, a hope for a reward
is a powerful incentive to motivate employees. Besides monetary
incentive, there are some other stimuli which can drive a person to better.
This will include job satisfaction, job security, job promotion, and pride
for accomplishment. Therefore, incentives really can sometimes work to
accomplish the goals of a concern.

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Graffin and Ebert defined Incentive schemes as, “special pay Recent Trends in Human
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programmes designed to motivate high performance”.
Incentive schemes attempt to link at least a portion of pay to job
performance to encourage higher productivity.

 NEED OF INCENTIVES
The need of incentives can be many:

 To increase productivity,

 To drive or arouse a stimulus work,

 To enhance commitment in work performance,

 To psychologically satisfy a person which leads to job satisfaction,

 To shape the behavior or outlook of subordinate towards work,

 To inculcate zeal and enthusiasm towards work,

 To get the maximum of their capabilities so that they are exploited and
utilized maximally.

 TYPES OF INCENTIVES
Therefore, management has to offer the following two categories of
incentives to motivate employees:

 Monetary incentives- Those incentives which satisfy the subordinates

by providing them rewards in terms of rupees. Money has been recognized
as a chief source of satisfying the needs of people. Money is also helpful
to satisfy the social needs by possessing various material items. Therefore,
money not only satisfies psychological needs but also the security and
social needs. Therefore, in many factories, various wage plans and bonus
schemes are introduced to motivate and stimulate the people to work. In
order to motivate employees care should be taken that they paid adequate
salary or wages and that is too on the regular basis. The basic drive behind
giving labour or service is money. So if employees are paid regularly it
surely motivates them to work positively and willingly. With regular
salaries Employees should be given bonus during festivals or occasionally.
Along with it they should also be provided incentives like Medical
Allowances, Leave and Travel Allowance to motivate them. Most of the
time, companies pay special rewards in the form of cash to the employees
who prove their efficiency in the form of any ideas or suggestions given
for the benefit of organization. These are the types of incentives which
motivate employees to perform their best.

 Non-monetary incentives- Besides the monetary incentives, there are

certain non-financial incentives which can satisfy the ego and self
actualization needs of employees. The incentives which cannot be
measured in terms of money are under the category of “Non- monetary
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incentives”. Whenever a manager has to satisfy the psychological needs of
the subordinates, he makes use of non-financial incentives.

 Non-financial incentives can be of the following types:

 Security of service- Job security is an incentive which provides great

motivation to employees. If his job is secured, he will put maximum
efforts to achieve the objectives of the enterprise. Job security should be
provided to the employees for making them feel that they are the
permanent part of an organization. They should be not be made feel
insecured. So the probation period should be kept minimum. Job security
increases the morale of employees to work with dedication. This also
helps since he is very far off from mental tension and he can give his best
to the enterprise.

 Praise or recognition- The praise or recognition is another non-

financial incentive which satisfies the ego needs of the employees.
Sometimes praise becomes more effective than any other incentive. In
order to motivate employees, it is very important to praise them. If they
show Excellency in the work, they should be verbally praised and
admired. It builds employee’s confidence and they feel contented
psychologically. The employees will respond more to praise and try to
give the best of their abilities to a concern.

 Suggestion scheme- The organization should look forward to taking

suggestions and inviting suggestion schemes from the subordinates. This
inculcates a spirit of participation in the employees. This can be done by
publishing various articles written by employees to improve the work
environment which can be published in various magazines of the
company. This also is helpful to motivate the employees to feel important
and they can also be in search for innovative methods which can be
applied for better work methods. This ultimately helps in growing a
concern and adapting new methods of operations.

 Job enrichment- Job enrichment is another non-monetary incentive in

which the job of a worker can be enriched. This can be done by increasing
his responsibilities, giving him an important designation, increasing the
content and nature of the work. This way efficient worker can get
challenging jobs in which they can prove their worth. This also helps in
the greatest motivation of the efficient employees.

 Promotion opportunities- Promotion is an effective tool to increase

the spirit to work in a concern. If the employees are provided
opportunities for the advancement and growth, they feel satisfied and
contented and they become more committed to the organization. In order
to motivate employees, their transfer should be done with planned
progression or within the organization they should be promoted. It is the
best way of motivation because the promoted employees surely show best
results due to willing dedication to work.

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concentration to the role of employees. A combination of financial and
non- financial incentives help together in bringing motivation and zeal to
work in a concern.

 Positive Incentives
Positive incentives are those incentives which provide a positive assurance
for fulfilling the needs and wants. Positive incentives generally have an
optimistic attitude behind and they are generally given to satisfy the
psychological requirements of employees. For example-promotion, praise,
recognition, perks and allowances, etc. It is positive by nature.

 Negative Incentives
Negative incentives are those whose purpose is to correct the mistakes or
defaults of employees. The purpose is to rectify mistakes in order to get
effective results. Negative incentive is generally resorted to when positive
incentive does not works and a psychological set back has to be given to
employees. It is negative by nature. For example - demotion, transfer,
fines, penalties.

 INNOVATIVE EMPLOYEE INCENTIVE SCHEMES

Incentive measures, such as salaries, secondary benefits, and intangible
rewards, recognition or sanctions have traditionally been used to motivate
employees to increase performance. Some of the financial incentives are
direct such as salary, pension, insurance, bonuses, etc. Others are indirect
such as subsidized meals, clothes or housing. Non-financial incentives
come in many forms such as gifts, rewards, travel. Incentive pay plans
reward employees according to production or performance, rather than
just paying for hours on the clock. An incentive plan can be made up of
many kinds of elements. The most common kind of incentive program
used by employers is a cash reward. In today business world there are
several types of staff incentive schemes.

 Cash incentives:
It includes following important schemes:

 Bonus schemes: It is the most common form of cash incentive.

Bonuses can be accrued and paid out at different intervals, such as
monthly, quarterly, or annually. Bonus size generally depends on the total
pay of the employee. Managers sometimes pay spot bonuses to some staff
members for having made special efforts in their work. Typically, the spot
bonus is awarded for an achievement that is not measured by any regular
performance standard. The bonus pay structure is common in professions
such as sales, marketing and production. When the employees reach a
predetermined goal, the company may create an incentive plan that pays a
bonus for going beyond that goal.

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Human Resource
Management  Profit-sharing plans: This is very widely used form of cash incentive.
Under such plans, employees receive a certain percentage of the annual
profit. In this type of plan the company sets aside a portion of their pre-tax
profits and distributes that money to the employees. The distribution has
made according to some form of allocation criteria i.e. base on salary,
individual performance, etc.). In most cases, an employee must qualify to
receive profit sharing by meeting company performance metrics, and by
having a predetermined amount of service in with the company. Some
companies offer to place the pre-tax profits into the employees' company
retirement plans, so it can add to future fund growth. Companies may also
develop a profit sharing percentage based on the amount of time worked
for the company, the position held within the company or a combination
of both conditions.

 Gain-sharing plans: These are similar to profit sharing plans, but

here the basis for the distribution pool is different. Typically, under gain-
sharing plans, employees are entitled to a certain percentage of the
productivity gains that are achieved over a given period. Payout intervals
are typically shorter than under profit-sharing plans.

 Merit pay plans: These involve salary increases for those employees
who have produced the best performance during a certain period of time
generally for one year. While most of the other incentives assure that staff
always has to work hard in order to receive the reward, employees will
feel the merit pay forever. Hence, merit pay schemes are not only
performance based, but also tenure based. While they can contribute to
low staff turnover rates, they can cause high disparities in the salaries of
junior and senior staff because of the past performance of senior staff.
Despite their drawbacks, merit pay schemes are widely used in practice.
According to the Society for Human Resource Management, one type of
incentive plan for executives is known as the performance unit. In the
executive's agreement there is a schedule of financial milestones that the
company must achieve for the executive to get awarded a pre-determined
amount of units. The amount of a performance unit varies by company.
Performance units are paid out based on a schedule agreed to by the
executive and the company.

 Symbolic rewards:
This is one of the types of non-cash incentive plans. Symbolic rewards are
of small monetary value and emphasize the recognition of the employee’s
work effort. Examples of such rewards include commendation letters,
branded gifts, trophies, joint dinners or trips. While the monetary value of
this reward is not likely to enhance staff performance, the provision of
such rewards can be valuable supplementary tools to support staff
motivation. However, staff usually prefers cash payouts as the financial
value of these rewards becomes significant.

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 Employee Stock Ownership Plans (ESOPs):
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It is an incentive offered to employees that want to invest their money into
the company stock by purchasing stock with pre tax money. Employee
Stock Ownership Plans, or ESOPs, involves the participation of
employees in the MFI’s share capital. Through an ESOP, employees
become co-owners of the organisation. They can increase their wealth and
income if the MFI makes profits, which would tend to increase the value
of the shares and make it possible to pay out dividends. Employees can be
motivated by knowing that they are shareholders in the company and that
they can participate in the success of the firm. Having relatively new this
plan of incentive has become more common. One difference between a
cash payout and an ESOP is that the former has a short-term impact while
the latter is felt more over the long term. Also, cash is “real” – employees
can take their bonuses and spend them. The value of an ESOP is
contingent upon such factors as future profitability and the presence of a
market for selling the shares. An Employee Stock Option Plan (ESOP) is a
benefit plan for employees which make them owners of stocks in the
company. ESOPs have several features which make them unique
compared to other employee benefit plans. Most companies, both at home
and abroad, are utilising this scheme as an essential tool to reward and
retain their employees. Currently, this form of restructuring is most
prevalent in IT companies where manpower is the main asset. So far as the
future of ESOPs in India is concerned, as more and more companies
realise the need to retain their best talent in a world which would be
dominated by companies with the best intellectual capital, this
management technique would be the phenomenon of the new century.

 Delayed Benefits:
Delayed Benefits as financial institutions grow and mature there is a
tendency for the average age of staff members to increase as well. Most
organisations only make the obligatory contributions to the national
pension and social security plans, but it may be worthwhile to consider
funding a private pension plan. With increasing age, most people worry
more about their situation after retirement. Since many public systems do
not provide adequate coverage after retirement, a private plan can have a
very positive effect on employees’ motivation. In fact, many people might
then be quite willing to forego short-term monetary benefits (such as a
higher monthly bonus) in favour of a higher regular income after
retirement. Another interesting feature of delayed benefits such as pension
entitlements is that they tend to increase with tenure in the organisation.
Long-term incentives, such as delayed benefits, can help to reduce
turnover since they increase the perceived cost of changing jobs.

 Perk:
It means the benefits or perquisites typically awarded to only a small
proportion of the management staff. Perks are generally a good method of
attracting and retaining employees as they are not related to productivity.
Perks can encourage staff to attach with the business. The common
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examples of perk are use of a company car, gifts on birthday, health
benefits, subsidised staff canteens, tea/coffee-making facilities, loans at
lower rates, season tickets, social events such as Christmas parties and
work outings, membership of social clubs etc.
For the success of any incentive plan it is essential to define the goals and
objectives clearly for staffers. Workload should also be equitably
distributed, or it could create resentment if staffers feel they have to carry
slow or poor-performing team members. Incentive plans are formalized
approaches to offering recognition and reward to employees for meeting
pre-established goals or objectives.

 IMPORTANCE OF INCENTIVE PLANS

Following points explains the importance of incentive plans:

 Incentive programs motivate employees to push and challenge

themselves to achieve higher degrees of productivity. This ultimately
translates to increased earnings for your company.

 When incentive plans are in place, employees recognize that

significant effort on their behalf will be acknowledged and rewarded.
This can increase the amount of time; effort and energy spend for the
company by the employees.

 Incentive plans for the group can help to promote collaborative work
efforts in the business. Employees working in teams collectively rely
on each others' productivity for the group to receive a bonus or award
may support and encourage each other to perform at top levels.

 Peer pressure may also encourage additional degrees of performance

from underperforming employees as each employee in the team takes
care of not to let their team members down.

 Incentive plans have the potential to raise morale and increase job
satisfaction in a company. Employees see a direct correlation between
their work effort and their earning potential.

 As the incentive plans are directly related to job satisfaction the

employees with high levels of job satisfaction often exhibit lower
degrees of absenteeism, which can also help improve a company's
bottom line.

 Employees competing for or striving to meet the goals of an incentive

plan may provide higher degrees of service to the customers, which
increase the degree of satisfaction of the customers.

 Satisfied customer makes positive word-of-mouth advertising. This

can encourage repeat business and enhance the company's reputation.

 Improved service levels can also encourage referral business.

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15.12 SUMMARY Reources Management II

Business Process Outsourcing (BPO) is the outsourcing of back office and

front office functions typically performed by white collar and clerical
workers. It is like a contract that enables the business person to hire the
services of an outsourcing firm that will manage and complete the tasks
for them. As far as the contract policies are concerned, it becomes the
entire responsibility of the service provider to complete the task well in
time. Business process outsourcing is becoming more and more in demand
and promising as it helps to a great extent in saving the money that can be
invested in enhancing the progress of other departments. Knowledge
Process Outsourcing (KPO) is the allocation of relatively high-level tasks
to an outside organization or a different group within the same
organization. KPO is, essentially, high end business process outsourcing
(BPO). KPO saves cost. This kind of outsourcing is adopted by companies
to implement their strategies and to protect their intellectual property
rights. Examples of KPO include accounting, market and legal research,
Web design and content creation.
Incentives help to achieve organizational goals or performance. Incentives
are either individual or group. Financial incentives are designed to
motivate employees to improve their performance, to increase effort and
output and by producing better results expressed in such terms as
objectives for profit, productivity, sales turnover, cost reduction, quality
customer service and on time delivery. This financial compensation
provides extra money for achievement in terms of contribution or output.
Incentive schemes relate compensation to productivity. A primary purpose
of an incentive scheme is to encourage greater productivity from
individuals and work groups. The assumption usually made by
management is that money or cash alone may not motivate employees. In
designing incentive schemes, output standards should be established. In
addition to motivating employees to increase their level of productivity,
incentive schemes may reduce turnover among good performers or
productive workers. Incentive schemes are also cost effective because of
savings that often resulted from productivity improvements. Generally, in
incentive schemes are classified into two types: material incentive and non
material incentives.

15.13 QUESTIONS
1. Explain future prospects of Business Process Outsourcing (BPO) in
India.
2. What do you mean by Knowledge Process Outsourcing (KPO)?
Explain its forms and benefits.
3. Explain Future Prospects of Knowledge Process Outsourcing (KPO) in
India.
4. Identify various career options available in BPOs/KPOs in India.
5. What are the career options in Business Process Outsourcing (BPO)
and Knowledge Process Outsourcing (KPO) sector?

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6. “Money or cash alone may not motivate employees”. Discuss.
7. Define the term Incentive Scheme. State the importance of Incentive
Schemes.
8. Explain in detail the types of Incentive Schemes.
9. Write Note on:
 BPO
 KPO
 HRM issues related to BPO and KPO
 Innovative Employees Incentive Schemes

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