BACHELOR OF MANAGEMENT STUDIES

HUMAN
RESOURCE

BMS : HUMAN RESOURCE MANAGEMENT (SEMESTER - IV)

MANAGEMENT
DISCIPLINE SPECIFIC CORE COURSE (DSc-12)
SEMESTER - IV COURSE CREDIT -4
(FOR LIMITED CIRCULATION ONLY)

Department of Distance and Continuing Education DEPARTMENT OF DISTANCE AND CONTINUING EDUCATION
University of Delhi UNIVERSITY OF DELHI
AS PER THE UGCF-2022 AND NATIONAL EDUCATION POLICY 2020
HUMAN RESOURCE MANAGEMENT

[FOR LIMITED CIRCULATION ONLY]

Editorial Board
Dr. Aniruddh Vijay
Assistant Professor, School of Open Learning, University of Delhi
Dr. Priyanka Singh
Assistant Professor, Sri Sukhmani Institute of Management
Content Writers
Dr. Abhishek Janvier Frederick,
Jasleen Kaur, Dr. Anushree Chauhan
Academic Coordinator
Mr. Deekshant Awasthi

1st Edition: 2024

E-mail: ddceprinting@col.du.ac.in
commerce@col.du.ac.in

Published by:
Department of Distance and Continuing Education
Campus of Open Learning/School of Open Learning,
University of Delhi, Delhi-110007

Printed by:
School of Open Learning, University of Delhi
 HUMAN RESOURCE MANAGEMENT

Internal Review Committee

Ms. Barkha Jamwal
Assistant Professor, School of Open Learning, University of Delhi

Corrections/Modifications/Suggestions proposed by Statutory Body, DU/

Stakeholder/s in the Self Learning Material (SLM) will be incorporated in
the next edition. However, these corrections/modifications/suggestions will be
uploaded on the website https://sol.du.ac.in.
Any feedback or suggestions can be sent to the email-feedback.slm@col.du.ac.in.

Printed at: Taxmann Publications Pvt. Ltd., 21/35, West Punjabi Bagh,
New Delhi - 110026 (500 Copies, 2024)

Department of Distance & Continuing Education, Campus of Open Learning,

School of Open Learning, University of Delhi
 Contents

PAGE
Lesson 1: Introduction to Human Resource
1.1 Learning Objectives 1
1.2 Introduction2
1.3 Human Resource Management  2
1.4 Human Resource Development  4
1.5 The Changing Environment of HRM 8
1.6 Summary16
1.7 Answers to In-Text Questions 18
1.8 Self-Assessment Questions 18
1.9 References18
1.10 Suggested Readings 18

Lesson 2: Human Resource Planning, Recruitment and Selection

2.1 Learning Objectives 19
2.2 Introduction20
2.3 Human Resource Planning 20
2.4 Human Resource Information System (HRIS) 27
2.5 Job Analysis  29
2.6 Recruitment  31
2.7 Selection  33
2.8 Orientation36
2.9 Summary  36
2.10 Answers to In-Text Questions 37
2.11 Self-Assessment Questions 39
2.12 References39
2.13 Suggested Readings 40
PAGE i
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_TOC.indd 1 15-03-2024 18:08:44

 HUMAN RESOURCE MANAGEMENT

PAGE
Lesson 3: Training and Development
3.1 Learning Objectives 41
3.2 Training42
3.3 Methods of Training 44
3.4 Management Development 50
3.5 Performance Management System 52
3.6 Performance Management Methods 54
3.7 Factors that Distort Performance Appraisal 57
3.8 Career Planning 57
3.9 Summary59
3.10 Answers to In-Text Questions 60
3.11 Self-Assessment Questions 61
3.12 References62
3.13 Suggested Readings 62

Lesson 4: Compensation
4.1 Learning Objectives 63
4.2 Introduction64
4.3 Concept of Compensation 64
4.4 Process of Compensation Determination 66
4.5 Job Evaluation 67
4.6 Components of Pay Structure 70
4.7 Factors Influencing Compensation Levels 70
4.8 Trends in Compensation  71
4.9 Incentives: Importance and Types 72
4.10 Benefits: Types and Brief Introduction to Social Security, Health,
Retirement & Other Benefits  76
4.11 Summary80
4.12 Answers to In-Text Questions 82
4.13 Self-Assessment Questions 82

ii PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_TOC.indd 2 15-03-2024 18:08:44

 Contents

PAGE
4.14 References82
4.15 Suggested Readings 83

Lesson 5: Industrial Relations

5.1 Learning Objectives 84
5.2 Introduction85
5.3 Introduction to Industrial Relations 85
5.4 Trade Union: Roles, Types Functions & Problems 87
5.5 Industrial Dispute: Concept, Causes & Machinery for Settlement of Disputes 90
5.6 Employee Grievances: Concept, Causes, Grievance Redressal Procedure 93
5.7 Discipline: Concept, Aspects of Discipline & Disciplinary Procedure 94
5.8 Collective Bargaining: Concept, Types, Process, Problems &
Essentials of Effective Collective Bargaining 96
5.9 Summary101
5.10 Answers to In-Text Questions 102
5.11 Self-Assessment Questions 102
5.12 Reference103
5.13 Suggested Readings 103
Glossary105

PAGE iii
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_TOC.indd 3 15-03-2024 18:08:44

Human Resource Management_TOC.indd 4 15-03-2024 18:08:44
 L E S S O N

1
Introduction to Human
Resource
Dr. Abhishek Janvier Frederick
Assistant Professor
Sam Higginbottom University of Agriculture, Technology and Sciences
Email-Id: abhishek.frederick@shiats.edu.in

STRUCTURE
1.1 Learning Objectives
1.2 Introduction
1.3 Human Resource Management
1.4 Human Resource Development
1.5 The Changing Environment of HRM
1.6 Summary
1.7 Answers to In-Text Questions
1.8 Self-Assessment Questions
1.9 References
1.10 Suggested Readings

1.1 Learning Objectives

u What is Human Resource?
u Human Resource Management – concept, objectives and functions.
u Human Resource Development – concept, definition, need, goal and challenges.
u The Changing Environment of HRM – globalization, cultural environment, technological
advances, workforce diversity, corporate downsizing, changing skill requirement,
HRM support for improvement programs and work-life balance.

PAGE 1
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 1 15-03-2024 18:03:51

 HUMAN RESOURCE MANAGEMENT

Notes
1.2 Introduction
Human Resources are the people who are appointed by the firm or an
organization to perform an activity for achieving their predetermined goals.
To understand the above statement let’s take an example, to run a prof-
itable business, a variety of capital is used by an organization such as
cash, raw material, machinery, etc. and to count on that cash, making
finish goods out of raw material and for operating machinery humans
are required. Thus, Humans are the key to success.

1.3 Human Resource Management

1.3.1 Concept of Human Resource Management

Human resource management is one of the functions of management that
looks after the recruitment, selection, training and motivating the people
of an organization. It rotates around the people as the main focus of HRM
is on investing in humans. And also it pays attention to the non-monetary
advantages like fairness, health, safety, relations and many more. HRM
ensures that employees are making the most out of themselves effectively
and efficiently towards the organization’s goal.
According to Edwin B. Flippo, “Human Resource Management is the plan-
ning, organizing, directing and controlling of the procurement, development,
compensation, integration, maintenance and separation of human resources to
the end that individual, organisation and social objectives are accomplished.”
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 apprais-
ing comprises of HRM”.
Thus, Human Resource Management is the most crucial tough essential
function of the management which manages the people in a particular
way that they get hired, trained, motivated, rewarded and paid.

1.3.2 Objectives of HRM

u To know what workforce is required in an organization.

2 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 2 15-03-2024 18:03:51

 Introduction to Human Resource

u To acquire right man and placing him at the right job of the Notes
organization.
u Communicating with the employees and providing them with suggestions
whenever required.
u To provide training to employees for enhancement of their output.
u Motivating them on continuous basis so that they don’t feel neglected.
u Creating good environment for the workforce by the way of appreciation,
rewards and other facilities.
u To help employer and employee in maintaining good relationship.

1.3.3 Functions of HRM

1. Planning of Human Resource: Planning refers to a process which
includes what is to be done, how it is to be done and by whom it
is to be done. And planning of human resource is all about the last
thing of planning that is ‘by whom’ the work is to be done. HRM
ensures whom to select for a specific work of an organization and
how to make him expert in it and how to make him feel appreciated
and motivated throughout so that his skills are utilized effectively
and efficiently for the organization goal.
2. Job Analysis: It is all about knowing what kind of knowledge,
skills and attitude are required to do a particular work. As a result,
organization creates job description and specification to recruit, appoint
and train the employee and to measure their performance.
3. Recruitment: It is the process of attracting or identifying the competent
person for the vacancy in an organization through advertisements
on different mediums.
4. Selection: From the multiple applicants those who are chosen by
an employer according to the requirement of an organization is
called selection. For example, 50 applicants came for interview
and out of them only 2 were fit for the job as per the description
and specification; so those 2 got chosen by the employers for that
vacant position. That choosing is called selection.
5. Placement: The person that an employer has identified and selected
using various methods has been put into specific department or
position of the organization is what placement is.
PAGE 3
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 3 15-03-2024 18:03:51

 HUMAN RESOURCE MANAGEMENT

Notes 6. Training: When the employees lack to achieve desired goal of the
organization then the employers plan a training program from the
instructor to enhance their skills and knowledge accordingly.
7. Career Development: HRM provides or ensures that employees are
getting ample opportunities of growth and helps them in identifying
their career objectives and also in achieving them.
8. Performance Evaluation: The output of employees in an organization
is evaluated and measured according to the expectations. If there
are any variations then corrective measures are taken to achieve
the desired output.
9. Remuneration: According to the policies and the employees’
performance their salaries are determined. HRM makes sure that
everyone is getting fair remuneration and no injustice is there.
10. Social Development: Many social development programs are organised
related to health, wellness and other aspects by the organizations
to support, encourage and retain top employees.

1.4 Human Resource Development

1.4.1 Concept of Human Resource Development

HRD is the integral part of human resource management which looks after
the training and development of the existing employees of an organization.
Without development of human resource an organization can never face
the dynamic environment which is necessary from the growth perspective.
With the help of training and development programs, skills and knowledge
of employees get enhanced and they are able to produce desired output
for which they get appreciated as well.

1.4.2 HRD Definitions

According to Leonard Nadler, “Human resource development is a series
of organised activities, conducted within a specialised time and designed
to produce behavioural changes.”
According to M.M. Khan, “Human resource development is the across
of increasing knowledge, capabilities and positive work attitudes of all
people working at all levels in a business undertaking.”
4 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 4 15-03-2024 18:03:51

 Introduction to Human Resource

Thus, it’s basically all about sharpening and enhancing the capabilities Notes
of employees to get the best output to attain the predetermined goal of
an organization, and also about maintaining a good relationship between
supervisor and subordinate so that they remain motivated throughout.

1.4.3 Need for HRD

 To improve the skills, knowledge and capabilities of employees
which leads to better output.
 With the help of HRD the work environment becomes positive.
 It creates the positivity in employees in such a way that they work
for combined goal rather than individual goal.
 By providing ample growth opportunities it helps to retain good
employees.
 It helps to meet the requirement of dynamic environment.

1.4.4 Goals of HRD

 To solve the problems whatever comes in between achieving the
organization’s goal.
 To avert expected problems.
 To balance and adapt the change.
 To develop proficiency.
 To provide opportunities of growth for employees.
 To create good work environment for employees so that they remain
focused, motivated and energetic throughout.
 To conduct training programs on regular basis.

1.4.5 Challenges in HRD

1. Change in Technology: Rapid changes are faced by the world in
terms of technology because of which organizations are also facing
the same. So the biggest challenge that comes in front of HRD is
to make the employees familiar with that technology change.

PAGE 5
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 5 15-03-2024 18:03:51

 HUMAN RESOURCE MANAGEMENT

Notes 2. Market Adaptation: Most of the organizations are operating locally

as well as globally; as a result, they face challenges regarding
policies, payment, economic taste, culture, etc. So to cope up with
this kind of issues an organization requires an HRD department
which trains employees in such a manner that they produce desired
output which becomes a challenge for HRD.
3. Development Opportunities: The only thing which is permanent in
this fleeting environment is change, so for the survival of existing
employees’ growth opportunities need to be provided and some
development programs to be conducted for enhancement of their
skills and knowledge which again is the biggest challenge for HRD
professionals.
4. Quality Demanded by Customers: As we all are aware the customer
is the king in the current market. So the product should be produced
according to customer’s need, demand, desire and want. As a result,
HRD professionals need to guide employees accordingly.
5. Mergers and Acquisitions: To avoid competition, mergers and
acquisitions are taking place. MNCs are bound to do that.
6. Product Life cycle: Just like people’s memory the life cycle of product
is extremely short. The product or service remains in demand for
a very short time in the market as the environment is dynamic so
the people choices are.
7. Quick Response: The market demands quick response from the
organization or else there will be no use as the demand would be
fulfilled by the other organization and you will be at loss. So the HRD
professionals have to look after the efficiency of their employees.
8. Trust Factors of Employees: Sometimes because of the working
environment or the insensitivity of the managers, employees face
trust issues related to job stability, appraisal and so on which result
in lesser productivity of an employee. Now here comes the challenge
for HRD professional to solve the factor of trust and maintain a
harmonious relationship between employee and his manager.
9. Environmental Scanning: Just to go hand in hand with the changing
trend the HRD professional needs to be more active and focused.
Through any medium he needs to be in touch with external

6 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 6 15-03-2024 18:03:51

 Introduction to Human Resource

environment so that he can transfer his knowledge regarding the Notes

same to the employees in the form of training.
10. Employee Assessment: Assessment of employees is the most important
part of their development as it helps in measuring their growth.
If assessment is not there then the most efficient employee will
perform poorly because the fear of being judged gets eliminated.
They should know what exactly are the things which are expected
from them for the organization’s growth.
11. Return on Investment: Training and development programs which
are organised by the HRD professionals for the employees of an
organization results in high return on investment as they get more
skilled and knowledgeable to produce better output for the longer
period of time.
12. Strategy: The HRD professionals of an organization must ensure
that the strategy which they are using is linked with the strategy
of a business so that no conflict arises later on.
IN-TEXT QUESTIONS
1. HRM stands for:
(a) Humanity resource management
(b) Human resource management
(c) Human resourceful management
(d) None of the given options
2. HRD stands for:
(a) Humanity resource development
(b) Human resourceful development
(c) Human resourceful department
(d) Human resource development
3. Human resource plays a _______ role in realizing business
objectives in the present business environment.
(a) Strategic
(b) Technical
(c) Vital
(d) Very important
PAGE 7
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 7 15-03-2024 18:03:51

 HUMAN RESOURCE MANAGEMENT

Notes 4. _______ designed the balance score card.

(a) Robert Kaplan
(b) David Norton
(c) Both (a) and (b)
(d) None of the above

1.5 The Changing Environment of HRM

1.5.1 Globalization
Globalization has helped many companies to operate overseas and expand
their business in various sectors. The protruding sector that has faced
change because of globalization is Human Resource Management.
So, let’s understand the impact of globalization in Human Resource
Management.

1.5.1.1 Meaning of Globalization in HRM

Human resource management looks after the employees of an organiza-
tion which includes their recruitment, selection, training, development,
remuneration, etc.
On the other hand, Globalization means expansion of companies, culture,
product and services. It made countries interdependent on each other for good
by eliminating restrictions between them in terms of policies and barriers.
When the organization is operating globally and recruiting people from
different countries is what globalization in HRM means.

1.5.1.2 Impact of Globalization on HRM

Some remarkable impacts of globalization on human resource manage-
ment are as follows:
u Innovation Opportunities: As we are aware that globalization has
given opportunities to organizations for having employees from
worldwide, because of which a company has skilled and talented
workforce. This collaboration of employees results in innovative
suggestions and unique ideas which helps the organization to flourish.

8 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 8 15-03-2024 18:03:51

 Introduction to Human Resource

 Talented Workforce: Globalization has given the opportunity to HRs Notes

for having talented people from different countries of the world
for an organization. This also results in enhancing the skills and
knowledge of current employees as they interact and learn from
each other.
 Complex Compliance: Different countries have different laws of
labour, tax system and standards of employment which require
experts to understand. This may sometimes become problematic
for the organizations.

1.5.1.3 Challenges of Globalization in HRM

 Team Management: As organizations are operating globally it
becomes difficult for them to coordinate with the teams sitting in
different time zones. They face lack of effective communication
because they can’t interact face-to-face which sometimes results in
conflict.
 Employee Retention: Employees gets ample opportunity of growth
from worldwide because of globalization, so for the organization
retaining top employees is the biggest challenge. Major difficulty
comes when the organization’s expectations differ from personal
goal of the employee.
 Training and Development programs: People got hired by the
organization from different culture, background and language which
demands training and development programs for enhancing their
skills. However, it has become challenging for companies to prepare
content according different employees.
 Data Privacy: Companies need to share their data with employees
overseas and officials while maintaining the privacy by using data
protectors and safeguards. The responsibility for having an eye on
this is of human resource department. So, maintaining that privacy
is one of the critical challenges for them.
 Human Resource Strategy: Human resource department faces
difficulty in making strategies for the employees of an organization
as per their country laws and culture because different countries
have different beliefs and to align them all together is a big task.

PAGE 9
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 9 15-03-2024 18:03:51

 HUMAN RESOURCE MANAGEMENT

Notes
1.5.2 Cultural Environment
First, let’s understand what is culture.

1.5.2.1 Meaning of Culture

Culture is basically the belief of an individual which they got from their
generations. It mainly includes manners, religion, rituals, language and attire.
In an organization every employee has his/her own beliefs which creates
differences among them and leads to conflicts and confusions. As a result
human resource department faces problem-related policies.

1.5.2.2 Role of Cultural Environment in Human Resource Management

Points which can describe the role of Cultural environment in HRM are:
1. Recruitment Policy: Different companies and countries follow
different recruitment policies. Hiring of an employee depends on
the cultural attitude the organization is following.
The different cultural attitudes are given below:
 Ethnocentric: When the organization follows same policies and
procedures wherever it is operating just like in home country,
this cultural attitude is known as ethnocentric. Sometimes
employees find it narrow and feel negative about it.
 Polycentric: When the organization appoints local manager to
handle regional offices because of his better understanding
of the employee’s belief and culture is what polycentric is.
For example, XYZ company having headquarters in India
opened its subsidiaries in America and Russia. So according
to polycentric approach the company will hire manager from
America and Russia as they will be aware of the culture there.
 Geocentric: When the organization is open for every individual
across worldwide is what Geocentric is. The best gets hired
on the basis of skills and knowledge. And because of this
cultural approach employees interact more with each other as
they meet people from different culture, religion, etc. which
generates the feeling of curiosity to know more.

10 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 10 15-03-2024 18:03:51

 Introduction to Human Resource

2. Selection Policy: Different countries follow different processes for Notes

selection of a candidate. Some are extensive whereas some are short
but all are followed by induction process which helps the candidates
to know about working style, culture, policies, etc. of the organization.
Mainly employees and their families have a feeling of depression
because they find it difficult to adapt different language, food, style,
fashion, environment, etc. It is suggested that candidate who has
supported family and great stress management skills should be selected.
3. Training and Development policies: Training and development
programs are needed on continuous basis to enhance the technical
skills and knowledge of the employees in an organization. HRs find
it difficult to arrange as the employees are from different regions,
culture, language, status, beliefs, values, etc. To communicate with
all of them regarding one thing becomes challenging.
4. Remuneration Policy: HR professionals have to fix the salary of
employees as per their lifestyle, taxes, pension, retirement, etc. It
becomes difficult for them as employees are from various countries.
Their respective culture and above-mentioned factors need to be
considered.
5. Motivation: Meaning of motivation differs from person to person,
country to country and culture to culture. One person gets motivated
by money while another by fame and appreciation. It’s a difficult
task for managers to understand each and every employee and
motivate them accordingly.
6. Performance Appraisal: Appraisal of an individual employee depends
on his work performance and on the manager who is working closely
with him/her. Appraisal needs to be done on time otherwise employees
feel unsatisfied with the work culture. Mainly it is a disadvantage
for employees who are working in subsidiaries because many a time
home company announces appraisal and the managers have no idea
about their performance as not working with them closely.
7. Leadership Style: There are various leadership styles which vary
from country to country. Some of the styles are formal, informal,
centralized, decentralized, straight, vertical, and so on; so managers
find it challenging in making decision for employees of the
organization.

PAGE 11
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 11 15-03-2024 18:03:52

 HUMAN RESOURCE MANAGEMENT

Notes
1.5.3 Technological Advances
With the passage of time world has experienced great change in terms
of technology. So now let’s understand by the following points how the
technology impacted Human Resource Management.
 Recruitment: Earlier when there was no internet connectivity,
phone calls and letters were the medium to connect with applicants
or people who were searching for job. After the advancement in
technology, it became easier for the human resource department
to connect through emails and online portals. They don’t have to
track the process manually as it can be done by online tracking
system. No more time of HRs will be spent on paperwork or
personal calls.
Technology made things faster. Job seekers used to get disappointed
by the delay in procedure of recruitment because human resource
managers had to do it manually.
 Communication: After the technology advancement communication
became so easy for human resource department as they can connect
with multiple applicants just with single email or message. They
don’t have to do it individually. Whenever a manager wants to
schedule a meeting or to share some information, he can do so in
a second by attaching an attachment with the email. As a result,
technology advancement is the time saver for the organization.
 Employee Performance Analysis: To analyse the employee performance
manager has to assess him personally according to the standards.
But after enhancement in technology managers don’t have to track;
this work is to be done by online tracking system which makes it
easier to know which employee is doing which work better and by
how much percentage.
 Data: Main work of HR is to maintain data of employees and analyse
it. But they end up getting lot of data which is difficult to maintain.
Whenever some specific document is required, it becomes impossible
for them to provide on time. Over the period, technology made it
possible as everything is maintained online.

12 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 12 15-03-2024 18:03:52

 Introduction to Human Resource

Notes
1.5.4 Workforce Diversity

1.5.4.1 Meaning of Workforce Diversity

Age, gender, status, language, education, etc. of employees of an orga-
nization comes under workforce diversity. There are two factors which
explain it better and those are:
1. Primary Factor: Things which can’t be changed with the passage of
time and remain there for life like age, gender, language, physical
abilities and sexual orientation fall under this category.
2. Secondary Factor: Things which can be changed over time like
health habits, education, knowledge, relationship status, beliefs, etc.
come under this category.

1.5.4.2 Impact of Workforce Diversity on Human Resource Management

Human resource department had to make many changes because of the
diversity that organization has announced due to globalization.
The functions which got affected are:
 Employee Rights: According to Equal Employment Opportunity
Commission (EEOC) every organization has to put posters and
hoardings of equal opportunities for all irrespective of age, sex,
disability, language and marital status. Human resource department
has to remain attentive regarding posters whether they are up-to-
date or not.
 Recruiting: Earlier when there was no concept of diversity in
organizations, the human resource department didn’t have to look
for diverse pool of skilled people. But the scenario has changed;
managers have to widen their range of looking people. They have
to reach out to different colleges, cities, even countries for having
skilled and knowledgeable employees.
 Managing Teams: After the diverse workforce, human resource
managers have to organize training programs for employees so that
they feel included and connected with each other as they are from
different religion, region, age and gender. HRs have to make sure
that any of the employees should not feel left out of unimportant
because that leads to unsatisfied workforce.

PAGE 13
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 13 15-03-2024 18:03:52

 HUMAN RESOURCE MANAGEMENT

Notes
1.5.5 Corporate Downsizing

1.5.5.1 What Corporate Downsizing Is?

When the organization terminates their workforce because of some reason
which could be stress, lesser revenue, mergers, recession, cost reduction,
national disaster or unproductivity is called Corporate Downsizing.

1.5.5.2 Impact of Corporate Downsizing on Human Resource Management

No organization wants to lose their employees until and unless they are
facing some serious issues. If they are going through downsizing phase
then the role of human resource department comes.
Following are the points which will help to assess the effect of down-
sizing on Human Resource Management.
 Reason for Downsizing: Terminating employees is not an easy task
for the organization. Managers or the owners who have worked
closely with employees, value them and appreciate them, feel pain
when those employees leave. And some are the managers who don’t
get affected at all. To tackle this situation, HR professionals need to
know the exact reason so that whenever they interact with existing
workforce they are ready with the reason and explanation so that
no miscommunication and confusion remain in their minds.
 Selection: Whenever the discussion is about employees, owners
always call upon human resource department. They are the ones who
are responsible for communicating. Now it’s on HR department to
decide which employee will stay and which will leave; if they face
any problem regarding deciding then they can ask to employee’s
managers. During layoff, HR professionals have to give the proper
reason to the employee which can be skills, performance, status or
anything decided internally.
 Honest Communication: While downsizing corporates should provide
a genuine reason to the employees as well as to the market as it
builds the feeling of trust and layoff becomes smooth. Sometimes
there are personal reasons which can’t be disclosed openly to protect
the image of an organization but should be known to employees so
that they don’t get hurt badly.

14 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 14 15-03-2024 18:03:52

 Introduction to Human Resource

 Flexible: During and after downsizing it’s the responsibility of Notes

human resource department to make sure that business is running
properly. They have to reorganize the departments and have to
transfer employees to other roles and this can be done only when
the HR department is flexible. Distribution of work to the existing
employees will also be done by them. For this human resource
professionals have to be ready with the best plan.

1.5.6 Changing Skill Requirement

To leverage with the fast-paced world, organization demands skilled and
knowledgeable employees because the productivity and the quality of work
that they can deliver can’t be expected from unskilled workforce. Only the
skilled employees can work accurately and help to generate revenue for
the organization as they are aware of the competitiveness. And to bridge
the skill gap amongst the existing employees, human resource department
needs to organise training and development programs on regular basis.

1.5.7 HRM Support for Improvement Programs

Improvement programs are the training and development programs that
are organized by the organization for enhancement of existing workforce
in terms of skills and knowledge which leads to higher productivity.
Without proper improvement programs the workforce loses their capabil-
ities, quality and productivity as no innovative ideas and strategies are
being used by them towards the growth of an organization.
Change is the greatest aspect of this unstable world and if the organization
wants to grow in this dynamic environment, it can only be done with the
help of their workforce. And that workforce can perform tremendously
only when they get proper training of it. These training programs require
human resource department to organise as they are aware of the employee’s
strength, weakness, culture, language, etc.; without their support improve-
ment programs can’t be successful.

1.5.8 Work-Life Balance

When a person balances his professional and personal life is
known as work-life balance. It is mandatory to have in one’s life
PAGE 15
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 15 15-03-2024 18:03:52

 HUMAN RESOURCE MANAGEMENT

Notes because then only a person will remain satisfied and can result
productive.
An unsatisfied person will always be less productive than the satisfied
one because both his mental and physical health gets disturbed which
causes the feeling of frustration and irritation in him.
A balanced work-life is very important for employees in an organization
because:
u Employee will be more efficient and effective.
u They will remain healthy and their sickness level will decrease.
u Their stress level will get reduced which leads to good mental health.
u They will be able to think more innovative.
To ensure that all the above-mentioned points are being practiced, human
resource department is required. If employees have a feeling of unstable
work-life, their point of contact is HR professionals and to help employees
they have to make policies regarding this or have to take some corrective
measures for healthy work environment.

1.6 Summary
Human Resources are the people who are recruited and selected by the
organization and one of the functions of management is human resource
management which manages those human resources. There are various func-
tions of HRM like training, development, selection and recruitment analysis
which have a great impact on employees as well as on the organization.
In this chapter, we have also studied about the goals and challenges that
Human Resource Development comes across on a daily basis and the
changing environment of HRM in various fields and their impact on it.
CASE STUDY: CORPORATE DOWNSIZING
In the wake of a severe economic downturn, Global Dynamics, a
multinational corporation with a strong presence in the technology
sector, found itself compelled to implement a comprehensive corporate
downsizing strategy. Faced with declining revenues and heightened
financial pressures, the executive leadership made the challenging
decision to reduce the company’s workforce by 30 percent. This

16 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 16 15-03-2024 18:03:52

 Introduction to Human Resource

downsizing initiative, while deemed necessary for the company’s Notes

financial viability, unfolded against the backdrop of a highly com-
petitive talent market and increased scrutiny from both internal and
external stakeholders.
As part of the downsizing process, various departments across the
organization underwent restructuring, leading to the unfortunate dis-
placement of numerous employees, including longtime contributors
like Emily, a senior project manager with over a decade of dedicated
service. The decision-making process for selecting individuals for
layoffs involved a combination of performance metrics, project con-
tributions, and, to some extent, seniority. Emily’s sudden departure
left not only a void in her team but also created a ripple effect of
uncertainty and anxiety among the remaining employees.
The communication strategy employed during this downsizing process
emerged as a crucial factor in shaping the employee experience. The
initial announcement, while acknowledging the economic challenges
faced by the company, left many employees seeking more clarity
regarding the specific criteria and rationale behind the selection of
individuals for termination. The lack of detailed information fu-
elled speculation and contributed to a sense of insecurity among the
remaining workforce.
As the downsizing unfolded, the organization faced the challenge
of managing the emotional fallout and providing adequate support
to the employees who remained. The human resources department
implemented counselling services and career transition assistance
programs, aiming to address the emotional well-being of those
impacted by the layoffs. However, the efficacy of these measures
remained an open question, as employees grappled with the dual
challenges of increased workloads and the emotional toll of wit-
nessing their colleagues abruptly depart.
Q.1. Summarise the case in your own words.
Q.2. Elaborate the complexities and challenges associated with cor-
porate downsizing with reference to the case.
Q.3. What are the possible long-term impacts of downsizing on the
organization? Explain.

PAGE 17
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 17 15-03-2024 18:03:52

 HUMAN RESOURCE MANAGEMENT

Notes
1.7 Answers to In-Text Questions
1. (b) Human resource management
2. (d) Human resource development
3. (a) Strategic
4. (c) Both (a) and (b)

1.8 Self-Assessment Questions

1. Explain the challenges of human resource development.
2. Elaborate how the changing environment of globalization and cultural
environment impacted HRM.
3. How human resource is the integral part of an organization and helps
in generating revenue?

1.9 References
u Armstrong, M. (1999). A Handbook of Human Resource Management
practice. https://ci.nii.ac.jp/ncid/BA83417636
u Fombrun, C. J., Tichy, N. M., & Devanna, M. A. (2015). Strategic
human resource management. In Routledge eBooks (pp. 28–42). https://
doi.org/10.4324/9781315881881-10

1.10 Suggested Readings

u Fombrun, C. J., Tichy, N. M., & Devanna, M. A. (2015b). Strategic
human resource management. In Routledge eBooks (pp. 28–42). https://
doi.org/10.4324/9781315881881-10
u Armstrong, M. (1999). A Handbook of Human Resource Management
practice. https://ci.nii.ac.jp/ncid/BA83417636
u Wright, P. M., & McMahan, G. C. (1992). Theoretical perspectives for
Strategic Human Resource Management. Journal of Management, 18(2),
295–320. https://doi.org/10.1177/014920639201800205
u Folger, R., & Cropanzano, R. (1998). Organizational justice and
human resource management. https://doi.org/10.4135/9781452225777
18 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 1.indd 18 15-03-2024 18:03:52

 L E S S O N

2
Human Resource Planning,
Recruitment and Selection
Dr. Abhishek Janvier Frederick
Assistant Professor
Sam Higginbottom University of Agriculture, Technology and Sciences
Email-Id: abhishek.frederick@shiats.edu.in

STRUCTURE
2.1 Learning Objectives
2.2 Introduction
2.3 Human Resource Planning
2.4 Human Resource Information System (HRIS)
2.5 Job Analysis
2.6 Recruitment
2.7 Selection
2.8 Orientation
2.9 Summary
2.10 Answers to In-Text Questions
2.11 Self-Assessment Questions
2.12 References
2.13 Suggested Readings

2.1 Learning Objectives

u Learn the importance of HR planning in aligning workforce requirements with
organizational objectives.
u Demonstrate the ability to conduct workforce analysis to determine staffing needs.
u Apply appropriate selection techniques to assess candidate suitability for a given
position.

PAGE 19
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 19 16-03-2024 11:30:00

 HUMAN RESOURCE MANAGEMENT

Notes u Evaluate the effectiveness of different recruitment methods in attracting

diverse talent pools.
u Design innovative recruitment strategies to address talent shortages
or emerging skill gaps.

2.2 Introduction
Businesses are run by people and only these people in an organization
are known as Human Resource. And this is because humans are the most
valuable and useful thing. They have the capability and ability of thinking
productively and innovatively which helps in generating revenue for the
organization. Therefore, for having these people in an organization, different
processes are to be followed such as planning, recruitment and selection.
In this chapter, we will be studying about human resource planning, re-
cruitment and selection, and the processes of doing all of these.

2.3 Human Resource Planning

2.3.1 Concept of Human Resource Planning

Planning is all about forecasting, i.e., to think about future and to make
plans for achieving desired goals. For example, an organization wants to
generate revenue of amount 1 cr in a month. So, to achieve that, they
have to think about future market conditions, estimation regarding in-
comes and expenses and accordingly have to make plans for achieving the
pre-determined goal. Likewise, it is a process of estimating the essential
requirement of human resource in future for an organization.
Need can be more or less depending upon the size of an organization.
But to know what type of human resource is required and for what pur-
pose, is where HR planning is required. Basically, HRP is employment
and manpower planning.
According to Robbins (2001), “Human Resource Planning is the process
by which an organization ensures that it has the right number and kinds
of people at the right places, at the right time, capable of effectively and
efficiently completing those tasks that will help the fulfil organization’s
overall objectives.”

20 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 20 16-03-2024 11:30:00

 Human Resource Planning, Recruitment and Selection

According to Coleman Bruce (1997), “Human Resource Planning is the Notes

process of determining human resources requirements and meeting those
requirements to carry out the integrated plan of the organization.”
Thus, Human Resource Planning is the most integral thing as it plans
about the human resource which is an asset for an organization.

2.3.2 Objectives of Human Resource Planning

u To assess the upcoming requirements of human resource in the
organization.
u To recruit, select and maintain the human resource by using best
methods.
u To anticipate about what level of training is required for human resource.
u To calculate the cost and select human resource accordingly.
u To manage technology as per the need of employees.
u To make strategies for maintaining balance between workforce and
their capabilities.
u To fulfil the requirement of diversification and expansion programs.

2.3.3 Importance of Human Resource Planning

1. Management Development: Human Resource Planning is required
for the development of management as various decision needs to be
taken such as how many new people are to be recruited, whether
responsible work should be given to existing employees or to the
new ones, whether training should be given to existing ones or to
hire skilled and well-qualified personnel.
2. Utilisation of Human Resource: Human Resource Planning ensures
that there is a proper utilisation of human resources in an organization.
Ensuring technological progress for providing the training to
employees is also a part of HRP.
3. Determining and Fulfilling Employee Needs: According to the
vacancy and organizational goal, determination and fulfilment of
employees are done with the help of Human Resource Planning. It
also helps in knowing what kind of skills and knowledge is required

PAGE 21
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 21 16-03-2024 11:30:00

 HUMAN RESOURCE MANAGEMENT

Notes in employees so that it becomes easy to achieve the ultimate goal

of organization.
4. Dynamic Environment: To make organization successful, they have
to operate according to the changing environment. In coping up
with dynamic scenario, human resource planning has a vital role
as it enables the enterprise to know about market trends, product,
technology, demand and government policies.
5. Management Succession: Human Resource Planning makes sure
that existing employees are getting enough time and opportunities
to go on the higher position by the way of promotions which leads
to development of employees.
6. Protection of Weaker Section: As per the policies of government
for the weaker section like SC/ST, OBC, handicapped, women, etc.,
Human Resource Planning protects their interest for the activities
of the organization.
7. Labour Cost Reduction: For being more successful than competitors,
cost reduction is a must and it is done with the help of human
resource planning by making effective use of employees and reducing
the wastage.

2.3.4 Process of Human Resource Planning

1. Determining the Objective: The very first thing is to know the
actual objective of organization and human resource planning, i.e.,
why we are doing such activity and for what? Is there need for
training of existing employees or need to recruit new people?
2. Evaluating Current Workforce: Before taking any plan further or
making any decision, it is important to know about current employees
in an organization, i.e., their weaknesses and strengths, how many
are there in each department, their skills and knowledge, their age,
their position, etc.
3. Demand Forecasting: It is one of the most critical stages of human
resource planning because by keeping in mind the organization
goal, one has to forecast the demand and supply of knowledgeable
employees. It includes how much manpower is needed in future and
it can be done by scenario planning, gap analysis and SWOT.
22 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 22 16-03-2024 11:30:00

 Human Resource Planning, Recruitment and Selection

4. Job Requirement: After knowing the requirement of employees in Notes

future, what kind of job and qualification of a person is required
to fill the post is being determined.
5. Employment Plan: Considering all the above stages of human resource
planning, employment plan is made for employee recruitment,
selection and training while ensuring that requirements of all the
departments in an organization are fulfilled.
6. Training and Development Programs: Without training employees are
not that much productive. To make sure they are working to the best
of their capability and productive, regular training and development
programs need to be organized in an organization. Only the productive
employee helps in achieving the end goal of enterprise.
7. Monitoring of Plan: Last step of human resource planning is to monitor
the plan to check whether after putting plan into action, it is giving
some result or not. Is there any requirement for more employees or
need to remove some of them? Is there any obstacle that is coming
into the way and requires attention? Basically, Human Resource
Planning is a continuous process and constant evaluation according
to the change needs to be done in favour of the organization.

2.3.5 Demand Forecasting

Demand Forecasting is an important part of Human Resource Planning.
It is basically a process through which an organization comes to know
about the future requirement of employees as per pre-determined goal
and annual budget.

2.3.5.1 Importance of Demand Forecasting in Human Resource Planning

u It helps to identify the number of employees that can be required in
future for each department in an organization.
u It helps in knowing what kind of workforce is required which can
yield more.
u It ensures appropriate employees in every department to avoid cost.
u It helps in preventing shortage of staff.
u It monitors the legal requirement regarding reservation of jobs.

PAGE 23
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 23 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes 2.3.5.2 Methods of Demand Forecasting

1. Managerial Judgement: This method of demand forecasting is used
when the organization is small and limited people are required.
To apply this technique, senior managers sit together, brainstorm
and find out the number of employees needed in future to handle
workload. ‘Bottom-up’ and ‘top-down’ approaches can also be a
part of this method. After this, managers submit their proposals to
the top managers who approve the forecast.
2. Work Study Technique: In this technique, future workload of an
organization is estimated with the help of various analyses.
u Workforce Analysis: This analysis is done on the basis of
average loss of manpower because of leave, retirement, transfer,
etc. in last five years.
u Workload Analysis: According to this analysis, the number of
man-hours required to do different jobs as per the planned
output is calculated by an organization.
u Job Analysis: With the help of this analysis, organizations
are able to find the desired skills and knowledge in people
to perform a particular job effectively and efficiently.
3. Statistical Techniques: When the organization is large and long-
term demand forecasting needs to be done then statistical and
mathematical techniques are used, such as:
u Ratio and Trend Analysis: This is the fastest forecasting
technique which uses past ratios and trends between the
workers and sales in an organization for forecasting future
trend by making some changes.
u Econometric Model: Here forecasting of employees is being
done on the basis of sales, revenue and profits.
u Bureks Smith Model: As per this technique, estimation is done
according to the volume of business in rupees and total growth.

2.3.6 Supply Forecasting

Supply forecasting is mainly about knowing how many employees are
available in an organization to work on various positions. This can also
be known as preparing manpower inventory.
24 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 24 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

For supply forecasting every organization has two sources: Notes

u Internal Sources: Through this source requirement of human resource
is estimated by the way of transfer, promotion, retirement, etc. For
knowing availability, manpower audit can also be carried out.
u External Sources: When an organization forecast supply through
external sources then they look up to employment agencies, colleges,
etc. This also contributes towards organization’s growth as new
talent gets hired.

2.3.7 Skill Inventories

Skill Inventory is a tool used by human resource department for compiling
the data about employees of an organization. It includes information like:
u Name, department and position of employee.
u Qualification and certifications.
u Knowledge and skills.
u Work experience.
u Goals towards career.
u Training requirements.

2.3.7.1 Why Skill Inventory is Required?

Human resource professionals use skill inventory for various purposes in
an organization. Some of them are:
u Consistent Improvement: When the skills inventory of employees
is made or updated then some improvement areas get highlighted.
For example, there is a mobile manufacturing company consisting
of 100 employees. Out of them, 60 know how to assemble it and
the rest are just helping hands; now the human resource department
will suggest their manager for organising a workshop or some
training sessions for them, which will result in more productivity
and revenue of an organization.
u Recognizing Gaps: Skill inventory is also used by human resource
department for recognizing gaps between the employees of an
organization. For example, there are only few employees who have
technical skills. In spite of providing them training, human resource
PAGE 25
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 25 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes department may plan for hiring new employees with technical skills.
After knowing about gaps within the workforce, they can take steps
for filling those gaps.

2.3.8 Succession Planning

Succession Planning is one of the strategies that human resource profes-
sionals use to fill out the vacancies which may occur in an organization
if an employee leaves or retires. It also helps in figuring out the most
capable employee for the higher vacant position based on his performance.
Thus, succession planning is also known as ‘replacement planning’.
According to Wendy Hirsch, “Succession planning is a process by which
one or more successors are identified for key posts (or groups of similar
key posts) and career moves and/or development activities are planned for
these successors. Successors may be fairly ready to do the job (short term
successors) or seen as having longer-term potential (long-term successors)”.

2.3.8.1 Process of Succession Planning

1. To Find Positions: The first step of succession planning is to find
out the key positions which are vacant and hampering in achieving
the organization goal.
2. Identifying Competencies: After knowing which position is vacant
and needs to get filled as soon as possible, its required skill is
identified so that selection criteria for that job get created. And the
managers can figure out the difference between employee’s current
skill and what needs to improve, and accordingly will train them
to achieve desired aim of the organization.
3. To Find out Potential Candidate: Now the next step is to search
that competent employee out of various employees who are working
in an organization, who has the desire, capability as well as skills
to fill out that key position.
4. Develop and Implement Succession Strategies: Various strategies
of training, development, learning, knowledge and experience are
developed and implemented for that capable employee who has
filled that vacant position.
5. Evaluating the Effectiveness: It is the last step for the process
of succession planning. It ensures that proper evaluation is done
26 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 26 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

regarding all the critical areas and positions of an organization Notes

under succession planning.

2.4 Human Resource Information System (HRIS)

Human Resource Information System is used by the human resource de-
partment for collecting and storing data of employees like name, contact
details, department, position, salary, date of birth, manager, status, grade,
etc., in an organization.
According to Hedrickson, “HRIS can be briefly defined as integrated
systems used to gather, store and analyze information regarding an or-
ganization’s human resources.”

2.4.1 Benefits of HRIS

u Record Keeping: HRIS is a system that keeps record of changes
that arise in data of employees.
u Compliance: Some data of employees is collected for the compliance
purpose like first contact person in case of emergency, identification
proof, information regarding tax, mandatory documents expiration, etc.
HRIS helps in storing this data safely according to GDPR regulations.
u Efficiency: When all the information is kept in one place in a
systematic way then that results in saving time. Whenever any of
the documents is required by any professional, within a minute of
time, it will be presented to them.
u Self Service: It is a system which enables employees and managers to
manage their own issues if used right. HRIS provides good experience.

2.4.2 Functions of HRIS

u Applicant Tracking System: All the requirements of an organization
related to recruitment are handled by this software. Also, the
information of candidate and resume is tracked and helps recruiter
to match the job opening with suitable candidate.
u Payroll: By the end of the month, orders for payment get
created automatically through payroll system. When the new

PAGE 27
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 27 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes employee gets hired then his information needs to be entered into
the system.
u Benefits Administration: It is a great benefit for employees because
of its self-service model. Employees can have compensation and
also have the right to manage it. For example, if someone wants
paid leave and another requires a car then they both will be able
to get it according to this system.
u Time and Attendance: With the help of HRIS there is no need to
write in and out time of employees on a piece of paper and then
calculate their attendance. This tracking system automatically tracks
the in and out time just by punching or biometric of employees and
it will reflect in the system. If there is any issue regarding being
late or so, it will be detected easily.
u Performance Management: It is an important part for managing
employees of an organization. Reporting manager generates performance
rating of employees in a month or yearly.
u Succession Planning: It on prior basis creates a pipeline related to
talented employees who can replace and perform the key roles in
an organization.
IN-TEXT QUESTIONS
1. __________ is the process of forecasting an organisation’s future
demand for, and supply of, the right type of people in the right
number.
(a) Human resource planning
(b) Recruitments
(c) Human resource management
(d) Human capital management
2. Which of the following factors states the importance of the
Human Resource Planning?
(a) Creating highly talented personnel
(b) International strategies
(c) Resistance to change and move
(d) All of the above

28 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 28 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

3. _______ is the process of estimating the quantity and Notes

quality of people required to meet future needs of the
organisation.
(a) Demand forecasting
(b) Supply forecasting
(c) Environmental forecasting
(d) None of the above
4. Which of the forecasting techniques is the fastest?
(a) Work study technique
(b) Flow models
(c) Ratio trend analysis
(d) HR demand forecast
5. Choose the correct option, where Human Resource Information
System can be used.
(a) Succession planning
(b) Retirement
(c) Designing jobs
(d) Inducting new hires

2.5 Job Analysis

Job Analysis is a detailed and formal explanation of work that needs
to be done by an individual along with the skills required in him. It is
purely an activity of human resource department.
Job analysis consists of duties, responsibilities, skills, knowledge,
work experience, etc., which helps in writing job description and
specification.
According to Edwin B. Flippo, “Job analysis is the process of studying
and collecting information relating to the operations and responsibilities
of a specific job. The immediate products of this analysis are job de-
scriptions and job specifications.”

PAGE 29
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 29 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes
2.5.1 Benefits of Job Analysis
u It helps in making decision during human resource planning regarding
how many employees are required for what kind of job with which
awareness.
u With the help of job description and job specification the recruitment
and selection process gets easier.
u By the way of job evaluation right remuneration of an employee is
ensured.
u It specifies the performance standards which helps in evaluating
performance appraisal.
u Through job specification employees are able to take vocational
guidance.
u Job analysis helps in avoiding health and safety related risks of
employees by providing opportunities to trace health hazards.

2.5.2 Methods of Job Analysis

1. Interview: It is a face-to-face interaction between the interviewer
and the applicant. Interviewer asks some questions because of
which he’ll be able to know about employee’s skills, knowledge
and ability that will be used in performing a job. For professional
jobs this method is used the most.
2. Questionnaire: It is a set of questions related to candidate’s knowledge,
skills and ability which are required for the job given to him for
filling out. It is of two types, open-ended questionnaire and highly
structured questionnaire.
3. Observation: When employees are doing their job then they get
observed by their managers; then that observation is converted into
skill, knowledge and ability for that job.
4. Logs/Diary: Managers ask their employees to maintain a log or
a diary of the activities that they perform in a day related to the
work that has been assigned to them. On the basis of this record
or after analysing, human resource department will make patterns
and convert them into duties and responsibilities.

30 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 30 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

5. Past Experience: Past experience includes the critical incidences Notes

that have been described by the employees. Managers use them for
creating job analysis.
6. Position Analysis Questionnaire: It consists of 194 items which
state the job role that needs to be performed in an organization.
Position analysis questionnaire is a quantitative technique.

2.5.3 Components of Job Analysis

There are two components of job analysis:
1. Job Description: It is a written detailed information about job title,
location, job summary, reporting, working condition, job duties,
machines which will be used and hazards that will be there while
performing a job by an employee.
2. Job Specification: It is a written detailed information regarding
personal attributes such as qualification, experience, skills, knowledge,
training, responsibilities, and characteristics of an employee which
helps in selecting the right individual for performing a job.

2.6 Recruitment
Recruitment is a process of looking and attracting prospective individuals
by different ways such as advertisements, job portals, official website,
etc., to apply for the job that has been offered by an organization. It
basically links the employer and the person who is searching job.

2.6.1 Sources of Recruitment

1. Internal Sources: In internal sources of recruitment existing employees
of the organization fill the vacant position through transfer, promotion
and by rehiring ex-employees. Transfers are horizontal, where the
existing employee gets shifted to the same position but in different
location with no change in power and authority while promotions
are vertical change where the power and authority of a person gets
higher and also results in increment of salary.

PAGE 31
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 31 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes (a) Advantages of Internal Sources

u Employee’s morale gets increased that results in better
performance.
u Cheaper as no advertisement cost is included.
u Through transfer employees get trained for higher jobs.
(b) Disadvantage of Internal Sources
u No fresh talent will get hired in an organization.
u Frequent transfers may result in less productivity.
u Can hamper the feeling of competition.
2. External Sources: In external sources of recruitment employees get
hired from outside the organization. No transfers and promotions
take place. Different ways of external recruitment are:
u Virtual Job Fairs: It is a digitalised way of doing job fair
where candidates upload their resumes and communicate with
recruiter through live chats.
u Dot Jobs: When candidates apply for job by directly uploading
their resume on official websites of company is known as dot
job source.
u Advertisements: By giving ads in different newspapers, television,
radio and in other mediums employers attract applicants.
u Casual callers: With the help of this source, applicants drop
their resumes by visiting prominent institutions.
u Employment Agencies: These agencies are run by government
which provide skilled and non-skilled labour’s data. And also,
they made it compulsory for organizations to post vacancies.
u Management Consultancies: These are the consultancy firms
which help organizations to have technical and professional
applicants for filling their vacant positions.
u Campus Recruitment: Many colleges as well as companies
maintain relations with each other for recruitment purpose.
Companies visit there and conduct their procedure of recruiting
students.
u Referrals: When existing employees of an organization recommend
their friends, relatives and knowns for the vacant position is
known as referral source of recruitment.
32 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 32 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

(a) Advantages of External Sources Notes

 Organizations can have well-qualified and talented
employees.
 Ample choices between people to select.
 Can have fresh and young talents which can think
productively and innovative.
 Enhancement in the feeling of competition between
new and old employees.
(b) Disadvantages of External Sources
 Costly as lot of money is required for advertisement,
running websites, etc.
 Different steps need to be followed for selecting
employees which results in delay in selection.
 Old employees can have a feeling of dissatisfaction
because of no promotion and competition from
young people.

2.7 Selection
It is a process of choosing the right candidate for the vacant position in
an organization. It is mainly a negative process because many people get
rejected during a process and only few get selected for performing an
activity who have the right skill and knowledge and will help in gener-
ating revenue for the organization.
According to Heinz Weihrich and Harold Koontz, “Selection is the process of
choosing from the candidates, from within the organization or from outside,
the most suitable person for the current position or for the future positions.”
According to Dale Yoder, “Selection is the process by which candidates
for employment are divided into classes those who will be offered em-
ployment and those who will not.”

2.7.1 Process of Selection

Different organizations use different processes of selection according to
their requirements. Some basic steps of selection are:
PAGE 33
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 33 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes  Preliminary Interview: It is a screening where all the unsuitable

applicants get rejected.
 Receiving Applications: Through advertisement and being at reception,
basic idea about applicants is given to employer.
 Application Blank: When the applicants are called for an interview
purpose, a blank application form is given to them which needs to
be filled regarding their personal demographics, skills, education,
experience, etc.
 Screening Interview: In this step, a junior executive conducts
interview of all the applicants to reject the unsuitable candidates
in initial stage for saving the time of interviewer’s panel.
 Employment Tests: To check the candidate’s skill, knowledge,
ability and interest towards the job, different tests are conducted
like simulation test, vocational test, aptitude test, etc.
 Selection Interview: Apart from tests, there are various questions
which need to be asked from candidates for further clarification. By
the way of interview, recruiter has that opportunity of asking those
questions face-to-face. Questions can be structured or unstructured.
 Medical Examination: Medical examination is required for some of
the jobs in which tests related to vision, hearing, stamina, voice,
etc. are done.
 Reference Check: Human resource department of an organization
does the reference check of the information that has been given by
employee for fetching his character, regularity at work, etc.
 Hiring Decision: After having discussion between managers, the
right candidate gets selected and is intimated by providing offer
letter and appointment letter.

2.7.2 Tests in Selection

During selection process some tests are conducted to check whether the
applicant is fit or not. These tests can vary in duration and also according
to the position that needs to be filled.
Types of tests are:
1. Personality Test: Personality test is done to check the characteristics
of an applicant. It includes habits, interests, preferences and working
34 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 34 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

style. Recruiters use this test to know whether the candidate is fit Notes
for the job or not.
2. Job Knowledge Test: This test is done to check the ability of a
candidate to succeed in a particular job. Candidate’s knowledge,
skills, and techniques are tested related to the job. For example, if
an organization requires candidate for coding purpose, then through
this knowledge test they will be able to know whether the applicant
is familiar with coding or not.
3. Integrity Test: Integrity test evaluates the honesty of an applicant.
This test helps managers to know whether the candidate they are
hiring is ethical or not because in an organization ethics are the
most important aspect.
4. Cognitive Ability Test: This test is also known as IQ test because
intelligence of an applicant is measured. It helps managers to know
how quickly mathematical functions are performed by an applicant.
This test is done for the job which requires high level of ability.
5. Emotional Intelligence Test: This test measures the emotional
intelligence of an applicant, and how well the candidate builds the
relationship with other employees of an organization. This test is
important when position is of leadership or a marketing job which
requires interaction between people.
6. Physical Ability Test: Strength of a candidate is tested with the help of
this physical ability test. Certain jobs make it compulsory like police
and army because their physical fitness is the most important element.

2.7.3 Concept of Reliability and Validity in Selection

 Reliability of selection tests differs from each other. It mainly depends
on the consistency of how the tests are managed. For the selection
purpose, reliability of tests is measured by conducting the same
each time and candidates are judged objectively.
According to Fraenkel and Wallen (2012), “Reliability is persistent of
the score which acquired from the study in relation to the instrument
of the research study.”
 When the selection test is implemented, its validity is considered.
Equal Employment Opportunity Committee describes validity into
PAGE 35
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 35 16-03-2024 11:30:01

 HUMAN RESOURCE MANAGEMENT

Notes three types, i.e., content validity, construct validity and criterion-
related validity.
According to Bond (2003), “Validity is foremost on the mind of those
developing measures and that genuine scientific measurement is foremost
in the minds of those who seek valid outcomes from assessment.

2.8 Orientation
Orientation is done when an employee joins the organization. It is basically
a process for introducing the new employee with the existing ones and
the work environment so that he feels comfortable and starts his work.
The feeling of belongingness is generated through orientation program.

2.8.1 Purpose of Orientation

 To introduce the new employee with the existing employees and
the organization.
 To generate the feeling of belongingness so the new employee feels
comfortable.
 To provide information related to facilities.
 To make him aware of human resource policies, rules and regulations.

2.8.2 Process of Orientation Program

 Introduction: In this stage new employee is introduced to all the
existing employees, rules, regulations, policies and facilities.
 Socialisation: When the new employee starts understanding the norms
of the organization and accepts the beliefs of others is known as
socialisation.
 Follow-up: Not all people understand everything in one go, so there are
chances of explaining them again. So, to overcome that gap follow-
up meetings are organised by the managers for the new employees.

2.9 Summary
Human Resource Planning is a process by which managers and profes-
sionals estimate the future need of employees for the smooth workflow
36 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 36 16-03-2024 11:30:01

 Human Resource Planning, Recruitment and Selection

of an organization. Demand and supply forecasting are the techniques Notes

which are used by the human resource department. Once the employee
requirement is known to departments, they start creating job descriptions
and job specifications so that applicants get a clear view about the job
and skills needed to perform that job.
Recruitment and selection processes are used for hiring a suitable candi-
date for the betterment of the organization. After hiring, his orientation
is conducted to make him aware of the rules, regulations, policies, work
environment, facilities and existing employees.
Hence, from planning to have a new candidate in an organization to
make him aware of the work he has been hired for is a lengthy process
which are carried out by human resource professionals for making an
enterprise successful.

2.10 Answers to In-Text Questions

1. (a) Human resource planning
2. (d) All of the above
3. (a) Demand forecasting
4. (c) Ratio trend analysis
5. (a) Succession planning

CASE STUDY: XYZ COMPANY

Recruitment and selection are critical processes in human resource
management, playing a pivotal role in shaping an organization’s
success. Let’s delve into a hypothetical case study to illustrate the
complexities and importance of these processes.
XYZ Corporation, a leading technology firm, faced a growing need
for skilled professionals to meet the demands of a rapidly evolving
industry. The company recognized the significance of a robust
recruitment and selection strategy to ensure the acquisition of top
talent. The first step involved conducting a comprehensive job anal-
ysis to clearly define the roles and responsibilities associated with
the open positions.

PAGE 37
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 37 16-03-2024 11:30:02

 HUMAN RESOURCE MANAGEMENT

Notes Once the job profiles were established, XYZ Corporation initiated the
recruitment phase. Leveraging a multi-faceted approach, the company
utilized online job portals, social media platforms, and professional
networks to cast a wide net and attract a diverse pool of candidates.
Simultaneously, the HR team collaborated with hiring managers to
create compelling job descriptions that highlighted the company’s
culture, values, and growth opportunities. As applications poured in,
the selection process became a critical juncture. XYZ Corporation
implemented a rigorous screening process, combining automated ap-
plication tracking systems with manual reviews to shortlist candidates
whose skills and experiences aligned with the company’s needs. The
shortlisted candidates were then invited for initial interviews, during
which their technical competencies, interpersonal skills, and cultural
fit were assessed.
The second round of interviews involved more in-depth assessments,
including case studies and behavioral interviews. XYZ Corporation
emphasized the importance of aligning candidates’ values with the
company’s mission and goals, ensuring a cohesive organizational
culture. Additionally, the final stage included reference checks and
background verifications to validate the accuracy of the information
provided by the candidates.
Throughout the process, XYZ Corporation remained committed to
diversity and inclusion, striving to create a workforce that reflected a
variety of perspectives and backgrounds. The company also invested
in continuous training for its hiring managers to mitigate biases and
ensure fair and equitable decision-making.
Ultimately, the recruitment and selection processes at XYZ Corpo-
ration yielded a talented and diverse team that contributed to the
company’s innovation and growth. The success of these processes
underscored the importance of a well-designed strategy, from metic-
ulous job analysis to thorough candidate assessments, in acquiring
and retaining top-tier talent. XYZ Corporation’s commitment to
excellence in recruitment and selection positioned it as an industry
leader, ready to navigate the challenges and opportunities of the
dynamic business landscape.

38 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 38 16-03-2024 11:30:02

 Human Resource Planning, Recruitment and Selection

Questions Notes

Q.1. Summarize the case in your own words.

Q.2. Explain the recruitment and selection process adopted by XYZ
corporations.

2.11 Self-Assessment Questions

1. Human resource planning is the most crucial thing to do in an
organization. Explain.
2. How does demand forecasting help human resource professionals to
find accurate vacancy?
3. Explain your understanding about HRIS.
4. What do you mean by recruitment? Brief about its sources.
5. Which process helps in selecting candidates? Explain its process.

2.12 References
 Adisa, T.A., Osabutey, E.L.C., Gbadamosi, G. and Mordi, C. (2017),
“The challenges of employee resourcing: the perceptions of managers
in Nigeria”, Career Development International, Vol. 22 No. 6,
pp. 703-723. https://doi.org/10.1108/CDI-01-2017-0003
 Branine, M. (2008), “Graduate recruitment and selection in the UK:
A study of the recent changes in methods and expectations”, Career
Development International, Vol. 13 No. 6, pp. 497-513. https://doi.
org/10.1108/13620430810901660
 El- Kot, G. and Leat, M. (2008), “A survey of recruitment and selection
practices in Egypt”, Education, Business and Society: Contemporary
Middle Eastern Issues, Vol. 1 No. 3, pp. 200-212. https://doi.
org/10.1108/17537980810909823
 Heraty, N. and Morley, M. (1998), “In search of good fit: policy
and practice in recruitment and selection in Ireland”, Journal of
Management Development, Vol. 17 No. 9, pp. 662-685. https://doi.
org/10.1108/02621719810244490

PAGE 39
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 39 16-03-2024 11:30:02

 HUMAN RESOURCE MANAGEMENT

Notes
2.13 Suggested Readings
 Armstrong, M. (1999). A Handbook of Human Resource Management
Practice. https://ci.nii.ac.jp/ncid/BA83417636
 Folger, R., & Cropanzano, R. (1998). Organizational justice and
human resource management. https://doi.org/10.4135/9781452225777
 Fombrun, C. J., Tichy, N. M., & Devanna, M. A. (2015b). Strategic
human resource management. In Routledge eBooks (pp. 28–42). https://
doi.org/10.4324/9781315881881-10
 Kainzbauer, A., & Rungruang, P. (2019). Science Mapping the
Knowledge Base on Sustainable Human Resource Management,
1982–2019. Sustainability, 11(14), 3938. https://doi.org/10.3390/
su11143938
 Wright, P. M., & McMahan, G. C. (1992). Theoretical perspectives for
Strategic Human Resource Management. Journal of Management, 18(2),
295–320. https://doi.org/10.1177/014920639201800205

40 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 2.indd 40 16-03-2024 11:30:02

 L E S S O N

3
Training and Development
Jasleen Kaur
Research Scholar
Department of Management Studies
J. C. Bose University of Science & Technology, YMCA
Email-Id: jasleen2796@gmail.com

STRUCTURE
3.1 Learning Objectives
3.2 Training
3.3 Methods of Training
3.4 Management Development
3.5 Performance Management System
3.6 Performance Management Methods
3.7 Factors that Distort Performance Appraisal
3.8 Career Planning
3.9 Summary
3.10 Answers to In-Text Questions
3.11 Self-Assessment Questions
3.12 References
3.13 Suggested Readings

3.1 Learning Objectives

 Understanding the concept of training and its methods.
 Understanding the concept of management development and its importance.
 Learning about concept, methods and distortion factors of performance management.
 Understanding career planning, its stages and career anchor.

PAGE 41
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 41 16-03-2024 11:36:29

 HUMAN RESOURCE MANAGEMENT

Notes
3.2 Training

3.2.1 Concept
In this dynamic environment and world of technological changes, the
need for training employees has become important for the organisations.
Employee skills that are needed to carry out certain work responsibilities
are improved with the aid of training. It is crucial for organisations to
preserve their human resources by giving them the necessary job-related
training in this knowledge-based era, where human resources are valued
more than physical assets. The training process should be continuous and
should impart required knowledge to the employees otherwise employees
may try to learn the job by trial and error which may prove very costly.
Training enhances the efficacy of individuals working for an organisa-
tion, helps to shape one’s personality, and strengthens management and
interpersonal abilities. It helps in updating knowledge and technical skills
relevant to his or her job. Training helps employees learn more about
their current position and gets them ready for positions at a higher level.
Training can be defined as, “a continuous process of learning that enhances
performance of employees by providing them with required resources of
knowledge for the job”. According to Edwin B. Flippo, “Training is the act
of increasing the knowledge and skill of an employee for doing a particular
job”. In simple words, it is a process that helps in developing the skills of an
individual required to perform effectively and efficiently in an organisation.

3.2.2 Objectives of Training

The purpose of training, whether for new hires or experienced employ-
ees, is to transfer information and abilities that will position them for
development. The training can range from providing instructions about a
job to general information about the company and its surroundings. The
objectives of training are as follows:
1. To equip new entrants with information about the position or job
and the company so they can function efficiently.
2. To avoid obsolescence in organisation by making old employees learn
about new skills which helps an organisation to achieve its goal.

42 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 42 16-03-2024 11:36:29

 Training and Development

3. To ensure smooth and effective working of an organisation. Notes

4. To develop second tier of capable officers in order for them to
eventually hold positions of responsibility.
5. To help workers learn about new equipments and thus save time
and resources.
6. Due to increase in competition, delivering quality goods and services
has become essential. Imparting knowledge regarding quality
management and maintenance becomes essential.
7. To equip employees with the skills that helps in dealing with the
changes whether in technology, processes or business activities.
8. To equip employees with skills to adapt to organizational changes,
avoiding resistance and fostering continuous improvement.

3.2.3 Process of Training

The training process is a continuous process of imparting knowledge,
skills and learning in individuals within an organization. The following
steps determine the process of training:
1. Needs Assessment: The first in the process deals with determining
if there is a need to provide training or not. It is important to find
the problems faced by the employees and what they are lacking in
terms of the skills which is essential to perform the job.
2. Setting Objectives: After analysing the need, it is essential to set
objectives to carry out an effective training program. With goals,
it will become easy to evaluate the success rate of the training
program and will help in examining the results.
3. Designing of Training Programme: The training program is designed
at this stage. The instructor, required equipment, medium of
communication, type of training that is to be provided to the
employees are all decided at this stage. There are two types of
training methods, off the job and on the job. The need of which
type is necessary is also figured out at this step.
4. Implementation of Programme: After thorough designing the
training program is implemented. At the implementation stage, the
employee participates in these programs which helps them improve
their learning and knowledge about the job.
PAGE 43
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 43 16-03-2024 11:36:29

 HUMAN RESOURCE MANAGEMENT

Notes 5. Evaluation: At this stage, the program is evaluated on the basis of

feedback from employees and through the enhancement of their
learning skills.
By following these steps, organization can create comprehensive training
program to enhance capabilities of its existing and new employees which
helps in dealing with changes in the workspace.

3.3 Methods of Training

There are several methods of training the employees in an organisation
and each method suits a given situation. Care must be taken while choos-
ing the type of training as it must be according to the requirements of
the job. The methods of training can be broadly classified as on-the-job
and off-the-job training.

3.3.1 On-the-Job Training

This type of training as the name suggests is imparted at the workplace
where employees are expected to deliver and fulfill job commitments. It
makes it possible for the employee to get training at the same workspace,
with same tools, supplies and resources that they would eventually use at
work. He/she can ask questions and get clarifications immediately about
it. This facilitates speedy learning for the staff member and eliminates
the need for any extra facilities from the business.
There are different types of on-the-job training which are as follows:
(a) Job rotation
(b) Coaching
(c) Internship
(d) Job instruction training
(e) Apprenticeship
(f) Committee assignments
(a) Job Rotation
This kind of training involves movement of trainee from one job to another
in an organisation. It gives general understanding of the organisation’s
working and its functions. It improves the trainee’s learning and aids in
understanding various job duties.
44 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 44 16-03-2024 11:36:30

 Training and Development

Advantages: Notes
(i) The employee receives a broad overview of the company during in-
person training.
(ii) It boosts satisfaction among employees and reduces boredom.
(iii) It helps employees to have better understanding of their interests
and potential career opportunities.
(iv) Trainees are exposed to different view points and situations which
improves their problem-solving abilities.
Disadvantages:
(i) It is a time consuming process.
(ii) The employees are not able to keep track of the time which leads
to confusion.
(iii) The coaches may mislead by providing different guidelines according
to their interpretation.
(b) Coaching
One-on-one instruction from a supervisor regarding the overall operation
of the company is known as coaching. The supervisor tries to answer all
the questions which are essential for the employees to know and gives
them better understanding about the job and overall goals of the company.
Advantages:
(i) It is a cost-effective method of training.
(ii) It provides opportunity for trainees to learn swiftly through continuous
interaction with the superior.
(iii) Regular feedback aids in the trainee’s development.
Disadvantages:
(i) Favoritism among supervisors may occur which may hinder growth
of the trainees.
(ii) The trainees may not get a chance to express their ideas.
(c) Internship
Under this method, theoretical and practical knowledge is provided to
the trainees. They learn all the required skills for the job during this
training. The period ranges from 3 to 6 months which is expected to be

PAGE 45
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 45 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes completed by the trainee to join the company as an employee in future.

Such kinds of training are included in their educational courses.
Advantages:
(i) It helps in maintaining a balance between theory and practice.
(ii) Productivity of the organisation improves.
Disadvantages:
(i) It is a slow process and it may discourage the trainee as well as the
trainer.
(ii) The trainee has to go through a lot of stress.
(d) Job Instruction Training
This is also known as step-by-step training process. It involves all neces-
sary steps in the job and in proper sequence which needs to be performed
for the job. A trainer or supervisor acts as a coach. The proper sequence
needs to be followed and for each step key points are mentioned speci-
fying the reason for performing the step. Steps are as follows:
(i) Preparation of trainees for instruction: The trainee is provided with
the overview of job and what has to be done. Proper documentation
of the job is prepared by the trainer.
(ii) Presentation of trainees for instruction: The trainer demonstrates
the right way to do the job. He/she explains each step thoroughly
to the trainee and the significance of performing it for the job.
(iii) Performance of the job by the trainee: The trainee then performs
the job according to the instructions given by the supervisor/trainer
and if he/she incurs any mistake, it is corrected immediately.
(iv) Motivating the trainee: The trainer keeps a follow-up on the trainee
after the training is completed to avoid any mistakes and faults.
Advantages:
(i) The learning by the trainee is fast by observation and practical
demonstration.
(ii) The mistakes can be corrected immediately and is an economical
method.
(iii) The trainee gains confidence as he/she does the job independently.

46 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 46 16-03-2024 11:36:30

 Training and Development

Disadvantages: Notes
(i) The trainee while learning may damage equipment and waste resource
during the process.
(ii) It occupies the machinery for training which may hinder normal
working hours of the organisation’s productivity.
(e) Apprenticeship
Apprentices are the ones who learn about certain skills by spending time
with the experienced supervisor, coach or trainer. The apprentice learns
by observing the work done by craftsmen. This training continues until
the worker is able to perform the job independently. This type of training
is common in jobs such as weaver, plumber, carpenter, etc.
Advantages:
(i) Immediate returns can be expected from training.
(ii) This type of training brings out a skilled workforce.
Disadvantages:
(i) It is an expensive method of training.
(ii) There is no guarantee that the trained worker will work in the same
organisation.
(f) Committee Assignments
The goal of this training approach is to have learners find real-world
solutions to organisational issues. Collaboratively, the trainees attempt to
solve the given challenge. This helps in enhancing their problem-solving
skills and broadens their level of thinking.
Advantages:
(i) It gives better understanding about the organisational problems to
the trainees.
(ii) It helps to develop team spirit among employees during training
sessions.
Disadvantages:
(i) It may create hassle among the employees.
(ii) It is a time-wasting method as it does not provide any practical
knowledge to the trainees.

PAGE 47
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 47 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes
3.3.2 Off-the-Job Training
Under this method, trainee is separated from the work location and entirely
focuses on learning about the job. The training is completely different
from the actual job work and is focused on providing knowledge to the
trainee about the materials and ways of doing job efficiently. This type of
training is considered more effective in inculcating skills and knowledge.
Types of off-the-job training are as follows:
(a) Lectures
(b) Conference
(c) Vestibule Training
(d) Case Study
(e) Role Playing
(a) Lectures
Lectures is one of the most simplest and traditional way of providing knowl-
edge to the trainee. When it comes to learning about facts, principles, prob-
lem-solving skills, theories and attitude, this method of training is very useful.
The study material is also handed to the trainees for further understanding.
Advantages:
(i) This method reduces cost per trainee as large number of trainees can
be lectured at once by the instructor/supervisor.
(ii) This is an easy, simple and effective way of learning.
(iii) The lectures provided by the instructor can bring clarity amongst
the trainees and they can also participate actively in the process.
Disadvantages:
(i) The practical knowledge is missing in this method of training.
(ii) Lectures can be time-consuming and may lead to disinterest amongst
the trainees.
(iii) The same lecture is delivered to the group of trainees without
considering their level of skills.
(b) Conferences
To avoid the limitations of lecture method, usually organisations opt for
conference method of training. It involves direct discussion among the
48 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 48 16-03-2024 11:36:30

 Training and Development

trainees on a particular problem and topic. This stimulates their level of Notes
thinking and helps in enhancing problem-solving skills. It is a two-way
communication method.
Advantages:
(i) This is a useful method of analyzing problem from different points
of view at the same time and place.
(ii) It helps in developing conceptual knowledge in trainees.
(iii) It contributes to active participation of the trainees in the discussion.
Disadvantages:
(i) This method can be applied in small groups.
(ii) The process is long and the learning is delayed.
(iii) The discussion may be diverted by some irrelevant topics which may
lead to wastage of time.
(c) Vestibule Training
In this method, actual work conditions are replicated and all the materials
that are used in actual job are used in the training. Theoretical knowledge
is carried out in practical to equip the trainees with all the required skills
for the job. This type of training is generally used in clerical and semi-
skilled work. The duration varies from a week to few days.
Advantages:
(i) It reduces distraction in trainees as the knowledge is imparted in
separate work setting similar to actual work space.
(ii) The trainees acquire complete knowledge about the rules, procedure
and skills by observing and doing themselves.
Disadvantages:
(i) Due to errors in practicing can lead to wastage of resources.
(ii) The trainees may develop certain skills at slow pace which may be
costly for the organisation.
(d) Case Study
It is believed that managerial skills can be attained by learning about the
problems that a company faces and finding solutions. A case is a set of
data or summary that describes about a problem in written form and is
provided to trainee to examine and find appropriate solution for it. This
PAGE 49
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 49 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes type of method helps them in gaining better understanding of real-life

situations that a company faces in the light of changing environment.
Some cases can be illustrative in nature.
Advantages:
(i) It helps in enhancing analytical and problem-solving skills.
(ii) This is an interesting approach as it is based mostly on real-life incidents.
(iii) The trainees are able to get different sets of solutions for the same
problem at one time.
Disadvantages:
(i) The trainees may use the provided case studies as benchmark for
other similar problems.
(ii) The method is time-consuming as it does not promise desired outcome.
(e) Role-Playing
In role-playing the trainees are given a particular role to perform in front
of others. They do not need any time for rehearsal but the problem is
explained to them in advance for smooth delivery of the role play. There
is no single answer to the given problem which broadens their way of
thinking. It also helps in developing interpersonal and communication skills.
Advantages:
(i) The knowledge of the result is immediate and the method emphasizes
on human emotions.
(ii) Involvement of trainees is high as it is interactive and full of learning.
(iii) Broadening of mindset and thoughts.
Disadvantages:
(i) It is a time-consuming process.
(ii) It is difficult to apply on large groups of trainees.

3.4 Management Development

3.4.1 Concept
A deliberate and all-encompassing strategy, management development
equips managers to tackle the ever-changing demands of organisational

50 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 50 16-03-2024 11:36:30

 Training and Development

leadership. This idea, which is based on the ideas of adaptation and con- Notes
tinuous learning, acknowledges that managers must constantly gain new
skills and competencies throughout their careers due to ever-changing
nature of the corporate environment. Effective management development
is a multifaceted strategy that includes multiple techniques including
formal training programs, coaching, on-the-job training in addition to
exposure to many company components. Behavioral transformation in
leaders is the goal of effective management development programmes.
It is not enough to simply acquire theoretical information; one must also
put that knowledge into practice by motivating managers to demonstrate
leadership traits in their daily responsibilities.
According to Edwin Flippo, “Management development includes the
process by which managers and executives acquire not only the skills
and competency in their present jobs but also capabilities for the future
managerial tasks of increasing difficulty and scope.

3.4.2 Importance of Management Development

The management development is an important concept and is required
for organizational success and sustainability. For achieving certain objec-
tives, it is necessary to impart knowledge and skills among employees
or managers which is possible through an effective management devel-
opment program. The importance of management development programs
is stated as follows:
1. Leadership Competence: This helps managers in developing required
skills and knowledge which helps them in accelerating their
performance at work. These include decision making, strategic
thinking, communication and team management.
2. Conservation of Resources: The most important task is optimum
utilisation of resources. These programs should help managers to
gain learning about techniques to utilise resources in a better and
sustainable way. He/she should be able to conserve resources and
avoid wastage of these resources as much as possible.
3. Competitive Advantages: The managers should be able to handle
competition in the dynamic environment. The training on innovative
management methods should be provided.

PAGE 51
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 51 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes 4. Risk Management: Leaders prepared through management development

are adept at managing risks associated with change. They can guide
their teams through transitions, mergers or industry disruptions with
resilience and agility.
5. Global Perspectives: In an interconnected global economy, management
development programs often incorporate cross-cultural competencies.
Leaders trained to navigate and understand diverse cultural context
contribute to successful international business arrangements.

3.5 Performance Management System

The power of an organisation entirely depends on human resources rath-
er than physical assets. The work done by employees is what drives an
organisation in the changing environment. Evaluation of performance has
become important for all the managers in a company. In simple words,
performance is the ability of managers and their subordinates to get the
work done in stipulated time.
Performance management is divided into two different ways. The first
way deals with evaluating the performance of organisation as a whole
and also of the managers. On the other hand, second way is evaluating
the performance of employees to help them achieve the desired goals.
Performance management is a systematic and continuous process of ex-
amining and evaluating the performance of employees as individuals and
also as part of a group. Performance management can also be defined as
a process of developing a work environment which enhances the perfor-
mance of employees and aligns their performance with the overall goals
of the organisation.

3.5.1 Purpose of Performance Management System

1. To facilitate HR practices and decision-making process.
2. Enabling the employees to compare their actual performance with
the expected performance.
3. It helps the employees to improve their performance after thorough
evaluation.

52 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 52 16-03-2024 11:36:30

 Training and Development

4. Creates a basis for performance appraisal, succession planning, Notes

strategic planning, promotion and compensation management.
5. Helps in promoting personal growth of employees and also improves
their knowledge base.

3.5.2 Performance Appraisal

The key responsibility of managers is to evaluate the performance of
employees. Performance appraisal is a powerful tool which helps in
providing documented feedback to the employees about their actu-
al performance. The performance appraisal data of employees helps
managers to determine continued employment, transfers, promotions,
compensation and raises. It helps in developing a sound communication
system between the supervisor and the subordinates. Performance ap-
praisal is defined as a “process of evaluating performance of employees
required for the given job and determine the scope of improvement”.
It is nothing but the process of judging the relative worth of an em-
ployee for the job.

3.5.3 Uses of Performance Appraisal

1. It helps in providing feedback in documented form to the employees
and explains what exactly they are currently doing at their job.
2. If the performance is found to be below standard, the employee can
be equipped with training and development programmes.
3. Performance appraisal helps management in identifying employees
eligible for promotion.
4. It is a better means of deciding layoffs for the company.
5. The appraisal data helps in human resource planning. The management
can determine the required personnel on the basis of current appraisal
data.
6. Performance appraisal helps in deciding the compensation for
employees on the basis of their performance and the requirements
of the job.
7. It helps in distinguishing between effective and ineffective employees
in the organisation.
PAGE 53
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 53 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes IN-TEXT QUESTIONS

1. What is the primary purpose of training and development in
an organization?
(a) Increasing employee turnover
(b) Enhancing employee skills and knowledge
(c) Reducing job satisfaction
(d) Ignoring workforce development
2. Which of the following training methods is considered most
interactive and hands-on?
(a) Lectures
(b) E-learning
(c) On-the-job training
(d) Case studies
3. What is the key benefit of a mentoring program in a training
and development context?
(a) Cost savings
(b) Formalized training curriculum
(c) Transfer of experience and knowledge
(d) Limited employee engagement
4. In the context of training evaluation, which level of Kirkpatrick’s
model assesses the impact on job performance?
(a) Level 1: Reaction
(b) Level 2: Learning
(c) Level 3: Behaviour
(d) Level 4: Results

3.6 Performance Management Methods

This section provides a broad overview of the various methods that are
used for managing and evaluating performance of employees in an or-
ganisation. The methods are divided into two categories, i.e., traditional
and modern methods.
54 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 54 16-03-2024 11:36:30

 Training and Development

Notes
3.6.1 Traditional Methods
(i) Ranking method
(ii) Paired comparison
(iii) Forced distribution method
(iv) Checklist method
(v) Confidential reports
(vi) Essay method
(i) Ranking Method: This is the simplest method of performance
appraisal. In this, ranks are assigned to employees on the basis of
their performance. The top performer is usually ranked 1 and as
the performance decreases, so does the rank. The limitation of this
method is that it does not specify why a person is better and is
difficult to rank a large number of employees.
(ii) Paired Comparison: This is a better version of ranking method as
each employee is compared with the other employees in the group
taking one trait at a time. This helps in better comparison but is
also a time-consuming process.
(iii) Forced Distribution Method: In this method, a five-point performance
scale is used to rank the employees according to their performance or
any traits described by the employer. For example, 10% employees
may be ranked as best performers, other 20% as performers, 40%
employees are average employees, the next 20% employees are
rated as below average employees and 10% as poor. This helps in
maintaining uniformity among the rate scale.
(iv) Checklist Method: In this method, a checklist of traits and essential
attributes required in an employee is prepared. The rater answers the
questions in the form of Yes/No. The method helps in examining
numerous traits at one time and the report is prepared for further
evaluation. The biasedness of the employer/rater can be seen in this
method and is a significant limitation.
(v) Confidential Reports: This is an old and traditional form of performance
appraisal. In this, the report of an employee is prepared by the
immediate supervisor describing about the strengths, weaknesses,

PAGE 55
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 55 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes achievements and other behavioral attributes. This report is usually

used for promotion and transfer purposes.
(vi) Essay Method: In this method, rater has an opportunity to write about
all the required information related to performance of an employee.
He/she describes all the traits in an essay form. This is a simple and
useful method of performance appraisal. The limitation of this method
is that each rater may have different ways of expressing the thoughts
in the essay which can be misleading or difficult to interpret.

3.6.2 Modern Methods

(i) Management by objectives (MBO)
(ii) 360-degree performance appraisal
(iii) Assessment centers
(i) Management by Objectives (MBO): This method is based on objectives.
The superiors and subordinates jointly identify common goals and
decide the level of expected performance required to achieve the
goals. During appraisal, the actual performance is compared with
the expected performance. After comparison, corrective actions are
taken to achieve the remaining goals. This method is applicable on
managerial positions.
(ii) 360-Degree Performance Appraisal: Usually the employer/superior
examines the performance on the basis of its difficulty, the standards
that are to be maintained and observes the employee at work. When
the performance is evaluated by other stakeholders like customers,
suppliers, team members, peers and self is known as 360-degree
appraisal. The performance should be evaluated without being biased
and should help in determining more important and less important
employees.
(iii) Assessment Centres: These centres are places where the managers
and employees come together and are examined on certain attributes
that affect their performance. They are requested to participate in
activities like work groups, computer assignments, role-playing and
others. This helps in analyzing their behavioral factors which may
arise while participating. Cost of such activities is high and may
add to the budget of organisation.
56 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 56 16-03-2024 11:36:30

 Training and Development

Notes
3.7 Factors that Distort Performance Appraisal
One of the errors that appraisal system faces is that the employer/rater
is unbiased and gives objective decisions. There are various factors that
hinder appraisal process in an organisation which are as follows:
1. Halo Effect: This error arises when the rater gets influenced by
one or two good traits of an employee and evaluates the complete
performance on those traits. The rater’s judgement at times may
get influenced by the team and other informal group that he/she is
associated with.
2. Leniency Error: The raters have their own way of evaluating
performance against some standard performance. Because of this,
it may lead to high or low ranking. This is called leniency error.
3. Similarity Error: Usually people tend to perceive and interpret
behavior by projecting their own perceptions on others. For example,
the rater believes in honesty, this will lead to this type of error as
the rater may perceive that all the employees are honest.
4. Constant Errors: The raters tend to make mistakes as they evaluate
a large pool of employees with different skill set and knowledge.
The rater may rank high because he/she is habitual of doing so or
vice versa.

3.8 Career Planning

3.8.1 Concept
Career is all the jobs that are held during one’s working life. Planning
of career merely does not bring success. Continuous improvement, better
performance, learning, education and experience help in successful career.
Career planning is the process of enhancing employee potential value by
improving their skills through continuous learning. Career planning de-
fined from the point of view of organisation is the process of providing
opportunities and growth potential to individual from the time of joining
to their retirement. Career planning is an ongoing process and is important
for every employee in their work-life.

PAGE 57
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 57 16-03-2024 11:36:30

 HUMAN RESOURCE MANAGEMENT

Notes
3.8.2 Purpose of Career Planning
1. Career planning helps manager foresee future job requirements and
identify the right employee for the same.
2. It helps in retaining right and efficient employees in the organisation.
3. Better utilisation of resources and employee skills motivates them
to be better at work.
4. With proper growth needs, employees tend to achieve their self-
esteem needs and feel satisfied.
5. Career plans and goals help the employees to grow and develop.
6. Career planning helps in achievement of individual as well as
organisational goals.

3.8.3 Career Life Stages

The stages in career planning consist of four steps:
1. Stage 1- Exploration: A lot of choices an individual makes in terms
of his career are much before he enters the workforce. He tries to
understand his own needs and finds his identity. He sits in lot of
examination tests to determine the best skills he possesses. This is
the most unstable stage and the start of the career is from exploring
one’s own personality and skills.
2. Stage 2- Establishment: This stage is start of finding the first job,
being accepted by peers, learning the job and understanding about
success or failure during the work. The individual tries to get
promotion through continuous learning.
3. Stage 3- Maintenance: This is the most important stage of an
employee’s career. Here, he is stable and tries to maintain his job,
get promotion and carries on with continuous learning. The career
progress may boom or become stagnant depending on his abilities
and hard work.
4. Stage 4- Decline: This is the last stage of career. The employee’s
performance starts to deteriorate and he is close to getting retirement.
These individuals are asked to step out of their limelight and give
up their career as they have served their time in their respective
fields of work.
58 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 58 16-03-2024 11:36:30

 Training and Development

Notes
3.8.4 Career Anchors
A person’s talent and attitude patterns, known as career anchors, enable
them to keep their position after receiving criticism and working for
numerous years. Because they change over time, career anchors are hard
to pinpoint. The better the career and our understanding about what we
do, the better is the career anchor. There are few career anchors as de-
scribed by Schein:
1. Managerial Competence: People with this drive seek positions that
offer better opportunities, power etc.
2. Technical Competence: People who are technically competent seek
opportunities in functional or technical content of the work like
engineering.
3. Security: With this anchor, people prefer to maintain job security
and choose opportunities according to this.
4. Creativity: This kind of people have desire to do something that is
completely different from others and seek recognition.
5. Autonomy: These people seek a career which offers freedom and
independence.
6. Dedication to a Cause: In this, person focuses on career that is
based on a cause and describes his personality.

3.9 Summary
 Training is a process that helps in developing the skills of an
individual required to perform effectively and efficiently in an
organisation.
 The training can range from providing instructions about a job to
general information about the company and its surroundings.
 Training equips employees with required skills, prepares them for
competition and helps in career planning. It further helps in dealing
with organisational changes.
 By following training process steps, organization can create comprehensive
training program to enhance capabilities of its existing and new
employees which helps in dealing with changes in the workspace.
PAGE 59
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 59 16-03-2024 11:36:31

 HUMAN RESOURCE MANAGEMENT

Notes  On-the-job and off-the-job training methods enable managers to ensure

continuous learning among employees and enhance their efficiency
at work.
 An efficient management development programme may help managers
and staff acquire the information and skills they need to accomplish
certain goals.
 Performance management helps the employees to improve their
performance after thorough evaluation. It provides traditional and
modern methods of evaluating performance.
 Performance appraisals assist in giving employees written feedback
and clarify what they are doing on the job right now.
 Career planning is an ongoing process and is important for every
employee in his/he work life.

3.10 Answers to In-Text Questions

1. (b) Enhancing employee skills and knowledge
2. (c) On-the-job training
3. (c) Transfer of experience and knowledge
4. (c) Level 3: Behaviour

CASE STUDY
Case Study: Transformational Journey of Workforce
Excellence at Tech International Solutions (TIS)
Tech International Solutions (TIS), a global leader in technology
solutions, is navigating a transformative journey to elevate its work-
force performance and adapt to the dynamic demands of the digital
era. Facing challenges such as increasing competition, evolving client
expectations, and rapidly changing technological landscape, TIS rec-
ognizes the imperative to overhaul its training and performance man-
agement strategies. In recent years, TIS has experienced a stagnation
in project innovation, a rise in client escalations, and a noticeable
disconnect between employee skill sets and market demands. The
leadership team attributes these challenges to an outdated training
model and a performance management system that fails to capture

60 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 60 16-03-2024 11:36:31

 Training and Development

the multidimensional nature of employee contributions. The organi- Notes

zation is committed to redefining its approach to talent development
and performance evaluation to stay at the forefront of the technology
industry.
TIS operates in a highly competitive market where technological
advancements occur at an unprecedented pace. The current training
programs lack the agility to keep up with the emerging technologies,
and the performance management system falls short in recognizing
the diverse skills and contributions of its workforce. TIS believes
that a strategic overhaul of these processes is essential to foster in-
novation, enhance employee engagement, and ensure the continued
success of the organization.
Questions:
1. What interactive training formats can be introduced to make
learning more engaging and practical?
2. How can the organization strike a balance between quantitative
and qualitative metrics to provide a comprehensive view of
employee performance?
3. In what ways can the organization integrate cultural competency
into training content and delivery?

3.11 Self-Assessment Questions

1. It has been said, “you cannot teach a person anything, but a
person can learn”. Discuss the implication of this for training
methodology.
2. Discuss the steps involved in training and the importance of training
programs in an organisation.
3. Enumerate the factors that distort performance appraisal.
4. Discuss the significance and career planning and also explain the
meaning of career anchor.
5. What do you mean by performance management? Explain the
methods required for appraising the performance of employees.

PAGE 61
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 61 16-03-2024 11:36:31

 HUMAN RESOURCE MANAGEMENT

Notes
3.12 References
 Adisa, T. A., Osabutey, E. L. C., Gbadamosi, G. and Mordi, C.
(2017), “The challenges of employee resourcing: the perceptions of
managers in Nigeria”, Career Development International, Vol. 22
No. 6, pp. 703-723. https://doi.org/10.1108/CDI-01-2017-0003.
 Branine, M. (2008), “Graduate recruitment and selection in the UK:
A study of the recent changes in methods and expectations”, Career
Development International, Vol. 13 No. 6, pp. 497-513. https://doi.
org/10.1108/13620430810901660.
 El- Kot, G. and Leat, M. (2008), “A survey of recruitment and
selection practices in Egypt”, Education, Business and Society:
Contemporary Middle Eastern Issues, Vol. 1 No. 3, pp. 200-212.
https://doi. org/10.1108/17537980810909823.
 Heraty, N. and Morley, M. (1998), “In search of good fit: policy
and practice in recruitment and selection in Ireland”, Journal of
Management Development, Vol. 17 No. 9, pp. 662-685. https://doi.
org/10.1108/02621719810244490.

3.13 Suggested Readings

 Mahapatro, B. B. (2022). Human resource management. PG Department
of Business Management.
 Naik, C. A., & Naik, C. A. (2010). Human Resource Management:
Managing People at Work. Ane Books Pvt. Limited.
 Jyothi, P., & Venkatesh, D. N. Human Resource Management Oxford
University Press 2006. P-36-37.

62 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 3.indd 62 16-03-2024 11:36:31

 L E S S O N

4
Compensation
Dr. Anushree Chauhan
Assistant Professor
Department of Management Studies
J. C. Bose University of Science & Technology, YMCA, Faridabad
Email-Id: anushree27973@gmail.com

STRUCTURE
4.1 Learning Objectives
4.2 Introduction
4.3 Concept of Compensation
4.4 Process of Compensation Determination
4.5 Job Evaluation
4.6 Components of Pay Structure
4.7 Factors Influencing Compensation Levels
4.8 Trends in Compensation
4.9 Incentives: Importance and Types
4.10 Benefits: Types and Brief Introduction to Social Security, Health,
Retirement & Other Benefits
4.11 Summary
4.12 Answers to In-Text Questions
4.13 Self-Assessment Questions
4.14 References
4.15 Suggested Readings

4.1 Learning Objectives

 To understand the process of compensation determination.
 To learn the role of job evaluation in compensation designing.
 To understand the factors influencing compensation.

PAGE 63
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 63 15-03-2024 18:06:02

 HUMAN RESOURCE MANAGEMENT

Notes  To learn different incentives and benefits.

 To understand recent trends in compensation.

4.2 Introduction
Every organisation has a goal to accomplish. This goal is accomplished
by its manpower. Hence the manpower of an organisation must have the
required knowledge, skills, aptitude and attitudes. An attractive compen-
sation package helps in retention of manpower. The desired behaviour
from the manpower depends a lot on the compensation provided to the
employees. The designing of employee compensation is therefore very
important. This chapter explores the different aspects of employee com-
pensation along with the current trends of compensation.

4.3 Concept of Compensation

Employees of an organisation are recognized for their performance and
work done by way of compensation. The classification of compensation,
its components are a major source of increasing the efficiency of em-
ployees. The compensation should be attractive, must be motivation for
employees to work and also justify the amenities provided to them by
the organisation. The compensation is very important for the employees
of an organization as for them it is the reward for the work they have
done for the organisation. Compensation is also an important tool for
the employer as it is an important part of the cost of the product or the
service it provides. Compensation may be viewed as:
(a) A process of rewards that motivates employees to perform.
(b) A tool through which an organisation attracts, retains employees
and foster desired behaviour in the employees.
“If you pick the right people and give them the opportunity to spread
their wings – and put compensation and rewards as a carrier behind it
– you almost don’t have to manage them.”
–Jack Welch
Compensation may be defined as the “Money received in the performance
of work, plus many kinds of benefits and services that organisations
provide to their employees.”
64 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 64 15-03-2024 18:06:03

 Compensation

Notes
4.3.1 Objectives of Compensation
Compensation is a mechanism used to fulfil the following objectives:
1. To attract and retain efficient employees.
2. To increase the job satisfaction of employees.
3. To increase the motivation level of employees.
4. Rewarding good performance.
5. Reducing turnover and keeping employees loyal towards the organisation.
6. To achieve external and internal equity.

4.3.2 Components of Compensation System

Compensation system consists of the entire process of designing the com-
pensation. The compensation system is designed according to the strategic
plans of the organisation and it includes the following components:
(i) Job Description: Includes the duties and responsibilities, location
related to work.
(ii) Job Specification: Includes the skills and professional qualifications
required for a particular job.
(iii) Job Analysis: The system of analysing a particular job which provides
the output as job specification and job description.
(iv) Job Evaluation: It is the process of comparing different jobs to
determine compensation levels for different jobs.
(v) Pay Structures: This is used to standardise compensation. Compensation
includes several grades containing a minimum compensation and
grade range.
(vi) Salary Surveys: These surveys include collection of data related to
salaries, inflation indicators, cost of living indicators for determining
the compensation.

4.3.3 Components of Compensation

Compensation received by employees has the following three main
components:

PAGE 65
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 65 15-03-2024 18:06:03

 HUMAN RESOURCE MANAGEMENT

Notes (i) Basic salary/wage for the job.

(ii) Incentives for the performance of employees on the job.
(iii) Benefits or supplementary compensation (fringe benefits)

4.4 Process of Compensation Determination

The process of compensation determination is done through the organi-
zational compensation management system and usually it involves the
following steps:
STEP I: Job Analysis: Through this process the analysis of a job is done in
detail and all information related to it are collected. The collected information
is divided into Job description (duties and responsibilities in a job) and Job
specification (knowledge, skills and abilities required for a job). After job
analysis the actual process of grading, rating and evaluating the job is done.
STEP II: Job Evaluation: Job evaluation is the process of finding out
the actual importance of a job for designing the compensation.
STEP III: Wage/Salary Survey: After the above-mentioned two steps,
the actual amount to be given as compensation is decided through salary
surveys. These results of such surveys are available through several re-
search bodies or they can be done by the organisation itself. These surveys
can be done for few jobs, key jobs or all jobs within an organisation.
STEP IV: Several factors in the working environment to be studied and
considered; these include employee expectations, ability of the organisa-
tion to pay, supply and demand of labour, applicable market rate, living
cost and skill levels available in market.
STEP V: Preparation of Wage/Salary Structure: The formulation of
wage/salary structure is done by the organisation by taking into con-
sideration several aspects like (i) the level of amounts the organisation
wishes to pay, (ii) number of pay grades and (iii) defining the jobs to
be placed in the pay grades.
STEP VI: After the rate ranges (minimum to maximum) have been decid-
ed the regulatory acts related to compensation need to be followed. The
regulatory acts related to compensation in India are: Minimum Wages Act
(1968), Payment of Wages Act (1936), Equal Remuneration Act (1976),
Payment of Bonus Act (1965).

66 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 66 15-03-2024 18:06:03

 Compensation

Notes
4.5 Job Evaluation
The origin of Job Evaluation dates back to 1987 in the US; it is now
used in almost all the countries for assessing the variations in salaries,
specifically for man-handled jobs and relevant activities.
According to BSI 1969 (British Standard Institution), “Job evaluation is a
generic term covering methods of determining the relative worth (equity)
of jobs. It is a systematic (qualitative and quantitative) technique, for
evaluating the actual worth of jobs in order to determine a job structure
for the organisation”.
The primary objectives of job evaluation are:
(i) To establish relevant wage/salary level in any organisation.
(ii) To facilitate salary/wage negotiations.
The secondary objectives of job evaluation are:
(i) To analyse wage/salary rates.
(ii) To establish the basis of promotions.
IN-TEXT QUESTIONS
1. Which of the following statements is not true regarding
compensation?
(a) Compensation includes direct and indirect cash payments
in the shape of employee benefits to motivate all the
employees to aim for upper levels of productivity.
(b) Adequate and equitable remuneration of personnel for
their contributions to the organizational objectives.
(c) Compensation is defined as only the money received by
an individual employee for rendering his services to his
employer.
(d) None of these.
2. What are incentives?
(a) Supplementary compensation
(b) Motivators
(c) Performance based
(d) All of these
PAGE 67
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 67 15-03-2024 18:06:03

 HUMAN RESOURCE MANAGEMENT

Notes 3. Gratuity and Provident fund are

(a) Incentives
(b) Allowance
(c) Social security measure
(d) None of these
4. Which of the following is not an individual time-based incentive
plan?
(a) Halsey Plan
(b) Rowan Plan
(c) Emerson Plan
(d) Taylor Plan
5. Compensation over and above the base compensation is
(a) Monetary compensation
(b) Non-monetary compensation
(c) Supplementary compensation
(d) None of these
6. Fixed component of the compensation includes
(a) Incentives
(b) Base pay
(c) Both incentives & Base pay
(d) None of these
7. The system of systematically assessing the actual worth of jobs
to create a job structure for the organisation is called
(a) Job analysis
(b) Job rotation
(c) Job evaluation
(d) Job description
8. The competency-based pay plan is more
(a) Person oriented
(b) Job oriented
(c) Tenure oriented
(d) Evaluation oriented
68 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 68 15-03-2024 18:06:03

 Compensation

Notes
4.5.1 Job Evaluation Procedure
The procedure of job evaluation includes the following:
1. Scope of Job Evaluation: The initial thing is to decide which jobs
are to be assessed office staff, supervisory or managerial.
2. Establish Purpose of Evaluation: The purpose of job evaluation
can be either to evaluate the integration of compensation of each
job with its relative contributions to the organisation and helps to
set salary structure of new or unique jobs or to align with strategy
of the organisation. It can be conducted for reducing grievances or
for motivating the employees.
3. Choosing Single or Multiple Plans: Different plans can be used
for different categories of jobs hence may result in multiple plans
of job evaluation within the same organisation. It is the decision
of the organisation to choose single plan for all the types of jobs
or to use multiple plans for different categories of jobs.
4. Choose Among Alternative Approaches (Methods): Three basic
job evaluation approaches are:
(i) Job Ranking: In this method all types of jobs are well arranged
according to their worth. The most important job is given the
highest rank while the least important job is given the lowest
rank. This is the simplest and less time-consuming method.
(ii) Job Classification: Also called as grading method. The jobs
are divided into various classes/grades; the label of each class/
grade describes the category of jobs in particular class/grade.
This process is also simple and less time-consuming.
(iii) Point Rating Method: This method identifies the compensable
factors for each job on the basis of job analysis. These factors
are scaled and are given weightage according to importance.
For example, the compensable factors of the job of a bookstore
manager include: skills (mental & experience), efforts (physical
& mental), responsibility and working conditions. These factors
are scaled and assigned the weightage to ascertain the worth
of the job.
(iv) Factor Comparison Method: In these methods the comparable
jobs with clear job description are selected. The factors to
PAGE 69
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 69 15-03-2024 18:06:03

 HUMAN RESOURCE MANAGEMENT

Notes be used are identified, the choice of factors are much more
limited than point rating method. The chosen jobs are then
ranked successively by reference to each of the factors chosen.
This method provides a more systematic comparison of jobs
than the non-analytical methods (ranking and classification)
5. Obtain Involvement of Relevant Stakeholders: After the jobs are
evaluated the results of the job evaluation are shared by all the
stakeholders for consideration and designing of the compensation.
6. Evaluate Plan’s Usefulness: The results of the evaluation are analysed
in detail to ascertain the suitability of the method of job evaluation
used.

4.6 Components of Pay Structure

An organisation designs the compensation of its employees keeping in
mind its function strategies. Results of job analysis are important determi-
nants for compensation. The basic financial components of compensation
system are divided into two broad categories direct and indirect, which
are given below:
1. Direct Components: These include the basic salary/wage and the
variable payments, i.e., commissions, incentives, bonus, stock options.
2. Indirect Components: These include all the benefits; it is also called
supplementary compensation (fringe benefits). The benefits are the
house rent allowance, medical allowance, health & life insurance,
retirement plans, educational assistance etc.
The non-financial components of compensation include challenging job
responsibilities, supervision, growth prospects, working conditions, and
recognitions like “employee of the month”.

4.7 Factors Influencing Compensation Levels

An organisation also takes into consideration the following factors to
design the compensation structure:
1. Organisation’s Ability to Pay: The organisations in their maturity
phase having a good percentage of profits every year are able to pay
good compensation to their employees as compared to organisations
70 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 70 15-03-2024 18:06:03

 Compensation

having less capital, are still in growing phase or are declining, they Notes
are unable to pay higher to its employees.
2. Market Forces of Supply and Demand of Labour: If the supply
of labour is less but demand is more then the compensation of such
labour will be high. If the demand is less and supply is higher then
the compensation will be less. So higher wages are distributed if
labour is scarce and lower wages are distributed if labour is in excess.
3. Prevailing Market Rate: An organisation while designing the
compensation structure analyses the compensation for same positions
in other similar organisations within the same industry. This is called
“Going wage rate”. Through this, the competitors pay relatively
same wages and retain the employees.
4. Cost of Living: An increase in cost of living automatically increases
the minimum wages.
5. Bargaining Power of Trade Unions: The compensation paid to the
employees also depends on how strong the union of that organisation
is. A strong union ensures the desired level of wages.
6. Psychological and Social Factors: These include fairness and equity
in payment. The employees perceive that the compensation they
receive is in return of their efforts, they compare the efforts with
the payment; this payment is also a symbol of success for them.
7. Managerial Attitudes: If the top management wants to attract and hire
best skilled resource available in the market, then the compensation
will be high.

4.8 Trends in Compensation

Compensation is an important tool with the employers to attract, motivate,
retain and train the employees of the organisations. The organisations
today are devising several designs of the compensation; trends in com-
pensation are given below:
1. Broad Banding: This results in few but wide bands of jobs, due to
which the management has greater flexibility in setting the pay rates.
2. Knowledge, Skill and Competency-based Compensation (also
called skill-based pay): Knowledge is the information acquired by

PAGE 71
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 71 15-03-2024 18:06:03

 HUMAN RESOURCE MANAGEMENT

Notes an employee while performing a job. Skill is the expertise acquired

after doing a work repeatedly. Competency is ability and efforts
required for a particular job. Organisations today are using knowledge,
skill and competency-based compensation to enhance productivity
of the organisation along with development of the employees. In
knowledge-based compensation the employees are rewarded for
increasing their knowledge related to work in any form like learning
a new technique or increasing educational qualifications. In skill-
based compensation, the employee is paid for skill enhancement
and utilisation. In order to keep an employee motivated for self-
development by increasing abilities, the organisations are opting
for competency-based pay.
3. Team-based Compensation: Today, majority of the organisations
encourage project-based/team-based work. The employees understand
each other well through this culture of work and when they get
compensation as a team, their motivation level is increased. But
individual performance is de-motivated in team-based compensation.
4. Equity-based Compensation: In this type of compensation the
employees of the organisation are offered shares of the organisation
at a reasonable price. This motivates the employee, as it gives
their representation in ownership of the organisation. It is non-cash
payment to the employees and it ensures retention of employees.
5. International Compensation: With globalisation and the emergence
of global corporate citizen, compensation strategy in the global
environment has acquired increasing importance. Multinational
companies today are standardizing the pay policy and strategy at
the global level.

4.9 Incentives: Importance and Types

Incentives are the performance-based components of compensation hence
they are the variable component. Incentives motivate the employee to
perform better in a job. Incentives are monetary as well as non-monetary.
The non-monetary incentives are job satisfaction, job security and rec-
ognition for the work done. The basic rationale of any incentive scheme
is to increase the productivity.

72 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 72 15-03-2024 18:06:03

 Compensation

Notes
4.9.1 Importance of Incentives
(i) Help in making improvements of workflow, work methods and man-
machine relationships.
(ii) The efficient workers are given an opportunity to earn for their
performance.
(iii) Help in innovation and remove the problems in performing the work.
(iv) Increases the motivation level of the employees, which reduces the
requirement of supervision.
(v) Enhance mutual relationships and teamwork. Ultimately, they help
in improving industrial relation.

4.9.2 Limitations of Incentives

Incentives as a component of compensation are disadvantages as stated below:
1. In an urge to earn more and more incentives an employee may
overwork.
2. As an employee overworks, the quality of work decreases resulting
in requirement of more inspection and supervision.
3. Cost and time of additional clerical work for calculating the incentives
of each worker increases.
4. Employees may feel jealous with each other and this may result in
conflict.

4.9.3 Types of Incentives

As highlighted in the below highlighted diagram the incentive plans are
individual, group or organisational based. The different types of plans
(as depicted in the figure) are discussed in detail.
1. Individual Incentives: These incentives are given to individual
employee and these can be time-based or output-based. Time-based
incentives are given to workers who are getting time rate-based
wages, while the output-based incentives are distributed to employees
who receive the wages based on output (Piece rate). The time-based
plans are dependent on the standard time for doing the job. The
output-based plans are dependent on a standard output.
PAGE 73
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 73 15-03-2024 18:06:03

 HUMAN RESOURCE MANAGEMENT

Notes
INCENTIVE PLANS

Individual Group Organisational

 Priest man  Profit-Sharing
Production  Co-partnership
Plan
 Scanlon Plan
TIME-BASED
1. Halsey
2. Rowan Plan
3. Emerson Plan
4. Bedeaux Plan

OUTPUT-BASED
1. Taylor
2. Merrick

Time-based Individual Incentive Plans

(i) Halsey Plan: It ensures a minimum time wage for each worker. The
standard time for completing a job is fixed. If the job is completed
in less than the standard time, then bonus is given. No deductions are
there in the wages if the job is done in more than the fixed standard
time. A worker who completes the work before the fixed standard
time is given bonus. This bonus given is calculated through 50 per
cent of time saved. It is simple to understand both the worker and the
employer get the benefit of time saved. The difficulty of this method
is in setting the standard time, although the method is simple.
(ii) Rowan Plan: This method ensures minimum time wages and no
wages are deducted of less efficient workers. Like Halsey method
a fixed standard time for job completion is selected; if the worker
completes the job before the fixed time, a bonus is given. This
method is advantageous to both the employees and efficient workers.
But this method is complicated for workers to understand.

74 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 74 15-03-2024 18:06:03

 Compensation

(iii) Emerson Plan: This plan classifies the workers on the basis of Notes
efficiency. The workers whose efficiency is less than 66.67% are not
provided bonus. Those workers who are 100% efficient are given
20% bonus, for every further 1% additional efficiency increase the
bonus is increased by 1%. All the workers get wages based on time
rate.
(iv) Bedeaux Plan: It uses the unit of time as point B. A minute of
allowed time for work is called as B (so 60Bs represents an hour).
For every job there is standard number of Bs. The standard time
for doing a job is expressed in terms of B. The bonus is 7 percent
of the number of Bs earned by a worker apart from 60 per hour.
Normal wages are given to workers who complete the work after or
on standard time. Workers who complete the work before standard
time are given bonus over and above the normal wages. Those who
are able to complete their work earlier are paid bonus. One-fourth
of the bonus is given to the foreman. This motivates the foreman
but demotivates the workers.
Output-based Individual Incentive Plans
(i) Taylor’s Plan: A differential piece rate is given. These piece rates
are of two types—high efficiency workers are paid higher piece
rate, i.e., 120% of piece rate while the low efficiency worker is
paid less piece rate, i.e., 80% of piece rate. Thus, this plan does
not ensure minimum guarantee wage.
(ii) Merrick’s Plan: In this plan the workers are divided into three
categories—(a) The workers who produce less than 83% of standard
output are given just the basic piece rate; (b) The workers whose
output varies from 83% to 100% of the standard output are given
110% of the basic piece rate; (c) The workers producing more than
110% of standard output are paid 120% of basic piece rate.
In this plan also the minimum wage is not guaranteed.
(iii) Gantt Plan: In this plan a standard performance level output is
defined. The worker who achieves it gets extra money in a range
of 25% to 50% of the per hour rate of payment. If the worker
completes the work in the standard time then only the wages are
given.

PAGE 75
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 75 15-03-2024 18:06:04

 HUMAN RESOURCE MANAGEMENT

Notes Group Incentive Plans

(i) Priestman Plan: Guaranteed time wage and incentive bonus for
increase in productivity in proportion to the increase in per capita
output. A standard output is determined (employees and employer).
Actual output compared with standard and the % of productivity
bonus calculated as:
% of Productivity Bonus = 100 × [(Pa/Wa) − (Pb/Wb)]/Pa/Wa
Pa = Actual output in assessment month
Wa = No. of workers in assessment month
Pb = Base output for standard
Wb = No. of workers for standard
Pa/Wa = Actual production in assessment month
Pb/Wb = Standard production in base month
(ii) Scanlon Plan: In this plan a committee is set up, which will ask
for suggestions from the workers regarding how to improve the
different ways of doing the work through which cost is also
reduced, as well as time is saved. The overall effort is to increase
the productivity of a plant/department. If there is increase in the
sales of the manufacturer product as compared to the cost of the
labour, then the workers are given incentives.
Organisational Incentive Plans
(i) Profit-Sharing: In this method a predetermined share in profit is
promised. There is unity of interest and cooperation among all the
employees.
(ii) Co-partnership: Workers get salary plus dividend on the shares.
Both the profit and loss are shared. Workers are co-owners so status
of the workers increases. This is possible in organisations having
shared capital.

4.10 Benefits: Types and Brief Introduction to Social

Security, Health, Retirement & Other Benefits
Benefits are the amount which an employee gets in compensation over
and in addition to the basic compensation and the incentives. Cockman

76 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 76 15-03-2024 18:06:04

 Compensation

defines employee benefits as “those benefits supplied by an employer, to Notes

or for, the benefit of an employee which are not in the form of wages,
salaries and time-related payments”. Cockman stated that there are fringe
and key benefits.
These are part of supplementary compensation; The major portion of
supplementary compensation are the fringe benefits.
As per the ILO fringe benefits can be explained as – “Wages are often
augmented by special cash benefits, by the provisions of medical and other
services or payments in kind that form part of the wage for expenditure
on the goods and services. In addition, workers commonly receive such
benefits and holiday with pay, low-cost meals, low rent housing etc. Such
additions to the wage proper are referred to as fringe benefits.”
Advantages offered to employees under ‘Fringe benefits’ component
include benefits like car with driver, foreign travel, insurance, medical
facilities, children’s education, office accommodation, secretarial services
share schemes, profit sharing, and retirement counselling house purchase.
According to Belcher, these benefits are “any wage cost not directly
connected with employee’s productive effort, performance, service or
sacrifice”. Dictionary meaning of “fringe” is “an ornamental border”.
These benefits are aimed at attracting and retaining efficient and contented
workforce through boosting up of their real earnings.
According to the International Encyclopaedia of Social Sciences, “a fringe
benefit has to meet two tests: it must provide a specific benefit to an
employee and it must represent a cost to the employer.”

4.10.1 Types of Benefits

There are different types of benefits available; these can be classified
into different types on the basis of different factors:
1. Mandatory By-law and Voluntary Benefits: The mandatory by-
law benefits include the different measures of social security and
employee welfare like the Employees Provident Fund, Gratuity,
Employee State Insurance, maternity benefits etc. provided by the
government. While the voluntary benefits are over and above these
benefits, it depends upon the willingness of employer to provide
these.
PAGE 77
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 77 15-03-2024 18:06:04

 HUMAN RESOURCE MANAGEMENT

Notes 2. On the Basis of Accounting Treatment: On the basis of accounting

treatment, the fringe benefits are classified into following categories:
(i) Payment for the time period in which worked, i.e., is overtime
payment as well as the payment for increase in cost of living.
(ii) Payments for time period in which not worked: Like paid
holidays, maternity leave, supplemental unemployment benefits.
(iii) Payment for other benefits: This includes the payment of
Insurance and employee services.
3. On the Basis of Certain Objectives: Those benefits which provide job
security like unemployment compensation, workman’s compensation,
insurance and retirement benefits.
4. Those benefits which increase the job satisfaction of employees, in
order to retain them or to improve their efficiency.
5. Deferred Benefits and Immediate Benefits: The benefits provided
after a time period are pension, insurance, and sick pay. On the
other hand, providing a vehicle for transportation to an employee
is an example of immediate benefit.
6. Benefits can also be classified as:
(i) Pay for time out worked.
(ii) Insurance benefits: Compensation for injury, hospitalisation,
health & disability insurance, life insurance.
(iii) Social security and Pension plans.
(iv) Employee welfare services within the organisation (Intramural)
and outside the organisation (Extramural). Intramural includes
toilets, creches, canteens, medical, recreation facilities etc.
while the Extramural includes accommodation, transport,
maternity benefits, child education, club etc.

4.10.2 Brief Introduction to Social Security

Benefits are integral part of compensation. One of the reasons to provide
benefits is to ensure social security to the employees of an organisation.
Social security is ensuring the safety of employees in the society against
life problems, diseases, deprivation, or to all the risks to which they are
exposed.
78 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 78 15-03-2024 18:06:04

 Compensation

The employees may not be able to cope with these contingencies through Notes
their limited means, hence the government provides safety to the citizens.
There are schemes of social security for both the organised as well as
unorganised sector.
As per the ILO, social security refers to the “protection which society
provides for its members through a series of public measures against
the economic and social distress that otherwise would be caused by the
stoppage or substantial reduction of earning resulting from sickness, ma-
ternity, employment injury, unemployment, old age and death”.
The features of social security are:
(i) It protects from risk to those who have limited means.
(ii) In public policy of a welfare state like India, it constitutes an essential
part.
(iii) Social and economic factors in a particular economy influence the
social security measures adopted by that economy.
(iv) All social security measures are statutory in nature.

4.10.3 Health, Retirement and Other Benefits

Health and retirement benefits are the major categories of benefits pro-
vided to the employees.
Health benefits include: (i) Mediclaim policy for the employees through
which employees are provided monetary benefits for their health checkup,
treatment of a disease or injury in accident; (ii) Health insurance and
(iii) Free medical checkups.
There are legislations through which it is mandatory for employers to
provide the advantages to the employees. These legislations include the
Employees’ State Insurance Act, 1948, the Maternity Benefit Act, 1961,
and the Workmen’s Compensation Act, 1923.
Retirement benefits are offered to the employees when an employee
attains a specified age or on completion of required number of years of
service. These retirement benefits include the following:
(i) Provident Fund: It is the fund which is managed by Employee
Provident Fund Organisation (EPFO) under the Employee Provident
Fund Act, 1952. Provident Fund is the fund established through
PAGE 79
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 79 15-03-2024 18:06:04

 HUMAN RESOURCE MANAGEMENT

Notes this Act. The objective of the Act was to secure the future of the
employees after their retirement, and to cultivate a spirit of saving
among the workers. Under this scheme the employer contributes
a portion (12%) of the basic salary plus dearness allowance, an
equivalent amount is deducted from the salary of the employee.
An employee can however contribute more amount from salary to
the provident fund. The total amount is deposited to EPFO.
(ii) Gratuity: It is the amount which is paid by an employer to an
employee on retirement or if an employee is leaving the organisation
after working in it for at least five years. It is a token of regard for
employee’s contribution towards the organisation. The legislation
through which payment of gratuity is mandatory is the Payment of
Gratuity Act, 1972. This Act is a social security measure which the
government has undertaken to provide protection to the employees
against the risk of old age. Through this Act a calculation of
gratuity is done through the formula specified in the Act. This
brings universality in the payment of gratuity.
Other benefits include stock options, cash bonus, insurance, profit shar-
ing, interest-free loans, expense account and membership of clubs, and
perquisites (perks).

4.11 Summary
Compensation is the return which an employee receives in return for the
work done for the organisation. The compensation system of an organi-
sation is a combination of several processes which includes job analysis,
job description and specification, job evaluation, wage/salary structure
and the various legislations related to compensation. The components of
compensation can be classified into direct and indirect. The direct com-
ponents are basic salary/wage, incentives, bonus etc. while the indirect
components include benefits. The monetary component of the compen-
sation are challenging task as well as appreciation for the work done.
Every organisation has a compensation system to determine the compen-
sation for its employees. This system includes conduct of job analysis for
finding the duties and responsibilities on the job as well as the required
skills for the job. After job analysis the strategy of the organisation, factors

80 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 80 15-03-2024 18:06:04

 Compensation

influencing compensation are identified and lastly the legal obligations Notes
are identified and incorporated.
For designing the compensation an important process is job evaluation.
Through job evaluation the relative worth of each job is ascertained in
order to assign compensation. Job evaluation can be done through ana-
lytical methods or non-analytical methods. The non-analytical methods
are the job ranking and job classification methods while the analytical
methods are the factor comparison and point rating methods.
The current trend in compensation payment includes skill-based compen-
sation: Knowledge-based, skill-based, and abilities-based. The equity-based
compensation provides employees with the shares of the organisation.
Competency-based payment helps employees to develop competencies
and ensure increased productivity in return.
Incentives are the performance-based component of the compensation;
hence they vary from individual employee to employee. The individual
incentives are dependent on output or based on time saved by the em-
ployee. The time-based incentive plans include the Halsey Plan, Rowan
Plan, Emerson Plan and Bedeaux Plan while the output-based plans
include the Taylor’s Plan, Merrick Plan and Gantt Plan. The group in-
centives are Scanlon and Priestman plans; these are based on efficiency
and productivity. At the organisation level the incentives are based on
the profit earned. Incentives encourage performance and help in retention
of employees.
The other main component of compensation is the benefits. The benefits
mandatory or voluntary are provided to all the employees irrespective of
their performance. Benefits mandatory in nature are the social security
benefits like provident fund, gratuity, maternity benefits and medical
treatment.
Compensation is a cost to the employer and reward for an employee for
the work done. This makes compensation an important aspect for man-
aging employees in an organisation. Through compensation components
the desired behaviour in the employees can be generated. The incentives
and fringe benefits motivate the employees to work. The social security
measures help in the retention of the employees as well as make the
employees feel secure with respect to their future. All the components
of compensation need to be added strategically depending on several

PAGE 81
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 81 15-03-2024 18:06:04

 HUMAN RESOURCE MANAGEMENT

Notes factors like ability of the organisation to pay, stage of the organisation
and several other factors. Today organisations are using several types
of compensation to enhance the knowledge, skills and abilities of the
employees. These types of compensations enhance the capabilities of
employees to increase productivity of the organisation. All these make
the concept of compensation important for study.

4.12 Answers to In-Text Questions

1. (c) C
 ompensation is referred to as only the money received by
an employee for providing services to his employer.
2. (d) All of these
3. (c) Social security measure
4. (a) Halsey plan
5. (c) Supplementary compensation
6. (b) Base pay
7. (c) Job evaluation
8. (a) Person oriented

4.13 Self-Assessment Questions

1. Explain the different monetary and non-monetary components of
compensation.
2. What are the different components of employee benefits?
3. What is the importance of incentives?
4. What do you mean by Compensation? Discuss the factors affecting
compensation & also write the features of a good compensation
plan.
5. Describe the importance of Job evaluation.

4.14 References
 International Labor Organization. n.d. Available online: https://www.
ilo.org.

82 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 82 15-03-2024 18:06:04

 Compensation

 Welch, Jack and suzy Welch. The real-Life MBA: Your No-BS Notes
Guide to Winning the Game, Building a Team, and growing your
Career, Harper, 2015, ISBN 97800628032015.
 https://www.economicsdiscussion.net/human-resource-management/
fringe-benefits-in-hrm-meaning-objectives-importance-and-types/31633.
 William A. Darity Jr. 2008, International Encyclopaedia of the Social
Sciences, Macmillian reference USA ISBN 9780028659657.

4.15 Suggested Readings

 Aswathapa K. 2023. Human resource management, Text & Cases,
8th ed., Tata McGraw Hill Education.
 Gray Dessler. 2019. Fundamentals of Human Resource Management.
5th ed., Pearson Education Limited.
 Shikha Kapoor. 2015. Human Resource Management, Taxmann
Publications Pvt. Limited, New Delhi.

PAGE 83
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 4.indd 83 15-03-2024 18:06:04

 L E S S O N

5
Industrial Relations
Dr. Anushree Chauhan
Assistant Professor
Department of Management Studies
J. C. Bose University of Science & Technology, YMCA, Faridabad
Email-Id: anushree27973@gmail.com

STRUCTURE
5.1 Learning Objectives
5.2 Introduction
5.3 Introduction to Industrial Relations
5.4 Trade Union: Roles, Types Functions & Problems
5.5 Industrial Dispute: Concept, Causes & Machinery for Settlement of Disputes
5.6 Employee Grievances: Concept, Causes, Grievance Redressal Procedure
5.7 Discipline: Concept, Aspects of Discipline & Disciplinary Procedure
5.8 Collective Bargaining: Concept, Types, Process, Problems & Essentials of
Effective Collective Bargaining
5.9 Summary
5.10 Answers to In-Text Questions
5.11 Self-Assessment Questions
5.12 Reference
5.13 Suggested Readings

5.1 Learning Objectives

 To understand the aspects and approaches of industrial relations.
 To understand the importance of Trade Union in industrial relations.
 To learn the need of resolving employee grievances.
 To learn the mechanisms for handling industry-related disputes.
 Understanding the role of collective bargaining.

84 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 84 15-03-2024 18:08:00

 Industrial Relations

Notes
5.2 Introduction
Industrial relations are important for maintaining relationships between
the management and employees. It is a complex web of employment re-
lationships. Edwards (2003) has used the term “employment relationship”
instead of “industrial relations”. Employment relationship is defined as the
relationship between employer and employee along with the trade union
and the state”. The unions are representation of the employees while the
state/government is representation of both employer and employee.

5.3 Introduction to Industrial Relations

Industrial relations are basically the relations between employee and
employers in an organisation. It does not include the interpersonal rela-
tionships among individuals as well as the behaviour of individuals as
members of groups, excluding the moral and social element.

5.3.1 Different Stakeholders in Industrial Relations

The main stakeholders in industrial relations include:
1. Employees and their unions.
2. Employers and their associations.
3. The State/Government.
The employees are represented by their unions. Unions help the em-
ployees in getting their demands fulfilled and provide a better working
environment for them. Employers also desire certain aspects in their or-
ganisations, which they can get from the government and they can also
desire from the workers, for which purpose they form associations. The
government plays an important role to protect the employee’s as well as
the employer’s interests through legislations.

5.3.2 Approaches to Industrial Relations

The industrial relations among the management and the workers are based
upon the following approaches:

PAGE 85
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 85 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes (i) Unitary Approach

This approach assumes that all the employees as well as the employer are work-
ing towards a common goal. As they are working towards a common goal
there will not be any conflict, all will work like a team.
(ii) Pluralistic Approach
This approach considers that the society is a complex of multiple in-
terest groups each having their goals, so conflicts will occur. These
conflicts can be resolved through compromises and bargaining between
the stakeholders.
(iii) Radical Approach (also called as Marxian approach)
Under this approach it is assumed that there are two classes, i.e., capital
and labour and there is power conflict between these two classes. This
conflict needs to be managed to maintain the relationships.
(iv) Trusteeship Approach (Mahatma Gandhi’s approach)
In Gandhiji’s view capital does not belong to one group; capital is held
by people in trust of society. So capital must be used for fulfilling the
needs of the society and not individual interests alone
(v) Dunlop’s Systems Approach
According to this approach, every system includes an input, a set of pro-
cesses, an output and feedback. The environmental factors influence the
entire system. The inputs are the actors (employees, employers, govern-
ment), contexts (technology, market, power) and ideology. These inputs re-
sult in processes like collective bargaining, conciliation, arbitration and
legislations. The processes give the rules as the output.

5.3.3 Objectives to Industrial Relations

The focus of industrial relations is to fulfil the following objectives:
1. To protect the interests of both the management and the labour.
2. To develop harmonious relationships in the organisation to avoid
conflict and increase the productivity of workers.
3. To promote industrial democracy.
4. To prevent conflicts, strikes and lockouts.
5. To improve the economic conditions of workers.
86 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 86 15-03-2024 18:08:01

 Industrial Relations

Notes
5.3.4 Importance of Industrial Relations
Industrial relations is about management of relationships between the
employer and employees. If this relationship is healthy it will result in
the following:
1. Increased and continuous productivity.
2. Increased motivation of employees.
3. Disputes between the employers and employees are reduced.
4. Full utilisation of the resources.

5.4 Trade Union: Roles, Types Functions & Problems

Trade Unions Act, 1926 defines Trade Unions as “any combination,
whether temporary or permanent, formed primarily for the purpose of
regulating the relations between workmen and employers or between
workmen and workmen or between employers and employers, or for
imposing restrictive conditions on the conduct of any trade or business,
and includes any federation or two or more trade unions.”
Trade unions play an important role in maintaining harmonious relation-
ship among the management and the workers. Trade unions are formed
by the workers to protect themselves, work for providing better work-
ing conditions etc. These unions are useful to the management as they
can deal with a group which is a representation of all the workers. The
workers are also interested in forming the unions as well as joining the
unions as collectively they can make efforts to protect their interests.

5.4.1 Role of Trade Union

The employees collectively come together to form a trade union. The
roles of the trade union are as follows:
1. Its purpose is to protect and promote all kinds of interests –related
to money, related to politics and related to society of its members.
2. To make employees participate in the management for protecting
their interest.
3. To improve the working conditions of the employees.

PAGE 87
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 87 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes 4. To secure social security to the employees.

5. To solve the grievances of its members.

5.4.2 Types of Trade Unions

The trade unions are classified as follows:
1. Plant Level Unions
2. Firm Level Unions
3. General Unions
4. Craft Unions
(i) Plant level Unions: Plant level unions are formed by the
workers of a manufacturing plant. Members are related to a
particular plant of a manufacturing firm.
(ii) Firm level Unions: In firm level unions, all the union members
belong to a particular firm.
(iii) General Unions: The members of the unions belong to several
firms from the same industry.
(iv) Craft Union: The union members have a particular skill in
common like carpentry, welding etc.

5.4.3 Functions of Trade Unions

The functions of Trade Unions are as follows:
1. Militant Functions (to get the rights): Through these functions the
workers ensure that they get fair wages, the conditions of work
are good, get respectable treatment from employers, etc. through
several methods like collective bargaining, negotiations, go-slow,
strike, boycott, gherao, etc.
2. Fraternal Functions: Through these functions the trade unions assist
the members by providing monetary and non-monetary measures
to them. The union develops cooperation among the members for
helping each other. The arrangements like legal assistance and
education facility are some of the other examples on which the
unions work. The welfare measures for which the unions work so
that the members are benefitted include, school for the education of
88 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 88 15-03-2024 18:08:01

 Industrial Relations

children, library and recreational facilities. The unions also publish Notes
their activities in some journals or magazines. These functions of
the union are dependent on the availability of funds, which is raised
by the contributions from the members and leadership.
3. Intramural Functions: These consist of those measures provided by
the unions through which employees get better working environment
within the organization. These functions are confined within the
organization.
4. Extramural Functions: These functions help the employees to
maintain and improve their efficiency or productivity outside the
organization through different measures like welfare measures,
education facility, health facility etc.
5. Political Functions: These functions are related to the formation of
a political party or to seek influence on public policy relating to
matters connected with the interests of the members of the Union.

5.4.4 Problems of Trade Unions

The problems related to trade unions in India are given below:
1. Uneven Growth: The trade unions in India are confined in a few
states only, where the number of industries is concentrated at one
place. The number of unions varies from industry to industry.
2. Limited Membership: The number of workers joining the union
is declining although there is an increase in the number of unions.
3. Multiple Unions: There are more than one union in the same
organisation. This leads to conflicts between different unions within
the same organisation.
4. Financial Problems: Unions face the problem of inadequate funds
required to protect the interest of the members.
5. Attitude of members of the Union: The problem with majority of
the unions is the indifferent attitude of its members; the members
lack interest to promote the activities initiated by the union for
their betterment.
6. Outside Leadership: The leaders of the trade unions are not the
workers but are the outsiders like politicians, intellectuals and

PAGE 89
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 89 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes professionals who have no work experience in industry. These

outsiders have their personal interest to lead the union.

5.5 Industrial Dispute: Concept, Causes & Machinery for

Settlement of Disputes
Industrial Disputes are inherited in the workplace, as whenever there
are differences in the goals of separate groups disputes will occur. It
is essential to understand the causes of industrial disputes and the ma-
chinery to settle these disputes. Disputes if not settled lead to decrease
in productivity, so it is essential to settle them. The government plays
an important role in dispute settlement through the dispute settlement
machinery provided by it in the Industrial Dispute Act, 1947.

5.5.1 Concept of Industrial Dispute

As per the Industrial Dispute Act, 1947, Industrial dispute refers to any
dispute between employers and employers, or between employers and
workmen, or between workmen and workmen, which is connected with the
employment or non-employment or the terms of employment or with the
conditions of labour, of any person (as stated in the Industrial Dispute Act).
The dispute in an organisation is considered as unhealthy and is consid-
ered to affect the functioning of an organisation. Disputes bring the issues
in public. The industrial disputes can be at the level of an individual or
can be at the level of all employees. At the individual levels the disputes
may be related to issues of compensation, for wrong termination etc. At
the level of all employees the disputes are related to wages, bonus, profit
sharing, hours of work etc.

5.5.2 Causes of Industrial Dispute

The different sources of industrial disputes are:
1. Psychological Causes: These causes are related to the psychology
of the employees; these include:
(i) The type of leadership particularly authoritative where there is
no participation of the worker in any decision.
(ii) Strict discipline.
90 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 90 15-03-2024 18:08:01

 Industrial Relations

(iii) Difficulty in adjusting with different personalities of people. Notes

(iv) Self-respect and recognition.
2. Institutional Causes: These causes are related to the working
conditions and environment like unfair working conditions, non-
acceptance of union by management, and exploitative pressure by
the management on the workers.
3. Economic Causes: These are most common causes of industrial
disputes. These include issues related to wage payment, bonus,
shifts, benefits and incentive payments to the workers, working
hours, promotions etc.
4. Legal and Other Rights of Workers are Denied: Through the legisla­
tions of the government there are certain liabilities to be accomplished
by the employers as well as by the employees. If these are not
accomplished it results in disputes. Sometimes the agreements between
the employer and employee are violated, this results in dispute.

Machinery for Prevention and Settlement of Industrial Disputes

Statutory Measures Non-Statutory Measures

Industrial Dispute Act, 1947: 1. Collective Bargaining

1. Works committee 2. Code of Discipline
2. Conciliation 3. Worker’s participation in
(a) Board management
(b) Officer 4. Trade Unions
3. Arbitration 5. Grievance Procedure
4. Adjudication
(a) Labour Court
(b) Industrial Tribunals
(c) National Tribunals

PAGE 91
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 91 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes
5.5.3 Machinery for Settlement of Industrial Dispute
In India the machinery for dispute settlement can be broadly classified into
two broad categories: statutory and non-statutory measures. The statutory
measures include the legislation related to industrial disputes, i.e., the In-
dustrial Dispute Act, 1947 while the non-statutory measures include code of
discipline, worker’s participation in management and collective bargaining.

5.5.4 Statutory Measures

As per the Industrial Disputes Act, 1947, given below are the statutory
measures for prevention and settlement of Industrial Disputes:
1. Works Committees: A voluntary committee to be set up in all industrial
units which employ 100 or more persons. It is a consultative body
for cooperative atmosphere for negotiation.
2. Conciliation: In this process services of a third neutral party are
used to reduce the differences and settle the dispute. This third
party can be a conciliation officer or a conciliation board.
3. Arbitration: This is also third-party intervention for dispute settlement
but is different from conciliation in the aspect that the decision of
the arbitrator is binding on the parties.
4. Adjudication: In this process the third party for dispute settlement
is through Labour Court, Industrial Tribunal and National Tribunal.

5.5.5 Non-Statutory Measures

These measures of industrial dispute settlement are voluntary in nature.
These measures include:
1. Collective Bargaining: It is the voluntary method of negotiation
between the parties to settle the industrial disputes.
2. Code of Discipline: It is a preventive measure of disputes in which
guidance is provided to workers through rules, related to their work
and behaviour at workplace.
3. Worker’s Participation in Management: In this preventive measure
of dispute, the workers are involved in the decision-making process
of the organisation.
92 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 92 15-03-2024 18:08:01

 Industrial Relations

4. Trade Unions: This is a preventive measure for disputes. The employees Notes
unite together for protecting their common interests and rights.
5. Grievance Procedure: This procedure helps in handling employee
grievance preventing them to take the form of a dispute.

5.6 Employee Grievances: Concept, Causes, Grievance

Redressal Procedure
In an organisation employees may feel at a point of time discontented or
dissatisfied related to any aspect of the working environment like manage-
rial style, decisions or conditions of work. This is grievance which needs
to be managed systematically to keep the employee motivated. Grievance
is any discontent or dissatisfaction experienced by an employee. It results
when an employee feels that his or her expectations are not fulfilled by
the employer. The grievance can be of a single employee or of all the
employees. It may be that an employee may not express the grievance felt
or it may be that the grievance felt is not at all a grievance. Grievance
arises in an employee due to unfair and unjust behaviour.
Keith Davis defines a grievance as, “any real or imagined feeling of personal
injustice which an employee has concerning his employment relationship”.

5.6.1 Causes of Grievances

The different causes of grievances are as follows:
1. Economic causes like increments, bonus, wages etc.
2. Working conditions like safety and hazards etc.
3. Leadership style.
4. Promotions and transfers.
5. Disciplinary action.

5.6.2 Grievance Redressal Procedure

If an employee feels grieved and dissatisfied, it leads to unhappiness
and discontent in the employee. Ultimately, it affects employees’ morale,
concentration, efficiency and productivity. This means that grievances

PAGE 93
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 93 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes need to be resolved. In India, most of the big organisations are having
a formal procedure to resolve these grievances.
Through this formal procedure of grievance redressal employees get formal
opportunity to communicate their discontent or dissatisfaction. The man-
agement can understand the root cause of the problem and resolve them
quickly before they become serious; this will enhance the morale of the
dissatisfied employees. The steps of a formal grievance procedure include:
1. Identifying the grievance.
2. Collection of data and evidences.
3. Analysing the facts, data and evidences.
4. Taking decisions.
5. Implementation and follow-up.
Apart from a formal system, proactive approach of dealing with griev-
ances includes:
1. Through observation
2. Gripe boxes
3. Open door policy
4. Exit interviews
5. Opinion survey

5.7 Discipline: Concept, Aspects of Discipline & Disciplinary

Procedure
Discipline is the bridge to accomplish the goals. Employee discipline is a
major role player in the attainment of goals of any organisation. Employee
discipline at the workplace means adhering to the procedures, regulations
and rules laid down by the management. The desired behaviour by the
employees is achieved through disciplinary procedure.

5.7.1 Concept of Discipline

The term “discipline” implies a state of order in an organisation. Discipline
ensures an acceptable performance of the employees by following the
rules of work behaviour laid down by the management and maintaining
the satisfactory work. The term discipline emerges through employment
94 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 94 15-03-2024 18:08:01

 Industrial Relations

relationship between a manager and workers. Through employee disci- Notes

pline a positive work environment is created which is necessary for the
smooth functioning of the organization.

5.7.2 Aspects of Discipline

The aspects of discipline can be categorised into two broad categories:
Negative Discipline and Positive Discipline
(i) Negative Discipline: When employees adhere to rules and regulations
of management, as they fear punishment. This type of discipline
requires intense supervision.
(ii) Positive Discipline: When the employees are given reward whether
monetary or non-monetary for the desired behaviour or for following
the rules, it is positive discipline.
Common disciplinary problems include absenteeism from work, unethical
practices like theft etc., smoking, sexual harassment, fighting, bribes,
leaving without permission, not completing work on time.
Indiscipline may result due to unfair management practices:
1. Poor management.
2. Unclear rules and policies.
3. No concern for welfare of employees.
4. Exploitation of workers.
5. No code of conduct for employees.

5.7.3 Disciplinary Procedure

Disciplinary procedure includes the following steps:
1. Framing Chargesheet: This is the initial step after an activity of
misconduct or indiscipline is established. Chargesheet is framed based
on the written complaint received against the employee. It contains
detail description of the offence with which the employee is charged,
along with the allegations against the employee. Such chargesheet is
provided to the concerned employee by hand; if the employee refuses
to receive it, the chargesheet is sent by post to the employee.

PAGE 95
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 95 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes Chargesheet provides a chance to the employee to give explanation

of misconduct. So, it is also known as show cause notice. If the
misconduct/indiscipline is of serious nature, a suspension order is
given to the employee along with the chargesheet.
2. Explanation by the Concerned Employee: The employee submits the
explanation of misconduct/indiscipline mentioned in the chargesheet
through an explanation. If this explanation is satisfactory then
no disciplinary action will be taken against the employee. If the
management is not satisfied with the explanation then a full-fledged
enquiry of the misconduct/indiscipline is conducted.
3. Enquiry: If the management is not satisfied with the explanation then
a full-fledged enquiry of the misconduct/indiscipline is conducted. A
notice of enquiry mentioning date, time and place of enquiry along
with the name of the officer conducting the enquiry is provided to
the employee. If the charge is serious, a suspension order may be
issued to the employee apart from the chargesheet.
4. Holding of Enquiry: At the intimated date, time and place the
employee presents before the enquiry officer. The employee is
given the chance to explain the situation of misconduct/indiscipline.
The enquiry officer enquires the entire episode by examining the
witnesses.
5. Order of Punishment: During the enquiry if the misconduct/
indiscipline is proved, then disciplinary action against the employee
is taken. Depending upon the nature of misconduct/indiscipline the
employee may be given dismissal, discharge, demotion, withholding
of increments, or warning.

5.8 Collective Bargaining: Concept, Types, Process,

Problems & Essentials of Effective Collective Bargaining
As already discussed, the main stakeholders of industrial relations are
the employees along with their unions, employer along with their asso-
ciations, and the government. The trade union system is dependent on
collective bargaining. The employees and the employer through the trade
union representatives negotiate with each other on several aspects related
to the working environment.

96 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 96 15-03-2024 18:08:01

 Industrial Relations

Collective Bargaining is a voluntary process and “It is a process of nego- Notes

tiation between the employers and trade unions to reach an agreement to
regulate the working conditions. The agreement acts as a labour contract
between an employer and union. The summary of the collective bargaining
negotiation is provided in the Collective Bargaining Agreement (CBA).
Both the workers and employers are benefitted from this agreement.
Workers are able to negotiate with the employers for their rights; for
them collective bargaining is a very effective tool. Through collective
bargaining the workers and employers understand their positions and have
a great learning experience through the process”.
The contents of collective bargaining include:
1. Cooperation between the management and the union.
2. Working conditions.
3. Wages and compensation.
4. Occupational health.
5. Conflict management.
6. Employee development.

5.8.1 Types of Collective Bargaining

1. Conjunctive Bargaining: In this type of bargaining between the
employer and the union, negotiation results in the benefit of one
party (either the union or the employer) through the loss of other.
This type of bargaining is over the issues of wages, increments,
bonus etc.
2. Cooperative Bargaining: In this type of bargaining both the parties
negotiate with each other so that both the parties are benefitted.
This type of bargaining is over the issues of change in technology,
process of manufacturing and equipment of production.
3. Productivity Bargaining: The employer bargains with the union to
provide the workers increments, bonus, benefits if they increase
their productivity for making the organisation successful.
4. Composite Bargaining: The workers bargain with employer in order
to ensure a safe workplace for them. The bargaining is related to
work policies and working conditions.
PAGE 97
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 97 15-03-2024 18:08:01

 HUMAN RESOURCE MANAGEMENT

Notes 5. Concessionary Bargaining: In this type of bargaining the employer

negotiates with the union to take away a previous benefit it has
given to the union, in order to secure the organisation and hence
the employability of the workers.

5.8.2 Process of Collective Bargaining

The process includes the following stages:
1. Preparation for Negotiation: “This includes collection and analysis
of data for placing their demands, prioritizing demands and to write
the CBA proposal. Both the parties are required to do extensive
research related to the working environment and for the needs of
the employees”.
2. Conduct of Negotiation: “The process of negotiation takes place
between the representatives of the unions and employer. A particular
date, time and place is scheduled for the same. During the
negotiation the data collected through research is used to place
the facts, generate alternatives and present before the party and
reach a conclusion. This stage requires strategies and tactics for
bargaining. The result of the negotiation process is the collective
bargaining agreement (CBA). CBA is like a contract between the
employer and the union”.
3. Implementation of CBA: “This takes place after both the parties
have accepted the CBA, signed it and the agreement is ratified by
the union members. It’s the responsibility of the employer and the
unions to interpret the provisions of CBA as was decided during
the negotiation”.

5.8.3 Essentials of Effective Collective Bargaining Between

Union and Management
The following are the essential principles to be followed for the collective
bargaining process to be effective:
1. Consideration should be given to the suggestions, recommendations
and difficulties of both the parties involved. This increases the
possibility of solution to a problem.

98 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 98 15-03-2024 18:08:02

 Industrial Relations

2. Both the parties must evaluate the different alternative solutions to Notes
a problem.
3. There should be respect for both the parties towards each other.
4. Both the parties must trust the process of collective bargaining to
reach a solution to a problem.
5. The legal aspects must be considered by both the parties when
deriving a solution to a problem.
IN-TEXT QUESTIONS
1. Objectives of industrial relations include
(a) To protect the socio-economic interest of workers and the
management
(b) To avoid industrial conflicts so as to develop a healthy
work environment
(c) To encourage collective bargaining to increase productivity
(d) All of these
2. Good system of industrial relations involves complex relationships
between
(a) Workers and their unions, employers and their associations
and Government
(b) Workers, employers and government
(c) Workers’ association, employer’s association
(d) Government and workers’ association
3. An organization is composed of individuals who make up distinct
sectional groups, each with its own interests, objectives, and
leadership. Which approach is based on the above-mentioned
assumption?
(a) Pluralistic approach
(b) Unitary approach
(c) Marxist approach
(d) Trusteeship approach

PAGE 99
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 99 15-03-2024 18:08:02

 HUMAN RESOURCE MANAGEMENT

Notes 4. Dunlop’s system’s approach comprises of input, _________,

output and feedback
(a) System
(b) Processes
(c) Management
(d) Rules
5. Regarding grievance procedure which one of the following is
true?
(a) It is a formal procedure of communication between employee
and management.
(b) It is for settlement of grievance.
(c) It differs in different organisations.
(d) All of these.
6. Which of the following is not a method of Grievance
Handling?
(a) Exit Interview
(b) Gripe Box
(c) Collective Bargaining
(d) Open Door Policy
7. Grievance is
(a) Grief
(b) Discontent
(c) Dissatisfaction
(d) All of these
8. Chargesheet is___
(a) Written document containing details of the complaint
(b) Verbal complaint
(c) A normal document given to an employee
(d) Not an essential document

100 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 100 15-03-2024 18:08:02

 Industrial Relations

9. Which of the following is not a cause of indiscipline? Notes

(a) Proper code of conduct in the organisation

(b) Lot of facilities of employee welfare
(c) Clear rules and regulations
(d) All of these

5.9 Summary
Industrial relations are a complex web of employment relationships with-
in an organisation. The key actors of maintaining these relationships are
the employers and their associations, employees and their unions and the
government. The government through legislations, rules and agreement
helps maintain the industrial relations. There are several approaches to the
concept of industrial relations which include Unitary Approach, Pluralistic
Approach, Radical Approach, Trusteeship Approach, Dunlop’s Systems
Approach. The objectives of industrial relations are to protect the interest
of both the employers and employees to ensure harmonious relationships
between them. Healthy employment relationships in an organisation are im-
portant for full utilisation of its resources and for increasing the productivity.
A trade union is an organisation of workers, who have united together
for common purpose like getting better working conditions. The objective
of the trade union is to ensure social, political and economic interests of
its members. The trade unions are plant level, firm level, general unions
and craft unions. The functions of the trade union include fraternal func-
tions, political functions and militant functions apart from intramural
and extramural functions. The unions suffer from several problems like
multiple unions in the same organisation with less number of members
and indifferent attitude of members.
Disputes are part of every industry. They need to be handled properly;
if not settled these may lead to loss to the employer, employee and ulti-
mately to the economy. There are several reasons due to which disputes
arise in an organisation; these may be categorised into psychological,
institutional and economic causes. The industrial disputes can be settled
through statutory measures (as stated in the Industrial Disputes Act, 1947)
and non-statutory measures.

PAGE 101
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 101 15-03-2024 18:08:02

 HUMAN RESOURCE MANAGEMENT

Notes Employee grievances are dissatisfaction against the management as they

fail to meet the expectations of the employees. Several factors and causes
contribute to the dissatisfaction and discontent of employees. These causes
and factors need to be identified and resolved so that the grievance does
not take a serious form. There are several proactive methods apart from
a formal procedure for handling the grievances.
Through discipline employees are made to follow the rules, regulations
and policies framed by an organisation. This ensures proper functioning
of the organisation without any wastage of resources. Desired behaviour
from employees is achieved through discipline. It prevents irregularities
at the workplace, reduces the cost of supervision, and reduces unrest
among the employees. Every organisation has a disciplinary procedure
to deal with the misconduct/indiscipline by the employees.
An effective method to prevent or resolve disputes in an organisation is
collective bargaining.

5.10 Answers to In-Text Questions

1. (d) All of these.
2. (a) Workers and their unions, employers and their associations
and Government
3. (a) Pluralistic approach
4. (b) Processes
5. (d) All of these
6. (c) Collective Bargaining
7. (d) All of these
8. (a) Written document containing details of the complaint.
9. (d) All of these

5.11 Self-Assessment Questions

1. Define Industrial Relations. State its importance.
2. Describe the different approaches of industrial relations.
3. What are the roles of Trade Unions? State their functions.

102 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 102 15-03-2024 18:08:02

 Industrial Relations

4. Describe the different problems faced by Trade Unions in India. Notes

5. Discuss the different causes of industrial disputes.
6. Describe the statutory measures of dispute settlement.
7. “Employee grievances need to be resolved as early as they erupt”.
Elaborate.
8. Describe the different steps of formal grievance redressal procedure.
9. Define Discipline. Discuss the need to keep the employees in discipline.
10. Describe the Disciplinary Procedure in detail.

5.12 Reference
 Edwards, P. (ED.). 2003. Industrial Relations: Theory and Practice.
Blackwell, Oxford.

5.13 Suggested Readings

 Aswathapa K. 2023. Human Resource Management, Text & Cases.
8th ed., Tata McGraw Hill Education.
 Gray Dessler. 2019. Fundamentals of Human Resource Management.
5th ed., Pearson Education Limited.
 Shikha Kapoor. 2015. Human Resource Management. Taxmann
Publications Pvt Ltd., New Delhi.

PAGE 103
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Lesson 5.indd 103 15-03-2024 18:08:02

Human Resource Management_Lesson 5.indd 104 15-03-2024 18:08:02
 Glossary
Ability: Aptitude or competence, the skill or proficiency needed to perform certain tasks.
Career Anchor: Career anchor refers to characteristics of a career that individuals are
drawn to.
Career Planning: Career planning helps manager foresee future job requirements and
identify the right employee for the same.
Competency-based Pay: A compensation system that recognises employees for the dif-
ferent types of skills they develop and apply them to work.
Disciplinary Action: The procedure to formally rebuke employees who fail to abide by
the rules, regulations and policies of the organisation.
Discipline: Discipline is following the rules, regulations and expectations of the management.
Employment Relations: Employment relations refer to the relationships between people
at work in an organisation.
Fringe Benefit: Employment benefits given to the employees in addition to their current
base salary or wages (health insurance, holidays, paid vacations etc.).
Grievance Procedure: A formal process to be followed by the employees and the man-
agement for resolving a grievance.
Grievance: A dissatisfaction or discontent of an employee or a group of employees against
unfair treatment.
HRD: Human Resource Development is the programs which are organised by the human
resource professionals to train the employees of an organization.
HRM: Human Resource Management refers to an activity of managing employees of any
organization.
Human Resource Information System: It is a system which makes managers and em-
ployees self-dependent by its unique functionality. HRIS tracks and records every single
information about workforce.
Human Resource Planning: It is a process for estimating the requirement of employees
in future.
Incentives: Variable components of compensation which are performance-based.
Industrial Dispute: It means dispute between employers and employers, or between em-
ployers and workers, or between workers and workers, which is connected with employment

PAGE 105
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Glossary.indd 105 15-03-2024 18:02:51

 HUMAN RESOURCE MANAGEMENT

Notes or non-employment of the terms of employment or with the conditions

of labour of any person.
Industrial Relations: Industrial relations refer to the relationship between
the management and workers (employers and employees).
Job Analysis: The systematic process of gathering and examining and
interpreting data regarding the specific tasks comprising a job.
Job Evaluation: It is the process of job comparison in an organisation
to determine the relative worth of a job.
Knowledge-based Pay: A salary differentiation system that bases com-
pensation on an individual’s education, experience, knowledge, skills or
specialised training.
Management Development: It is a multi-faceted process that helps in
creating effective and efficient workforce which helps in organisation
success.
Orientation: When a new employee is introduced to the organization is
known as orientation.
Performance Management: Performance management is a systematic
and continuous process of examining and evaluating the performance of
employees as individuals and also as part of a group.
Performance: It can be defined as a process of fulfilling responsibilities
and duties which lead to achievement of attainable objectives.
Recruitment: Recruitment refers to searching a competent employee for
the vacant position in an organization.
Selection: Selection refers to choosing that candidate from ample appli-
cants who has the capability and ability to perform that job for which
he is getting hired.
Skill-based Pay: A salary differentiation system that bases compensation
on an individual’s education, experience, knowledge, skills or specialised
training.
Trade Union: Trade Union is a voluntary formal organisation to protect
the interests of its members through collective action.
Training: Training is the process of enhancing the efficacy of individu-
als working for an organisation, helping to shape one’s personality, and
strengthening management and interpersonal abilities.

106 PAGE
Department of Distance & Continuing Education, Campus of Open Learning,
School of Open Learning, University of Delhi

Human Resource Management_Glossary.indd 106 15-03-2024 18:02:51

 BACHELOR OF MANAGEMENT STUDIES

HUMAN
RESOURCE

BMS : HUMAN RESOURCE MANAGEMENT (SEMESTER - IV)

MANAGEMENT
DISCIPLINE SPECIFIC CORE COURSE (DSc-12)
SEMESTER - IV COURSE CREDIT -4
(FOR LIMITED CIRCULATION ONLY)

Department of Distance and Continuing Education DEPARTMENT OF DISTANCE AND CONTINUING EDUCATION
University of Delhi UNIVERSITY OF DELHI
AS PER THE UGCF-2022 AND NATIONAL EDUCATION POLICY 2020