Directorate of Distance Education

UNIVERSITY OF JAMMU
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SELF LEARNING MATERIAL

PGDBM - IIND SEMESTER

Paper - 1st Unit I - V
Lesson 1 to 25
HUMAN RESOURCE MANAGEMENT

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Rohini Gupta Suri

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 HUMAN RESOURCE MANAGEMENT

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 PGDBM Semester - II
Course Title : Human Resource Management Total Marks : 100
Paper : 1st Internal Assessment : 20
Contact Hours : 45 Semester Examination : 80
Duration of Examination : 3 Hours

OBJECTIVE :
The objective of this course is to sensitize the students to the various facets of
managing people and to create an understanding of the various policies and practices of
Human Resource Management
UNIT 1 Human Resource Management (HRM) : Concept, Nature, Scope,
Importance and Challenges, HR Profession and HR Department, Line
Management Responsibility in HRM, HR Philosophy, Policies, Procedures
and Practice, Designing HR Systems, Functional Areas of HRM, Human
Resource Development; Values and Tools, HR as a Factor of Competitive
Advantage.
UNIT - II Manpower Planning, Job Analysis, Recruitment and Selection Process,
Induction - Performance and Potential Appraisal; Coaching and Mentoring;
HRM issues and practices in the context of Outsourcing as a strategy.
UNIT - III Training and Development : Methods, Design & Evaluation of Training &
Development Programmes; Career Development - Promotions and
Transfers; Personnel Empowerment; Retirement and other Separation
Processes.
UNIT - IV Compensation Management : Principles, Factors and Types, Job Evaluation
- Concept and Methods, Employee Morale and Motivation, Stress
Management and Quality of Work Life, Work life Balance, Human Resource
Information System (HRIS), Knowledge Management and Human Resource
Audit.
UNIT - V Industrial Relations : Meaning and Characteristics - Parties to Industrial
relations, Trade Unions - Nature, Problems and Types, Industrial Disputes
- Causes and Settlement of Industrial Disputes, Collective Bargaining -
(i)
 Features, Pre-requistes and process of Collective Bargaining, Workers
Particpation in Management - Objectives and Forms for Successful
Particpation
Note for Paper Setting :
The question paper shall contain two questions form each unit (Total 10 Questions)
and the candidates shall be required to answer one question from each unit (total amount of
questions) to be attempted shall be five i.e., there shall be internal choice within each unit).
Suggested Readings :
1. A framework for Human Resource Management : Desseler, Gary, Published by
Pearson education (2010), 7th Edition.
2. Human Resource Management Text and Cases : Rao, VSP, Excel Books (2010)
3rd Edition
3. Training for Development : Lynton R. P., Pareek Udai. Sage Publication India Pvt.
Ltd (2011) 3rd Edition
4. Human Resource Development : Rohmetra Neelu, Anmol Publication House Pvt.
Ltd. (2005) Ist Edition
5. Strategic Thought in the New Age Management : Rohmetara Neelu, Dhotra, J. R.
Excel Books (2006)
6. Managing Human Resources : Cascio W. F., Nambudiri Rajeet, Tara Mc Graw -
Hill (2010) 8th Edition
7. Business Dynamics : Contemporary Issues and Challenges : Rohmetrea Neelu,
Singh B. P. and Sharma. Vishal., Excel Books, New Delhi 2014
8. Sustainable Business Practices : Rohmetra Neelu, Singh B. P. and Sharma Vishal
Excel Books 2014
9. Managing Human Resouves : Mejia L.R.G. Balkin D.B. Cardy R. L., PHI Learning
Private Limited (2012) 7th Edition
10. Human Resource Development in Commerical Banks in India : Rohmetra Neeru
Ashgate Publishing Co., UK (1998)

( ii )
UNIT - I LESSON NO. 1-5

INTRODUCTION TO HRM

STRUCTURE

1.1 Introduction

1.2 Objectives

1.3 Concept and Nature of HRM

1.4 Scope of HRM

1.5 Objectives of HRM

1.6 Role of Human Resource Management / Importance

1.7 Significance of HRM / Importance

1.8 Functions of HRM

1.9 Difference between HRM and Personnel Management

1.10 Line management responsibility in HRM

1.11 Human Resource Policies, Procedures and Programmes

1.12 HR as a factor of Competitive Advantage

1.13 Summary

1.14 Glossary

1.15 Self Assessment Questions

1.16 Lesson End Exercise

1.17 Books Recommended

1
1.1 INTRODUCTION

Organisations are nothing but people. They utilize resources- physical, financial and
human to produce results. To be a long runner, every organisation requires extraordinary
efforts from its people. It’s the people factor that separates the mediocre organization
from the outstanding ones. When people work to the best of their abilities and work
with zeal, enthusiasm and commitment, organisations grow to gigantic proportions.
When people fail to live up to expectations, organisation fall behind in the competitive
race and get pushed to the wall eventually. In fact every organisation has more or less
the same kind of resources to work with materials, equipments, land, building and
finances. If the organisation is able to utilize its human resources to best advantage,
there is nothing to stop the company from reaching the top to the ladder.

1.1 OBJECTIVE

After going through this lesson, you should be able to explain,

• meaning of HRM

• significance of HRM

• functions of HRM

• HRM as a competitive advantage

1.3 CONCEPT AND NATURE OF HRM

Human Resource Management is a process of bringing people and organisations

together so that the goals of each one are met. It tries to secure the best from people by
winning their wholehearted cooperation. It is the art of procuring, developing and maintaining
competent workforce to achieve the goals of an organisation in an effective and efficient
manner. It has the following features :-

• Pervasive force: HRM is pervasive in nature. It is present in all enterprises.

It permeates all levels of management in an organisation. All managers, in fact,
are human resource managers. At Infosys, for example, every manager is, expected
to pay attention to the development and satisfaction of subordinates.

• Action oriented: HRM focuses attention on action, rather than on record keeping,
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 written procedures or or rules. The problems of employees at work are solved
through employee-friendly policies aimed at eliminating - tension-points, resolving
controversies, securing cooperation—with a clear intent to move closer to the
hearts of people.

• Individually oriented: It tries to help employees develop their potential fully. It

encourages them to give their best to the organisation. Employees are not treated as
second class citizens but as valued members of an indispensable team. Every attempt
is made to make them feel important.
• People oriented- HRM is all about people at work, both as individuals and
groups. It tries to put people on assigned jobs in order to produce excellent results.
The resultant gains are used to reward people and motivate them toward further
improvements in productivity. Ultimately, employees should receive satisfaction
equal to that of the company.
• Future oriented: Effective HRM prepares people for current as well as future
challenges, especially working in an environment characterized by dramatic change.
It is firmly believed that employees, not the buildings and machinery, give a company
a competitive advantage.
• Development oriented: HRM intends to develop the full potential of employees.
The reward structure is tuned to the needs of employees. Training is offered to
sharpen and improve their skills. Employees are rotated on various jobs so that
they gain experience and exposure. Every attempt is made to use their talents fully
in the service of organisational goals.
• Integrating mechanism: HRM tries to build and maintain cordial relations
between people working at various levels in the organisation. In short, it tries to
integrate human assets in the best possible manner in the service of an organisation.
• Comprehensive Function:. HRM is, to some extent, concerned with any
organisational decision which has an impact ‘on the workforce or the potential
workforce; The term ‘workforce’ signifies people working at various levels,
including workers, supervisors, middle and top managers. It is concerned with
managing people at work. It covers all types ‘of personnel. Personnel work may
take different shapes and forms at each’ level in the organisational hierarchy but
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 the basic objective of achieving organisational effectiveness through effective and
efficient utilisation of human resources, remains the same. “It is basically a method of
developing potentialities of employees so that ‘they get maximum satisfaction out
of their work and give their best efforts to the organisation”(Pigors and
Myers).

• Auxiliary service: HR departments exist to assist and advise the line or operating
managers to do their personnel work more effectively. HR manager is a specialist
advisor. It is a staff function.

• Interdisciplinary function: ‘HRM is a multi-disciplinary activity, utilizing

knowledge and inputs drawn from psychology, sociology; anthropology; economics,
etc. To unravel the mystery surrounding the human brain, managers, need’ to
understand and appreciate the contributions of all such ‘soft’ disciplines.

• Continuous function: According to Terry, HRM is not a one shot deal. It cannot
be practiced only one hour each day or one day a week. It requires a constant
alertness and awareness of human relations and their importance in every day
operations. (See M. Armstrong, 2009 14-17)

1.1 SCOPE OF HRM

The scope of HRM is very wide. In fact, no organisational activity is completely

removed from humans. Even automatic processes and equipments are designed and
implemented by someone. Capable and motivated people can have a profound impact on
everything an organisation does. Research in behavioural sciences, new trends in managing
knowledge workers and advances in the field of training have expanded the scope of HR
function in recent years. The Indian Institute of Personnel Management has specified the
scope of HRM thus:

• Personnel Aspect: This is concerned with manpower planning, recruitment,

selection, placement, transfer, promotion, training and development, lay off and
retrenchment, remuneration, incentives, productivity, etc.

• Welfare aspect: It deals with working conditions and amenities such as canteens,
crèches, rest and lunch rooms, housing, transport, medical assistance, education,
health and safety, recreation facilities, etc.
4
 • Industrial relations aspect: This covers union-management, relations, joint
consultation, collective bargaining, grievance and disciplinary procedures, settlement’
of disputes, etc.

1.5 OBJECTIVES OF HRM

Human resource managers need to get the right people into the right place at the
right time and then help them maximize their performance and future potential. The principle
objectives of HRM may be listed thus:

1. To help the organisation reach its goals: HR department, like other departments
in an organisation, exists to achieve’ the goals of the organisation first and if it does
not meet this purpose, HR department (or for that matter any other unit) will
wither and die.

2. To employ the skills and abilities of the workforce efficiently. The primary purpose
of HRM is to make people’s strengths productive and to benefit customers,
stockholders and employees. Keep your employees happy and encourage them to do
everything possible to keep customers happy. The results would be trulyoutstanding—
like take the case of Southwest Airlines—delivering outstanding results for over
three decades - based on its “employees first and customers next” policy.

3. To provide the organisation with well-trained and well-motivated employees:

HRM requires that employees be motivated to exert their maximum efforts, that
their performance be evaluated properly for results and that they be remunerated
on the basis of their contributions to the organisation.

4. To increase to the fullest the employee’s job satisfaction and self-actualization:

It tries to prompt and stimulate every employee to realise his potential. To this end
suitable programmes have to be designed aimed at improving the quality of work life
(QWL).

5. To develop and maintain a quality of work life: It makes employment in the

organisation a desirable, personal and social, situation. Without improvement in the
quality of work life, it is difficult to improve organisational performance.

5
1.6 ROLE OF HUMAN RESOURCE MANAGEMENT / IMPORTANCE

Although managers and supervisors in the past often were arbitrary and autocratic
in their relations with subordinates, today this type of leadership is being increasingly rejected.
The present generation of employees is more enlightened and better educated than were
preceding ones. Today’s employees demand more considerate treatment and a more
sophisticated form of leadership. Furthermore, because of the protection that is provided
by the unions and government or because their skills are in short supply, many group of
employees are in a position to demand and obtain more favourable employment conditions
and treatment. In the light of these emerging trends, HRM role has been expanding all
these years. Let’s examine these in detail.

a. It helps the organisation reach its goals: HR department, like other

departments in an organisation, exists to achieve the goals of the organisation first
and if it does not meet this purpose, HR department (or for that matter any other
unit) will wither and die.

b. It employees the skills and abilities of the workforce efficiently: The primary
purpose of HRM is to make people’s strengths productive and to benefit customers,
stockholders and employees.

c. It provides the organisation with well-trained and well-motivated

employees: HRM requires that employees be motivated to exert their maximum
efforts, that their performance be evaluated properly for results and that they be
remunerated on the basis of their contributions to the organisation.

d. It increases to the fullest the employee’s job satisfaction and self-

actualisation: It tries to prompt and stimulate every employee to realize his
potential. To this end suitable programmes have to be designed aimed at improving
the quality of work life(QWL)

e. It develops and maintains a quality of work life: It makes employment in the

organisation a desirable personal and social situation. Without improvement in the
quality of work life, it is difficult to improve organisational performance.

f. It communicates HR policies to all employees: It is the responsibility of HRM

to communicate in the fullest possible sense both in tapping ideas, opinions and
6
 feelings of customers, non-customers, regulators and other external public as well
as in understanding the views of internal human resources.

g. It helps to maintain ethical policies and behavior: The Chief Personnel Officer
in a large American Corporation put it thus: Personnel’s purpose is “to practice
morality in management in preparing people for change, dealing with dissent and
conflict, holding high standards of productivity, building acceptance of standards
that determine progression and adhering to the spirit and letter of high professional
conduct”

Thus, HRM in short should try to (a) attain economically and effectively the
organisational goals; (b) serve to the highest possible degree the individual goals; and (c)
preserve and advance the general welfare of the community. The above eight objectives
(drawn from Ivancevich and Glueck) should ultimately lead to employee satisfaction and
fulfillment. This is however easier said than done. Unless HR people are thoroughly
conversant with the social, legal and economic trends in the economically, managing people
in today’s world of work would always prove to be a ticklish affair.

1.7 SIGNIFICANCE OF HRM / IMPORTANCE

Human resources, along with financial and material resources, contribute to the
production of goods and services in an organisation. Physical and monetary resources, by
themselves, cannot improve efficiency or contribute to an increased rate of return on
investment. It is through the combined and concerted efforts of people that monetary or
material resources are harnessed to achieve organisational goals. But these efforts, attitudes
and skills have to be sharpened from time to time to optimize the effectiveness of human
resources and to enable them to meet greater challenges. This is where Human Resource
Management plays a crucial role. It helps an organisation in multifarious ways:

i. At the enterprise level

• Good human resource practices can help in attracting and retaining the best people
in the organisation. Planning alerts the company to the types of people it will need
in the short, medium and long run.

ii. At the individual level :Effective management of human resources helps

employees thus:
7
• It promotes team work and team spirit among employees.

• If offers excellent growth opportunities to people who have the potential to rise.

• It allows people to work with diligence and commitment.

iii. At the society level: Society, as a whole, is the major beneficiary of good human
resource practices.

• Employment opportunities multiply.

• Scarce talents are put to best use. Companies that play and treat people well
always race ahead of others and deliver excellent results.

Human Resource Management becomes significant for business organisation due

to the following reasons.

• Objective:- Human Resource Management helps a company to achieve its

objective from time to time by creating a positive attitude among workers. Reducing
wastage and making maximum use of resources etc.

• Facilitates professional growth:- Due to proper Human Resource policies

employees are trained well and this makes them ready for future promotions. Their
talent can be utilized not only in the company in which they are currently working
but also in other companies which the employees may join in the future.

• Better relations between union and management:- Healthy Human Resource

Management practices can help the organisation to maintain co-ordinal relationship
with the unions. Union members start realizing that the company is also interested
in the workers and will not go against them therefore chances of going on strike are
greatly reduced.

• Helps an individual to work in a team/group:- Effective Human Resource

practices teach individuals team work and adjustment. The individuals are now
very comfortable while working in team thus team work improves.

• Identifies person for the future:- Since employees are constantly trained, they
are ready to meet the job requirements. The company is also able to identify
potential employees who can be promoted in the future for the top level jobs.
8
 Thus one of the advantages of HRM is preparing people for the future.
• Allocating the jobs to the right person:- If proper recruitment and selection methods
are followed, the company will be able to select the right people for the right job.
When this happens the number of people leaving the job will reduce as the will be
satisfied with their job leading to decrease in labour turnover.

1.8 FUNCTIONS OF HRM

Human resource Management is concerned with two sets of functions, namely –
managerial functions and operative functions. Let us briefly throw light on them.
Managerial Functions
The basic managerial functions comprise planning, organising, directing and
controlling.
• Planning: This function deals with the determination of the future course of action
to achieve the desired results. Planning of personnel today prevents crises tomorrow.
While carrying out this function, the personnel manager is expected to determine
the personnel programme regarding recruitment, selection and training of the
employees of the organisation.
• Organising: This function is primarily concerned with proper grouping of the
personnel activities, assignment of different groups of activities to different individuals
and delegation of authority. Creation of a proper structural framework is the primary
task of the personnel manager in the organizing function. Organising, in fact, is
considered to be the wool of the entire management fabric and hence cannot
afford to be ignored by the personnel manager.
• Directing: This involves supervising and guiding the personnel of the enterprise.
To execute plans, direction is essential; without direction there is no destination.
Many a time, the success of the organisation depends on the direction of things
rather than their design .Direction, most importantly, consists of motivation and
leadership. The personnel manager must be a good motivator. At the same time,
he must be a good leader and able to exercise a leadership style suitable to the
situation. He should, in essence, effectively motivate and lead the employees at
work.
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 • Controlling: Controlling functions of personnel management comprises measuring
the employee’s performance, correcting negative deviations and assuring the
accomplishment of plans efficiently. Controlling essentially implies a detection of
deviations of employee performance from standards and the correction of such
deviations. Controlling also makes individuals aware of their performance through
review reports, records and personnel audit programmes, etc. Controlling is
necessary to ensure that the activities are being carried out in accordance with
stated plans.

Operative Functions

The operative functions of Human Resource Management are related to specific

activities of Human Resource Management, viz., employment, development, compensation
and relations. These functions are to be performed in conjunction with managerial functions.

1. Employment: The first operative function of Human Resource Management is

employment. It is concerned with procuring and employing the people possessing
necessary skill, knowledge, aptitude, etc, to achieve the organisational objectives.
It covers,the functions such as job analysis, manpower planning, recruitment,
selection, placement, induction and internal mobility.

i. Job analysis: It is the process of collecting information relating to the operations

and responsibilities of a specific job

ii. Human resources planning: It is a process of determining and assuring that the
organisation will have an adequate number of qualified persons, available at proper
times, performing jobs which would meet the needs of the organisation and which
would provide satisfaction for the individuals involved.

iii. Recruitment: It is the process of searching for prospective employees and

stimulating them to apply for jobs in an organisation.

iv. Selection: It is the process of ascertaining the qualifications, experience, skill,

knowledge, etc., of an applicant with a view to appraising his/her suitability to a
job.

v. Placement: It is the process of assigning the selected candidate with the most

10
 suitable job.It is matching of employee specifications with job requirements.

vi. Induction and orientation: Induction and orientation are the techniques by
which a new employee is rehabilitated in the changed surroundings and introduced
to the practices, policies, proposes and people, etc, of the organisation.

2. Human Resource Development: It is the process of improving, moulding,

changing and developing the skills, knowledge, creative ability, aptitude, attitude,
values commitment, etc., based on present and future job and organisational
requirements. This function includes:

i. Performance appraisal: It is the systematic evaluation of individuals with respect

to their performance on the job and their potential for development.

ii. Training: Training is a systematic process by which employees learn skills,

knowledge, abilities or attitudes to further organisational and personnel goals.

iii. Management development: It is the process of designing and conducting suitable

executive development programmes so as to develop the managerial and human
relations skill of employees.

iv. Career planning and development: It is the planning of one’s career and
implementation of career plans by means of education, training , job search and
acquisition of work experiences. It includes internal and external mobility.

v. Organisational development: Organisation development is an organisation wide,

planned effort, managed from the top, with a goal of increasing organisational
performance through planned interventions. It seeks to change attitudes, values,
organisations structures and managerial practices in an effort to improve
organisational performance.

3. Compensation: It is the process of providing equitable and fair remuneration to

the employees. It includes job evaluation, wage and salary administration, incentives,
bonus, fringe benefits, social security measures,etc.

i. Job evaluation : It is the process of determining relating worth or jobs.

ii. Wage and salary administration : It is the process of developing and operating

11
 a suitable wage and salary programme.

iii. Incentives : It is the process of formulating, administering and reviewing the

schemes of financial incentives in addition to regular payment of wages and salary.

iv. Bonus : It includes payment of statutory bonus according to the payment of

Bonus Act,1965.

v. Fringe benefits : In addition to compensating employees fairly and adequately,

for their contributions in the performance of their jobs, organisations, these days,
typically pay for a wide variety of supplementary benefits-often called ‘fringe
benefits’.

vi. Social security measures : Managements provide social security to their

employees in addition to the fringe benefits. These measures include:

(a) Workmen’s compensation to those workers (or their dependents) who are involved
in accidents;

(b) Maternity benefits to women employees;

(c) Sickness benefits and medical benefits;

(d) Disablement benefits/allowance;

(e) Dependent benefits;

(f) Retirement benefits like provident fund, Pension, Gratuity, etc.

4. Human relations: It is the process of interaction among human beings. Human

relations is an area of management practice in integrating people into work situation
in a way that motivates them to work together productivity, cooperatively and
with economic, psychological and social satisfaction.

5. Effectiveness of Human Resource Management: Effectiveness of various

personnel programmes and practices can be measured and evaluated by means of
organisational health and human resource accounting.

i. Organisation health: Organisational health may be studied by looking into

employees’ contribution to organisational goals and the employee job satisfaction.

12
 Employee satisfaction could be understood by labour turnover, absenteeism,
commitment and the like. Low rate of absenteeism and high rate of employee
commitment indicate employee-satisfaction about the job and the organisation.
Employee contribution to organisational goals can be measured through employee
productivity of different types.

ii. Human resource accounting, audit and research: Effectiveness of human

resource management can also be found out through human resource accounting,
audit and research.

• Human Resource Accounting (HRA): It is a measurement of the cost and

value of human resources to the organisation. Human resource management is
said to be effective if the value and contribution of human resources to the
organisation is more than the cost of human resources.

• Human Resource Audit: Human resource audit refers to an examination and

evaluation of policies, procedures and practices to determine the effectiveness of
HRM.

• Human Resources Research: It is the process of evaluating the effectiveness

of human resources policies and practices and developing more appropriate ones.

DIFFERENCE BETWEEN HRM AND PERSONNEL MANAGEMENT

Some people don’t make a distinction between HRM and Personnel Management.
Both are taken to include identical functions. Some even say that HRM is a dignified term
for personnel Management. They consider HRM as old wine in a new bottle. However,
there are thinkers who feel that HRM is much more than Personnel Management. The
very philosophy of Human Resource Management is different from that of Personnel
Management.

Human Resource Management is viewed in entirely different perspective. Though

organizational interest is important in personnel management policies, HRM projects
the development of individuals in accordance with the individual needs and aspirations
so that the individual would be motivated to make their best contribution towards the
accomplishment of the common goals. While Personnel Management was designed to
respond to the organisational objectives like profit maximization, HRM visualized human
13
elements of enterprise as important resources. Hence, development of human resources is
the most crucial aspect of human resource management.

Personnel Management has been traditionally viewed as a staff function headed

by Personnel Manager who is responsible for procurement, training, compensation and
appraisal of personnel. On the contrary, HRM is a part and parcel of every line function.
Since the primary job of every manager is leading and actuating, HRM cannot be isolated
from leading and actuating. However, the traditional personnel functions are included in
HRM. Thus, HRM includes not only manpower, compensation, appraisal, etc. but also
career planning and development, counselling, motivation and potential appraisal.

Traditionally, Personnel Managers have operated through pressure tactics, and coercive
measures including threats of punishments. But HRM aims to achieve workers’ cooperation
through team building, mutual understanding and motivation.HRM is, in fact, an
integrated approach to management of human resources in the organisation.

Challenges of HRM

Because of continuous changing socio-economic, technological and political

conditions, the human resource managers of the future shall have to face more problems in
the management of labour. The human resource managers of today may find themselves
obsolete in the future due to changes in environment if they do not update themselves some
of the important challenges which might be faced by the managers in the management of
people in business and industry are discussed below

1. Increasing Size of Workforce: The size of organisations is increasing. A large

number of multinational organisations have grown over the years. The number of
people working in the organisation has also increased. The management of increased
workforce might create new problems and challenges as the workers are becoming
more conscious of their rights.

2. Increase in Education Level : The governments of various countries are taking

steps to eradicate illiteracy and increase the education level of their citizens. Educated
consumers and workers will create very tough task for the future managers.

3. Technological Advances : With the changes coming in the wake of advanced

technology, new jobs are created and many old jobs become redundant. There is
14
 a general apprehension of immediate unemployment. In the competitive world of
today, industry cannot hope to survive for long with old technology. The problem,
of unemployment resulting from modernisation will be solved by properly assessing
manpower needs and training of redundant employees in alternate skills.

4. Changes in Political Environment : There may be greater Government‘s

interference in business to safeguard the interests of workers, consumers and the
public at large. Government‘s participation in trade, commerce and industry will
also pose many challenges before management. The Government may restrict the
scope of private sector in certain areas in public interest. It does not mean chances
of co-operation between the Government and private sector are ruled out. In fact,
there will be more and more joint sector enterprises.

5. Increasing Aspirations of Employees : Considerable changes have been noted

in the worker of today in comparison to his counterpart of 1950s. The workers
are becoming more aware of their higher level needs and this awareness would
intensify further in the future workers. 6. Changing Psychosocial System : In future,
organisations will be required to make use of advanced technology in accomplishing
their goals while satisfying human needs. In the traditional bureaucratic model, the
organisations were designed to achieve technical functions with a little consideration
given to the psychosocial system. But future management would be required to
ensure effective participation of lower levels in the management of the organisation
system.

7. Computerised Information System : In the past, the automation of manufacturing

processes had a major effect upon the systems of production, storage, handling
and packaging, etc. More recently, there has been and in the future there will be
the impact of revolutionary computerised information system on management. This
revolutionary development would cover two primary areas of personnel
management which are as follows : (a) The use of electronic computers for the
collection and processing of data, and (b) The direct application of computers in
the managerial decision making process.

8. Mobility of Professional Personnel : Organisations will expand the use of ?

boundary agents ? whose primary function will be achieving coordination with the
15
 environment. One interesting fact will be an increase in the mobility of various
managerial and professional personnel between organisations. As individuals
develop greater technical and professional expertise, their services will be in greater
demand by other organisations in the environment.

9. Changes in Legal Environment : Many changes are taking place in the legal
framework within which the industrial relations systems in the country are now
functioning. It is the duty of the human resource or personnel executive to be
aware of these changes and to bring about necessary adjustments within the
organisations so that greater utilisation of human resources can be achieved. This,
indeed, is and would remain a major challenge for the personnel executive.

10. Management of Human Relations : On the industrial relations‘ front, things

are not showing much improvement even after so many efforts by the government
in this direction. Though a large number of factors are responsible for industrial
unrest but a very significant cause is the growth of multi unions in industrial complexes
having different political affiliations. Under the present conditions, it appears that
inter-union rivalries would grow more in the coming years and might create more
problems in the industry. Management of human relations in the future will be more
complicated than it is today. Many of the new generation of employees will be
more difficult to motivate than their predecessors. This will be in part the result of
a change in value systems coupled with rising educational levels. Greater skepticism
concerning large organisations and less reverence for authority figures will be more
common. Unquestioning acceptance of rules and regulations will be less likely.
New Role of Human Resource Management Human Resource Management in
the New Millenium‘ has undergone a great revolution by questioning the accepted
practices and re-inventing the organisations as well as structures. Many traditional
practices have been thrown out. As an example, it can be seen that hierarchies are
vanishing and there is greater emphasis on flat organisations. It means a great deal
of specialisation and skills. It also means upgrading the norms and standards of
work as well as performance. The new role of human resource management is
much more strategic than before. Some of the new directions of the role of HRM
can be summed up as follows :

16
1. A Facilitator of Change : To carry people through upheaval requires the true
management of human resources.

2. An Integrated Approach to Management : Rather than being an isolated

function, human resource is regarded as a core activity, one which shapes a
company‘s values. In particular, this can have an impact on customer service.

3. A Mediator : Establishing and balancing the new and emerging aspirations and
requirements of the company and the individual. These changes, which are taking
place, involve more commitment of the organisation to the development of people
by improving performance and cutting costs. As a result of this, the duration of
tenure, which was traditionally long standing, is now limited, future is becoming
less certain, management opportunities are self-determined and motivational factors
are more concerned with enhancing future employability rather than loyalty to the
company and, at the same time, the rewards are going up in terms of higher salaries.
The future creative careers, will require more involved approach to career
development, which will include : (i) Share employees with strategic partner
organisations (customers of suppliers) in lieu of internal moves. (ii) Encourage
independence : Employees may go elsewhere for career development, possibly to
return in a few years. (iii) Fund-groups of employees to set-up as suppliers outside
the organisation. (iv) Encourage employees to think of themselves as a business
and of the organisation‘s various departments as customers. (v) Encourage
employees to develop customers outside the organisation. (vi) Help employees
develop self-marketing, networking and consultancy skills to enable them to search
out, recognise or create new opportunities for both themselves and the organisation.
(vii) Identify skilled individuals in other organisations who can contribute on a
temporary project basis or part-time. (viii) Regularly expose employees to new
people and ideas to stimulate innovation. (ix) Balance external recruitment at all
levels against internal promotion to encourage open competition, ?competitive
tendering? for jobs to discourage seeing positions as someone‘s territory which
causes self-protective conformity. (x) Forster more cross-functional teamwork
for self-development. 15 (xi) Eliminate the culture of valuing positions as career
goals in favour of portraying a career as a succession of bigger projects,
achievements and new skills learned. The concept of ?position? is part of the
17
 outside static concept of the organisation. Positions are out. Processes and projects
are in. (xii) Abandon top-down performance appraisal in favour of self appraisal
based on internal customer satisfaction surveys and assessing people as you would
suppliers. (xiii) Replace top-down assessment processes with self assessment
techniques and measure performance in term of results.

1.10 LINE MANAGEMENT RESPONSIBILITY IN HRM

• The primary job of HR managers is "to create value by engaging in activities that
produce the employee behaviours, the company needs to achieve its strategic
goals" (Dessler). To this end, they may assume the role of a line manager,. the staff
expert and even an integrator—coordinating various personnel activities. Viewed
broadly all managers are HR managers as they are involved in activities like
selecting, compensating, training and developing, employees. Yet most modern
firms have the HR department headed by a person with requisite qualifications in
behavioural sciences: How do the duties of this HR manager relate to the line
managers' HR duties would be an interesting question to examine. Line managers
have the final responsibility for achieving the organisation's goals. They also have
the authority to direct the work of subordinates. Staff managers usually help and
advise line managers in achieving organisational goals.

• HRM's line management responsibilities include, placing the right person on the
right job, offering orientation to new hires, training employees and helping them
develop their knowledge 'and skills, improving performance of each person, gaining
creative cooperation and developing smooth working relationships, explaining firm's
policies and procedures, taking steps to control labour costs, protecting employees'
health; undertaking appropriate safety measures; boosting the morale of employees,
etc.

• HR managers use line authority - right to make decisions, direct other's work and
give orders: to carry out the above activities. However, HR managers, by nature,
are staff experts. They are there to assist and advise hue managers in areas like
recruiting, selecting, training and compensating. Managing people, in a broader
context, is every manager's business and successful organisations generally combine
the experience of line managers with the experience of HR specialists while utilizing
18
 the talents of employees to their, greatest potential. HR managers have to win the
hearts of employees working alongside line mangers and deliver results in a cost
effective manner. HR managers as indicated earlier are assuming a greater role in
top management planning and decision making trend that indicates the growing
realisation among executives that HRM can make significant contributions to the
success of an organisation.

1.11 HUMAN RESOURCE POLICIES

After the establishment of objectives of personnel management, personnel policies

are to be formulated. Policies are general statements that guide thinking and action in
decision-making. (Dale Yoder; Beach)

Definition of Personnel Policy

Personnel policies guide action. They offer the general standards or parameters
based on which decisions are reached. They serve as a road map for managers on a number
of issues such as recruitment (the job, for example, reserved for physically challenged only),
selection (selection based on merit only), promotion (performance leads to promotion)
and compensation (only star performers would get performance bonus, not everyone.)
Important features of an effective personnel policy can be broadly outlined as:

1. It is generally derived from the personnel objectives of an organisation.

2. It summaries past experience in the form of useful guidelines that help managers to
speed-up the decision making process.

3. As a guide to executive thinking it permits managers to transfer some of the recurring

problems to subordinates.

4. It helps in achieving coordination of organisational members and help predict more

accurately the actions and decisions of others.

Characteristics of a Sound Personnel Policy

While developing sound personnel policies, management should pay attention to

the following:

1. Related to objectives: Policies must be capable of relating objectives to functions,

19
 physical factors and company personnel.

2. Easy to understand: Policies should be stated in definite, positive, clear and

understandable language.

3. Precise: Policies should be sufficiently comprehensive and prescribe limits and

yardsticks for future action.

4. Stable as well as flexible: Personnel policies should be stable enough to assure

people that there will not be drastic overnight changes. They should be flexible
enough to keep the organisation in tune with the times.

5. Based on facts: Personnel policies should be built on the basis of facts and sound
judgement and not on personal feelings or opportunistic decisions.

6. Appropriate number: There should be as many personnel policies as necessary

to cover conditions that can + be anticipated, but not so many that they become
confusing or meaningless.

7. Just, fair and equitable: Personnel policies should be just, fair and equitable to
internal as well as external groups. For example, a policy of recruitment from
within may limit opportunities to bright candidates from outside; and a policy of
‘recruitment from outside only would limit promotional avenues to promising internal
candidates. To ensure justice, it is necessary to pursue both the policies scrupulously
and to apply them carefully.

8. Reasonable: Personnel policies must be. reasonable and capable of being

accomplished. To gain, acceptance and commitment from employees, they should
be ‘conditioned by the suggestions and .reactions of those who will be affected by
the policy’.

9. Review: Periodic review of personnel policies is essential to keep in tune with changing
tithes and to avoid organisational complacency or managerial stagnation. For
instance, if the current thinking is in. favour of workers’ participation in management,
the personnel policy should be suitably adjusted to accommodate the latest fad,
accepted by many in the organisation.

Personnel policies, to be sound, should also have broad coverage, in addition to

20
satisfying the above .conditions. Hence, it would be appropriate, to discuss the coverage
of personnel policies here.

Personnel Procedures and Programmes

Policies do not include detailed statements, describing specifically how the policy
is to be implemented. Policies are implemented by procedures. A procedure is a well-
thought out course of action. It prescribes the specific manner in which a piece of work is to
be done. Procedures are called ‘action guidelines’. They are usually derived from policies.
‘Where policies define a abroad field, procedures show a sequence of activities within that
area. The emphasis is on chronological, step-by-step sequence of required actions. For
instance, a student is required to complete several customised steps in order to register
himself for courses in a university. The basic purpose of a procedure is to spell out clearly
the way one has to go about doing something.

Further, personnel rules and programmes help in translating procedures into concrete
action. They spell out specific required actions or non-actions allowing no discretion.

Personnel programmes are complex sets of goals, policies, procedures, rules, steps to
be taken, resources to be employed and other elements necessary to carry out a given
course of action. As a single purpose ‘metaplan’, they show the major steps needed to
achieve an objective, which will be responsible for each, and the appropriate time for
carrying it out. A programme, this, is a comprehensive plan covering a large territory.

Types of Personnel Policies

These may be classified into several categories depending on (i) their source
(originated appealed and imposed) (ii) scope (general or specific) and (iii) form (written or
implied). These may be stated, thus:

1. Originated policies: These are established by top management deliberately so as

to guide executive thinking at various levels.

2. Appealed policies: These are formulated to meet the requirements of certain peculiar
situations which have not been covered by the earlier policies. Such requests usually
came from subordinates who fail to handle the cases based on guidance offered
by existing policies.

21
 3. Imposed polices: These are formed under pressure from external agencies such
as government, trade associations and unions.
4. General policies: They reflect the basic philosophy and priorities of the top
management in formulating the broad plan for mapping out the organisation’s growth
chart.
4. Specific policies: These policies cover specific issues such as hiring, rewarding and
bargaining. Such policies, however, should be in line with the basic framework
offered by the general policies.
5. Written or implied policies: Implied policies are inferred from the behaviour of
members (such as dress code, gentle tone while talking to customers, not getting
angry while at work etc.). Written policies, on the other hand, spell out managerial
thinking on paper so that there is very little room for loose interpretation.
Advantages of Personnel Policies

Policies, as useful instructional devices; offer many advantages to the personnel working
at various levels. These are:

1. Delegation: They help managers operating at different levels to act with confidence
without the need for consulting superiors every time.
2. Uniformity: They increase the chances of different people at different levels of
the organisation making similar choices, when independently facing similar situations.
They make the actions of organisational members more consistent.
3. Better control: As personnel policies specifies the relationship shared between the
organisation, .management and its employees, they allow members to work towards
achievement of the objectives of the organisation without friction/conflict, paving
the way for better control.
4. Standards of efficiency: Policies can also serve as standards in the execution of
work. They enable the management to see if they have been translated into action
by various groups in the organisation or not. In the light of actual performance,
existing policies may be subjected to amendment/refinement.

5. Confidence: Policies make the employees aware of where they stand in the organisation
22
 and create confidence in them while confronting routine and recurring problems. They
reduce chances of misinterpretation, misrepresentation and friction.

6. Speedy decisions: Policies can speed up decision-making by providing a blanker

framework within which personnel decisions can be made. They summarise past
experience.

7. Coordinating devices: Personnel policies help in achieving coordination. If

organisational members are guided by the same policies, they can predict more
accurately the actions and decisions of others. They ensure a steady course of
action and prevent unwarranted deviations from planned operations.

Obstacles in Administering Personnel Policies

The factors which obstruct the implementation of personnel policies are:

1. Many times managers are reluctant to follow policy guidelines, for they restrict the
scope of managerial work and curtail executive freedom.

2. Often conflicts erupt: between implied and expressed policy statements especially
on employment matters. For example, a policy of promoting employees on the basis
of merit only (expressed) may be sabotaged byunscrupulous managers by promoting
‘yes men’ (implied).

3. Personnel policies demand constant revision, modification and restructuring. However,

they are characterized by considerable inertia. Once established, they persist and
become unalterable. In the absence of review and appraisal, it would be difficult
to break the cycle and effect a desirable policy change.

4. Personnel policies are not easy to communicate. From the time policies are initiated
to the time they are used, there is always the danger of falling into ‘generalities and
pleasantries’.

Since policies grant freedom to managers as to what is to be done in a particular

situation, there is always the danger of some managers strictly adheres to the policy rhetoric
and others deviating from the path excessively. A manager may be more liberal than was
originally intended and vice versa. In general, ‘the extra margin’ of liberty may or may not
prove to be an investment in the long run.
23
 In order to overcome these obstacles, it is necessary to understand the basics in
policy formulation and revision. It would be pertinent to look into the essentials of a sound
personnel policy at this stage.

Coverage of Personnel Policies

The coverage of personnel policies has been classified on the basis of functions of
HRM by Michael Armstrong and is outlined as:

1. Social responsibility:

i. Equity: Treating employees fairly and justly by adopting an even-handed

approach.
ii. Consideration: Considering individual circumstances when decisions affect the
employee’s prospects, seniority or self-respect.

iii. Quality of work life: Increase the interest in the job and organisation by reducing
monotony, increasing variety of responsibilities avoiding stress and strain.

2. Employment policies: Provision of equal employment opportunities involves -

selecting the candidates based on job requirements and encouraging them to put
in their 100%.

3. Promotion policies: Promotion policies should reconcile the demands of

employees for growth and the organisation’s demands for fresh and much more
promising talent. Promotion policy should be fair and just to all.

4. Development policies: Policies should cover the kind of employees to be trained,

time span of training programmes, techniques, rewarding and awarding system,
qualifications and experience of the trainer, encouraging the employees for self-
advancement, etc. These policies also cover areas like career planning and
development, performance appraisal, organisational change and organisational
development.

5 Relations policies: Relations policies cover different aspects of human relations

like: policies regarding motivation, morale, communication, leadership styles, grievance
procedure, disciplinary procedure, employee counseling, etc. These policies also
cover the areas of industrial relations like union recognition, union representation,
24
 collective bargaining, prevention and settlement of industrial disputes and
participative management. In order to be effective they must be written on the
basis of authentic information available from different sources.

Formulation of Personnel Policies

Policy formulation and implementation involves the following steps:

1. Identifying the need: Initially important areas of personnel management (recruitment,

selection, training, compensation, bargaining) must have a policy formulation which
is clearly spelt out. Additional policy guidelines can come at any stage depending
on the recurrence of a ticklish issue at various levels. (appealed policies).

2. Collecting data: Once priority areas are listed, steps should be taken to collect
facts before formulating a policy. Various sources could be tapped for this purpose
such as (i) company’s records (ii) past practices (iii) survey of industry practices
(iv) experience of personnel handling various issues (v) top management philosophy
(vi) organisational culture (vii) employee aspirations and (viii) changing economic,
social and legislative environment etc.

3. Specifying alternatives: Policy alternatives should emerge clearly after collecting

relevant data ‘from various sources. These have to be evaluated carefully in terms
of their contribution to organisational objectives. It is always better to involve
people at-various levels, especially those who are going to use and live with such
policies. Top management should put the stamp of approval only when everything
is above board and the stated policy clearly reflects organisational priorities

4. Communicating the policy: To gain approval at various levels, the formulated policy
should be communicated throughout the organisation. Policy manual, in-house journal
and ‘discussions with people at various levels ‘may be used to ‘reach out to
employees quickly. Special coaching programmes can also inform people about
the manner of application.

5. Evaluating the policy: Personnel policies, to be effective, must be reviewed, evaluated

and controlled regularly against certain established standards. Evaluation helps
determine changes in existing policies. All the policies should be reviewed annually
and some policies should be reviewed at specific times for example when there is
25
 collective bargaining or after strike/lock out, etc. Departmental policies may be
reviewed through participation of all employees. Outside consultants or experts
from other organisations may be engaged to review crucial policies. Adequate
care should be taken to review the policies in the following situations when (a)
employees offer suggestions; (b) employees express grievances; (c) unsatisfactory
reports about employee performance and behavior. Personnel policies to be effective
should have favourable impact on the objectives and function of HRM and help
the parties concerned.

Quality of work life: Increase the interest in the job and organisation by reducing
monotony, increasing variety of responsibilities avoiding stress and strain.

2. Employment policies: Provision of equal employment opportunities involves -

selecting the candidates based on job requirements and encouraging them to put
in their 100%.

3. Promotion policies: Promotion policies should reconcile the demands of

employees for growth and the organisation’s demands for fresh and much more
promising talent. Promotion policy should be fair and just to all.

4. Development policies: Policies should cover the kind of employees to be trained,

time span of training programmes, techniques, rewarding and awarding system,
qualifications and experience of the trainer, encouraging the employees for self-
advancement, etc. These policies also cover areas like career planning and
development, performance appraisal, organisational change and organisational
development.

Relations policies: Relations policies cover different aspects of human relations

like: policies regarding motivation, morale, communication, leadership styles, grievance
procedure, disciplinary procedure, employee counselling, etc. These policies also
cover the areas of industrial relations like union recognition, union representation,
collective bargaining, prevention and settlement of industrial disputes and
participative management. In order to be effective they must be written on the
basis of authentic information available from different sources.

26
Advantages of Personnel Policies
Policies, as useful instructional devices; offer many advantages to the personnel working
at various levels. These are:

1. Delegation: They help managers operating at different levels to act with confidence
without the need for consulting superiors every time.

2. Uniformity: They increase the chances of different people at different levels of

the organisation making similar choices, when independently facing similar situations.
They make the actions of organisational members more consistent.

3. Better control: As personnel policies specify the relationship shared between the
organisation, management and its employees, they allow members to work towards
achievement of the objectives of the organisation. without friction/conflict, paving
the way for better control.

4. Standards of efficiency: Policies can also serve as standards in the execution of

work. They enable the management to see if they have been translated into action
by various groups in the organisation or not. In the light of actual performance,
existing policies may be subjected to amendment/refinement.

5. Confidence: Policies make the employees aware of where they stand in the
organisation and create confidence in them while confronting routine and recurring
problems. They reduce chances of misinterpretation, misrepresentation and friction.

6. Speedy decisions: Policies can speed up decision-making by providing a blanker

framework within which personnel decisions can be made. They summarise past
experience.

7. Coordinating devices: Personnel policies help in achieving coordination. If

organisational members are guided by the same policies, they can predict more
accurately the actions and decisions of others. They ensure a steady course of
action and prevent unwarranted deviations from planned operations.

Human Resource Development

Human Resource Development (HRD) is a positive concept in human resource
development. It is based on the belief that an investment in human beings is necessary and will
27
invariably bring in substantial benefits to the organisation in the long run. It aims at overall
development of human resources in order to contribute to the well being of the employees,
organisation and the society at large.
HRD rooted in the belief that human beings have the potential to do better. It, therefore, places
a premium on the dignity and tremendous latent energy of people. Where balance sheets show
people on the left side, HRD seeks to show them as assets on the credit side.

HRD : A Humanistic Concept

According to Prof TV Rao, HRD is a process by which the employees of an organisation are
helped in a continuous and planned way to: (1) acquire or sharpen capabilities required to
perform various functions associated with their present Or expected future roles; (2) develop
their general capabilities as individuals and discover and exploit their own inner potential for
their own’ and/or organisational development purposes; (3) develop an organisational culture in
which superior-subordinate relationships, team work and collaboration among sub units are
strong and contribute ta the professional well being, motivation and pride of employees. (Udal
. Pareek and T.V.Rao)
In short, HRD aims, at helping people’ to acquire competencies required to perform all
their functions effectively and make their organisation do well. ‘
Features of HRD
HRD is a process by which the employees of an organisation are helped to help themselves and
develop the organisation. It has the following features:
1. HRD is a system: It is a system having several interdependent parts or subsystems
such as procurement, appraisal, development, etc. Change in any one subsystem leads
28
 to changes in other parts. For example, if there is a change in the promotion policy
where seniority is replaced with merit,’ the chain reactions on affected individuals,
unions shall have to be assessed - keeping the difficulties in framing acceptable guidelines
regarding ‘merit’ in mind.

2. HRD is a planned process: It is a planned and systematic way of developing people.

Further, it is undertaken on a continuous basis. Learning, as we all know, is a lifelong
process and goes on and on.

Human resources are the most important assets in organization. (Valuable assets).
Human resources can be developed to an unlimited extent. Two plus two could be
five, six or ten. (capable of producing outstanding results). A healthy organisational
climate (openness, trust, collaboration) is essential for developing human resources.
(Healthy organisational climate helps employees to find meaning in their lives)

HRD can be planned and implemented to benefit both individuals and

organisations.(mutually beneficial interchange of ideas, thoughts and actions could
be worked out)

• If the organisation is able to inculcate a spirit of belongingness’ in its employees,

they will be more loyal and committed. (give love; get love)

• To ensure this healthy feeling, the organisation has to provide for their basic as well
as higher order needs through appropriate management styles and systems.
(Inducements must match contributions).

• The commitment of employee increases when he/she is able to find opportunities to

use his/her potential while at work (find what the employee wants and offer him the
best so that he has nothing to complain and look for). The managers must clear the
paths, create a developmental climate and help employees realise their full potential.
(put the employee on the right path, clarifying things, clearing fog and dispelling
doubts)

• The higher the level of the manager the more attention should be paid to the HRD
function in order to ensure its effectiveness (words and deeds must be in sync with
each Other and managers must exhibit rare passion and commitment while moving
closer to the hearts of employees)
29
• The maintenance of a healthy working climate and the development of its human
resources are the responsibilities of every organisation. (work should be real fun;
everyone participates and everyone gains; a culture of learning from experiences—
good or bad—and getting ahead with confidence.
2. HRD involves deuelopment of competencies: Basically; it tries to develop
competencies at four levels. At the individual level, employees are made to realise the
importance of playing their roles inüne with overall goals and expectations of other
people (regarding such roles). By enriching and ‘redesigning jobs, the roles of employees
are made more meaningful and interesting. At the interpersonal level, more stress is laid
on developing relationships based on trust, confidence and help. At the group level,
task forces, cross-functional teams are created to cement intergroup relations. At the
organisational level, the organisation is made to nurture a ‘development climate’, where
every effort is made to harness human potential while meeting organisational goals.
3. HRD is an interdisciplinary concept: HRD. is an amalgamation of various ideas,
concepts, principles and’ practices drawn from a number of soft sciences such as
sociology, psychology, anthropology, economics, etc.
4. HRD ‘improves quality of life: HRD enables the employee to discover and utilise his/
her capabilities in service. of organisational goals. He finds a new meaning in work,
when managers, support such initiatives through-incentive plans and challenging work
assignneñts. The whole effort of H’RD, thus, is focused on impro1ing the quality of ‘life
of employees working at various levels in an oganisation.
5. HRD aims at offering a motivating environment: HRD aims at creating an
enabling culture:
6. Where employees are encouraged to give their best—with fire in the belly— putting
their potential
7. To best use. Where employees really love their company and are willing to take risks,
experiment, innovate and deliver superior results.
‘Where people are trusted, encouraged to put their best foot forward showing
enthusiasm, involvement and commitment
• Where people enjoy their—work, collaborate with each other, discuss problems openly,
30
 care for each other and confront issues in ‘a straight forward manner and arrive at
solutions working like a team.

Objectives of HRD

HRD, basically, aims at developing:

1. The capabilities of each employee as an ‘individual;

2. The capabilities, of each individual in relation to his or her present role;

3. The capabilities of each employee in relation to his or her expected, future role(s);’

4. The dyadic relationship between each employee and his or her employer;

5. The team spirit and functioning in every organisational unit;

6. Collaboration among different units of the organisation;

7. The organisation’s overall health and self-renewing capabilities, which, in turn, increase
the enabling capabilities of individuals, dyads, teams and the entire organisation.

Benefits of HRD

HRD is needed by any organisation that wants to grow continuously. In the fast
changing environment, organisations can scale new heights only through, the effective and
efficient use of human resources. Appropriate personnel policies help maintain employee
motivation and morale at a high level, but this alone may not help the organisation achieve
success and venture into new fields. To this end, employee capabilities must be continually
trained, developed and expanded. The employees must be encouraged to take risks, experiment,
innovate and make things ‘happen in an atmosphere of mutual trust, goodwill and cooperation.
“People need competencies to perform tasks. Higher degree and quality of performance of
tasks requires higher level or degree of skills. Without continuous development of competencies
in people, an organisation is not likely to achieve its goals. Competent and motivated employees
are essential for organisational survival, growth and excellence” (1GNOU, MS 22, p.6).

He early part of the century saw a concern for improved efficiency through careful
design of work. During the middle part of the century emphasis shifted to the availability of
managerial personnel and employee productivity. Recent decades have focused on the demand
for technical personnel, responses to new legislation and governmental regulations, increased
31
concern for the quality of working, total quality management, and a renewed emphasis on
productivity Let us look into these trends more closely by examining the transformation of
personnel function from one stage to another in a chronological sequence. (Table 12.2)

Evolution of the Personnel Function

Historical Roots

Based on the work done at L&T Limited, Prof. Udai Pareek and Prof TV. Rao had
pioneered the concept of Human Resource Development in 1974 signifying the people
development orientation of organisations in India. The basic philosophy underwent significant
changes from time to time, in sync with the changing aspirations and expectations of employees
and found its way in many organisations, including the likes of the State Bank of India, Bharat
Earth Movers Ltd., etc. To propagate the HRD message a series of workshops were held from
time to time both at JIMAand in the Indian Society for Applied Behaviour Sciences. In course
of time many organisations have either started new HRD department or have appointed HRD
32
managers or at least have strengthened their personnel departments to look after the HRD
functions. Among the public sector companies it was BHEL which introduced this concept in
1980. Even while introducing HRD, many organisations were under the imprssion that it was
nothing but Training and Development concept. Certain companies started renaming their Training
and Development Departments as Human Resource Development Departments and some
have created new departments. Later some other personnel management functions like
Performance Appraisal, Potential Appraisal, Career Planning and Development, Feedback
and Counselling, Organisational Development and Data Storage Systems were included as
sub-systems of Human Resources Development.

As L&T Professor at XLRJ; Prof. TV. Rao was instrumental in spreading the HRD
philosophy through a series of nationwide lectures, seminars, conferences, workshops, etc.
The National HRD network was conceived in a seminar organised in Bombay in 1975. The
first HRD Newsletter was started consequent to this seminar by the Centre for HRD for XLRI
and was sponsored by L&T The National HRD Network grew from strength to strength
during the last three decades of its existence—with concrete support from IIMA, XLRI and
.L&T The National HRD Network later gave, birth to the Academy of Human Resource
Development, Delhi,

HRD’at ‘Macro and Micro Level

HRD as stated earlier is mainly concerned with developing the competencies of people.
When we call it as a people-oriented concept then several questions come to mind like should
the people be developed in the larger and national context or in the smaller institutional context?
Is it different at the macro level and micro level? As things stand now, HRD applies to both
institutional (micro) as well as national- (macro) issue The main. objective, however, is to develop
the newer capabilities in people so as to enable. them to tackle both present and future challenges
while realizing organisational goals. However, it is useful both at macro and micro levels.

Macro Levek At the macro level, HRD is concerned with the ‘development of people
for the nation’s well-being. It takes health, capabilities, skills, attitudes of people which are more
useful to the development of ili-tiation as a whole. While calculating the national income and
economic growth, the prospective HRD concept examines the individuals’ potentialities, their
attitudes, aspirations, skills, knowledge, etc., and establishes a concrete bass for economic
planning. However, HRD’s contribution at macro level has not gained popularity as Micro

33
LeveLS HRD has concern for grass root development in the organisations. Small wonder,
then, that HRD was well received by companies’ managements as they realised its importance
and foresaw its future .contribution for the individual and organisatioxal development. Generally,
HRD at micro level talks ofthe organisations’ manpower planning, selection, training, performance
appraisal, development, potential appraisal, compensation, organisational development, etc.
HRD’s- involvement in all these areas is mainly, with an objective to* develop certain new
capabilities in .people concerned to equip them to meet the present job ‘challenges and to
accept future job requirements.

HRD vs Personnel Function

The traditional personnel function is a service oriented activity; responding to the needs
of the organisation as and when they arise. On the other hand, HRD is a productive function
which does not merely .respond to organisational requirements but anticipates them and prepares
the people and the organisation to face future challenges .with confidence. ‘HRD is wider in
scope as it tries to develop the whole organisation instead of focusing attention on people
alone. Instead of concentrating on maintenance factors (wages5 incentives, day-to day
plans, operating procedures, etc) it tries to focus on motivating factors (job enrichment, developing
potentialities of people, creating, fostering -innovation and creativity; developing trust etc.’).
Personnel function, traditionally, ‘is viewed as the primary job of personnel department. HRD,
however, is. the responsibility of all managers in the organisation The personnel function views
higher morale and improved job satisfaction as the causes of improved performance. HRD, on
the other hand, regards “job challenges, creativity and opportunities for development as the
main motivating force” (Udai Pareek, T.V. Rao)

HRD Matrix

The HRD Matrix shows the interrelationships between HRD instruments, processes,
outcomes and organisational etfctiveness as shown in Table 12.4.

1. HRD instruments: These include performance appraisal, counselling, role analysis

potential development, training, communication policies, job rotations, rewards, job
enrichment programmes, etc. These instruments may vary depending on the size of the
organisation, the internal environment the support and commitment of the top
management, the competitive policies, etc.

34
 2. HRD processes: The .HRD instruments lead to the generation of HRD of processes
like role clarity, performance planning, development climate, risk-taking, dynamism in
employees. Such HRD processes should result in more competent, satisfied and
committed people that would make the organisation grow by contributing their best to
it.

3. HRD outcomes: As shown in Figure 12.4, HRD instruments and processes make,
people more committed and satisfied, where they tend to give their best to the
organisation enthusiastically.

4. Organisational effectiveness: Dimensions: Such HRD outcomes influence the

organisational effectiveness, which in turn, depends on a number of variables like
environment, technology, competitors, etc.

HRD Mechanisms or Sub-systems

Many HRD mechanisms are available to develop the competencies of employees and
improve the overall organisational climate. The major ones are discussed below: (T.V. Rao
1975,1990,1991)

1. Performance appraisal: Performance appraisal have become increasingly important

tools for organisations ,to use in managing and improving the performance of employees,
in making timely and accurate staffing decisions and in improving the overall quality of
the firm’s products and services. The appraisal process isa formal way of evaluating an
employee’s performance. Its purpose is to provide an accurate picture of past and/or
future employee performance. To meet this, performance targets are set. The targets
are based on job-related criteria that best determine successful job performance. Where
possible actual performance is measured directly and objectively. Using a wide variety
of techniques, specialists select an appropriate method to measure employee’s actual
performance against the previously set targets. The process is used to strengthen the,
effort-performance linkage. Appraisals help an organisation communicate its expectations
regarding performance and the connection between performance and rewards to
employees. They increase employees’ confidence when employees’ receive feedback
that their efforts are being adequately rewarded. The feedback is offered through an
evaluation interview. Here the rater tries to give both positive and negative sides of
employee performance. To be useful, raters or supervisors should use HRD oriented
35
 appraisals as a mechanism to:

• Uncover difficulties faced by the subordinate while handling assigned tasks and try to
remove these hurdles.

• Understand the strengths and weaknesses of subordinates and help the subordinate to
overcome the obstacles in the way.

• Encourage subordinates to meet problems head-on, accept responsibilities and face

challenges with confidence and courage.

• Plan for effective utilisation of the talents of subordinates.

2. Potential appraisal- The term ‘potential’ refers to the abilities possessed by an

employee but not put to use currently or the abilities to assume chal1enging responsibilities
in future assignments. The term ‘performance’refers to one’s skills, abilities in meeting
the requirements of the job which one is holding currently. Potential appraisal is different
from performance appraisal which shows an employee’s current performance in his
existing role. If the employee is required to play a completely different set of roles at
higher levels, potential appraisal needs to be carried out at regular intervals. “The
objective of potential appraisal is to identify the potential of a given employee to occupy
higher positions in the organisational hierarchy and undertake higher responsibilities”.
The appraisal is carried out on the basis of: (i) supervisor’s observations (ii) performance
data relating to various previous roles played by an employee; (iii) performance on
roles in simulated settings relating to a new position. A good potential appraisal system
helps management to pick up a suitable candidate for a given job and offer additional
training, if necessary.

3. Career planning: A career is a sequence of positions held by a person in the course

of a lifetime. Career planning is a process of integrating the employees’ needs and
aspirations with organisational needs. Career - programmes and HR programmes are
linked to the degree that they help each individual meet individual and organisational
requirements.

In the HRD system, the long-term growth plans of a company are not kept secret.
They are made known to the employees. Major changes are discussed at all levels to
promote understanding and commitment among employees. The immediate concern
36
 of employees would be to find out where do they stand in such a road map. Do they
have any chance to grow while building the organisation brick by brick? Since managers
have information about the growth plans of the company, they need to transmit their
information to their subordinates. The subordinates should be assisted in planning their
careers within the company. It is, however, not necessary that each one of them would
scale new heights every year but at least they are aware of the opportunities and get
ready for greater challenges ahead. Career planning does not guarantee success. But
without it, employees are rarely prepared to encash the opportunities that come their
way.

4. Training and employee development: Training has gained importance in present

day environment where jobs are complex and change rapidly. Training is a learning
experience designed to achieve a relatively permanent change in an individual that will
improve the ability to perform on the job. Employee development, on the other hand,
is a future-oriented training process, focusing on the personal growth of the employee.
To illustrate: a bank officer can receive training to improve skills oil a latest computer.

5. Whereas development may come from a workshop in ‘Effective Interpersonal

Skills’. Both training and development focus on learning. To be effective, training
should be conducted in a systematic way - backed up by careful needs’ assessment,
solid programme design and thorough evaluation of results. Training programmes should
not be designed as quick fixes for organisational problems, nor should they depend on
faddish techniques just because they are popular now and are followed by our next-
door-neighbour. Instead, training should be planned to meet the specific needs of the
organisation and its employees. (It should be viewed as a continuous learning exercise
which is designed to help employees and managers to stay current and to anticipate
future needs.) To survive and grow in a competitive environment, organisations have to
motivate their employees to get ready for all kinds of future challenges. An emphasis on
continual training and education can help firms in this direction.

6. Organisation development (OD): Organisations are never perfectly static. They

keep on changing. Employees’ skills and abilities, therefore, require continual upgrading.
The future is uncertain and full of surprises. It is not easy to fight the forces of change
without adequate preparation and training. Asystematic planned way of managing this
change is through the, process of OD.
37
7 OD may be defined as a change effort that is planned, focused on an entire
organisation or a large sub-system, managed from the top, aimed at enhancing
organisational health and effectiveness and based on planned interventions made with
the help of a change agent Or third party who is well-versed in the behavioural sciences
(Beckhard). Let us examine the important components of this definition:
8. The change effort is planned and proactive.
9. Changes are aimed either at a whole organisation or any department/division.
10. Effort is managed from the top, integrating various parts of the system.
11. The major focus is on increasing the capability for long-run effectiveness, developing
the organisation’s self-renewing capacity, including its ability to, create new and innovative
solutions to its problems.
12. OD uses several interventions such as process consultation (interpersonal relations and
dynamics operating in workgroups), team building (aimed at helping work groups
,become effective at task accomplishment), third-party intervention (resolving
differences through an experienced, ‘knowledgeable third party), sensitivity training
(training groups that seek to change behaviour through unstructured group interaction),
survey feedback (the use of questionnaires to identify discrepancies among member
perceptions; discussion follows and remedies are suggested), etc.
13. The changes are brought about through a consultant/specialist.
14. Initially, the change agent tries to find’ the psychological health of the organisation
through employee surveys. After identifying the problems such as absenteeism, low
output, conflicts, etc, efforts are made to improve the overall climate through various
means.
15. Rewards: People do what they do to satisfy needs. They choose to behave in ways
which will maximise their rewards. The most obvious reward is pay, but there are many
others. Intrinsic rewards come from the job itself; such as feelings of achievement,
pride in doing a job, etc. Extrinsic ‘rewards come from a source outside the job,
including pay, promotions and benefits offered by management. Rewards could be
linked to performance as well to motivate high achievers to do well. If rewards are
allocated completely on non-performance factors such as seniority, job title, etc., then
38
 employees are likely to reduce their effort. Nowadays, organisations also use team-
based rewards to’ motivate empowered work teams to exceed established targets.

16. Behavioural scientists point out the need to practice the principle of equity or fairness
while designing the reward structure within a company. The question involves
consideration of three kinds of equity:

17. External equity: The extent to which pay rates for particular jobs correspond to
rates paid for similar jobs in the external job market.

• Internal equity: The degree to which pay rates for various jobs inside the organisation
reflect the relative worth of these jobs.

• Individual equity. The extent to which pay rates allocated to specific individuals within
the organisations reflect variations in individual merit.

To incorporate these three types of equity into compensation systems, jobs are evaluated
systematically to determine equitable pay differentials among jobs. To address the
external equity issue, pay surveys are undertaken. A pay survey is a survey of the
labour market to find the current rates of pay for key jobs included in the survey -
reflecting a cross section of jobs in the organisation. The pay survey data for key jobs
is matched to job evaluation points with a view to develop, an equitable pay structure.
As far as individual equity is concerned, every effort is made in HRD systems to
encourage employees to acquire new skills and capabilities so that they become eligible
to obtain suitable rewards in the form of bonus, special privileges, letter of application,
stock options, etc.

18 Employee welfare and quality of work life (QWL): The term employee welfare
means “the efforts to make life worth living for workmen”. It includes various services,
facilities and benefits offered to employees by the employers, unions and government.
The purpose is to improve the living standards of workers and thereby improve the
quality of work life. Employers voluntarily extend a number of benefits to employees in
the hope that these indirect compensation plans motivate employees to perform better;
Over the years, the types of benefits offered have been expanding in line with competitive
pressures, changing job market trends, employee expectations, union demands and
legislative requirements.

39
 Quality of Work Life (QWL) efforts are systematic efforts by organisations to give
workers a greater opportunity to affect the way they do their jobs and the contributions
they make to the organisation’s overall effectiveness. It is a way of empowering
employees by giving them a greater ‘say in the decision-making process. QWL means
having good working conditions, good wages and benefits, good leadership and
interesting, challenging jobs. QWL efforts include the following:
• Employee involvement: Here employees are given the opportunity to participate in
the decisions that affect them and their relationship with the company.
• Quality circles: These are small groups of employees who meet regularly to find,
analyse and solve quality and other work-related problems of a particular department/
section/area.
• Socio-technical systems: These are interventions in the work situation that redesign
the work, the workgroups and the relationship between workers and the technologies
they use to perform their jobs.
• Co-determination: In this method, representatives of workers meet management in
a formal way to discuss and vote on important decisions that affect the lives of workers.
19. Self-managed work teams: These are employee groups (also ‘called autonomous
workgroups) with a high degree of decision-making, responsibility and behavioural
control for completing their work. - The team is usually given the responsibility for
producing an entire product or service.
• Suggestion programmes: It is a formal method for generating, evaluating and
implementing employee ideas.
• Open door policies: ‘Where open door policies exist, employees are free to walk
into any manager’s office with their problems and seek solutions to such problems.
HRD systems focus on employee welfare and QWL by continually examining employee
needs and meeting them to the best, possible extent.
20. Human resource information system: Human Resource Information System (HRIS)
is a method by which an organisation collects, maintains and reports information on
people and jobs. The information is generally stored in a central human resource data
bank, preferably in a computer containing the following details:
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 • Personal Data : identification, education, reserved category, place of origin, etc.;

• Recruitment data : entry date, grade in aptitude tests, grade in leadership tests;

• Experience data : placement history, promotions, tasks performed grade wise;

• Appraisal data : appraisal on each job, ratings of behaviours in a group, commitment

to overall goals

• Training data : nature of training received at each level, current training assignment,
etc.;

• Miscellaneous : health status, personal problems, security needs, record of incentives

received absence and sickness data, etc.;
This information is put to use whenever there is a need to identify employees for certain
special assignments.

Each of the subsystems described contribute to the achievement of overall HRD goals.
Performance and potential appraisal helps an employee develop his role capabilities and prepare
himself for future changes. Training improves his learning abilities. Feedback. and performance
coaching helps him correct mistakes and improve interpersonal relationships. OD promotes the
collaborative spirit atid self-renewing skills. Rewards and welfare amenities enrich the life of
employees and help them carry out the assigned tasks with zeal and enthusiasm. It should be
remembered that the subsystems discussed above should not be viewed in isolation. They are
all interconnected and interdependent parts. When viewed in isolation, they do not offer the
synergistic advantages of a well developed HRD system.

Hr and competitive advantage

Company’s human resources are its most fundamental source of competitive

advantage. When they get inspired and work to their full potential, people can bring a lot
to the table. They can bring smiles to customers through unmatched service and winning
ways of doing things. They can combine the scarce organisational inputs in such a wonderful
manner; the end result could be stunningly superior and vastly different from the one offered
by a rival firm. The expertise, knowledge and experience that capable employees of an
organisation possess could often spell the difference between success and failure in the corporate
world. Competitive advantage is the ability of a firm to win consistently over the long-term in a
41
competitive situation. Competitive advantage occurs if customers perceive that they receive
value from their transaction with an organisation. It occurs when the firm does something
that others cannot do or does it better than others. For example, Dell has a competitive
edge over its rivals, arising out of its exceptional ability to create a direct selling ‘c-commerce
channel that is highly responsive to customers.
Human resource professionals have, more or less, agreed now’that the key to a firm’s
success depends on a set of core competencies—in the form of employee skills, knowledge,
experience and the ability to use these to the advantage of the firm when required—that
separate the firm from its rivals and deliver value to customers. Most often, a core competence
(may also be viewed as a competitively superior resource strength) is knowledge based, residing
in people and in a company’s intellectual capital and not in its assets or the balance sheet
(Thompson et al 2006). For example, Federal Express has core competencies in package
routing, delivering and employee relations. The quality of 3M’s R&D department is the
principal source of 3M’s sustained growth. Generally speaking, core competencies tend to
be limited in number but they definitely offer a solid basis for technology innovation, product
development and service delivery. It must also be remembered here that it is not enough
for an organisation to possess valuable resources that offer competencies; those resources
have to be managed in a way that gives the organisation an edge over competition.
organisations can achieve a sustained competitive advantage through people if they meet
the following conditions.
• Superiority: This requires single-minded focus on customer needs and
expectations. To achieve this, the organisation needs to tune its policies in line
with changing customer’s requirements and deliver superior service. For example,
Federal Express was one of the first companies to introduce package tracking capability.
It created a system for tracking a package all along its path. Obviously, it was
better than UPS at finding where a customer’s package was. HR can bring that
plus value to the firm by hiring the best talent that actually matches with organisational
culture. Organisations will have to invest heavily in their human resources in order
to be competitive during the twenty-first century. Human resources become a source
of strength when they find ways to reduce costs offer something unique to customers
and thereby improve the efficiency, or effectiveness of a company.
• Inimitability: Superiority alone does not guarantee competitive advantage. To
42
 gain the edge, the firm must erect barriers that are insurmountable. That is, it must
offer a product or service that is not easy to imitate or copy. An organisation
should always try to be unique in its industry along dimensions that are widely
valued by customers. For example, Disney’s theme parks are often quoted as
having a competitive advantage in friendly, smiling employees. Now, is it easy for
other firms to replicate this? If the answer is yes, Disney’s superior advantage will
soon disappear. But how easy is it to find and keep employees who can smile for
hours on end even while being asked where the nearest restroom is for the ten-
thousandth time that day? The harder it is for other firms with theme parks to hire,
develop and keep friendly employees, the longer Disney’s competitive advantage
will persist. Through employee friendly policies and practices HR can instillconfidence
in people and inspire them to give their best to the organisation. Beth Southwest
Airlines and Starbucks are known for creating unique, cultures that get the most
from employees and are difficult to imitate.

• Durability: For over two decades, some analysts now argue, the Disney brand
was largely neglected—especially after the death of Walt Disney. It nonetheless
endured in the minds of children and their parents. Again, what is the glue that
holds employees together in HDFC to be able to offer home loan products to
individuals for over two decades—with surprisingly low attrition rates when
compared to rivals’—and deliver superior returns to shareholders at the same
time? IBM and GE have, over the years, perfected the art f blending the diverse
skill sets of people and deploying them on challenging assignments at a moment’s
notice.

• Non-substitutability: Competitive advantage demands a low possibility of

substitution. Substitution is is concerned with whether or not the customer’s need
that you fulfill can be met by alternative ways. It is not possible to sustain a
competitive advantage over extended periods of time. After the emergence of
Internet, students have almost forgotten Encyclopaedia Britannica (and its 30 bound
volumes as ready sources of information). The best way to maintain leadership is
to continually seek new forms of advantage through constant experimentation,
innovative efforts and investments in latest technology. In order to enjoy the
competitive advantage, the firm should be a cost-leader, delivering value for money.
43
 • Appropriability: This is a funny way of asking whether you actually end up
making profits that are above the average for a comparable set of firms. In other
words, you may have a smaller share of the market, but you are able to ride over
the market, enjoying supernormal returns, enjoying usually a cost advantage.

To deliver superior value and offer unmatched service, every firm requires the
services of a committed and competent workforce. There is increasing research
evidence indicating that employees are most productive if (i) they are loyal to the
company, informed about its mission, strategic and current levels of success, (ii)
involved in teams which collectively decide how things are to be done and (iii) are
trusted to take the right decisions rather than be controlled at every stage by
managers above them (Thompson). A good team of competent and committed
employees will deliver the goals if they are involved in all important activities and
are encouraged to develop goals that they are supposed to achieve. In recent
years, a new line of thinking has emerged to support this view-known as Strategic
Human Resources Management. (SHRM).

1.12 HR AS A FACTOR OF COMPETITIVE ADVANTAGE

Design Method for HR Business systems :

Regardless of the design, most HR systems fulfill similar business needs, including
job planning, employee recruitment and selection, workforce development employee safety
and health and labor relations. If a union is involved. HR manager may also design research
method to provide vital information to management about the workforce Management
must ensure that HR systems function with in the law by providing equal opportunity
employment and practicing nondiscrimination

Planning, Recruitment and Selection :

Methods for job planning include establishment the requirement for specific jobs
within the organization and creating systems that alert HR when it’s time to hire new
employees. Business use different systems to forecast workforce needs. HR managers
may look at a business’s objectives, link those objectives to specific tasks, create a job or
jobs that include those tasks and then seek out an hire an employee capable of performing
the tasks.
44
Development :

Employee development systems require HR planning and method design. Types

of employee development include employee orientation, training and team building. A variety
of systems exist to facilitate this HR Function. Some business use classroom-style training,
on the job training or online training. Other organizations use a combination of training
methods. Similarly, team building comes in many forms, from team work contest to corporate
retreats.

Safety and Health :

HR Departments are often charged with designing and implementing employee

health and safety programs. Under the occupational Health and safety administration, or
OSHA, employers must provide a safe work environment for employees. Different
industries require different safety systems. For Example, construction sites and banks
require different safety precautions. Some HR department develop ongoing employee
health programs designed to keep the workforce in good physical

Labour Relations :

HR personnel often act as intermediaries between the union and management. In

this role, HR employees designs methods for negotiation, attempting to smooth the interaction
between employee unions and company executives. The HR department is also responsible
for handling employee grievances, and must set up methods for dealing with official and
unofficial employee complaints.

Research :

Some industries have a pre-existing knowledge base, complete with training

suggestions and best practices. HR departments may be responsible for sorting through
existing research to create a knowledge base that fits the company’s needs. When research
is sparse or nonexistent, HR employees may need to develop a system for locating and
applying research. HR departments may also create and maintain a system for communicating
research to employees.

Five Functional Areas of Human resource Management :

HRM has five functional areas that include : Staffing, Human Resource Development
45
(HRD) Compensation and Benefits, Safety and Health and Employee and Labor
Relations :

Staffing :

Achieving organizational objectives requires having the proper number of employee

with the appropriate skills. Staffing accomplishes this objective through four tasks. The
first task is job analysis, which examines specific job functions in determining the skills,
duties and knowledge required for each position. The second task is ensuring that the
required numbers of employees, with the appropriate skills, are available when needed
organizations engage in Human Resource Planning (HRP). The third task is recruitment,
which is the process of attracting enough skilled people to apply for jobs in the organization.
Fourth, the last step in the staffing process, is selection. The involves choosing the best
suited individuals to fill the open positions in the firm.

Human Resource Development (HRD)

Six functions, including training, development, career planning, career development,

organization development and performance appraisal, make up Human Resource
Development (HRD)

Training is a process designed to provide employees with the knowledge and

skills needed for their present job. Focusing on long-term learning needs is development.
The ongoing process of career planning sets career to achieve them. Career development
is a formal approach used by firms to ensure that people with the proper qualifications and
experiences are available when needed. A planned process for improving the firm by
developing its structures, systems and processes to improve effectiveness and achieving
desired goals is organizational development (OD). And finally, performance appraisal is a
formal system of review and evaluation of individual or team task performance.

Compensation and Benefits :

Compensation includes all rewards that individuals receive as a result of their

employment. Pay is the money that a person receives for performing a job. Additional
financial rewards other than base pay include paid vacations, sick leave, holidays and
medical insurance, and they are called benefits. Non-financial rewards are non monetary
rewards, such as enjoyment of the work performed or a pleasant working environment.
46
Safety and Health :

Employees who work in a healthy and safe environment are more likely to be
productive. Safety involves protecting employees form work. Safety involves protecting
employees from work related accidents and injuries. Health activities seek to prevent
illness and provide for general physical and mental well being.

Employee and Labor Relations :

Business firms are required by law to recognize a union and bargain with it in good
faith if the firm’ employees want the union to represent them. This is still true despite the
fact that the private sector membership has fallen to 9 percent.

HUMAN RESOURCE PHILOSOPHY

Introduction :

Human resource management relates to strategic and coherent approach to the

management of human resources of an organisatization. It involves a set of inter related
policies with ideological and philosophical orientation and forms a business focused approach
to manage people for competitive advantages.

Organizational Philosophy andVision :

The starting point of HRM is to define philosophical orientation which help in

defining visionary long - term concepts of organization its mission. Policies as shown in
figure 1.
Key decision maker’s philosophies

Visionary long - Term concepts of Organization

Organizational Mission and Goals

Organizational Policies

Human Resources Policies

Human Resources Management Practices

Figure 1. Organizational Philosophy and Vision
47
 The key terms in this linkage that require our attention are philosophy. Vision
mission, and policies which may be arranged in a hierarchy, and which ultimately determine
various organizational practice including HRM practices.

Philosophy :

Philosophy, in the context of management of an organization, consists of an integrated

set of assumptions and beliefs about the way the things are the purpose of the activities.
And the way these should be. These assumptions and beliefs of those who create an
organization (owners) and those who manage it (managers, specially the key decision
makers) become base for defining vision of the organization. These assumption and beliefs
are sometimes explicit, and occasionally implicit, in the minds of the decision makers. The
philosophy of a person has its origin in two premises in two premises-fact premises and
values premises. Fact premises represent our descriptive view of how the world behaves.
They are drawn from research findings and our experiences. Value premises represent our
view of the desirability of certain goals and activities.

Machine approach, a person is treated as a part of the machine that can be fitted
like any other part. Both these approaches treat a person as physiological human being. In
humanistic approach, a person is treated as human being a having psychological. Therefore,
HR philosophy should take into account all these endowments of human beings mor
specifically; HR philosophy should be base on the following beliefs :

1. Human beings are the most important in the organization.

2. Human beings can be developed to a great extent as they have creative energy
which is utilized only partially.

3. Human being feel committed to their work in the organization if they develop
belongingness with it.

4. Human being are likely to develop a feeling of belongingness if the organization

takes care of them and their need satisfaction.

5. Human beings contribute to the maximum if they get an opportunity to discover

their full potential and to use it.

48
 6. It is the responsibility of the organization to create healthy and motivating work
climate characterized by openness, enthusiasm, trust, mutually, and collaboration.

The management philosophy of ITC limited is charged with the following concerns :

1. Concern for their ultimate customers - millions of customers.

2. Concern for their intermediate customer - the trend

3. Concern for their suppliers - their sources of raw materials and ancillaries.

4. Concern for their employees - the most valued assets.

5. Concern for their competitors whom they wish well for healthy competition
ultimately, benefits the customers.
6. Concern for their shareholders the investing public.

7. Concern for the national aspiration India’s future.

The human resource philosophy of the company is based on the seven cardinal belief’s

1. Self-Managing Resource :

We believe that the human being is a fundamentally different and unique resource
in that he/she is simultaneously a source, a resource and the end of all economic
and social activity. He is the means as well the purpose. He is capable, willing and
in the normal course of evolution, developing

2. Potential

We believe in the inherent potential of people. There are different kinds and degree
of potential which can be developed and utilized in the context of task challenges,
responsibility and commitment.

3. Limitations :

We believe that any apparent limitations in people are the results of a variety of
circumstances and factors, and can be overcome with support, awareness and
correction following which, the potential has a chance to flower again.

49
 4. Quality Work Life :
We believe that ITC as a business institution can provide a high quality of work life
for all its members. Through opportunities for a meaningful carrier, job satisfaction
and professional. Through this, ITC members will contribute to quality of life in the
interface with society
5. Meritocracy

We believe that people accept meritocracy as a just equitable system and contribute
best under conditions of open opportunities and challenges and different
commensurate with performance

6. Membership :
We believe that people can blend harmoniously the components in there
membership of ITC, Namely leadership, fellowship and peer ship
7. Actualisation

We believe that the design, implementation, and update of human resource

management systems, enhancement of skills and creation of an enabling climate
will facilitate the self-actulization of us as individuals and of ITC as a valued business
institution.

1.13 SUMMARY
Human resource management is the art of procuring, developing and maintaining
competent workforce to achieve the goals of an organisation in an effective and efficient way.
HRM role comprise of attaining organisational goals economically and effectively; preserving
& advancing general welfare to the community. Efficient HRM ultimately lead to employee
satisfaction and fulfillment. Its significance can be seen from enterprise level, individual
level and societal level. HRM functions are divided into two i.e. managerial functions
comprising of planning, organising, directing and controlling and operative function including
employment, development, compensation and relations
Human resource Development aims at helping people to acquire competencies required
to perform all their functions effectively and make the organisation do well. HRD improves the
capabilities of people; promotes team spirit among employees, and helps an organisation
50
achieve its goals efficiently.HRD has gained importance in recent times, as companies
have realised the benefits of treating their employees as valuable assets. The traditional personnel
function is a service-oriented activity; responding to the needs of the organisation as and when
they arise. HRD, on the other hand, is proactive function as it prepares people to face future
challenges with confidence. Many HRD mechanism (performance appraisal, potential appraisal,
career planning, training, organisation development, rewards, welfare amenities, etc.) are available
to develop the competencies of people and improve the overall organisational climate. These
mechanisms are designed to work together as an integrated system and deliver results. There is
an increasing realisation in business circles that HRD (not a Highly Redundant Department
please) would help people acquire knowledge, skills, and capabilities needed to survive and
flourish in a competitive world.

1.14 GLOSSARY

• Human Resource Management : It is an art of Procuring developing, maintaing

and compensating the required manpower to achieve the goal of an organisation in an
effective and efficient maner.

• Policies : Policies provide a guide to action.

1.15 SELF ASSESSMENT QUESTIONS

1. What is Human Resource Management?

___________________________________________________________

___________________________________________________________

2. Give difference between Human Resource Management and Personnel

Management.

___________________________________________________________

___________________________________________________________

3. What are Human Resource Policies?

___________________________________________________________

___________________________________________________________
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1.16 LESSON END EXERCISE

Q1 What is the role of human resource management?

Ans. ___________________________________________________________

___________________________________________________________

Q2 Human resource management is important. Why?

Ans. ___________________________________________________________

___________________________________________________________

Q3 What are the managerial functions of human resource management?

Ans. ___________________________________________________________

___________________________________________________________

Q4 What are the operative functions of human resource management?

Ans. ___________________________________________________________

___________________________________________________________

1.17 BOOKS RECOMMENDED

• Personal Management & Industrial Relations: B.P.Singh; T.N.Chhabra And

P.L.Taneja

• Human Resource Management: V.S.P.Rao

• Personnel Management: C.B.Mamoria and S.V.Gankar

• Principles and Practice of Management: L.M.Prasad

52
UNIT - 2 LESSON NO. 6-10

MANPOWER PLANNING

STRUCTURE

2.1 Introduction

2.2 Objectives

2.3 Factors Affecting Manpower Planning

2.4 Human Resource Planning Process

2.5 Critical Evaluation of Human Resource Planning

2.6 Job analysis

2.7 Job Description and its Contents

2.8 Job specification

2.9 Recruitment

2.10 Selection

2.11 Induction

2.12 Performance Appraisal

2.13 HRM issued and practices in the context of outsourcing as a Strategy.

2.14 Coaching and mentoring

2.15 Glossary

2.16 Self assessment questions

53
2.17 Lesson End Exercise

2.18 Books Recommended

2.1 INTRODUCTION / CONCEPT

Manpower planning also known as human resource planning. It is the starting

point in staffing function. HR planning basically deals with forecasting of additional human
resources required in an organisation in future, though there is no complete agreement
among writers and practiotners on the exact scope of HR. It is process of getting right
number of people in the right job at the right time doing the right kind of things.

2.2 OBJECTIVES

After going through this unit, you will be able :

• To determine the factors affecting human resource planning

• To find out the steps required to be taken in human resource planning

• To critically analyze the human resource planning

• To know the concept of succession planning

• To know the concept of job analysis.

• To determine the whole process of job specification.

• To have better insight of the idea of job description and its content

• To determines the uses of job description and to know how to make job description

• To find out the good characteristics of job description

2.3 FACTORS AFFECTING MANPOWER PLANNING

The following factors affecting manpower planning are as follows :

i. Employment : HRP is affected by the employment situation in the country i.e. in

countries where there is greater unemployment; there may be more pressure on
the company, from government to appoint more people. Similarly some company
may force shortage of skilled labour and they may have to appoint people from
54
 other countries.

ii. Technical Changes in the Society : Technology changes at a very fast speed
and new people having the required knowledge are required for the company. In
some cases, company may retain existing employees and teach them the new
technology and in some cases, the company has to remove existing people and
appoint new.

iii. Organisational Changes : Changes take place within the organisation from time
to time i.e. the company diversify into new products or close down business in
some areas etc. in such cases the HRP process i.e. appointing or removing people
will change according to situation.

iv. Demographic Changes : Demographic changes refer to things referring to age,

population, composition of work force etc. A number of people retire every year.
A new batch of graduates with specialization turns out every year. This can change
the appointment or the removal in the company.

v. Shortage of Skill due to Labour Turnover : Industries having high labour

turnover rate, the HRP will change constantly i.e. many new appointments will
take place. This also affects the way HRP is implemented.

vi. Multicultural Workforce : Workers from different countries travel to other

countries in search of job. When a company plans its human resources, it needs to
take into account this factor also.

vii. Pressure Groups : Company has to keep in mind certain pleasure. Groups like
human rights activist, woman activist, media etc. as they are very capable for
creating problems for the company, when issues concerning these groups arise,
appointment or retrenchment becomes difficult.

2.4 HUMAN RESOURCE PLANNING PROCESS

Process of human resource planning (Fig. 1) involves the following steps:

1) Determination of objectives of human resource planning.

2) Current human resource inventory.

55
3) Demand forecasting.

4) Supply forecasting.

5) Estimating net human resource requirements.

6) Action plan for redeployment.

7) Action plan for recruitment and selection.

8) Training and development programme.

Objective of Human
Resource Planning

Current Inventory of
Human Resource

Demand Forecasting and

Supply Forecasting

Action plans for:

-Redeployment
-Recruitment &Selection
-Training & Development

Critical Evaluation

Fig.1 Steps in Human Resource Planning

56
1. Determination of Objectives of Human Resource Planning : The persons
concerned with human resource planning must be clear about the goals of human
resource planning. According to Sikula, “The ultimate purpose of human resource
planning is to relate future human resources to future enterprise need so as to
maximize the future return on investment in human resources.”
Human resource planning is an integral part of the corporate planning. It must be
integrated with the overall organisational plans. Human resource planning should
be done carefully as it has got long-term repercussions. Once the wrong forecast
of future requirement of human resources and the wrong analysis of the available
human resource inventory are made, it may not be possible to rectify the errors in
the short-run. Therefore, human resource planning should be more concerned
with filling future vacancies with right type of people rather than with matching
existing personnel with existing jobs.
2. Preparation of Current Human Resource Inventory : Analysis of current
human resource supply may be undertaken by department, by function, by
occupation, or by level of skill or qualifications. Appropriate adjustments in these
would need to be made in the light of any foreseeable changes in weekly hours of
work, holidays, leave entitlements, etc. It may be noted that assessment of demand
for the operative personnel presents less problems of uncertainty and current human
resource supply can be adjusted accordingly. But projections of human resource
requirements for supervisory and managerial levels present a complex problem
because the required talents are not available at a short notice. This explains the
need to ascertain the present human resource inventory in the enterprise. This will
also help in drawing recruitment and development plans to meet the needs of
certain skills in the future.
Systematic steps must be taken in order to ensure that a reservoir of talent is
available when vacancies occur. The search for talented employees in the
organisation must be continuous. To be sure that available talent has been included;
the inventory of various skills in the enterprise should be indexed. Detailed bio-
data of each individual included in the human resource inventory must be obtained
separately for the purpose of human resource planning. This record will provide
the foundation for a programme of individual development. It will also reveal the
57
 scarcity or non-availability of certain talents for which outside sources of human
resource may be tapped.
3. Forecasting Demand for Human Resource : A proper forecast of human resource
required in the future (say, after one year, two years, three years and so on) must be
attempted. The factors relevant for human resource forecasting are as follows:

i. Employment trends: The human resource planning committee at the corporate

level should make an examination of number of employees on the payroll during
the past five years to know the trend within each employee’s group. With the
help of this, it would be possible to determine whether a particular group has been
stable or unstable and whether it has been expanding or contracting.

ii. Replacement needs: The need for replacement arises due to death, retirement,
resignation and termination of employees. The examination of replacement needs
may relate to specific human resource groups: supervisory, skilled, clerical, unskilled,
etc. For some groups like managerial or supervisory, it is very difficult to predict
the needs. One of the major difficulties involved in predicting the need for managerial
skill is that the management development cycle takes a long time. So the needs for
managerial human resource should be anticipated sufficiently in advance.

iii. Productivity: An important area to which the human resource planning is related
is the improvement in productivity. Gains in productivity add to the growth potential
of the organisation and can make possible healthy wage increase. Gains in
productivity will also influence the requirements of human resource.

iv. Expansion and Growth: The Company’s growth plans and expansion programme
should be carefully analysed to judge their impact on human resource requirements
in future. Steps must be taken in time for procuring and developing the talent
required to implement expansion and growth plans without delay.

v. Absenteeism: It means a situation when a person fails to come to work when he

is scheduled to work. The rate of absenteeism can be calculated by the following
formula :

Absenteeism = Man-days lost

Man-days worked+ Man-days lost
58
 There are certain employees who are more prone to absenteeism in any
organisation.10 to 20 percent of such employees may account for 70 to 80 percent
of total number of absences. It should be noted that excessive absenteeism (more
than the irreducible minimum, say 3 to 5%) involves a considerable cost to the
firm even when the absent employees receive no pay. Work schedules are upset
leading to overtime work which in turn leads to increased cost of production. The
management should go into the causes of absenteeism and attempt to reduce the
absenteeism rule as far as possible. The human resource planning experts will
have to consider the known rate of absenteeism in their decision regarding estimation
of human resource requirements.

4. Forecasting Human Resource Supply : In order to meet anticipated

requirements at the time of their opening, it is also necessary to plan for supply of
adequate number of personnel at the time they are needed. There are two sources
of supply of human resource - internal and external. But internal supply is more
important for human resource planning. It comprises of present employees working
in the organisation that can be promoted or transferred to fill up various jobs as
and when they fall vacant. This would require evaluation of the present personnel
abilities, their strengths and weaknesses, so as to gauge their suitability for the
required opening. Therefore, in order to estimate internal supply of personnel for
the future openings, a manager needs to conduct what is called human resource
audits and prepare replacement charts in advance.

i. Human resource audit : Systematic audit of executive personnel or managers

are called management inventories while those recording skills of non-managerial
workers are called skill inventories. Human resources audits give a thorough idea
of potential and capabilities of persons working in an organisation. Those audits
need to be reviewed and updated regularly or periodically so as to record the new
accomplishments or qualifications and skills achieved over the time.

ii. Replacement charts: Replacement charts are records listing each key position
and indicating time when it is likely to be vacated. It also lists the most likely
candidates working in the organisation suitable to fill each vacancy and also the
time when they would be ready for promotion. In short, a replacement chart presents

59
 clearly who will replace whom in case of vacancy. These also contain their relative
strengths and weaknesses. Often, large enterprise use, computer to record job
analysis information and human resource audits and replacement summaries.

5. Estimating the Net Human Resource Requirements: Net human resource

requirements in terms of number and components are to be determined in relation
to the overall human resource requirements (demand forecast) for a future date
and supply forecast for that date. The difference between overall human requirement
and future supply of human resources is to be found out.

6. Action Plan for Redundancy: If future surplus is estimated, the organisation has
to plan for redeployment, redundancy, etc. If surplus is estimated in some job/
departments, employees can be redeployed in other jobs/departments, where the
deficit of employees is estimated. The organisation should also plan for training or
re-orientation before redeployment of employees. Redundancy plan includes the
type and number of employees, time of and place of retrenchment, type of help to
be extended to retrenched employees in the form of compensation, help in getting
new job, priority in filling future vacancies

7. Action Plan for Recruitment and Selection : This phase deals with planning
how the organisation can obtain the required number of right type of personnel as
reflected by the personnel forecasting. In other words, there is a need to prepare
programmes of recruitment, selection, training, transfer and promotion so that
personnel needs of various departments of the organisation are met.

8. Plan for Training and Development : The preparation of skill inventory helps
in identifying the training and development needs of the organisation. Training is
necessary not only for new employees, but also for old employees .Executive
development programmes have to be devised for the development of managerial
personnel. No enterprise has a choice of whether to provide training or not, the
only choice is that of method or technique .All types of jobs usually require some
sort of training for their efficient performance. Even when the persons appointed
have some job experience, they must be given some training to refresh their
knowledge and skills and to tell them what they are expected to do. The talents of

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 the employees are not fully productive without a systematic programme of training
and development

2.5 CRITICAL EVALUATION OF HUMAN RESOURCE PLANNING

After the employment and training programmes have been implemented, an

appraisal must be made of the effectiveness of human resource planning. Deficiencies in
the programme should be pointed out and the catalogue of human resource inventory
should be updated periodically. Corrective actions should also be taken wherever it is
feasible and necessary to remove the deficiencies in human resource planning. An appraisal
of the existing human resource plans will also serve as a guide in the future human resource
planning.

i. Quantitative Dimension of Human Resource Planning

Quantitative aspect of human resource planning is concerned with the determination

of the total number of employees required in future. For proper assessment, the
human resource planner must have thorough knowledge of the company’s future
production and sales plans because the demand for human resources is related
with the overall organisational objectives which provide the basis for estimating
human resource requirements in terms of the number and characteristics of
employees. Management scientists have suggested various methods to assess the
number of employees required in an organisation. Two most commonly used
methods are: work load analysis and work-force analysis.

• Work-load Analysis: In work-load analysis, the human resource planning expert

needs to find out sales forecast, work schedules and thus determine the human
resource required per unit of product. The sales forecasts are translated into
work performance for the various departments of the enterprise. In a manufacturing
enterprise, one shall first find out the master schedule and then departmental
schedules. The departmental work-loads are converted into man-hours in terms
of different skills required. Work- loads analysis is used to determine how many
employees of various types are required to achieve total production targets.
Similarly, plans are made concerning the amount of work that each other part
(marketing department, purchase department, etc.) of the organisation is expected

61
 to accomplish during the coming year. It is essential to determine the work load in
some tangible units so that they may be translated into man-hours required per
unit. Past experience can, of course, be utilized for translating work-loads into
man-hours required.

To take an illustration, let us assume that the annual production budget of a company
is 1,80000 units. The standard man-hours required to complete a unit of the product
are 2 hours. The past experience reveals that a worker on an average can contribute
about 2,000 hours per year. The work-load may be calculated as under:

a) Annual Production Budget = 1, 80000 units.

b) Standard Man-hours required per unit = 2 hrs.

c) Planned Man-hours for the year (a × b) = 360000 hrs.

d) Annual contribution of a worker = 2000 hrs.

e) No. of Workers required [c/d] = 180.

Thus, 180 workers are needed throughout the year to meet the production target
of 180000 units. But this figure cannot be relied upon fully as the actual production
is influenced by many other factors such as availability of inputs and power,
breakdown of machinery, strike, lockout, etc. Nonetheless, work-load analysis is
quite suitable for short-term projections of human resource requirements. Long-
term projections can be made with the help of work-force analysis.

• Work-force Analysis: In the above illustration, we came to a conclusion that

180 workers are required to make 180000 units in a year. Assuming that all other
factors are favourable, this conclusion is illusory because it is almost certain that all
the 180 workers will not be available on all working days because of the two
major problems:

i. Absenteeism, and

ii. Labour Turnover.

Both these factors operate to reduce the number of workers available. Therefore,

62
 it is essential to do work-force analysis in the light of these major problems which
have been discussed later in the book. In other words, it is necessary to keep a
sufficient margin for absenteeism, labour turnover and idle time on the basis of
past experience. If it is essential to keep a margin of 20% of the human resource
required as per work-load analysis, the company must ensure that it has atleast
210 workers on its payroll to meet the annual production target.

ii. Qualitative Dimension of Human Resource Planning

The qualitative aspect of human resource planning deals with skills-mix analysis.
Each job in a company has its own peculiarities. Hence, the quality of personnel
required to perform each job differs. Thus, identification and determination of job
requirements is necessary to determine the quality of employees required to perform
that job. For knowing the job requirements of a particular job, ‘job analysis’ is
made. Job analysis refers to the detailed and systematic study of all elements of a
job such as tasks or activities included in it, responsibilities, abilities, working
conditions, skills and knowledge required to perform it, qualifications, and its
relation to other jobs in the company. In short, job analysis indicates what activities,
responsibilities, and abilities a job demands.

With the help of the facts and information obtained through job analysis, two
statements are prepared:

i. Job description-it contains details about the contents of a job; and

ii. Job specification-it reveals physical, educational, and other qualifications as well
as the experience required in an individual to perform the job satisfactorily.

Thus, job analysis obtains information about jobs, and it uses that information to
develop job descriptions and job specifications which, in turn, help in conducting
job evaluation. Job descriptions and job specifications are valuable in helping
managers to identify the kinds of individuals they should recruit, select, and develop,
as well as to provide guidance for decisions about training and career development,
performance appraisal, and compensation management.

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 • SUCCESSION PLANNING

Many progressive organisations generate a separate executive inventory report

that it is called succession planning. Succession planning is the process that is used
by human resource planners to convert information about current employees into
decisions about future internal job placements through possible promotions,
transfers, resignations, retirements, etc. Since promotions and other placement
decisions are usually the responsibility of operating (line) managers, the personnel
department serves in a advisory role. Owing to the complexities and time-
consuming nature of succession plans, succession planning is usually limited to key
employees in middle management and top-executive positions, and to those
employees identified as having long-term potential. By identifying successors to
key jobs and high-potential employees, an organisation may ensure a steady flow
of internal talent to fill important openings or vacancies.

Succession planning encourages hiring from within and creates an environment in

which employees have careers, not merely jobs. Moreover, it identifies human
resource shortages and skill deficiencies before vacancies occur. Through special
assignments, job rotation and other forms of development techniques, internal
candidates may be prepared to accept greater responsibilities of future job
openings. All this results in greater continuity of organisations operations, better
qualified incumbents and more unified corporate culture.

2.6 JOB ANALYSIS

Determination of manpower requirements is one of the most important problems

in manpower planning. Manpower planning is concerned with the determination of
requirements of manpower for the organisation both in terms of quantity and quality. The
quantitative aspect deals with determining the total amount of work to be done in a particular
period of time and the total number of workers required to do the work. But the type of
people to be employed for doing the work comes under qualitative aspect of manpower
requirements. The process by which qualitative requirements are determined is known as
job analysis.

Job analysis is a detailed and systematic study of jobs to know the nature and

64
characteristics of people to be employed for a job. It is a process of discovering and
identifying the pertinent information relating to the nature of a specific job .It is the
determination of the tasks which comprise the job and of the skills, knowledge, abilities
and responsibilities required of the worker for successful performance of the job. The
process of job analysis is essentially one of data collection and then analysis that data. It
provides the analyst with basic data pertaining to specific jobs in terms of duties,
responsibilities, skills, knowledge, etc. This data may be classified as follows:

a) Job Identification: Its title, including its code number.

b) Important Characteristics of a Job: Its location, physical setting, supervision, union

jurisdiction, hazards and discomforts.

c) What the Typical Worker Does? This includes collection of information on specific
operations and tasks to be performed by the typical worker including their relative
timing and importance, their simplicity, routine or complexity, the responsibility for
others, etc.

d) Job Duties: A detailed list of duties along with the probable frequently of occurrence
of each duty.

e) What Materials and Equipments the Worker Uses? Metals, plastics, grains, and
yarn or lathes, milling machines, testers, punch presses and micrometers.

f) How the Job is Done? The focus here is on the nature of operations like lifting,
handling, cleaning, washing, feeding, removing, drilling, driving, setting up and the
like.

g) Required Personal Attributes :These include experience, training undertaken,

apprenticeship, physical strength, coordination or dexterity, physical demands,
mental capabilities, aptitudes, social skills, etc,

h) Job Relationship: This includes opportunies for advancement, patterns of

promotion, essential cooperation, etc.

The information relating to a job which is thus classified, if examined carefully,

would suggest that some information relates to the job and some concerns the individual

65
doing the job. The requirements of a job are known as Job Descriptions and the qualities
demanded from the job holder are termed as Job Specification. Thus, job description and
job specification are the immediate products of job analysis.

The emphasis in job analysis is upon determining the principal duties of a job, the
nature and level of skills and aptitudes required to perform these activities, the relation of
the job to others in the organisation, responsibilities involved, and working conditions. Its
purpose is to describe and define the distinctions among various jobs. Considerable
emphasis is placed upon an accurate listing of the human characteristics-physical and
mental skills, personality traits and so on-needed to adequately perform the job. This will
facilitate the process of job evaluation which is concerned with determining the worth of
various jobs.

OBJECTIVES OF JOB ANALYSIS

The objectives of job analysis are to study processes, simplify methods, measures
work for establishing job and time standards, provide information for compensation and
incentive plans, and improve the safety, recruiting, selecting, training, appraising and
compensating of employees. These objectives of job analysis can be grouped under three
headings:

1) Work simplification (job redesign).

2) Establishment of work standards.

3) Support of other personnel activities.

NEED FOR JOB ANALYSIS

Job analysis is an important component of human resource management. It provides

important information which aids in redesigning jobs and organisation structure, planning
staffing procedures, designing training and appraisal programmes and so on as shown in
Fig.2.

66
 JOB ANALYSIS

JOB DESCRIPTIONS

JOB SPECIALISATION TRAINING

JOB EVA LUATION Developing

Appraising

compensating

Structuring Position and Recruiting Work

the Productivity
objectives Job design Selecting
organisation Results
Conceptual
Detailed staffing
design of the
work design

of the work

Fig. 2 Uses of Job Analysis.

The need of job analysis are as follows:

1) Manpower Planning : Job analysis represents the qualitative aspect of human

resource requirements. It determines the demands of a job in terms of responsibilities
and duties and then translates these in determining the number and kinds of jobs
and qualifications needed to fill these jobs. It is job analysis which reveals what an
average person can do on a job in a day. It facilitates the division of work into
different jobs. Thus, it is an essential element of effective manpower planning.

2) Recruitment and selection : To make employment programme successful, it is

necessary to have clear statements of jobs to be performed and of the skills and
knowledge that must be possessed by the employees who will fill these jobs. The
information regarding these two is procured from job description and job
specification respectively. These help in matching as closely as possible the job
requirements with workers’ aptitudes, abilities and interests to facilitate the
execution of employment programme.

3) Training : If there is any confusion about what the job is and what is supposed to
be done, proper training efforts cannot be initiated. Whether or not a current or
67
 potential job-holder requires additional training can be determined only after the
specific needs of the job have been identified through job analysis.

4) Counselling : Managers can properly counsel employees about their careers

when they understand the different jobs in the organisation. Likewise, employees
can better appreciate their career options when they understand the specific needs
of various other jobs. Job analysis can point out areas that an employee might
need to develop to further a career.

5) Job Evaluation : Job evaluation aims at determining the relative worth of various
jobs. The worth of a job would in turn help in determining the base compensation
of the job. Job evaluation ensures internal pay equity of one job to another. To
calculate the worth of a job, information concerning the job is provided by the job
description.

6) Performance Appraisal : Performance of the employees can be appraised

objectively if clear-cut standards of performance for every job are established.
Job analysis data can be adapted to establish clear-cut standards of performance
for every job. In evaluating the performance of an employee, the supervisor can
compare the actual contribution of each man with the set standards.

7) Employees Safety : A thorough job analysis reveals unsafe conditions associated

with a job. By studying how the various operations are taken up in a job, managers
can find unsafe practices. This helps in rectifying things easily.

8) Job Design and Redesign : Once the jobs are understood properly, it is easy to
locate weak spots and undertake remedial steps. We can eliminate unnecessary
movements, simplify certain steps and improve the existing ones through continuous
monitoring. In short, we can redesign jobs to match the mental make-up of
employees.

9) Career Planning : Job analysis provides a clear idea of opportunities in terms of

career paths and jobs available in the organisation. With the help of such
understanding, employees and the organisation both can make efforts for career
planning and career development.

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Steps in Job Analysis

The major steps in a job analysis programme are as follows:

1) Organise and plan for the programme. The company must determine who will be
in charge of the programme and must assign responsibilities. A schedule should be
established and a budget estimated.

2) Obtain current job design information. The job analyst should next obtain
organisation charts, current position descriptions and job specification procedures
manuals and system flow charts to the degree that these are available.

3) Conduct “needs research”. The job analyst should investigate to determine which
organisation, managers, or staff people require job analyses or output from job
analyses. The analyst should also determine for what purpose and to what extent
jobs must be analysed and how the information will be used.

4) Establish priorities in the jobs to be analysed. The personnel department, working

with manners of the various organisational units, identify the jobs to be analysed
and the priority of each job analysis.

5) Collect job Data. Collect data about the selected jobs as they are currently being
performed using established systematic techniques.

6) Evaluate and redesign the jobs.

7) Prepare job descriptions and job classifications.

8) Prepare job specifications.

There are three types of job analyses: Job-oriented, workers-oriented, and

combined. Analysis of jobs based on describing the tasks required for successful
performance is called worker-oriented analysis. Usually a combination of each type of
analysis is used.

PROCESS OF JOB ANALYSIS

There are five basic steps required for doing a job analysis, viz.,

Step 1: Collection of Background Information : According to Terry, “the make-up of

69
a job, its relation to other jobs, and its requirements for competent performance are essential
information needed for a job evaluation. This information can be had by reviewing available
background information such as organisation charts (which show how the job in question
relates to other jobs and where they fit into the overall organisation); class specifications
(which describe the general requirements of the class of job to which the job under analysis
belongs); and the existing job descriptions which provide a starting point from which to
build the revised job description.

CHART - 1
Job Analysis
(At Process for Obtaining All Pertinent Job Facts)

Job Description Job Specification

a) Job Identification (job title, location, occupational a) Physical make-up or
code, alternative name in use, name of division, characteristics.
department and unit where it exists. b) Psychological characteristics.
b) Job Summary (gives a quick capsule explanation of c) Personal characteristics.
the contents of a job, its hazards and discomforts). d) Responsibilities.
c) Duties performed (says the what, how and why of a e) Other factors of a
job; also describes a worker’s responsibilities in demographic nature (sex,
regard to custody of money, supervis ion of other age, education, language,
workers, training of subordinates, etc.) ability to read, write and
d) Relation to other jobs (gives how many persons may speak).
be supervised).
e) Supervision given/taken (helps in locating a job in the
job hierarchy).
f) Machines, tools, equipment (what type of
tools/equipment material is used).
g) Materials and forms used.
Conditions of work Location -factory/office/inside
/outside/overhead/Underground/solitary gang; Time-
day, night, overtime, peak loads, uniformity of work;
Posture-standing, sitting, stopping, clinging, walking,
reaching, lifting; Speed -quick, moderate, slow;
Accuracy-coarse, fine, exacting, Health hazards -
ventilation, illumination, nerve strain, eye -strain,
physical strain, moisture, heat, dust, humidity, fumes,
acids, exposure to such disagreeable features as dirt,
noise, etc, Hazards (accident hazards)

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Step 2 : Selection of Representative Position to be Analysed : Since the analysis of
all jobs would be time-consuming, flow representative positions should be analysed.

Step 3: Collection of Job Analysis Data : Job data on features of the job, required
employee qualifications and requirements, should be collected either from the employees
who actually perform a job; or from other employees (such as foremen or supervisors)
who watch the workers doing a job and thereby acquire knowledge about it; or from the
outside persons, known as the trade job analysts who are appointed to watch employees
performing a job.

The duties of such a trade job analysts are:

i. to outline the complete scope of a job and to consider all the physical and mental
activities involved in determining what the worker does.For this purpose, he studies
the physical methods used by a worker to accomplish his task (including the use
of machinery, tools and his own movements and necessary mental facilities);

ii. find out why a worker does a job; and for this purpose he studies why each task
is essential for the overall results; and

iii. the skill factor which may be needed in the worker to differentiate between jobs
and establish the extent of the difficulty of any job.

Step 4 : A job Description : The information collected is to be developed in the form of

a job description. This is a written statement that describes the main features of the job, as
well the qualifications/activities which the job incumbents must possess.

Step 5 : Developing Job Specification : The last step is to convert the job description
statements into Job Specifications, i.e.; to specifically mention what personal qualities,
traits, skills and background is necessary for getting the job done.

TECHNIQUES OF COLLECTION OF JOB ANALYSIS DATA

1. Job Performance

Under this technique, the job analyst actually does the job under study in order to
have direct exposure and get first-hand experience of and information about the
actual tasks, physical demands and environment conditions of the job. This method

71
 is appropriate in circumstances where skill requirements were low and therefore
can be learnt by the analyst quickly and easily. However, this is a crude and time-
consuming method and is not suitable in case of those jobs which require extensive
training before performing them.

2. Observation

Under observation method, the analyst simply observes a worker or group of

workers doing the job. Sometimes he reviews films of workers engaged in doing
the job. Without interfering, the analyst records the what, why and how of the
various parts of the job. During a complete cycle of performance of a job, he also
observes the working conditions and the hazards involved. Information is also
collected on the sequences of observed behavior. Usually this information is
recorded in a standard format.

The observation method is quite simple as the analyst has to observe certain facts
and records the same. It is often used for the analysis of jobs that consists largely
of repeated manual operations over a relatively short time cycle. It may also be
preferred when analyst wants to confirm or remove doubt about the data collected
through questionnaires. Though this method provides first hand method information
yet workers in many cases do not function most efficiently when they are being
observed. Thus, distortions in the job analysis may occur. It is slow, costly, and
sometimes less accurate if the analyst misses the irregularly occurring activities. It
is inapplicable to jobs which involve high proportions of unobservable mental
activities (e.g. manager’s job) and those which do not have complete and easily
observable job cycles. Moreover, the analyst needs to be trained to carefully
observe and record the competence of a job incumbent (such training involves
additional cost). However, better results will be available when observation method
is used along with other methods of job analysis.

2. Interview

Face-to-face interview with the job-holders are an effective way to collect job
information. In addition to job-holders, their supervisors and other concerned
persons may also be interviewed. The results of these interviews are combined

72
 into a single job analysis. The interviews are usually structured. In other words, a
standard format containing specified questions is used to collect answers from all
workers to survey the requirements of a particular job. In this way, all questions
and responses are restricted to job –related topics.

This method relies on workers’ own descriptions of what is done, why it is done,
and how it is done, etc. During the interview, the analyst usually makes judgements
about the information to be included and its degree of importance. In many jobs
where it is not possible for the analyst to actually perform the jobs (e.g.; airline
pilot) or where observation approach is impractical (e.g.; architect), interview
method is widely used. It is also used along with observation method in order to
seek sufficient information for the purpose of job analysis.

Three types of interviews are desirable. An initial interview provides most of the
job information. A verification interview is made after the results from the first
interview have been checked with other sources and prepared in task form. A
follow-up interview with a group of incumbents and supervisors may be used to
polish up the final draft for language, clarity and correctness of terms. Effective
interview involves the following steps:

• Preparation for the Interview: All interviewees should be notified in advance of

the purpose of the study. The questionnaire, the task inventory, or other materials
such as draft of task lists should be given to the interviewees in advance. A time for
the interview should be established that allows for an adequate period of questioning.

Opening the Interview: Workers who participate in job analysis frequently have
fears that the results will be used to lower their salaries, demean their jobs, or
increase their tasks. Until rapport is established, the analyst should try to put the
worker at ease with some casual talk and explanation of the service he is providing.

• Getting Information : The job analyst while collecting data should focus his
attention on the contents of the job and not on the personality of the employee.
The objective is not to describe this particular employees but rather the job that
the employee performs and also the skills and education necessary for proper
execution of job duties. If the job incumbent in question possesses a University

73
 degree which is not essential for performing the job the analyst must refrain from
inferring that a University degree is a must for proper performance of the said job.
The approach of the job analyst should be scientific in so far as it attempts to
distinguish between fact and inference and between fact and opinion.

• Verification of Information: The collection of job information should not be

confined to work done by the best worker in the job, rather it should represent a
reasonable sample of good, poor and average job doers. Information collected
from one employee should be checked in consultation with others holding the
same or similar jobs. This would help the analyst to get additional information and
strike out inconsistencies and contradictions in the information already collected.

• Position Analysis Questionnaire (PAQ)

The Position Analysis Questionnaire, developed at Purdue University, is a method

for analyzing jobs in quantitative form. The PAQ covers 195 job elements grouped
into six sections:

1) Information input: Where and how do workers get information to do their jobs?
... 35 elements

2) Mental processes: What reasoning, planning, organizing and decision-making is

done ….14 elements

3) Work output: What physical activities, tools and machines are used?

....49 elements

4) Relationship: What contact with other people, both in the company and outside of
it, is maintained or developed? ….36 elements

5) Job context: What is the physical and social context in which the job is performed?
….19 elements

6) Other job characteristics: What other activities, conditions, or characteristics not

covered by the other categories are relevant? ….41 elements

A major problem with PAQ is the time it takes for a job analysts to fill out the
ratings. However, PAQ has been widely researched and tested and appears to be
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 both reliable (among different raters) and valid (correlates with the job pay).

3. Checklists

Questionnaires and checklists, though appear to be similar, differ somewhat in the

degree to which they are structured. Questionnaires rely on job-holders to provide
most of the narrative description of the tasks, skills, knowledge, abilities, working
conditions, hazards etc. involved in the performance of their jobs. On the other
hand, checklist already contains the characteristics likely to be found in the job
being analysed. The respondent is often asked how frequently a task is performed,
or how important it is to overall performance in his position. Thus, checklist is
more structured than a questionnaire and contains fewer subjective judgements
and tends to be either ‘yes’ or ‘no’ variety.

A checklist may cover as many as 100 activities, and job-holders tick only those
tasks that are included in their jobs. After many job-holders have responded,
highly related behaviours are clustered by using statistical methods to form factors
representing common underlying dimensions of tasks characteristics. However,
preparation of a checklist is a challenging job. The specialist who prepares the list
has to collect all relevant information about the job concerned. Checklist method
is useful in large organizations that have a large number of people assigned to a
particular kind of job. This technique is amendable to tabulation and recording on
computer. However, this technique is costly and therefore not suitable for small
firms

4. Work Sampling

Under this method, a small proportions of the behavior required of any given job-
holder is recorded. Two types of sampling are usually done:cross-selection and
longitudinal. In the former, work samples are selected from different sections, and
in the latter, they are taken from the same selection. In a cross-sectional approach,
the recording of the job activities of several job-holders at the same time, may
yield a picture of the overall job. For example, the observation of one day’s behavior
for each of the ten engineers may give a good picture of what the total job
encompasses. If few persons are engaged in a given job, the analyst may observe

75
 their behaviours at separate time periods. For example, the engineer may be
observed for one day each of the thirty random days out of a year to build a
description of the job. This method resembles the observation method in spirit,
but differs from that because of the application of sampling technique.

5. Diary or Log of Job Incumbent

The diary or log is a recording by job incumbent of job duties, frequently of the
duties, and when the duties were accomplished. This technique requires the
incumbent to keep a diary/log on a daily basis. Unfortunately, most individuals are
not disciplined enough to keep such a diary/log.

If a diary/log is kept up to date, it can provide good information about the job.
Comparisons on a daily, weekly or monthly basis can be made. This will permit an
examination of the routineness or non-routineness of job duties, The diary/log is
useful when attempting to analyse jobs that are difficult to observe, such as those
performed by engineers, scientists, and senior executives.

Any of the above methods can be used in combination. In fact, all these can be
used to acquire a comprehensive picture of a job. Of course, using all would take
time and be rather costly. The analyst decides which method or combination is
needed to do a thorough job analysis. Job analysts often use a more specific,
widely used technique that incorporates various features of these general techniques
and provides a quantitatives

2.7 JOB DESCRIPTION AND ITS CONTENTS

A job description is an organized factual statement of job contents in the form of

duties and responsibilities of a specific job. The preparation of job description is necessary
before a vacancy is advertised. It tells in brief the nature and type of a job. In other words,
it emphasises the job requirements. As the title indicates, the documents are descripitive in
nature and constitute a record of job facts in an organized way.

Job description document discloses what is to be done, how it is to be done and

why it is to be done. It must disclose at least the facts relating to these three points in detail.
The data to be recorded on the description document must be objectively determined by

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the job analyst. To make this document more meaningful, the personnel department may
invite job descriptions from workers, foremen and supervisors.

1) Job title : It is desirable that the job title should be short, definite and suggestive
of the nature of the job. Commerce and industry nomenclature, wherever applicable,
should always be considered in phrasing meaning job titles

2) Job Location : It is necessary to give the location of the job. By location we

mean the name of the department where the job under consideration exists.

3) Job Summary : A short paragraph succinctly summarizing the tasks performed

by the employee is helpful for subsequent convenient identification of the job.

4) Duties to be Performed : Each task performed should be written out and estimate
made of the percentage of the time that is devoted to the performance of each
task. This is the most important phase of the job description and should be carefully
prepared

5) Machines, Tools, Materials : The tools, machines, equipments and materials

used in the performance of the job should be included in the job description. This
is necessary since these items tend to indicate the nature and complexity of the
job.

6) Relation to Other Jobs : Clear-cut relation of the job under consideration with
other jobs in the organisation will help to understand the nature of the job well

7) Nature of Supervision : There are certain jobs, particularly unskilled jobs, which
require intensive supervision, while other jobs require less supervision, because
people manning these positions are more committed to the achievement of
organisation goals. Nature of supervision must be given in the job description.

8) Working Environment : The working conditions, hazards and other

characteristics of the physical surroundings within the working area should be
described to help in subsequent interpretation of job evaluation.

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A specimen of job description is given below:
Specimen of Job Descriptions
X. Y. Z. Co. Ltd.
Job Title - Personal Secretary Job No…………..
Department………………… Grade…………....
Immediate Supervisor…………………. Date……………
Job Summary Perform secretarial duties involving taking dictation, typing, preparing
routine correspondence and reports, maintaining records and related clerical duties.
Job Duties. Take dictation in shorthand or from dictation machine, transcribe and
type letters, memoranda, reports, etc. Take shorthand notes in meetings, transcribe
and type into final form.
Compose and type routine letters, memoranda, open, read, sort, distribute and
follow-up incoming mail. Maintain files of letters, reports, catalogues and other
documents.
Obtain data and information by telephone or personal contacts for the boss.
Answer telephone calls and take messages.
Compile routine departmental reports.
Receive, disburse and keep records of petty cash funds.
Receive visitors.
Arrange hotel and travel reservations.
May be required to take technical dictation involving engineering and chemical
terminology.
Equipment, Instruments and Machines, Typewriters, dictation machine.
Relation to Other Jobs…………
Nature of Supervision…………
Working Environment…………….
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USES OF JOB DESCRIPTION

Job description has several uses, such as:

i. Preliminary drafts can be used as a basis for productive group discussion,

particularly if the process starts at the executive level.

ii. It aids in the development of job specifications, which are useful in planning
recruitment, in training and in hiring people with required skills.

iii. It can be used to orient new employees toward basic responsibilities and duties

iv. It is a basic document used in developing performance standards.

v. It can be used for job evaluation, a wage and salary administration technique.
A job description enables the manager to frame suitable questions to be asked
during an interview. It is particularly helpful when the application form is used as a tool for
eliminating the unfit personnel. According to Zerga, who analysed 401 articles on job
description about 30 years ago, a job description helps us in:

i. Job grading and classification;

ii. Transfers and promotions;

iii. Adjustments of grievances;

iv. Defining and outlining promotional steps;

v. Establishing a common understanding of a job between employers and employees;

vi. Investigating accidents;

vii. Indicating faulty work procedures or duplication of papers;

viii. Maintaining, operating and adjusting machinery;

ix. Time and motion studies;

x. Defining the limits of authority;

xi. Indicating case of personal merit;

xii. Studies of health and fatigue;

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 xiii. Scientific guidance;

xiv. Determining jobs suitable for occupational therapy;

xv. Providing hiring specifications; and

xvi. Providing performance indicators.

Job description helps top executives, especially when they jointly discuss one
another’s responsibilities. Overlapping or confusion can then be pointed out; questions
can be raised about the major thrust of each position, and problems of structure can be
identified. A job description becomes a vehicle for organizational change and improvement.

Some companies have more than one job description for each job. A detailed
version may be used in training and in evaluating a job, while a shorter version may be
used in planning and training of management.

PREPARATION OF JOB DESCRIPTION

Job description provides the data of the job itself in terms of duties and
responsibilities. In other to prepare this document, detailed information is to be collected
about job title, job contents duties and responsibilities and so on. The information necessary
for the preparation of the job description can be obtained in one or more of the following
ways:

1) By observation of job being performed.

2) By discussion with the supervisor of the job.

3) By requesting the supervisor of the job to fill in a questionnaire describing the job.

4) By discussion with some of the employees working on the job.

5) By requesting some of the employees working on the job to fill in the questionnaire
describing the job.

The most practical method of getting information is through personal observation

of the work performed, coupled with discussion with the supervisor of the job. The
technique of questionnaires is time consuming and generally does not yield satisfactory
results. Most of the employees cannot be depended upon to complete the questionnaire
80
because of their own limitations. At the same time, supervisors also cannot be depended
upon fully. He may either attempt to magnify the job in order to increase its importance or
may fail to include pertinent information in the reply. When questionnaires are used, invariably
the job analyst must discuss the job with the supervisor concerned in order to clarify the
information provided in the questionnaire. The use of questionnaires is recommended only
in case of those technical jobs where the job contents are not completely known to the
supervisor, or the operation is too complex to observe, or the job is actually what the
employee makes it.
Job description may well be prepared out in the shop. Every job should be described
as it exists and as it is currently performed. Changes in procedure that might be planned
should never be included in a job description until they take place. Sometimes, instances
are found where the way in which the job is performed does not correspond to the way in
which supervision wants the job to be done. In such cases, the preparation of the job
description should be held up until the operator is trained in the method which is finally
decided upon
Accountability for Job Descriptions. Usually, the chief executive of the organisation
will hold the personnel department accountable for coordinating the development and
maintenance of job description. Managers throughout the organisation are held accountable
for cooperating in this programme and for supplying accurate information. Thus, the personnel
director and other top managers are held jointly accountable for the development and
maintenance of job descriptions.
Validity of Job Descriptions. A job description is valid to the extent that it accurately
reflects job contents. The importance of job description validity becomes clear when the
influence of job descriptions on employment and evaluation practices is taken into
consideration. These two functions are likely to be performed away from the job scene
and possibly by people not immediately familiar with details of the various jobs. If the job
description is inaccurate and misleading, candidates without the proper qualifications may
be referred to departmental heads, or jobs may be ranked improperly with others in terms
of worth to the organization. When used for this purpose, inaccurate job descriptions can
also reduce the effectiveness of training, or they can result in the development of unrealistic
standards of performance. These problems demonstrate the importance of systematic,
periodic information-gathering and the careful writing of the descriptions.
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CHARACTERSTICS OF GOOD JOB DESCRIPTION

Opinions differ on how to write job descriptions. Some experts are of the view
that these should be written in detail and in terms of work flow. Others feel that these
should be written in terms of goals or results to be achieved, in other words as performance
standards (or what is popularly known as “management by objectives”). The prevalent
thinking is that job descriptions should be written in terms of duties and responsibilities,
i.e., in terms of functions performed.

Job descriptions are written by Personnel Department or its representatives.

Although there is no set way of writing a job description, the following pattern is
fairly typical, and used by many companies.

1) A paragraph is allocated to each major task or responsibility.

2) Paragraphs are numbered and arranged in a logical order, task sequence or

importance.

3) Sentences are begun with an active verb, e.g., “types letters”, “interviews the
candidates”, “collects, sorts out, routes and distributes mail”.

4) Accuracy and simplicity are emphasized rather than an elegant style.

5) Brevity is usually considered to be important but is largely conditioned by the type

of job being analysed and the need for accuracy.

6) Examples of work performed are often quoted and are useful in making the job
description explicit.

7) Job descriptions, particularly when they are used as bases for training, often
incorporate details of the faults which may be encountered in operator tasks and
safety check-points.

8) Statements of opinion, such as “dangerous situations are encountered”, should be

avoided.

9) When job description are written for supervisory jobs, the main factors (such as
manning, cost control, etc.) are identified and listed. Each factor is then broken
down into a series of elements with a note on the supervisor’s responsibility.
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The British Institute of Management Publication adds four more guidelines:

1) Give a clear, concise and readily understandable picture of the whole job;

2) Describe in sufficient detail each of the main duties and responsibilities;

3) Indicate the extent of direction received and supervision given;

4) Ensure that a new employee understands the job if he reads the job description.

LIMITATIONS OF JOB DESCRIPTION

In any use of job descriptions, it should be remembered that these descriptions

are not perfect reflections of the job. “The object of a job description is to differentiate it
from other jobs and set its outer limits.” Future, executives tend to carry work patterns
with them into new jobs, thus modifying the job drastically.

To avoid such problems, care must be exercised in writing a job description to

make it as accurate as possible, and at the managerial or professional level, it should be
reviewed and discussed after the job. Job tend to be dynamic, not static and a job description
can quickly go out of date. Therefore, jobs should be constantly revised and kept up-to-
date, and the personnel and the other departmental heads should be apprised of changes.

Both supervisors and subordinated should understand the uses to which a job
description would be put so that appropriate information is recorded by them. The relevant
parties should agree that a job description fairly reflects the job; other job evaluation and
job performance review would seem to be unfair.

2.8 JOB SPECIFICATIONS

Job specification, also known as man or employee specification, is a statement of

minimum acceptable qualities required in a job incumbent for the effective performance of
the job. In contrast to job description which provides various features of the job, job
specification specifies various features of the job holder.

“Job Specification involves listing of employee qualifications, skills and abilities

required to meet the job description. These specifications are needed to do job
satisfactorily.” In other words, it is a statement of minimum and acceptable human qualities
necessary to perform job properly. Job specification seeks to indicate what kind of persons
83
may be expected to most closely approximate the role requirements and thus, it is basically
concerned with matters of selection, screening and placement and is intended to serve as
a guide in hiring.

Job specification is a statement which tells us minimum acceptable human qualities

which helps to perform a job. Job specification translates the job description into human
qualifications so that a job can be performed in a better manner. Job specification helps in
hiring an appropriate person for an appropriate position. The contents are:

i. Personal characteristics such as age, sex, education, job experience and extra-
and co-curricular activities.

ii. Physical characteristics such as height, weight, chest, vision, hearing, health, voice,
poise and hand and foot coordination.

iii. Mental characteristics such as general intelligence, memory, judgement, foresight,

ability to concentrate, etc.

iv. Social and psychological characteristics such as emotional stability, flexibility,

manners, initiative, drive, conversational ability, creativity, etc.

Various contents of a job specification can be prescribed in three forms: (i) essential
attributes which a person must possess, (ii) desirable attribute which a person
may possess, and (iii) contra-indicators which will become a handicap to successful
job performance. So far as essential attributes are concerned, these are mandatory.
Organisations provide flexibility so far as desirable attributes are concerned. In
this case, it is desirable to prescribe the extent to which desirable attributes
contributes to satisfactory job performance and these attributes will be acquired
by the job incumbent. Chart 1 shows the specification of Human Resource Director
in a company on whose behalf Stanton Chase International, an executive search
firm, has inserted advertisement.

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 Chart 1

Job Specification of Human Resource Director: Qualification and Experience

1. Demonstrated expertise over atleast 5 to 6 years in human resource

management, in a leading role, in a large organisation environment preferably
with experience in change management.

2. Understanding in HR management for multiple HR constituencies- general

managers, highly skilled scientists, sales force and workers. Should be IT savvy.

3. Should be capable of effectively understanding the HR nuances for the

recruitment of expatriates for the senior position aboard.
4. Preferably (but not essential) MBA from a good abroad or one of the top
institutes in India.

5. Age 40-45 years

Personality Traits

1. Ability to be a strong team player and to lead from behind.

2. Sensitivity to people-related issues at different levels/backgrounds in the

organizations.

3. Ability to be perceived as a counselor and peer by senior management.

4. Strong selling and communication abilities.

5. Thinking on the feet and on-line creativity.

A job specification is a document which states the minimum acceptable human

qualities necessary to perform a job properly. It sets forth requirements sought in the
person who is to be selected to perform a particular job. Job specifications translate the
job descriptions into human qualifications, and sometimes level of performance, required
for successful performance of the job. Specifications are often appended to the job
descriptions. They are intended to serve as a guide in hiring and to be used in job evaluation.
In hiring, they are presumed to be a partial quide to the characteristics sought in the
application blank, the tests, the interviews, and the checking of references.
85
 In contrast to job description, job specification is a measuring rod of personnel
and it combines qualities required for acceptable performance of a particular job like
formal education experience, psychological attitude, physical measurements, etc. The
qualities as assessed and recorded on job specification document involve an element of
subjectivity. The proper assessment of these qualities depends upon the value judgements
of a number of people such as job analysts, job-holder and his supervisor.

Because of the admitted impossibility of presenting a completely objective and

accurate standard of personnel, some firms have discarded the idea of preparing job
specifications. Instead, they prefer to deliver the description to the employment interviewers
as they are sure of the accuracy of that information. But this does not mean that job
specification has been eliminated or discarded. It now exists in the minds of the interviewers.
Instead of having one standard of personnel for the job, there may be as many as readers
of the job descriptions.

If kept separate from job description, the job specification includes two sections-
Job identification and human requirements. The exact list of human requirements will vary
from company to company and according to uses to which job specification is to be put.
Such attributes as education and experience are always indicated. As far as possible, the
specification is to be put. Such attributes as education and experience are always indicated.
As far as possible, the specifications written for each characteristic should be quantified.

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 Specimen of Job Specifications

X. Y. Z. Co. Ltd

Job Grade Title: Middle Management

Department : …………….

Age Limits: 30-35, Relaxable in exceptional cases.

Education and Qualifications: Must be graduate in commerce or any other

Discipline with emphasis on business. Post-graduate degree in Commerce or
Business Management preferred. Proficiency in accounting, marketing and personnel
management.
Physical and Health: Good health; emotional stability.

Appearance: Charming personality.

Mental abilities: Alertness, ability to listen with an open mind, conceptual clarity.

Special abilities: Flexibility, adjustability.

Previous abilities: 5-7 years experience in executive position in a reputed company

Skill in operating special equipment: Working of computers.

Degree of stability and Dependability: High.

Maturity: Must be capable of accepting responsibility in company and community

affairs.

Innovation: Must be a self-starter and self-reliant.

Dominance: Must be a strong man who sticks with his decisions.

Must be able to provide leadership to subordinates and get the things done from
them.

Any other requirement…………………

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ADVANTAGES OF JOB SPECIFICATION

Job specification has following advantages:

i. It is helpful in preliminary screening in the selection procedure.

ii. It helps in giving due justification to each job.

iii. It also helps in designing training and development programmes.

iv. It helps the supervisors for counseling and monitoring performance of employees.

v. It helps in job evaluation.

vi. It helps the management to take decisions regarding promotion, transfers and
giving extra benefits to the employees.

A job specification can be developed by talking with the current jobholders about
the attributes required to do the job satisfactorily. Opinions of supervisors could also be
used as additional inputs. Checking the job needs of other organizations with similar jobs
will also help in developing job specifications.

Job specification is useful in the selection process because it offers a clear set of
qualifications for an individual to be hired for a specific job. Likewise, a well-written job
specification offers a clear picture to new recruits of what they will be doing in the
organization. A specimen (table 1) job specification is given below:

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 Table1 : Job Specification of Compensation Manager

Education

Experience

Skill,
Knowledge,
Abilities

Work · The position may require upto 15 per cent travel.

Orientation
Factors
Age · Preferably below 30 years.

PREPARATION OF JOB SPECIFICATIONS

The job specifications should define the minimum acceptable standards for
employment and performance on the job. Exceptional functions, which are of non-routine
nature, should not be allowed to influence the overall description. Specifications should
not be coloured by the personalities of or special skills exhibited by particular people from
whom job information may have obtained.

Job specifications are generally developed with the cooperation of the personnel
department and various supervisors throughout the organisation. The personnel Manager
co-ordinates the writing of job descriptions and specifications. So he should see that
useful information regarding the preparation of job descriptions and specifications is obtained
by studying actual practice in the different jobs. There is no doubt that because of
supervisor’s knowledge of the job, the personnel department will give a great deal of
weight age to his suggestions while preparing job specifications, but it should also ensure
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that specifications are realistic, fair and designed to assist the organisation in attaining its
goals.

Accountability for Job Specifications. As an outgrowth of job descriptions are

typically developed with the cooperation of the personnel department and various
supervisors throughout the organization. The personnel department coordinated the writing
of job descriptions and job specifications and secures agreement on the qualifications
desired.

Because of the supervisor’s knowledge of the job, the personnel director will give
a great deal of weight to the suggestions of a supervisor concerning needed qualifications,
but the personnel director will want to make certain that specifications are realistic, fair
and designed to assist the organization in attaining its goals

PROCESS OF JOB SPECIFICATION

The first step in the programme of job specification is to prepare a list of all jobs in
the company and where they are located. The second step is to secure and write up
information about each of the jobs in a company. Usually, this information about each of
the jobs in a company. Usually this information includes:

1. Physical specifications :- Physical specifications include the physical qualifications

or physical capacities that vary from job to job.

2. Physical qualifications or capacities :- Include physical features like height,

weight, chest, vision, hearing, ability to lift weight, ability to carry weight, health,
age, capacity to use or operate machines, tools, equipment etc.

3. Mental specifications :- Mental specifications include ability to perform,

arithmetical calculations, to interpret data, information blue prints, to read electrical
circuits, ability to plan, reading abilities, scientific abilities, judgment, ability to
concentrate, ability to handle variable factors, general intelligence, memory etc.

4. Emotional and social specifications :- Emotional and social specifications are

more important for the post of managers, supervisors, foremen etc. These include
emotional stability, flexibility, social adaptability in human relationships, personal
appearance including dress, posture etc.

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 5. Behavioural Specifications :- Behavioral specifications play an important role
in selecting the candidates for higher-level jobs in the organizational hierarchy.
This specification seeks to describe the acts of managers rather than the traits that
cause the acts. These specifications include judgments, research, creativity, teaching
ability, maturity trial of conciliation, self-reliance, dominance etc.

2.9 RECRUITMENT

If the HR department fails to indentify the quality and the number of persons to be
recruited and also fails to procure the services of persons with required qualifications, skill
and calibre continuously, a time may come ultimately when all the qualified persons have
retired and no qualified person remains in the organization. Therefore, the importance of
recruitment and selection of the right type of persons at the right time is indispensable to
the organization. According to Flippo, recruitment “is a process of searching for prospective
employees and stimulating and encouraging them to apply for jobs in an organization”. In
the words of Mamoria, “recruiting is the discovering of potential applicants for actual or
anticipated organizational vacancies”.

Sources of Recruitment : Basically, the sources of recruitment are of two types:

(a) Internal; and (b) External. (a) Internal Sources Internal sources include personnel
already on the pay roll of an organization. Filling a vacancy from internal sources by promoting
people has the advantages of increasing the general level of morale of existing employees
and of providing to the company more reliable Human Resource Management Among the
internal sources, may be included promotions transfers, and response of employees to
notified vacancy.

Merits of Internal Sources of Recruitment: Absorbing people already

acquainted with the company culture. Having tried and tested people on whom the company
can depend. It is a useful signal to employees that assures them that their services are
recognized; this helps in maintaining their motivation and morale. It reduces labour turnover
as it gives employees a sense of job security and opportunity for advancement. Fully
acquainted employees minimizes job training. Internal sources of recruitment are less costly
than the other sources of recruitment.

Demerits of Internal Sources of Recruitment: Internal sources of recruitment

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suffer from certain demerits which are: It limits the choice to a few employees only. The
likes and dislikes of the superiors play an important role in the selection of an employee. It
creates frustration among the unselected employees. (b) External Sources These sources
lie outside the organization. They may include: (i) Advertisements: Advertising in newspapers,
trade journals and magazines is the most frequently used method. In order to be successful,
an advertisement should be carefully written. If it is not properly written, it may not draw
the right type of applicants or it may attract too many applicants who are not qualified for
the job. (ii) Employment Exchanges: An employment exchange is an office set up for
bringing together as quickly as possible candidates searching for employment and employees
looking for prospective employees. The main functions of employment exchanges are
registration of job seekers and their placement in notified vacancies. (iii) Campus
Recruitment: Sometimes, recruiters are sent to educational institutions where they meet
the placement officer or the faculty members who recommend suitable candidates. This
system is prevalent in USA where campus recruitment is a major source. However, today
the idea of campus recruitment has slowly caught up the fancy of Indian employers too.
(iv) Unsolicited Applicants: Unsolicited applicants are another source. Some candidates
send in their applications without any invitation from the organization. (v) Labour Contractors:
Many organizations employ labour contractors to hire workers. This method is usually
resorted to when the work is of a temporary nature. (vi) Employee Referrals: Friends and
relatives of present employees are also a good source from which employees may be
drawn. (vii) Field Trips: An interviewing team makes trips to towns and cities, which are
known to contain the kinds of employees required. In this method of recruitment, carefully
prepared brochures describing the organization and the job it offers are distributed to the
candidates before the interviewer arrives. The arrival dates and the time and venue of
interview are given to the candidates in advance. Merits of External Sources of Recruitment:
Fresh talent and skill come into the organization. New employees may try to change old
habits. HR Planning, Recruitment, Selection, Placement and Induction New employees
may be selected at the latest terms and conditions of the organization. Highly qualified and
experienced employees may help the organization to boost performance. Since persons
are recruited from a large market, the best selection can be made. In other words, the
recruiter has a wide range of candidates to choose from. External sources provide the
requisite type of personnel having the required skill and standard.

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 Demerits of External Sources of Recruitment: They reduce the morale of
existing employees because outsiders are preferred to fill up superior vacancies. They
deny carrier advancement for existing employees. Proper evaluation may not be possible
due to the time constraint resulting in faulty selection. Outsiders not being acquainted with
the policies and procedures of the organization need training, before they can deliver.
From all this we can conclude that there is no hard and fast rule whether the recruitment
must be internally or externally or exclusive to each other. The best management policy
regarding recruitment must be to first look within the organization and if no able talent is
available, external sources may be looked at. To use the words of Koontz and O’Donnell
“the (recruitment) policy should be to ‘raise’ talent rather than ‘raid’ for it”.

Recruitment Policy : A policy is standing plan policies are directives providing

continuous framework for executive actions on recurrent managerial problems. A policy
assists decision-making but deviations may be needed, as exceptions and under some
extraordinary circumstances. Such a policy asserts the objectives of the recruitment and
provides a framework of implementation of the recruitment programme in the form of
procedures. The essentials of policy formation may be listed as follows: 1. It should be
definite, positive and clear. Everyone in the organization should understand it. 2. It should
be translatable into practice. 3. It should be flexible and at the same time have a high
degree of permanency. 4. It should be formulated to care all reasonable anticipated
conditions. 5. It should be founded upon facts and sound judgment. 6. It should conform
to economic principles, statutes and regulations. 7. It should be a general statement of the
established rules. Therefore, a well-considered and pre-planned recruitment policy, based
on corporate goals and needs may avoid hasty decisions and help the organization to
appoint the right type of personnel. According to Yoder, ‘a recruitment policy may involve
a commitment to broad principles such as filling vacancies with the best-qualified
individuals... It may also involve the organization system to the developed for implementing
recruitment programme and procedures to the employed’. Therefore, recruitment policy
involves a commitment by the organization to principles such as: (i) To find and employ the
best qualified persons for each job. (ii) To retain the best talent by offering life-time carriers,
and (iii) To facilitate personal growth on the job. Conditions Necessary for a Good
Recruitment Policy: A good recruitment policy must satisfy the following conditions: Human
Resource Management NOTES 40 Self-Instructional Material (a) Organization’s Objectives

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A good recruitment policy should be in conformity with the organization’s objectives. It
must take into consideration the basic parameters for recruitment decisions. (b) Identification
of Recruitment Needs A good recruitment policy should be flexible enough to meet the
changing needs of an organization. The recruiters should prepare profiles for each category
of workers and accordingly work out the employees’ specifications. (c) Ensure Long
Term Employment Opportunities for Its Employees A good recruitment policy should be
so designed as to ensure career growth for its employees on a long-term basis. It should
help in developing the potentialities of employees. (d) Preferred Sources of Recruitment A
good recruitment policy should match the qualities of employees with the requirements of
the work for which they are employed. The preferred sources of recruitment, which would
be tapped by the organization for, such staff as skilled or semi-skilled workers could be
internal sources or employment exchanges whereas for highly specialized managerial
personnel, external sources could be preferred.

2.10 SELECTION

MEANING AND DEFINITION OF SELECTION

Workers are essential, active and sensitive factor of production, therefore utmost
care should be taken in their selection. Any carelessness at the time of selection may
endanger the future prospects of the enterprise. The manager should make fair and impartial
selection, based upon scientific testing. Where efficient workers are no doubt, the permanent
asset of the future, inefficient will prove to be liability. Selection of employees is the
process of choosing up the most competent and suitable candidates. It is the process
of picking individual who have relevant qualifications to fill jobs in an organisation. The
basic purpose is to choose the individual who can most successfully perform the job from
the pool of qualified candidates. Selection is the process of finding out the right candidate
(out of the pool of job candidates) to fill the job organisation. The process of selection
leads to employment of person having the ability and qualifications to perform the jobs
which have fallen vacant in the organisation. It divides the candidates for employment into
two categories, namely, those who will be offered employment and those who will not be.
This process could be called ‘rejection’ since more candidates may be turned away than
are hired. That is why selection is frequently described as a negative process in contract
with the positive process of recruitment. The basic purpose of the selection process is

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choosing right type of candidates to man various positions in the organisation. In order to
achieve this purpose, a well organised selection procedure involves many steps and at
each steps more and more information is obtained about the candidates.

According to Dale Yoder, “selection is the process in which candidates for

employment are divided into two classes those who are to be offered employment and
those who are not. Selection means a process by which qualified personnel may be chosen
from the applicants offering their services to the organisation for employment”.

SELECTION VS. RECRUITMENT

Selection is the process of choosing or picking up the most suitable candidates out
of many available or interested. It is the process of selecting few and rejecting the unwanted
applicants. Recruitment is the positive function which aims at increasing the selection ratio,
that is, the number of applicants available per job. The selection process is a negative
function as it attempts to eliminate unsuitable applicants, leaving only the best to be taken
in the organisation.

Both recruitment and selection are the two phases of the same process. Recruitment
being the first phase envisages taking decisions on the choice of tapping the sources of
labour supply. Selection is the second phase which involves giving various types of tests to
the candidates and interviewing them in order to select the suitable candidates.

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 Difference between Recruitment and Selection

Basis of Recruitment Selection

Difference
Meaning Recruitment is the process of Selection is the process of selecting most
searching prospective candidates suited candidates from among those who
and encouraging them to apply have applied for job in the organisation.
for jobs in the organisation.
Object Main object of recruitment is to Main object of selection is to select the
encourage more a nd more most suited candidates.
candidates to apply for jobs in the
organisation.
Number There is no restriction upon the Only a certain number of candidates are
number of candidates. selected.
Order Recruitment is the first step of Selection is made only after recruitment.
employment process.
Nature Recruitment is always treated as Selection is a negative process as it leads
positive process. to elimination of unsuitable candidates.

SIGNIFICANCE OF SELECTION

Selection is a critical process these days because it requires a heavy investment of

money to get right types of people. Induction and training costs are also high. If the right
types of persons are not chosen, it will lead to huge loss of the employer in terms of time,
effort and money. Therefore, it is essential to device a suitable selecting procedure. Each
step in the selection procedure should help in getting more and more information about the
applicants to facilitate decision-making in the area of selection.

Absenteeism and employee turnover are the important problems which are being
faced by most of the organisations. The intensity of these problem can be reduced if in the
future all selections are made carefully so that there are ‘round pegs in the round holes’.
Whenever unsuitable employees are appointed, the efficiency of the organisation will go
down. Such employees will shirk work and absent themselves from the work more often.
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They may also be compelled to leave their jobs. If this happens, all the expenses incurred
on the selection and training of such employees will go waste.
Scientific selection and placement of personnel will go a long way towards building
up a stable work-force. It will keep the rates of absenteeism and labour turnover low and
will increase the morale of the employees. If the employment is suitable according to the
requirement of the jobs, they will show higher efficiency its objectives effectively.
SCIENTIFIC SELECTION
Fitting the worker to the job is the first and the most important step in promoting
individual efficiency in industry. Scientific selection of employees is an important function
of the personnel department. The object of scientific selection is to place on each job a
worker who can maintain a given output with minimum expenditure of energy and who will
be best fitted to the job.
The factors to be considered for selecting the right person for the right job are as
under:
(i) Physical Characteristics: Sound body, limbs, height, weight, sight, etc.

(ii) Personnel Characteristics: Age, sex, marital status, number of children, family
background, etc.
(iii) Proficiency or Skill and Ability: Qualifications and previous experience.
(iv) Competency: Potentiality of an individual for learning and becoming proficient in
a job. Competency points out capability to acquire knowledge and skill for success
on the job.
(v) Temperament and Character: Emotional, morale and social qualities, honesty,
loyalty, etc. a high degree of intellectual competency can never serve as a substitute
for such qualities as individual’s character, his habits of work, his way of reacting
in this or that situation, his driving forces in determining his fitness for the job.
(vi) Interest: Without interest, work is colourless and monotonous. With interest,
work seems meaningful and worthwhile to the individual and abilities are developed
as well as accomplishments are realised. Even if a person has skill, competency,
efficiency, but if he has no interest in the job, he will be unhappy in his work.
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SELECTION POLICY

The enterprise should adopt the following policy, while making the selection of the
suitable candidates:

(i) Selection based on vacant post. The number of employees to be appointed must
be according to the number of vacancies. If candidates appointed are lesser than
required, effective use of the business resources cannot be made. If more than
required employees are appointed, this will be an additional burden on the
enterprises.

(ii) Selection of employees according to work: after the analysis and the study of the
work, right persons may be appointed, who can perform the specific job efficiently.
It means the basis for selection should be work, not employees. It will be the
worse policy to select the worker first and to decide afterwards the job, where he
may be absorbed.

(iii) Sanctioned by department heads: the concerned departmental heads should be

consulted regarding the job, its nature and the type of persons required. It will be
in the interest of organisation, if the department heads are also one of the members
of selection committee.

(iv) Fixing minimum qualification: the minimum qualification, training, experience and
proficiency for the vacant post should be fixed, so that incompetent persons may
not be appointed. It will be advisable to mention desirable qualification also, in
addition to the minimum qualification.

(v) Recruitment through employment exchange: it will be fair to recruit through

employment exchanges, where qualified unemployment persons are available.

SELECTION PROCEDURE

The selection procedure is concerned with securing relevant information about an

applicant. This information is secured in a number of steps or stages. The objective of
selection process is to determine whether an applicant meets the qualifications for a specific
job and to choose the applicant who is most likely to perform well in that job.

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 Selection is a long process, commencing from the preliminary interview of the
applicants and ending with the contract of employment.

The hiring procedure is not s single act but it is essentially a series of methods or
steps or stages by which additional information is secured about the applicant. At each
stage, facts may come to light which may lead to the rejection to the applicant. A procedure
may be compared to a series of successive hurdles or barriers which an applicant must
cross. These are intended as screens, and they are designed to eliminate an unqualified
applicant at any point in the process. This technique is known as the successive hurdles
techniques. Not all selection processes include all these hurdles. The complexity of a
process usually increases with the level and responsibility of the position to be filled.

According to Yoder, “the hiring process is of one or many ‘go, no-go’ gauges.
Candidates are screened by the application of these tools. Qualified applicants go on to
the next hurdle while the unqualified are eliminated”. Thus, an effective selection programme
is a non-random process because those selected have been chosen on the basis of the
assumption that they are more likely to be “better” employees than those who have been
rejected. Chart 1 gives the hiring requirements as outlined by Yoder.

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 CHART - I

HIRING REQUIREMENTS

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 Selection processes or activities typically follow a standard pattern, beginning
with an initial screening interview and concluding with the final employment decision. The
traditional selection process includes: preliminary screening interview; completion of
application form; employment tests; comprehensive interview; background investigations,
physical examination and final employment decision to hire.

ESSENTIALS OF SELECTION PROCEDURE

The selection procedure adopted by an organisation is mostly tailor made to meet

its particular needs. The thoroughness of the procedure depends upon three factors:

First, the nature of selection, whether faulty or safe, because faulty selection affects
not only the training period that may be needed, but also results in heavy expenditure on
the new employee and the loss that may be incurred by the organisation in case the job-
occupant fails on his job.

Second, the policy of the company and the attitude of the management. As a
practice some companies usually hire more than the actual number needed with a view to
removing the unfit persons from the jobs.

Third, the length of the probationary or trial period. The longer the period, the
greater the uncertainty in the minds of the selected candidate about his future.

The hiring process can be successful, if the following preliminary requirements are
satisfied:

(i) Someone should have the authority to hire. This authority comes from the
employment requisition, as developed by an analysis of the work-load and work
force.

(ii) There must be some standard or personnel with which a prospective employee
may be compared, i.e., there should be available, beforehand, a comprehensive
job description and job specifications as developed by a Job Analysis.

(iii) There must be a sufficient number of applicants from whom the required number
of employees may be selected.

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STEPS INVOVLED IN SELECTION PROCESS/PROCEDURE

Every organisation will design a selection procedure (Figure 1) that suits its
requirements. However, the main steps which could be incorporated in the selection
procedures are discussed below:

(i) Receipts of applications: In the first step, applications from the interested
candidates are received.

RECEPTION OF APPLICATIONS

PRELIMINARY INTERVIEW

APPLICATION BLANK
PHYSICALLY UNFIT PERSONALLY OBJECTIONABLE OR

PSYCHOLOGICAL TESTS

INTERVIEW
UNFAVOURABLE GENERAL IMPRESSION

UNFAVOURABLE SECOND IMPRESSION

BACKGROUND INVESTIGATION
UNFAVOURABLE PERSONNEL DATA

(REFERENCE CHECK) WAITING

UNFAVOURABLE TEST SCORE

LIST OF
UNFAVOURABLE PREVIOUS

DESIRABLE
APPLICANTS
FINAL SELECTION
BY INTERVIEWERS

PHYSICAL EXAMINATION
HISTORY

PHYSI-
CALLY
UNFIT

NEGATIVE DECISION PLACEMENT

Figure 1: Selection Process

(ii) Preliminary interview: The preliminary interview is the first screening device
utilised in the personnel department. As a district step in selection, handled by
special preliminary interviewers, it is considered desirable where large number of
applicants are to be processed. The initial appraisal of the applicant is in the nature
of a general survey, not a detailed probing of qualifications.
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 The preliminary interview is considered with eliminating those who cannot be
employed because of such factors as age, citizenship, status, disqualifying physical
handicaps and inexperience or lack of training. He also determines whether the
type of work, hours, wages, and other working conditions are agreeable. Personal
interview, many a times, is resorted to elicit further information from the applicants
and to know them in person. It may be used as a good device to judge the overall
personality of the candidates. Those who pass this crude screening are usually
asked to fill in the application blank available with the employment office of the
organisation.

(iii) Application blank: Whenever there is a vacancy, it is advertised or enquiries are

made from the suitable sources, and applications are received from the candidates.
Standards application forms may be drawn up for all jobs and supplied to the
candidates on request. The application form is useful for several reasons. It gives
a preliminary idea of the candidates to the interviewer and helps him in formulating
the questions to have more information about the candidate. The written information
about age, qualification, experience, etc. may prove to be of greater value to the
interviewers. It makes the processing of applications very easy since there is
uniformity of filling the data in the application form.

After the applications are received, they are screened by a screening committee
and a list is prepared of the candidates to be interviewed. Applicants may be
called for the interview on some specific criteria like sex, desired age group,
experience and qualifications. The number of candidates to be called for interview
is normally five to seven times the number of posts to be filled up. The screened
applications are then reviewed by the personnel manager and interview letters are
despatched by registered post.

(iv) Employment tests: Formal testing of candidates has become a common practice
in selection. A test provides indications of some aspects of an individual’s such as
his attitudes, knowledge, ability, behaviour, and performance. It also provides a
systematic basis for comparing these aspects among candidates. Valid test can be
extremely valuable tools in the selection process. Systematic use of tests helps in
rejecting applicants. They are especially useful when the number of applicants is

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 large. Tests help to reduce bias and favouritism in selection by serving as a
supplementary screening device. They are designed to better match the candidates
and the jobs. The testing programme is highly effective and useful if it contains
valid tests. ‘Validity’ means that the test scores (marks) are significantly related to
job performance or to some other relevant criterion. The stronger the relationship
between test results and performance, the more effective the test is as a selection
tool. When scores and performance are unrelated, the test is invalid and should
not be used for selection. Tests should not only be validly designed but also be
properly and honestly administered.

The important types of tests used in industry for selection of skilled and professional
personnel include the following:

• Intelligence tests: These tests are used to judge the mental capacity of the
applicants. They measure the individual learning ability, i.e., ability to catch or
understand instructions and also ability to make decision and judgement. There
are many verbal as well as non-verbal intelligence tests constructed by the
psychologists for different jobs. One such standardised intelligence test developed
by U.S. Army in Second World War is known as the Army General Classification
Tests (AGCT). When applied to children, it is called Intelligence Quotient (IQ)
Test, where IQ is defined as follows.

IQ = Mental Age/Chronological Age

• Aptitude tests: Aptitude means the potential which an individual has for learning
the skills required to do a job efficiently. Aptitude tests measure an applicant’s
capacity and his potential for development. Aptitude tests are the most promising
indices for predicting worker’s success.

• Psycho-motor tests: Here applicant’s mental dexterity, control and coordination

of muscles are checked. It is useful for workers employed on semi-skilled and
repetitive jobs such as assembling, packing, checking, testing and inspection work.
Two popular standardised psycho-motor tests are McQuarril Test and Purdue
Mechanical Adaptability Test (PMAT).

• Proficiency tests: Proficiency tests are those which are designed to measure the
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 skills already acquired by the individuals. They are also known as performance,
occupational or trade tests. They are used to test the level of knowledge and
proficiency acquired by the applicants. A trade a trade tests takes a sample of
individual’s behaviour which is designed as replica of the actual work situation
such as typing. A trade test should be differentiated from the aptitude test. An
aptitude test measures the potential of the applicant to learn skills required on a
job.

• Interest test : interest test identify pattern of interests that is areas in which the
individual shows special concern, fascination and involvement. These tests will
suggest what types of jobs may be satisfying to the employees. Interest tests are
more often used for vocational guidance also. They help the individuals in selecting
occupations of their interest.

• Personality tests : Research studies have shown that more employees fail in
their performance due to defects in personality and not due to lack of aptitude or
ability. This is especially true in case of supervisors and managers. This is because
their success depends to a great extent on their ability to deal with people effectively.
This is called the human relations skill. Success depends on many attributes of his
personality like his own value system, emotional stability, attitude and maturity.
The purpose of personality test is to assess an applicant’s motivation.

(v) Comprehensive employment interview: After having cleared the employment

tests, the candidates are given a comprehensive interview. An ‘interview’ refers to
a conversation with a purpose. ‘selection interview’ is a formal in-depth conversation
conducted to evaluate the applicant’s suitability and acceptability. The interviewer
seeks to satisfy himself with the reference to the applicant about three board issues:
(i) can the applicant do the job? (ii) will the applicant do the job? (iii) how does the
applicant compare with the other applicants who are being considered for the job.

Selection interview is the most widely used selection technique especially due to
its salient feature of flexibility. Interviews can be adapted to unskilled, skilled,
managerial, and professional employees. They serve three fold purpose, i.e.,
obtaining information, giving information, and motivation. The interviewers learn
about the applicant – his background, training, work history, education, and
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interests. The applicant learns about the employer- the enterprise, its personnel
policies, compensation levels, job environment, and career paths. Further, the
selection interview seeks to establish a positive relationship between the employer
and the employee, and to motivate the prospective employees to accept the offer
of appointment with the enterprise.

The interview is taken by the Interview or Selection Committee consisting of

chairman of the organisation, head of the department, personnel manager, and
outside experts. During the interview, the members of the selection committee
appraise each candidate according to merit. At the end of the interview of each
candidate, the chairman consults the members and after a brief discussion finalises
the grading of the candidate. After all the candidates have been interviewed, a
panel is prepared. The number of person in the panel is generally about two to
three times the number of vacancies to be filled up.

The proper physical arrangement for the interview is of great importance. It enhances
the reputation of the organisation in the eyes of the candidates. The interview
should be conducted in a room free from any disturbance, noise and interruption,
so that interview may be held confidentially and in a quite environment. Another
important condition for successful interviewing is that the interviewers should look
ready for the meeting and the room should look ready for a private discussion.
Privacy and comfort are recognised as aids to free talk. People generally speak
more freely and frankly when they are at ease and do not feel threatened.

According to Jucius Michael, “An interview is a face to face, oral observational

and personal appraisal method. Usually, it is more than a means of getting
information. It involves giving information that will help the applicant make up his
mind about the company, and giving advice that may serve to change the mental or
emotional attitudes of the interviews”. Since talking with other is such a familiar
experience, perhaps the interview is apparently a simple, but essentially a very
difficult and intricate part of the selection procedure.

Interview is an important aspect of selection procedure. The final selection is partly

on his performance of the candidate in different tests and partly on his performance
in the final interview. In this interview, the candidate has to appear before the
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 interviewer or a panel of interviewers. The candidate’s overall personality is judged
in the interview.

Kinds of Interviews

The nature of interview varies from firm to firm. It may be conducted in the following
forms.

• Structured or guided interview. In this interview a series of questions which can

illuminate the significance aspects of the applicant’s background are standardised
in advance. Answers to these questions are compared with a critical score and
used in determining who is best to be selected. In the interview process these
standard questions are asked as they are written; the order may be varied but not
the phrasing of the questions.

The interviewer may occasionally depart from the prepared list of questions and
put other questions, but the important characteristics of structures interview remain
one of the questioning and active participation by the interviewed. The interviewee
is supposed only to answer the questions put by the interviewer.

• Unstructured or non-directed interview. The interviewer does not ask direct

and specific questions. He tries to create an atmosphere in which the candidate
feels free to talk on the subject selected by the interviewer. The interviewer is
basically a passive listener as he avoids making value judgement interrupting the
candidates and revealing his personal opinion.

• Preliminary or background information interview. This type of interview is

conducted when the history of applicant has to be known in terms of his experience,
education, health, interest, likes, dislikes, etc. it is more or less like the preliminary
interview.

• Stress interview. The applicant is intentionally put under a stress by interrupting

him, criticising his viewpoint and keeping silent after he has finished speaking. It
requires that the interviewer must be tactful and skilful. It is used for higher posts.

• Group interview. It is an interview of a number of applicants in a group. Reactions

of the applicants in dealing with each other can be seen by the interviewers. It is

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 used where it is essential to know how the candidates behave in groups.

(vi) Checking references : A referee is potentially an important source of information

about a candidate’s ability and personality if he holds a responsible position in
some organisation or has been the boss or employer of the candidate. Prior to
final selection, the prospective employer normally makes an investigation on the
references supplied by the applicant and undertakes more or less a thorough search
into the candidate’s past employment, education, personal reputation, financial
condition, police record, etc. However, it is often difficult to persuade a referee to
give his opinion frankly. The organisation may persuade him to do so by giving an
assurance that all information provided by him will be treated as strictly confidential.

(vii) Medical test: Medical or physical examination of the potential employee is

necessary for the company must protect itself against the risk of claims for the
company must protect itself against the risk claims for compensation from individuals
who are afflicted with disabilities. The medical examination should be both general
and thorough. The findings should be carefully recorded as to give a complete
medical history, the scope of current physical capabilities, and the nature of
disabilities, if any. Such information should be kept confidential.

The physical examination should reveal the physical characteristics of the individual
that are significant from the standpoint of his efficient performance of the job he
may be assigned or those jobs to which he may reasonably be expected to be
transferred or promoted. A qualified medical expert appointed by the organisation
should certify whether the candidate is physically fit to the requirements of the job.
A proper medical examination will ensure higher standard of health and physical
fitness of the employees and will reduce the rates of accident, labour turnover, and
absenteeism.

The advantages of physical examinations are: (i) it serves to ascertain the applicant’s
physical capability to meet the job requirement; (ii) it serves to protect the
organisation against the unwarranted claims under workers’ compensation laws
or against law suits for damagers; and (iii) it helps to prevent communicable diseases
entering the organisation.

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 (viii) Final selection and job offer: After a candidate has cleared all the stages in the
selection procedure, he is formally appointed by issuing him an appointment letter.
The letter of appointment contains the terms and conditions of employment including
pay-scale, starting, salary, allowances and other benefits (perks or perquisites),
the period of probation, reporting officers, etc. The final hiring decision marks the
end of the selection process, assuming that the candidate accepts the job offer. If
during the probation period, an employee is not found suitable, the management
may transfer him to some other job to which he may be expected to do justice.
But if the organisation cannot offer him a job which he can do well, the management
may sack him or give him time and training to improve himself.

(ix) Placement: Putting the right man at the right job is also an important function of
the personnel manager. Proper placement reduces labour turnover, eliminate wastes,
increase productivity and improves morale. Determination of a suitable job for the
worker and providing right type of worker for the job is called placement. Placement
has an experimental element, but for most of the employees it is a decisive step
and should consist in matching what the supervisor has the reason to think the new
employees can do with what the job demands (job requirements), imposes (in
strain, working conditions, etc.), and offers (in the form of pay-rate, interest,
promotional possibilities, etc.). it is not easy to match all these factors for a new
worker, who is still, many ways, an unknown quantity. For this reason, the first
placement usually carries with it the condition of probation.

2.11 INDUCTION

Induction is a technique, by which a new employee is rehabilitated into his

surroundings and introduced to the practices, polices and purposes of the organisation. In
other words, it is a welcoming process – the idea is to welcome a newcomer, make him
feel at home and generate in him a feeling that his own jobs, however small, is meaning and
has significance as a part of the total organisation.

In the words of Armstrong, induction is “the process of receiving and welcoming

an employee when he first joins a company and giving him the basic information he needs
to settle down quickly and start work”.

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 According to Edwin B. Flippo, “Induction is the welcoming process to make the
new employee feel at home and generate in him a feeling of belongingness to the
organisation”. It is concerned with the problem of orienting a new employee to his work
group, supervisor and the organisation. It is the beginning of the fusion process and it helps
in integration between the organisation goals and the personal goals of the new employee.
Planned induction creates a good impression on the new employee to feel at home right
from the beginning.

Orientation or induction expands on the information received during the recruitment

and selection stages and helps to reduce the initial anxiety which all employees feel when
they first begin a new job. For example, an orientation programme familiarises the new
member with the organisation’s objective, history, philosophy, procedures, and rules;
communicates relevant personnel policies such as hours of work, pay procedures, overtime
requirements, and fringe benefits; reviews the specific duties and responsibilities of the
new member’s job; provides a tour of the organisation’s physical facilities; and introduces
the employee to his superior and co-workers.

The experience during the initial period with an organisation can have a major
impact on a new employee’s career. A new employee stands on the “boundary” of the
organisation- certainly he is no longer an outsider, but he is not yet embraced by those
within. There is great stress for the new employee. He wants to reduce this stress or
anxiety by becoming incorporated into the “interior” as quickly as possible. Consequently,
it is during this period that an employee is more receptive to cues (signals) from the
organisational environment than he is ever again likely to be. Such cues to proper behaviour
are provided through orientation programmes and this is the major objective of orientation.
However, an orientation programme may be designed to achieve certain specific objectives
also.

OBJECTIVES OF ORIENTATION / INDUCTION

Established orientations conduct formal orientation of employees to achieve the

following objectives:

(i) To infuse confidence. An induction programme is designed to help the newcomer

to overcome his shyness or nervousness that he may experience in meeting new

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 people in the new environment, and to infuse confidence in him to successfully
face the new situations. The confidence built up in the new employee through
orientation makes him an efficient worker.

(ii) To develop sense of belongingness. Orientation integrates new employees with

the organisation and develops a sense of commitment and loyalty which is a strong
motivation force.

(iii) To supply required information. The orientation programme aims at supplying

necessary information to the new employee regarding the nature of the workforce,
service conditions, welfare facilities, benefits, career paths, company’s programmes,
and policies. Neglect in the area of induction may lead to labour turnover,
psychological tensions and avoidable grievances.

(iv) To foster cordial relationships. Orientation also aims at foster close and cordial
relationship between the newcomers and their supervisors as well as the existing
employees, by introducing him to these people.

SIGNIFICANCE OF INDUCTION

Induction is a socialisation process by which the organisation seeks to make an

individual its agent for the achievement of its objectives and the individual seeks to make
an agency of the organisation for the achievement of his personal goals. The basic purpose
of induction is to introduce the new employee and the organisation to each other, to help
them become acquainted, and to help them accommodate each other. The new employee
is explained what is expected of him and is also told the rules, regulations, policies and
procedures that directly affect him. He is made aware of how his job fits into the overall
operations of the organisation, his own duties and responsibilities, and to whom he should
look for when he has any problem or difficulty.

The first impression made on the mind of the employees is likely to be a lasting
impression, and the treatment he receives during the early days on the new job will help to
form his opinion of his employers. Careful introduction to his job will make his adjustment
to the job more rapid, his mistakes fewer and his attitude more co-operative.

Indoctrination or orientation is very important in India, where the percentage of

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illiteracy is quite high. The new worker finds himself completely at sea when by force of
circumstances he has to shift from rural surroundings into an industrial unit. It is no use
trying to push a handbook of certified rules and regulations into his hands and expecting
him to turn out into a loyal and efficient employee. He needs a short and simple induction
conducted by someone who speaks his own language. This will go a long way in reducing
turnover and, above all, in preventing a worker from the likelihood of falling a prey to
subversive elements which thrive on creating labour unrest by misrepresenting employers
to illiterate employees.

ELEMENTS OF INDUCTION

Induction is the process of welcoming new staff into their role within the
organisation. While induction and orientation are sometimes used interchangeably. The
following are the elements of induction.

(1) Corporate Policies and Procedures: This step covers all organisational-level
policies and strategies. This step of the process helps with clarification of overall
organisational goals, operating environment and internal policies. Where relevant,
staff should be familiarised with:

• Organisation mission statement;

• Organisational planning and strategy;

• Organisational structure and chart;

• Operating framework;

• Privacy principles with respect to sensitive information;

• Quality assessment and training processes;

• Codes of practice;

• Compliance requirements for reporting, best practice, and transparency; and

• Facilities and internet usage policies for staff.

(2) Human Resource and Payroll Forms: Terms of employment and the
probationary period should be made clear to new staff. Attention can be drawn to
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 annual leave periods, holidays, sick days and other terms of employment. Human
resource and payroll forms can be completed and forwarded to the HR and payroll
departments.

(3) Environment and Occupational Health and Safety: Environment and

occupational health and safety issues can also be addressed. Some of the issues
to clarify during the induction process are:

• Fire exits;

• First aid officers, kits and procedures;

• Safety procedures, including how to report safety and health issues;

• Any potential hazards in the workplace and how to manage them;

• Any duties to report potential hazards, accidents, injuries, and incidents;

• Appropriate ways to use equipment; and

• Fire and emergency procedures.

(4) Role Description, Tasks, and Responsibilities: A comprehensive role

description should be provided to the employee. Even if the work contract already
covers the employee’s tasks and responsibilities, it can help to present it again to
new staff as part of the induction process. Any on-the-job training or professional
development opportunities can also be communicated here.

(5) IT and Work Facilities: Staff can be informed as to how the organisation’s IT
and other work facilities are to be used with respect to their role, particularly if
there are varying levels of information access or system privileges in your
organisation.

(6) Orientation: The orientation or workplace induction stage often begins on the
first day. With an effective induction strategy, such as staff induction software, the
orientation stage can be fairly brief and relatively less time consuming for both staff
members and managers. Some of the issues to cover during orientation are:

• Introduction and physical tour of company facilities;

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 • Workstation and chairs;

• Keys/passes for staff;

• Emergency exits;

• Office security;

• Office procedures;

• Location of fire extinguishers;

• Meeting colleagues and managers; and

• Amenities areas.

PROCEDURE OF INDUCTION

Induction may be informal in case of small firms and formal of the duration of two
to four weeks in case of big organisations. Orientation training course should not be too
lengthy. It need not necessarily be given on the day when the new employee joins his
work. But if a formal course is to be attended after two or three weeks on the job, the
initial introduction and the immediately needed information may be given by the supervisor
of the department.

The induction programme should be handled by persons who are fully conversant
with the course contents. The success of the induction course will depend upon the quality
of trainers and their ability to draw out the interest of their listeners. The range of information
that may be covered in such a course is as follows:

(a) Company’s history: a brief description of the early history and growth of the
organisation and its future potentialities. This can be made more interesting when
the company’s history is built around personalities than around events.

(b) Product of the company: a brief story of the original products and its evolution to
meet competition and consumer needs. Use of sale literature, exhibits and films
can also help.

(c) Company’s organisation: brief description of the organisation structure, relation of

new employee’s department with other departments and so on.
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 (d) Location of departments: location and layout of the company’s plants, stores,
departments, canteen, etc.

(e) Personnel policies: policies of the companies regarding compensation, training,

promotion, retirement, insurance, etc.

(f) Employee’s activities: statement of available programmes and activities carried on

by workers, such as recreation, mutual benefit association, credit union, etc.

(g) Rules and regulations: description of rules and regulations of the company regarding
attendance, working hours, pay, advances, sick leave, conduct, etc.

(h) Safety: safety measures taken by the company for the protection of the workers
and their use by the workers.

(i) Standing orders: grievance and disciplinary procedure and suggestion system in
the company.

(j) Counselling service. Information about the counselling service provide by the
company to go into personal complaints of individuals and to help them about
their problems.

(k) Job routine: requirement of the particular job to which presently assigned as well
as the job to which this may lead in the chain of promotions.

(l) Special training: information about the training programmes carried out by the
company to help the employees learn new skills in doing their jobs.

INDUCTION PRACTICES

Different induction practices used in industry are discussed below:

(a) Induction guide or check-list may be prepared to provide supervisor with

information on what induction steps have been taken and what are still to be
covered. This is done by listening the necessary steps to be taken in induction, by
whom and when the instruction is to be given.

(b) The supervisor may take the new workers expected to work under him and induct
them by introducing and counselling them by reassuring and reinforcing his

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 confidence and by guarding against false impression.

(c) Follow up interview may be taken by the officers of the personnel department
permitting the new worker to open up about shop, supervisor or fellow workers
without any fear. On the basis of this interview, personnel department can take
action to reassure the workers, dispel fears, gains their confidence and promote
their efficiency the best method of induction training is talk plus pictures, followed
by printed materials. However, their use depends upon the size of plant, number
of new workers to be inducted, etc. Motion pictures, visual aids, charts, printed
materials, etc. can be used to explain company policies, processes and products
of the company. A round of the plant and the department should also be arranged
to acquaint the new workers with the overall operations of the company.

TYPICAL TECHNIQUES OF INDUCTION PROGRAMMES

A typical induction programme should consist primarily of three steps:

(i) General orientation by the staff of the personnel department: the first phase of the
programme should ordinarily be conducted by the personnel department. This
type of induction is general, for it gives the necessary general information about the
history and the operation of the firm – the purpose of which is to help an employee
to build some pride and interest in the organisation. Information is also given on
specific employee services, such as pension, health and welfare plans, safety
programme, etc. The better policy is not to give everything in one day, but to
administer smaller doses over a long period.

(ii) Specific orientation by the job supervisor, or his representative: at the second
stage, induction should be conducted by the job supervisor. Induction is specific
and requires skill on the part of the foreman. The employee is shown the department
and his place of work, introduced to other employees, informed of the location of
the bathrooms, laboratories, canteen, and time clock; and told about the
organisation’s specific practices and customs (such as whether the personnel bring
their lunch or whether lunch is supplied to them at concessional rates, the timings
and the length of rest periods, the work dress, etc.). The purpose of specific
induction is to enable an employee to adjust himself to his work and environment.

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 (iii) Follow-up orientation by either the personnel department or the supervisor: Follow-
up induction takes place sometimes within one week to six months from the time
of the initial hiring and orientation. It is conducted either by a foreman or a specialist.
Its purpose is to find out whether the employee is reasonably well-satisfied with
him. The employee may be asked whether his hours of work and his pay are as
represented to him before employment; how he feels about his fellow-workers:
how he feels about his boss; and whether he has any suggestions to make for
changes in the induction procedure or in other company practices. The interviewer
records the answers as well as his own comments on the employee’s progress. At
the same time, the line supervisor completes an evaluation of the employee, indicating
his strong and weak points, indicating also whether he is doing well.

Through personal talks, guidance and counselling, efforts are made to remove the
difficulties experienced by the newcomer.

ADVANTAGES OF INDUCTION PROGRAMME

The benefits of formal induction programme are as under:

(i) It reduces new employee’s anxieties and provides him an opportunity to know the
organisations and its people.

(ii) It helps the new employees in knowing expectations of the organisation and its
executives.

(iii) It foster a uniform understanding among employees about the company, its
objectives, principles, strategies, and what the company expects of its people.
New employees are interested in learning about the total organisation. Orientation
tells them how they and their unit fit into the “big picture”.

(iv) It builds a positive attitude towards the company and its surrounding communities.
First day is crucial because new employee remembers it for years. A well managed
orientation forms good impressions on the mind of new employee which last long.

(v) It builds and strengthens a two-way communications channel in the company.

(vi) It helps speed up socialisation process by making the new recruit understand the

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 social, technical and cultural aspects of the workplace. New employee becomes
a part of the social fabric of the organisation and develops a sense of belongingness.

(vii) It facilitates informal relations and team-work among employees.

(viii) It reduces voluntary turnover, employee grievances, and absenteeism by making

new employees more aware, adjusting and satisfied.

PROBLEMS OF INDUCTION

Induction programmes suffers from the following potential problems:

(i) Orientation may remain a superficial indoctrination into company philosophy,

policies and rules. Sometimes, it includes the presentation of an employee handbook
and a quick tour of the office or plant. The likely result is that the new employees
do not feel like part of the company.

(ii) Giving too much information in an orientation sessions becomes almost as much of
a problem as providing too little. If a great deal of information is given to employees
all at once, they may feel overwhelmed, overloaded, and “suffocated” and may
not retain much. On the other hand, sketchy overview of the basis, i.e., a quick or
superficial orientation after which the new employee is immediately put to work
(to sink or swim), results in ineffective, sometimes negative, socialisation. Thus,
providing an appropriate amount of information, becomes a real problem in
orientation.

(iii) The weakest part of most orientation programmes is at the supervisory level.
Even when the personnel department has designed an effective orientation
programme and trained supervisors to conduct their part of it, orientation still may
not be effective. The supervisors are more interested in immediate production
issues and may see orientation as far less important than other problems they face.

(iv) Orientation suffers from ‘mickey mouse’ assignment, i.e., small and unimportant
tasks. Sometimes, the new employee’s first tasks are in the nature of insignificant
duties, perhaps intended to teach the job from the ground up. Giving only menial
tasks to the new employee might discourage job interest and company loyalty in
him.

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2.12 CONCEPT OF PERFORMANCAE APPRAISAL

Appraisal is the evaluation of worth, quality or merit. In the organisation context,

performance appraisal is a systematic evaluation of personnel by superiors or others familiar
with their performance. Performance appraisal is also described as merit rating in which
one individual is ranked as better or worse in comparison to others. The basic purpose in
this merit rating is to ascertain an employee’s eligibility for promotion. However, performance
appraisal is more comprehensive term for such activities because its use extends beyond
ascertaining eligibility for promotion. Such activities may be training and development,
salary increase, transfer, discharge, etc. besides promotion. A formal definition of
performance appraisal is as follows:

“It (performance appraisal) is the process of evaluating the performance and

qualifications of the employees in terms of the requirements of the job for which he is
employed, for the purpose of administration including placement, selection for promotion,
providing financial rewards and other actions which require differential treatment among
the members of a group as distinguished from actions affecting all members equally”.

According to Beach, “Performance appraisal is the systematic evaluation of the

individual with regard to his or her performance on the job and his potential for
development”.

Scott, Clothier and Spriegel have defined performance appraisal as the process
of evaluating the employee’s performance on the job in terms of requirement of job.
According to Dale Yoder, performance appraisal refers to all formal procedures used in
working organisations to evaluate personality, contribution and potential group members.
This definition reveals that performance appraisal is a formal programme in an organisation
which is concerned with not only the contribution of the members who form part of the
organisation but also aims at spotting the potential of the people. Heley observes,
“performance appraisal is the process of evaluating the performance and qualifications of
the employees in terms of the requirements of the job for which he is employed, purpose
of administration including placement, selection for promotions, providing financial rewards
and other actions which require differential treatment among the members of a group as
distinguished from actions affecting all members equally”. Other regard it as a “process of

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estimating or judging the value, excellence, qualities or status of some object, person or
thing”. Individually and collectively, it is a part of all the other staffing processes, viz.,
recruitment, selection, placement and indoctrination.

Thus, performance appraisal is a systematic and objective way of judging the

relative worth or ability of an employee in performing his job. It emphasises on two aspects:
systematic and objective. The appraisal is systematic when it evaluates all performance in
the same manner, utilising the same approaches so that appraisal of different persons is
comparable. Such an appraisal is taken periodically according to plan; it is not left to
chance. Thus, both raters and rates know the system of performance appraisal and its
timing. Appraisal has objectivity also. Its essential feature is that it attempts at accurate
measurement by trying to eliminate human biases and prejudices.

FEATURES OF PERFORMANCE APPRAISAL

The main characteristics of performance appraisal may be listed thus,

(i) The appraisal is a systematic process. It tries to evaluate performance in the same
manner using the same approach. A number of steps are followed to evaluate an
employee’s strength and weaknesses.

(ii) It provides an objective description of an employee’s job’s relevant strength and

weaknesses.

(iii) It tries to find out how well the employee is performing the job and tries to establish
a plan for further improvement.

(iv) The appraisal is carried out periodically, according to a definite plan. It is certainly
not a one-shot deal.

(v) Performance evaluation is not job evaluation. Performance appraisal refers to

how well someone is doing an assigned job.

(vi) Performance appraisal may be formal or informal. The informal evaluation is more
likely to be subjective and influenced by personal factors. Some employees are
liked better than others and have, for that reason only, better chances of receiving
various kinds of rewards than others. The formal system is likely to be more fair

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 and objective, since it is carried out in a systematic manner, using printed appraisal
forms.

PERFORMANCE APPRAISAL VS. JOB EVALUATION

Performance appraisal should be differentiated from job evaluation which is

concerned with the determination of worth of different jobs. Performance appraisal refers
to the task of rating or assessing the individual performance and abilities of the workers.
Both the process differ from each other in regard to the following points.

(i) Performance appraisal is concerned with the differences among the employees in
terms of their performance. But job evaluation is the analysis of various jobs to
know the demands which the normal performance of particular jobs makes on
average employees. It does not take into account the individual abilities of
performance of the employees concerned.

(ii) The purpose of performance appraisal or merit rating is to appraise the performance
of individuals for taking decisions like increase in pay, transfer, promotion, etc.
But the purpose of job evaluation is very limited, i.e., to determine the worth of the
job on the basis of demands made by it on the average workers.

(iii) Performance appraisal rates the performance of job-holder and not the job. As a
matter of fact, it measures the worth of men to the organisation. But job evaluation
rates the jobs in the organisation in order to determine their worth and fix the wage
or salary level that will be fair and equitable.

(iv) The results of performance appraisal are used for taking important personnel
decisions such as training, transfer, promotion, etc. but job evaluation si used as a
basis of wage structure in the organisation.

PURPOSES/USE OF PERFORMANCE APPRAISAL

Performance appraisal could be taken either for evaluating the performance of

employees or for developing them. The evaluation is of two types: telling the employee
where he stands and using the data for personnel decisions concerning pay, promotions,
etc. The developmental objectives focus on finding individual and organisational strengths
and weaknesses; developing healthy superior-subordinate relations; and offering appropriate

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counselling/coaching to the employee with a view to develop his potential in future.

The purposes or uses of performance appraisal fall in two categories:

(1) Administrative; and

(2) Self-improvement.

(1) Administrative Use.

(i) Promotions. This is perhaps the most important administrative use of performance
appraisal. It is to the common interests of both the management and employees to
promote employees into positions where they can most effectively utilise their
abilities. It is mismanagement to promote employees into positions where they
cannot perform effectively at the time in question. A properly developed and
administered performance appraisal system can aid in determining whether
individuals should be considered for promotions. The system must rate the ratee
for the present job and potentialities for the higher job. A person performing his
job well does not necessarily mean that he fit for promotion.

(ii) Transfers. In an organisation, it may be necessary to consider various types of

personnel actions such as transfers, layoffs, demotions and discharges. In some
cases, such actions are called for because of unsatisfactory performance while in
other cases it may be called for due to economic conditions over which the
organisation has no control because of changes in production process. Such actions
can be justified if they are based on performance appraisal.

(iii) Wage and Salary Administrative. In some cases, the wage increases are based
on the performance appraisal reports. In some cases, appraisals and seniority are
used in combination.

(iv) Training and Development. An appropriate system of performance appraisal

can be helpful in two ways. First, it can help in identifying the areas of skills or
knowledge in which numerous employees are not upto par, thus pointing out general
training deficiencies which presumably should be corrected by additional training,
interviews, discussions, or counselling. Secondly, these appraisals help in spotting
the potentials to train and develop them to create an inventory of executive skills.

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 It can also provide the areas where the employee/executive could be further trained
and positioned to meet retirement and expansion situations.

Helps to achieve
organisation’s task
through guided efforts
of individuals

Provides data for Provides one of the

evolving development inputs for decisions on
plans for individuals promotions etc.

Performance appraisal
system

Enables clarification of Provides data in terms of

expectations between needs, aspirations of
superiors and individuals to review
subordinates company policies and
structures

Figure 1: Purposes of performance appraisal

(v) Personnel Research. Personnel research helps in research in the field of personnel
management. Various theories in human relationships are the outcome of efforts to
find out the cause and effect relationship between the personnel and their
performance.

(2) Self Improvement. The performance appraisal brings out the deficiencies and
shortcoming of the rates. A discussion between the rater and the rate conducted in
a spirit of co-operation and mutual understanding gives the chance to employee to
have an insight on his performance in the general set up of the organisation. The
way these discussions are conducted give chance to the employees to take suitable
steps to improve upon their performance or the correct their shortcomings.
Performance rating answers the questions of the employee like ‘How am I doing?’

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 and ‘Where do I stand?’

Performance appraisal helps manpower development in another way also. A

promotion minded individual can ask for the target programme of a position he seeks and
use the information given by performance appraisal to prepare him for the job and enhances
his candidacy.

In short, performance appraisal helps to spot out a person’s ability to see an

organisational problem, devise ways of attacking it, translate his ideas into action,
incorporate new information as it arises and carry his plans through the results. It highlights
a sort of total managerial action in contrast to thing we customarily factor out ad conceptual
entities- things such as the planning function, leadership ability, or financial knowledge.
The manager’s selection will often be improved by this emphasis on the whole managerial
job. It should be noted that best predictor of future success as a manager is past success
in managerial duties. The appraisal programme asks the raters to look at the record of
managerial success, not the manger’s personality.

NEED OF PERFORMANCE APPRAISAL

Performance appraisal has been considered as a most significant and indispensable

tool for an organisation, for the information it provides is highly useful in making decisions
regarding various personal aspects such as promotions and merit increases. Performance
measures also link information gathering and decision-making processes which provide a
basis for judging the effectiveness of personnel sub-divisions such as recruiting, selection,
training and compensation. Accurate information plays a vital role in the organisation as a
whole. They pinpoint weak areas in the primary systems (e.g., production foreman, sales
manager, financial analyst). These categories can be broken into smaller and smaller groups,
if necessary. If valid performance data are available, timely, accurate, objective, standardised
and relevant, management can maintain consistent promotion and compensation policies
throughout the total system.

Mcgragor say: “Formal performance appraisal plans are designed to meet three
needs, one of the organisation and other two of the individual, namely:

(i) They provide systematic judgements to back up salary increases, transfers,

demotions, or terminations.
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 (ii) They are means of telling a subordinate how he is doing, and suggesting needed
changes in his behaviour attitudes, skills, or job knowledge. They let him know
“where he stands” with the boss.

(iii) They are used as a base for coaching and counselling the individual by the superior.
According to Roland Benjamin, a “performance appraisal determines who shall
receive merit increases; counsels, employees on their improvement; determining
training needs; determines promotability; identifies those who should be transferred.
Moreover, it improves employee job performance; encourages employees to
express their views or to seek clarification on job duties; broadens their outlook,
capacity and potential; promotes a more effective utilisation of the best qualified
employee; prevents grievances and increases the analytical abilities of supervisors’.

Levinson has given three functions of performance appraisal: (i) It seeks to provide
an adequate feedback to each individual for his or her performance. (ii) It purports
to serve as a basis for improving or changing behaviour toward some more effective
working habits. (iii) It aims at providing data to managers with which they may
judge future job assignments and compensation. He stresses the fact that the existing
systems of performance appraisal do not serve any of these functions effectively
but focus on ‘outcome of behaviour’.

APPROACHES OF PERFORMANCE APPRAISAL

Generally speaking three approaches are used in making performance appraisal:

(i) A casual, unsystematic, and often haphazard appraisal: this method was commonly
used in the past, but now it has given place to a more formal method, the main
basis being seniority or quantitative measures of quantity and quality of output for
the rank-and-file personnel.

(ii) The traditional and highly systematic measurement: it measures (i) employee
characteristics, and (ii) employee contribution, or both. It evaluates all the
performances in the same manner, utilising the same approach, so that the rating
obtained of separate personnel are comparable.

(iii) The behaviour approach, emphasising mutual goal-setting: according to Mcgragor,

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 in the traditional approach, the supervisor is placed in the position of “playing
gods”. He judges and times criticise the personal worth of his men. Therefore,
emphasis has been laid upon providing mutual goal-setting and appraisal of
progress by both the appraiser and the appraise. The approach is based on the
behavioural value of fundamental trust in the goodness, capability and responsibility
of human being.

COMPONENTS OF PERFORMANCE APPRAISAL

Performance appraisal can be made for a variety of reasons- counselling,

promotion, research, salary, administration or a combination of these. So it is necessary to
begin by stating very clearly the objectives of the evaluation programme. Having done this,
the personnel evaluation system should address the questions who, what, when, where
and how? of performance appraisal.

So, the first question involved is who? And this issue states “who should be rated,
and who should do the rating”. The answer to first issue is that all employees of an
organisation should be appraised, from the operator to the top-level management need be
appraised for one reason or the other. Regarding the second issue, it may be said that
personnel experts assist and advise the top and the line management, who should participate
in the appraisal programme; and the line management should actually do the evaluation
work. The personnel officer obtains the ratings of different raters and analyses and
determines the reliability and validity of such ratings. Such validity can be checked against
certain objective evidence such as production quantities, quality, absenteeism, and by
comparing the results of one system with those of another. The rating should not be changed
by the personnel expert. However, he has the obligations to point out inconsistencies to
the rater.

“WHO” OF THE APPRAISAL?

As Ruderman observes, “the appraisal can be accomplished by one or more

individuals involving a combination of the immediate supervisor, other managers acquainted
with the assessee’s work, a higher level manager, a personnel manager, the assessee’s
peers, the assessee himself and the assessee’s subordinates”.

Usually the immediately supervisor must be entrusted with the task of rating the
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assessee because he is most familiar with his work; and because he is also responsible for
recommending or approving personnel actions based on the performance appraisal; and
for providing a feedback of performance appraisal to the subordinate. Because of these
reasons supervisors’ rating are regarded as the best possible assessment; and they are
often considered as the “heart of the most appraisal system”. This is so because getting
supervisor’s appraisal is relatively easy and also makes sense. Therefore, most appraisal
system relies heavily on the supervisor’s evaluation. In such rating hierarchical control is
maintained over the appraisal process.

Appraisal is done, by the staff specialists, i.e., the personnel officers. They may
advise the supervisor while evaluating their subordinate stressing the need for evidence for
making specific appraisal judgements and comparing a particular subordinate’s evaluation
with those of others.

The appraisal of an individual may also be done by his peers. Such appraisal
proves effective in predicting future management success. Researchers have verified that
rating made by peers have been quite accurate in predicting which persons would be
promoted and which would not.

Sometimes self-evaluation is also employed for evaluating performance. Self rating

emphasises human relations, which supervisors focus on technical knowledge and initiative.
Flippo observes: “The major value lies in the development and motivation areas, it being
claimed that this approach (1) results in a superior upward flow of information (2) forces
the subordinate to become more personally involved and, to some extent constrains him
to think about himself and his work, (3) improves communication between superior and
subordinate, in that each is given more information by other when disagreements are
discovered, and (4) improves motivation as a result of great participation”. But this approach
has its disadvantage that the individual rates himself excessively high than it would be if he
was rated by his superior. Because of this fairly consistent upward bias in self-appraisals,
the best thing would be to use these appraisals for counselling and developing subordinates.
They are not as useful for making salary and promotion decisions.

Many companies use rating committees to evaluate employees. These committees

consist of supervisors, peers, and subordinates. Everyone on the committee is a person
who is able to intelligently evaluate some aspect of the employee’s performance. Many
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discrepancies in the rating may occur – such as “very strict” or very “lenient” ratings- when
evaluations are done by the individuals. It has, therefore, been felt that “the combined use
of several rates” can help “cancel out” problems like ‘bias’ as ‘halo’ effect on the part of
the individual rates. Second, the raters at different levels in the organisation usually observe
different facets of an employee’s job performance and the appraisal by a group reflects
these differences.

Last in many countries, subordinates and superiors jointly establish goals and
periodically evaluate the subordinate’s performance with respect to these goals.

“WHAT” OF APPRAISAL

The “what” of the performance appraisal consists in appraising non-supervisory

employees for their current performance, and managers for future potentials. It also includes
evaluation of human traits.

THE “WHY” OF APPRAISAL

The “why” of an appraisal is concerned with:

(a) Creating and maintaining a satisfactory level of performance of employees in their

present job,

(b) Highlighting employee needs and opportunities for personal growth and
development.

(c) Aiding in decision making for promotions, transfers, lay-offs and discharges; and

(d) Promoting understanding between the supervisor and his subordinates.

(e) Providing a useful criterion for determining the validity of selection and training
methods and techniques and forming concrete measures for attracting individual
of higher calibre to the enterprise.

THE “WHEN” OF APPRAISAL

The ‘when’ answers the query about the frequency of appraisal. It has been
suggested informal counselling should occur continuously. The manager should discuss an
employee’s work as soon as possible after he has judged it. He should use good as an

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opportunity to provide positive reinforcement and use poor work as a basis for training.

In most organisations employees are formally evaluated once in a year, in others

twice in a year. New employees are rated more frequently than the older ones. The ideal
thing is that each employee should be rated three months after being assigned to a job,
after six months on the job, and every six months thereafter. The time of rating should not
coincide with the time of salary reviews, for if the two occur together constructive evaluation
and consideration of self-development will probably take second place to the pressure of
pay.

THE “WHERE” OF APPRAISAL

The ‘where” indicates the location where an employee may be evaluated. It is

usually done at the place of work or office of the supervisor.

Informal appraisals may take anywhere and everywhere, both on the job in work situations
and off the work job.

THE “HOW” OF APPRAISAL

Under ‘how’, the company must decide what different methods are available and
which of these may be used for performance appraisal. On the basis of the comparative
advantages and disadvantages it is decided which method would suit the purpose best.

THE PERFORMANCE APPRAISAL PROCESS

Performance appraisal is planned, developed and implemented through a series

of steps (FIGURE 2):

(a) Established performance standards: The process of evaluation begins with

the establishment of performance standards. At the time of designing of a job and
formulating a job description, performance standards are usually developed for
the position. These standards should be clear and not vague, and objective enough
to be understood and measured. These standards should be discussed with the
supervisors to find out which different factors are to be incorporated, weights and
points to be given to each factor and these then should be indicated on the appraisal
form, and later on used for appraising the performance of the employees.

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(b) Communicate the standards: Performance appraisal involves atleast two parties;
the appraiser who does the appraisal and the appraise whose performance is
being evaluated. Both are expected to do certain things. The appraiser should
prepare job description clearly; help appraise set his goal and targets; analyse
result objectively; offer coaching and guidance to appraise whenever required
and reward good results. The appraisee should be very clear about what he is
doing and why he is doing. For this purpose, performance standards must be
communicated to appraisees and their reactions be noted down initially. If necessary,
these standards must be revised or modified. As pointed out by De Cenzo and
Robbins, “too many jobs have vague performance standards and the problem is
compounded when these standards are set in isolation and do not involve the
employee”.

ESTABLISH PERFORMANCE STANDARDS

COMMUNICATE PERFORMANCE EXPECTATIONS TO EMPLOYEES

MEASURE ACTUAL PERFORMANCE

COMPARE ACTUAL PERFORMANCE WITH STANDARDS

DISCUSS THE APPRAISAL WITH TH E EMPLOYEES

IF, NECESSARY, INITIATE CORRECTIVE ACTION

Figure 2 : THE Performance Appraisal Process

(c) Measure actual performance: after the performance standards are set and
accepted, the next step is to measure actual performance. This requires the use of
dependable performance measures, the rating used to evaluate performance.
Performance measures, to be useful must be easy to use, be reliable and report on
the critical behaviours that determine performance. Four common sources of
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 information which are generally used by managers regarding how to measure actual
performance: personal observation, statistical reports, oral reports and written
reports.

Performance measures may be subjective or objective. Objective performance

measures are indications of job performance that can be verified by others and
are usually quantitative. Objective criteria include quality of production, degree of
training needed and accidents in a given period, absenteeism, length of service,
etc. Subjective performance measures are rating that is based on the personal
standards of opinion of those doing the evaluation and are not verifiable by others.
Subjective criteria include rating by superiors, knowledge about overall goals,
contribution to social-cultural values if the environment. It should be noted here
that objective criteria can be laid down while evaluating lower level jobs which are
specific and defined clearly. This is not the case with middle level positions that are
complex and vague.

(d) Compare actual performance with standards and discuss the appraisal:
Actual performance may be better than expected and sometimes it may go off the
track. Whatever be the consequences, there is a way to communicate and discuss
the final outcome. The assessment of another person’s contribution and ability is
not an easy task. It has serious emotional overtones as it affects the self esteem of
the appraisee. Any appraisal based on subjective criteria is likely to be questioned
by the appraisee and leave him quite dejected and unhappy when the appraisal
turns out to be negative.

(e) Taking corrective actions, if necessary: A corrective action is of two types.

The one which puts out the fires immediately and other one which strikes at the
root of the problem permanently. Immediate actions sets things right and get things
back on track whereas the basic corrective action gets to the source of deviations
and seeks to adjust the difference permanently. Basic corrective steps seek to find
out how and why performance deviate.

Potential Appraisal :-

The potential appraisal refers to the appraisal i.e. identification of the hidden talents

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and skills of a person. The person might or might not be aware of them. Potential appraisal
is a future oriented appraisal whose main objective is to identify and evaluate the potential
of the employees to assume higher position and responsibilities in the organisational hierarchy
Many organisation consider and use potential appraisal as a part of the performance
appraisal process.
The Purposes of a Potential review are :-
1. to inform employees of their future prospects.
2. to enable the organisation to draft a management sucession programme.
3. to update training and recruitment attitudes
4. to advise employees about the work to be done to enhance their career
opportunities.
Methods of Performance appraisal :
Performance appraisal is defined by Wayne Cascio as “the systematic description
of employee’s job relevant, strength, weakness. Companies use different methods of
appraisal for identifying and appraising the skills and qualities of their employees. The
different methods used can be explained with the help of following diagram.
Methods of performance appraisal :
1. Check list method
2. Confidential method
3. Critical incident method
4. Ranking method
5. Graphic rating scale
6. Narrated essay
7. 3600 Appraisal
Traditional Method :
Traditional method of performance appraisal has been used by companies for
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very long time. A common feature of these methods is that they are all relatively simple and
involve appraisal one senior.

1. Check list method :

In this method, the senior the boss is given a list of question about the junior. These
questions are followed by check boxes. The superior has to put a tick mark in any
one of the boxes. This method can be explained with the following eg.

YN

Does the employee have leadership qualities ?

Is the employee capable of group efforts ?

YN

Has the employee shown analytical skills on the Job ?

As seen in the above eg. A questioner containing question is given to the senior.
This method is an extremely simple method and does not involve a lot of time. The
same set of questioner can be given for every employee so that there is uniformity
in selecting employee.

Methods of Performance Appraisal :

1. Confidential Report :-

This method is very popular in government department to appraise IAS officers

and other high level officials. In this method the senior or the boss writes a repot
about the junior giving him details about the performance about the employee.
The +ve an -ve traits, responsibilities handled on the job and recommendations
for future incentives or promotions. The reports is kept highly confidential and
access to the report is limited

2. Critical incident method :

In this method critical or important incidents which have taken place on the job
are noted down along with employee’s behaviour and reaction in all these situations.
Both +ve and -ve incidents are mentioned. This is followed by an analysis of the
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 person, his abilities and talent, recommendations for the future incentives and
promotions.

3. Ranking method :

In this method ranks are given to employees based on their performance. There
are different methods of ranking employees.

Simple Ranking Method

Alternative Ranking Method

Paired Comparison Method

i. Simple Ranking Method :

Simple ranking method refers to ranks in serial order from the best employee eg.
If we have to rank 10 best employees we start with the first best employee and
give him the first rank this is followed by the 2nd best so on until all 10 have been
given ranks.

ii. Alternative Ranking :-

In this method the serial alternatives between the best and the worst employee.
The best employees is given rank 1 and then we move to the worst employee give
him rank 10 again to 2nd best employee and give him rank 2 and so on.

iii. Paired Comparision :-

In this method each and every person in the group, department or team is compared
with every other person in the team / group / department. The comparison is made
on certain criteria and finally ranks are given. This method is superior because it
compares each and every person on certain qualities and provides a ranking on
that basis.

5. Graphic Rating scale :-

Graphic rating scale refers to using specific factors to appraise people. The entire
appraisal is presented in the form of a chart. The chart contains certain columns
which indicate qualities which are being appraised and other columns which specify
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 the rank to be given.

Eg. Employee A

Quality of work quantity of work intelligence

Excellent

Good

Satisfactory

Poor

The senior has to put a tick mark for a particular quality along with the ranking.
Such charts are prepared for every employee. According to the department in
which they work. Sometimes the qualities which are judged may change depending
upon the department.

6. Narrated Essay :

In this method, the senior or the boss is supposed to write a narrative essay
describing the qualities of his junior. He may describe the employee strength and
weakness, analytical abilities etc. the narrative essay ends with a recommendations
for future promotion or for future incentives.

Modern Methods :

Modern methods of appraisal are being increasingly used by companies. Now

days one of the striving feature that appraisal involves is the opinion of many people about
the employee and in some cases psychological test are used to analyze the ability of
employee. These methods are as follows :

1. Role analysis :-

In this method of appraisal the person who is being appraised is called the focal
point and the members of his group who are appraising him are called role set
members.

These role set members identify key result areas (KRA 2 marks) areas where you
want improvement are called KPA) which have to be achieve by the employee.
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 The KRA and their improvement will determine the amount of incentives and
benefits which the employee will receive in future. The appraisal depends upon
what role set members have to say about the employee
2. Assessment centers :
Assessment centers (AC) are places where the employee’s are assessed on certain
qualities talents and skills which they posses. This method is used for selection as
well as for appraisal. The people who attend assessment psychological test, puzzles,
questioners about different management related situations etc. based on their
performance in these test an games appraisal is done.
3. Management by objective :
This method was given by Petter Drucker in 1974. It is a method of group decision
making it can be use performance appraisal also. In this method all members of
the department starting from the lowest level employee to the highest level employee
together discuss, fix target goals to be achieved, plan for achieving these goals and
work together to achieve them. The seniors in the department get an opportunity
to observe their junior-group efforts, communication skills knowledge levels,
interest level etc. based on this appraisal is done.
4. Behavioral anchored rating scale :
In this method the appraisal is done to test the attitude of the employee towards
his job. Normally people with +ve approach or attitude view and performance
their job differently as compared to people with a -ve approach.
5. Psychological testing :-
In this method, clinically approved psychological test are conducted to identify
and appraise the employee. A feedback is given to the employee and areas of
improvement are identified.
6. Human resource audit / accounting :-
In this method the expenditure on the employee is compared with the income
received due to the efforts of the employee. A comparison is made to find out the
utility of the employee to the organization. The appraisal informs the employee
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 about his contribution to the company and what is expected in future.

7. 3600 degree appraisal :-

In this method of appraisal and all round approach is adopted. Feedback about
the employee is taken from the employee himself, his superiors, his juniors, his
colleagues, customer he deals with, financial institutions and other people he deals
with etc. Based on all these observations an appraisal is made and feedback is
given. This is one of the most popular methods.

2.13 HRM ISSUES AND PRACTICES IN THE CONTEXT OF

OUTSOURCING AS A STRATEGY

In The Context of Outsourcing As A Strategy : Outsourcing is changing the

way HR departments operate as well. Technology makes it easy to outsource HR activities
to specialist service providers, by allowing service providers real time internet based access
to the employer's human resource information database. Payroll, benefits, applicant testing
and screening, carrying out reference checks, exit interviews, employee training etc. are
some of the popular human resource tasks that are being outsourced currently. Companies
are outsourcing more HR activities nowadays because the transactional functions could
be turned over to a service provider—with a piocess 'and technology expertise—and the
core company can concentrate its efforts on strategic acquisition, motivation and retention
of talent which by all means is critical to business success.

Offshoring (also known as global sourcing) refers to the movement of jobs overseas.
For example, in an age of cheap telecommunications, almost any job—professional or
blue collar—can be performed in India for a fraction of U.S. wages. MNCs are forced to
indulge in this kind of 'labour arbitrage' and remain ahead of competition. Cost reduction
is the overwhelming motivation, for doing so. The cost savings are estimated to be varying
between 40-60 per cent in terms of labour costs when offshoring work is moved to countries
such as India, Philippines, Russia, China, Mexico, Brazil and Hungary. It is estimated
(according to a Wall Street Journal's report, and also according to Frester Researh, Inc.)
that three to four million U.S jobs ranging from office support, computer operations, sales
management, legal services and many more are likely to move offshore to some of these
countries by 2015. Rising levels of educational attainment in developing countries such as

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China, Philippines and India, especially in fields such as science, technology., electronics,
telecommunications etc. make offshoring increasingly attractive for MNCs in the years
ahead.
Human Resource Outsourcing
Human Resource Outsourcing (HRO) is a process in which a company utilizes the
services of a third party to take care of its HR functions. A company may outsource a few
or all of its HR related activities to a single or combination of service provides located in
offshore destinations like India, China, Philippines, The decision by Unilever, for example
in 2006, to outsource its HR'activities—mostly transaction oriented such as pay roll
administration, applicant tracking, training and development, record keeping, performance
appraisal follow up etc.— to Accenture appears to be iia the right directiom These are
basically people and effort-intensive activities but are quite routine in nature.. Such repetitive
work can easily be turned over to a third party specialist—who would be able to deliver
excellent results, leading to significant savings in cost and effort. Through standardisation
of processes the specialist is able to. deliver service at unbelievable speed also. At the
same time, the organisation should continue to perform transformational HR roles—such-
-as attracting and retaining talent, bringing about strategic change in partnership with line
managers, championing employee concerns etc. Across boardrooms and business schools
HR is primarily viewed as a powerful tool to attract and retain talent, build workforce
capabilities, handle grievances and bring out the best in people. With high attrition rates
still haunting most.
• Potential Appraisal- The term 'potential' refers to the abilities possessed by an
employee but not put to use currently or the abilities to assume
chal1engingresponsibilities in future assignments. The term 'performance' refers to
one's skills, abilities in meeting the requirements of the job which one is holding
currently.. Potential appraisal is different from performance appraisal which shows
an employee's current performance in his existing role. If the employee is required
to play a completely different set of roles at higher levels, potential appraisal needs
to be carried out at regular intervals. "The objective of potential appraisal is to
identify the potential of a given employee to occupy higher positions in the
organisational hierarchy and undertake higher responsibilities". The appraisal is
carried out on the basis of: (i) supervisor's observations (ii) performance data
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 relating to various previous roles played by an employee; (iii) performance on
roles in simulated settings relating to a new position. A good potential appraisal
system helps management to pick up a suitable candidate for a given job and offer
additional training, if necessary.

Flexible Manufacturing Systems

The term 'Flexible Manufacturing' refers to the ability of computerised machines

to perform a variety of programmed functions. It is the integration of computer aided
design, engineering and manufacturing to produce low volume products at mass production
costs. Here a single machine can make dozens or even hundreds of different parts in any
order the management wants. When management wants to produce a new part, it need
not change machines - it has to just change the computer programme. Robots operate the
computer controlled mechanical arms that can be equipped with grippers, vacuum cups,
painting guns, welding torches or other tools. They take care of tasks that require precision
under hazardous conditions (spray painting, welding), handle dangerous materials (hot
ingots, radioactive rods) and paint, repair, or carry out any other task under inhuman
conditions without suffering any ill effects.

Here is an example of how the computer aided manufacturing works. A -machine

tool operator can select, and combine from a colour graphics screen, the geometric shapes
that match the shape in which the metal is to be cut and provide the location and dimensions
of the cut. Conventional machine tools, by contrast, require every single machine tool
movement to be specially plotted. By eliminating programming steps, the system makes it
easier to get a machine tool to- perform new tasks.

The implications of flexible manufacturing are fairly obvious. Employees require

more training and higher skills. Since there are fewer employees, each one has to be able
to do a greater variety of tasks. Additionally, they are supposed to keep away from
interdepartmental competition, conflict and politics and get along with other members as
teammates Cross-functional team work is essential in factories of the future-where, for
example, engineers may have to design products by working hand in hand with market
research and, manufacturing specialist

The impact of technology on the HR function, thus, is quite profound. Hazardous

and risky jobs could be turned over to robots increasingly in the days ahead. Repetitive
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jobs could also be handed over to sophisticated robots. As organisations turn to
computerisation and full-scale automation, the demand for people with multi-skills will
grow. One -negative impact of technology would be the growing worker alienation, since
job opportunities may shrink along with opportunities for socialization on the job. High-
paying factory work for skilled and unskilled categories may become scarce as organisations
begin to use lighter, faster, stronger and more intelligent robots in. the years ahead.

Outsourcing, Offshoring and HR

Outsourcing is the force behind the virtual organisation movement. Outsourcing is

simply obtaining work previously done by employees inside the company from sources
outside the company. If someone is specialised in an activity-which 'is not strategically
critical to our business— and is able to do that cost-effectively, it is better to get it from
outside. You get benefited in the form of excellent quality, reliable supply and rock bottom
price. You can also focus exclusively on doing what you are good at (the so called mission
critical activities)—thereby enhancing your own competitive advantage. For example, Dell
outsources the manufacture of its computers. It concentrates all its efforts on- enhancing
its Web-based direct sales capability and does. dilute its energies on other aspects of the
game. Unable to fight rivals, IBM sold its -PC division to the Chinese firm; Len ovo (at
present, keeping an 18 per -cent minority interest in Lenovo). It's is now doing what it
knows - -best—that is providing clients with IT management services. It just buys PCs
very cheaply from Lenovo as it needs them. It's able to free up capital locked up in this
division (and also release people doing this job previously) and is able to focus more
intensely on its new emphasis on IT systems, BPO and consulting. Outsourcing, not
surprisingly, is a big hit with many global- firms. Companies such as Nike and Reebok
have succeeded by focusimg on their core strengths in design and marketing and contracting
all their footwear manufacturing to outside suppliers. Sun Microsystems relies so heavily
on outside manufacturers and distributors that its own employees never touch one of its
computers.

2.14 COACHING AND MENTORING :

• Coaching : Coaching is a form of development in which a person called a coach

supports a learner or client in achieving a specific personal or professional goal by
providing training, advise and guidance. The learner is called coaches. Occasionally,
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 coaching may mean an informal relationship between two people of whom one
has more experience & expertise than the other and offers advice and guidance.

• Mentor : It is a powerful personal development and empowerment tool. It is

effective way of helping people to progress in their careers & is becoming increasing
popular as its potential is realised. It is partnership between two people (Mentor
and Mentee) normally working in a similar filed or sharing similar experiences. It is
helpful relationship based upon mutual trust & respect.

A mentor is a guide who can help the mentee to find the right direction & who can
help them to develop solutions to career issues. Mentoring provides the mentee
with an opportunity to think about career options & progress.

A mentor should help the mentee to believe in herself and boost her confidence. A
mentor should ask questions & challenge. While providing guidance and
encourgement mentoring allows the mentee to explore new ideas in confidence. It
is a chance to look more closely at yourself, your issues, opportunities and what
your want in life. Mentoring is about becoming more self aware, taking responsibility
for your life and directing your life in the direction you decide, rather than learning
it to chance.

Difference between Coaching and Mentoring :

• Coaching is task oriented : The focus is on concrete issues, such as managing

more effectively, speaking more articulately, and learning how to think strategically.
This requires a content expert (coach) who is capable of teaching the coachee
how to develop these skills.

• Mentoring is relationship oriented : It seeks to provide a safe environment

where the mentoree shares whatever issues affect his or her professional and
personal success. Although specific learning goals or competencies may be used a
basis for creating the relationship, its focus goes beyond these areas to include
things, such as work / life balance, self-confidence, self-perception, and how the
personal influences the professional.

• Coaching is Short term : A coach can lead to his or her success. Successful
mentoring relationship last nine months to a year.
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 • Coaching is performance driven : The purpose of coaching is to improve the
individual’s performance on the job. This involves either enhancing current skills
or acquiring new skills. Once the coachee successfully acquires the skills, the
coach is no longer needed.

• Mentoring is development driven : Its purpose is to develop the individual not

only for the current Job, but also for the future. This distinction differentiates the
role of the immediate manager and that of the mentor. It also reduces, the possibility
of creating conflict between the employee’s manager and the mentor.

Coaching does not require design.

• Coaching can be conducted almost immediately on any given topic. If a company

seeks to provide coaching to a large group of individuals, then certainly an amount
of design is involved in order to determine the competency area, expertise needed,
and assessment tools used, but this does not necessarily require a long read-time
to actually implement the coaching program.

• Mentoring requires a design phase in order to determine the strategic purpose for
mentoring, the focus areas of the relationship, the specific mentoring models, and
the specific components that will guide the relationship, especially the matching
process.

• The coachee’s immediate manager is a critical partner in coaching. He often provides

the coach with feedback on areas in which his or her employees is in need of
coaching. This coach uses this information to guide the coaching process.

In mentoring, the immediate manager is indirectly involved. Although he or she

may offers suggestions to the employees on how to best use mentoring experience
or many provide a recommendation to the matching committee on what would
constitute a good match, the manager has no link to the mentor and they do not
communicate at all during the mentoring relationship. This helps maintain the
mentoring relationship’s integrity.

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When to consider coaching :
• When a company is seeking to develop it employees in specific competencies
using performance management immediate manager.
• When a company has a number of talented employees who are not meeting
expectations.
• When a company is introducing a new system or program
• When a company has a small group of individuals (5-8) in need of increased
competency in specific areas.
• When a leader or executive needs assistance in acquiring a new skill as an additional
responsibility
The benefits :
The great benefit of coaching is that you are very likely to see quick, positive result
as an outcome. This is because it is participative and people tend to learn and adopt new
habits more easily when they are actively engaged in the learning process as soon as a
coaching ends you can implement a new practice.
The process is entirely devoted to you - your issues and the attainment of news
behaviour goals. One great point about coaching is that it takes places over an extended
period of time. Which means will constantly challenges an encourage to work on issues
that need improvement.
By Constantly doing better you practice good habits and the more your practice -
the more natural it becomes to automatically change and improve your behaviours.
Benefits of coaching to an individuals include :
• Improvement an individual’s performance, targets and goals
• Increased openness to personal learning and development
• Increased ability to identify solutions to specific work-related issues
• Greater ownership and responsibility
• Development of self- awareness
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 • Improvement of specific skills or behaviour

• Greater clarity in roles and objectives

• The opportunity to correct behaviour / performance difficulties

Benefits of coaching to an organisation :

• Allows fuller use of individual’s talent / potential

• Demonstrates commitment to individuals and their development

• Higher organisational performance / productivity

• Increased creativity, learning and knowledge

• Motivates people

• Facilitates the adoption of a new culture / management style

• Improve relationship between people and departments.

Benefits of Mentoring :

• The employee feels supported and has a mechanism for working through any
problems that exist as a result of being in a minority.

• Women often - but not always feels more comfortable being mentored by another
woman
• Women mentors are uniquely places to understand the issues faced by other
women in engineering taking into account the specific issues and challenges
experienced.

• Mentoring includes training support, encouragement, advice and guidance from

people who have both ‘done it before’ and are usually independent of the mentee’s
current organisation.

• Both the mentees and mentors gain confidence and leadership skills

• Mentees report the benefits of a different perspective

• Mentees are more likely to plan and apply for promotions

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 • Mentors and mentees can gain insights into best business practices in other
companies

• The process allows mentors and mentees to make useful networking connections,
and have access to role models.

2.15 GLOSSARY

• Recruitement : It is a process of searching for prospective candidates and

stimulating them to apply for jobs in an organisations.

• Selection : It is the process of picking individuals who have relevant qualification

to fill jobs in an organisation.

• Induction : It is a process of introducing new employees to the culture of the

organisation.

• Performanace Appraisal : It means systematically evaluation of the performanace

of the employee with respect to his or her present job performances and potential
for future growth

2.16 SELF ASSESSMENT QUESTIONS :

Q1 What are the factors that affect the human resource planning?

Ans ___________________________________________________________

___________________________________________________________

Q2 Explain in brief process involved in human resources planning?

Ans ___________________________________________________________

___________________________________________________________

Q3 Discuss the process of Performance Appraisal ?

Ans ___________________________________________________________

___________________________________________________________

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Q4 What do you mean by succession planning?

Ans ___________________________________________________________

___________________________________________________________

2.17 LESSON END EXERCISE

Q1 What is meant by job specification?

Ans ___________________________________________________________

___________________________________________________________

Q2 What are the advantages of job specification?

Ans ___________________________________________________________

___________________________________________________________

Q3 Distinction between Job Specification and Job Description.

Ans ___________________________________________________________

___________________________________________________________

Q4 Give points of Difference between Job Evaluation and Performance Appraisal.

Ans ___________________________________________________________

___________________________________________________________

2.18 BOOKS RECOMMENDED

• Personal Management & Industrial Relations: B.P.Singh; T.N.Chhabra And

P.L.Taneja

• Human Resource Management: V.S.P.Rao

• Personnel Management: C.B.Mamoria and S.V.Gankar

• Principles And Practice of Management: L.M.Prasad

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UNIT - 3 LESSON NO. 11-15

TRAINING AND DEVELOPMENT

STRUCTURE:

3.1 Introduction

3.2 Objectives

3.3 Training and Development

3.4 Evaluation of a Training Programme

3.5 Development

3.6 Transfer

3.7 Promotion

3.8 Separation and Other Processes

3.9 Summary

3.10 Glossary
3.11 Self Assessment Questions

3.12 Lesson End Exercise

3.13 Books Recommended

3.1 INTRODUCTION

After employees have been selected for various positions in an organisation, training
them for the specific tasks to which they have been assigned assumes great importance. It
is true in many organisations that before an employee is fitted into a harmonious working
relationship with other employees, he is given adequate training. Training is the act of
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increasing the knowledge and skills of an employee for performing a particular job. The
major outcome of training is learning. A trainee learns new habits, refined skills and useful
knowledge during the training that helps him improve performance. Training enables an
employee to do his present job more efficiently and prepare himself for a higher level job.
(Lynton; Gupta; Rajamani; Group; Goldstnin)

3.2 OBJECTIVES :

After going through this lesson, you will be able to understand

• Meaning of training

• Methods of training

• Evaluation of development

• Promotions and Transfers

• Retirement and other separations process

3.3 TRAINING AND DEVELOPMENT

Training often has been referred to as teaching specific skills and behaviour. Examples
of training are learning to fire a rifle, to shoot foul shots in basketball and to type. It is
usually reserved for people who have to be brought up to performing level in some specific
skills. The skills are almost always behavioural as distinct from conceptual or intellectual.

Development, in contrast, is considered to be more general than training and more

oriented to individual needs in addition to organisational needs and it is most often aimed
toward management people. There is more theory Involved with such education and hence
less concern with specific behaviour than is the case with training. Usually, the intent of
development is to provide knowledge and understanding that will enable people to carry
out non-technical organisational functions more effectively.

Training is meant for operatives and development is meant for managers. Training
tries to improve a specific skill relating to a job whereas development aims at improving
the total personality of an individual. Training is a one-shot deal; whereas development is
an ongoing, continuous process. The scope of training is on individual employees, whereas
the scope of development is on the entire work group or the organisation. Training is
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mostly the result of initiatives taken by management. It is the result of some outside motivation.
Development is mostly the result of internal motivation. Training seeks to meet the current
requirements of the job and the individual; whereas development aims at meeting the
future needs of the job and the individual; In other words, training is a reactive process
whereas development is a proactive process. Development is future oriented training,
focusing on the personal growth of the employee.

TRAINING VS EDUCATION

The term ‘education’ is wider in scope and more general in purpose when compared
to training. Training is the act of increasing the knowledge and skills of an employee while
doing a job. It is job-oriented (skill learning). Education, on the other hand, is the process
of increasing the general knowledge and understanding of employees. It is a person-oriented,
theory-based knowledge whose main purpose is to improve the understanding of a particular
subject or theme (conceptual learning). Its primary focus is not the job of an operative.
Education is imparted through schools or colleges and the contents of such a programme
generally aim at improving the talents of a person. Training is practice-based and company-
specific. However, both have to be viewed as programmes’- that are complementary and
mutually supportive. Both aim at harnessing the true potential of a person/employee.

IMPORTANCE

Training is an indispensable part of HR functions in every organisation now. Gone

are the days when training was considered to be futile, waste of time, resources and
money. Other departments such as Finance, Marketing and Sales, Production are
dependent on Training and Development Department in a major way. Training is a vital
investment because the payoffs are immeasurable in terms of employee growth, involvement
and commitment. It is an important tool of HRM as it helps to control the attrition rate-it
helps in motivating people to stay on,-acquire new skills and remain, continually useful to
the organisation; it helps in increasing the job knowledge and skills of employees at each
level. The importance of training can be studied under the following heads. (Tessin; Morrow
et al)

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150
A CHECKLIST TO AVOID TRAINING PITFALLS
Attempting to teach too quickly: Trying to teach too quickly results in frustration.
It is not wise to push employees beyond their learning limits.
Trying to teach too much: There are limits to the amount that one can learn. It is
recommended to teach segments of the job in sequential fashion in order to develop a
greater appreciation and understanding of the whole job. .
Viewing all trainees as the same: All employees are different. This must be
recognised when it comes to training. Since-some workers learn faster or slower than
others, these differences must be accounted for in the training programme.
Not providing time to practice: Practice makes perfect. There is no such thing
as natural-born skilled workers. Adequate practice time must be provided for employees
to develop their skills.
Providing a pat on the back: It is always a good idea to reinforce, employees
during the learning process. Encouragement, praise, and reward are highly recommended.
Not frightening the employee: As a supervisor, it is possible to know the job for
which the employee is training so thoroughly that a new employee may feel inadequate or
intimidated.
LEARNING PRINCIPLES THE PHILOSOPHY OF TRAINING
Training is essential for job success. At can lead to higher production, fewer mistakes;
greater job satisfaction and lower turnover. These benefits accrue to both the trainee and
the organisation, if managers understand the principles behind the training process. To this
end, training efforts must invariably follow certain learning-oriented guidelines. (Silverman;
Goldstein; Gagne)
Modelling: Modelling is simply copying someone else’s behaviour. Passive class
room learning does not leave any room for modelling. If we want to change people, it
would be a good idea to have videotapes of people showing the desired behaviour. The
selected model should provide the right kind of behaviour to be copied by others. A great
deal of human behaviour is learned by modelling others. Children learn by modelling parents
and older children, they are quite comfortable with the process by the time they grow up.
As experts put it. “Managers tend to manage as they were. managed”
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 Motivation: For learning to take place, intention to learn is important. When the
employee is motivated, he pays attention to what is being said, done and presented.
Motivation to learn is influenced by the answers to questions such as: How important is my
job to me? How important is the information? Will learning help me progress in the company?
etc. People learn more quickly when the material is important and relevant to them. Learning
is usually quicker and long-lasting when the learner participates actively. Most people, for
example, never forget how to ride a bicycle because they took an active part in. the
learning process!

Reinforcement: If a behaviour is rewarded, it probably will be repeated. Positive

reinforcement consists of rewarding desired behaviours. People avoid certain behaviours
that invite criticism and punishment. A bank officer would want to do a post graduate
course in finance, if it earns him increments and makes him eligible for further promotions.
Both the external rewards (investments, praise) and the internal rewards (a feeling of pride
and achievement) associated with desired behaviours compel subjects to learn properly.
To be effective, the trainer must reward desired behaviours only. If he rewards poor
performance, the results may be disastrous: good performers may’ quit in frustration,
accidents may go up, productivity may suffer. The reinforcement principle is also based,
anthe premise that punishment is less effective ‘in learning than reward. Punishment is a
pointer to undesirable behaviours. When administered, it causes pain to the employee. He
may or may not repeat the mistakes. The reactions may be mild or wild. Action taken to
repeal a person from undesirable action is. punishment. If administered properly, punishment
may force the trainee to modify the undesired or incorrect behaviours.

Feedback :

People learn best if reinforcement is given as soon as possible after training. Every
employee wants to know what is expected of him and how well he is doing. If he is off the
track, somebody must put him back on the rails. The errors in such cases must be rectified
immediately. The trainee after learning the right behaviour is motivated to do things in a
‘right’ way and earn the associated rewards. Positive feedback (showing the trainee the
right way of doing things) is to be preferred to tiegative feedback (telling the trainee that he
is not correct) when we want to change behavior

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Spaced Practice :
Learning takes place easily if the practice sessions are spread over a period of
time. New employees learn better if the orientation programme is spread over a two or
three day period, instead of covering it all in one day. For memorising tasks, ‘massed’
practice is usually more effective. Imagine the way schools ask the kids to say the Lord’s
prayer, aloud. Can you memorise a long poem by learning only one line per day? You tend
to forget. the beginning of the poem by the time you reach the last stanza. For ‘acquiring’
skills as stated by Mathis and Jackson spaced practice is usually the best. The incremental
approach to skill acquisition minimizes the physical fatique that deters learning.
ApplicabiIity of Training
Training should be as real as possible so that trainees can successfully transfer the
new knowledge to their jobs. The training situations should be set up so that trainees can
visualise - and identify with - the types of situations they can come across on the job.
Environment
Finally cnvironnent plays a major role in training. It is natural that workers who are
exposed to training in comfortable environments with adequate, well spaced rest periods
are more likely to learn than employees whose training conditions are less than ideal.
Generally speaking, learning is very fast at the beginning. Thereafter, the pace of learning
slows down as opportunities for improvement taper off.
Areas of Training
The Areas of Training in which training is offered may be classified into the following
categories:
Knowledge
Here the trainee learns about a set of rules and regulations about the job, the staff
and the products or services offered by the company. The aim is to make the new employee
fully aware of what goes on inside and outside the company.
Technical Skills
The employee is taught a specific skill (e.g., operating a machine, handling computer
etc.) so that he can acquire that skill and contribute meaningfully.
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Social Skills.

The employee is made to learn about himself and others, and to develop a right
mental attitude towards the job, colleagues and the company. The principal focus is on
teaching the employee how to be a team member and get ahead.

Techniques

This involves the application of knowledge and skill to various on-the-job

situations.In addition to improving the skills and knowledge of employees, training aims at
moulding employee attitudes: When administered properly, a training programme will go a
long way in obtaining employee loyalty, support and commitment to company activities.

Types of Training

There are many approaches to training. We focus here on the types of training that
are commonly employed in present-day organisations. (Zalman; Smith)

• Skill training: This type of training is most common in organisations. The process
here is fairly simple. The need for training in basic skills (such as reading, writing,
computing, speaking, listening, problem solving, managing oneself, knowing how
to learn, working as part of a team, leading others) is identified through assessment.
Specific training objectives’ are set and training content is developed to meet
those objectives. Several methods are available for imparting these basic skills in
modern organisations (such as • lectures, apprenticeship, on-the-job) coaching,
etc.). Before employing these methods, managers should:

• Explain how the training will help the trainees in their jobs.

• Relate the training to the trainees’ goals.

• Respect and consider participant responses and use these as a resource.

• Encourage trainees to learn by doing.

• Give feedback on progress toward meeting learning objectives.

• Refresher training: Rapid changes in technology may force companies to go in

for this kind of training. By organising short-term courses which incorporate the
latest developments in a particular field, the company may keep its employees up-
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 to-date and ready to take on emerging chllenges. It is conducted at regular intervals
by taking the help of outside consultants who specialise in a particular descriptive.

• Cross-functional training: Cross-functional Training involves training employees

to perform operations in areas other than their assigned job. There are many
approaches to cross functional training. job rotation can be used to provide a
manager in one functional area with a broader perspective than he would otherwise
have. Departments can exchange personnel for a certain period so that each
employee understands how other departments are functioning. High performing
workers can act as peer trainers and help employees develop skills in another
area of operation. (Buchen; Messner) Cross-functional training provides the
following benefits to an organisation (and the workers as well): (1) Workers gain
rich experience in handling diverse jobs; they become more adaptable and versatile
(2) They can better engineer their own career paths (3) They not only know their
job well but also understand how others are able to perform under a different set
of constraints. (4) A broader perspective increases workers’ understanding of the
business and reduces the need for supervision. When workers can fill in for other
workers who are absent, it is easier to. use flexible scheduling, which is increasingly
in demand as more employees want to spend more time with their families. Eli Lilly
and Company (India), for example, encourages cross-functional movements to
make the organisation equally attractive to both specialists and generalists.

Team training :

Team training generally covers two areas: content tasks and group processes
Content tasks specifies the team’s goals such as cost control and problem solving. Group
processes reflect the way members function as a team - for example, how they interact
with each other, how they sort out, differences, how they participate etc. Companies are
investing heavy amounts, nowadays, in training new employees to listen to each other and
to cooperate They are using outdoor experiential training techniques to develop teamwork
and team spirit among their employees (such as scaling a mountain, preparing recipes for
colleagues at a restaurant, sailing through uncharted waters, crossing a jungle, etc.). The
training basically throws light on (i) how members should communicate with each, other
(ii) how they have to cooperate and get ahead (iii) how they should deal with conflictful

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situations (iv) how they should find their way, using collective wisdom and experience to
good advantage. (Buchen)

Creativity Training:

Companies like Mudra Communications, Titan Industries, Wipro encourage their

employees to think unconventionally, break the rules, take risks, go out of the box and
devise unexpected solutions. (Hequet; Kawatra; Solomon). In creativity training, trainers
often focus on three things:

(a) Breaking away: In order to break away from restrictions, the trainee is expected
to (i) identify the dominant’ ideas influencing his own thinking (ii) define the
boundaries within which he is working (iii) bring the assumptions out into the open
and challenge everything.

b) Generate new ideas: To generate new ideas, the trainee should open up his
mind; look at the problem from all possible angles and list as many alternative
approaches as possible. The trainee should allow his mind to wander over
alternatives, freely, expose himself to new influences (people, articles, books,
situations), switch over from one perspective to another, arrange cross fertilization
of ideas with other people and use analogies to spark off ideas.

c) Delaying judgement: To promote creative thinking, the trainee should not try to
kill off ideas too quickly; they should be held back until he is able to generate as
many ideas as possible. He should allow ideas to grow a little.

d) Brainstorming (getting a large number of ideas from a group of people in a short

time) often helps in generating as many ideas as possible without pausing to evaluate
them. It helps in releasing ideas, overcoming inhibitions, cross fertilizing ideas and
getting away from patterned thinking.

e) Diversity Training: Diversity training considers all of the diverse dimensions in

the workplace - race, gender, age, disabilities, lifestyles, culture, ‘education, ideas
and backgrounds - while designing ‘a training programme. It aims to create better
cross-cultural sensitivity with the aim of fostering more harmonious and fruitful
working relationships among a firm’s employees. The programme covers two

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 things: (i) awareness building, which helps employees appreciate the key benefits
of diversity, and (ii) skill, building, which offers the knowledge, skills and abilities
required for working with people having varied backgrounds. (Jordan; Day)

f) Literacy Training: Inability to write, speak and work well with others could
often come in the way of discharging duties, especially at the lower levels. Workers,
in such situations, may fail to’ understand safety messages, appreciate the
importance of sticking to rules, and commit avoidable mistakes. Functional illiteracy
(low skill level in a particular content area) may be a serious impediment to a
firm’s productivity and competitiveness. Functional literacy programmes focus on
the basic skills required to perform a job adequately and capitalize on most workers’
motivation to get help in a particular area. Tutorial programmes, home assignments,
reading and writing exercises, simple mathematical tests, etc, are generally used in
all company in-house programmes meant to improve the literacy levels of employees
with weak reading, writing or arithmetic skills.

g) Orientation Training: In orientation training, new hires get a first hand view of
what the company stands for, how the work is carried out and how to get along
with colleagues. In short, ‘they learn the ropes’, the specific ways of doing things
in a proper manner. When a new employee is from a different country and culture,
this initial training is especially important in helping new, employees adjust in the
company.

3.4 EVALUATION OF A TRAINING PROGRAMME

Training Evaluation checks whether training has had the desired impact or not. It
also tries to ensure whether candidates are able to implement their learning in their respective
workplaces or not. The process of training evaluation has been defined as “any attempt to
obtain information on the effects of training ‘performance and to assess the value of training
in the light of that information.” Training evaluation helps in offering feedback to the candidates
by defining the objectives and linking it to learning outcomes It helps in finding the relatioship
between acquired knowledge, transfer of knowledge at ‘the workplace and training. It
helps in controlling the training programme because if the training is not effective, then it can
be dealt with accordingly It helps in determining that whether the actual outcomes are
aligned with the expected outcomes.
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Process of Training Evaluation

• Before Training : The learner’s skills and knowledge are assessed before, the
training programme. During the start of training, candidates generally perceive it as
a waste of resources because at most of the times’ candidates are unaware of the
objectives and learning outcomes of the programme. Once aware, they are asked
to give their opinions on the methods used and whether those methods confirm to
the candidates preferences and learning style

• During Training: It is the phase at which instruction is started. This phase usually
consist of short tests at regular intervals.

• After Training: It is the phase when learner’s skills and knowledge are assessed
again to measure the effectiveness of the training. This phase is ‘designed to
‘determine whether training has had the desired effect at individual department
and organizational levels. There are various evaluation techniques for this phase.

Five Levels of Training Evaluation

Hamblin suggested five levels at which evaluation of training can take place, viz,,
reactions, learning,’ job behavior, organisation and ultimate value.

• Reactions: Trainee’s reactions to the overall usefulness of the training including

the coverage of the topics, the method of presentation, the techniques used to
clarify things, often throw light on the effectiveness of the programme. Potential
questions to trainees might include: (i) ‘What were your learning goals for the
programme? (ii) Did you achieve them? (iii) Did you like this programme? (iv)
Would you recommend it to others who have similar learning goals? (v) What
suggestions do you have for improving the programme? (vi) Should the organisation
continue to offer it?

• Learning: Training programme, trainer’s ability and trainee’s ability are evaluated
on the, basis of quantity of content learned and time in which it is learned and
learner’s ability to use or apply the content learned.

• Job behaviour: This evaluation includes the manner and extent to which the trainee
has applied his learning to his job.

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 • Organisation: This evaluation measures the use of training, learning and change
in the job behaviour of the-department/organisation in the form of increased
productivity, quality, morale, sales turnover and the like.

• Ultimate value: It is the measurement of ultimate result of the contributions of the

training programme to the company goals like survival, growth, profitability; etc.
and to the individual goals like development of personality and social goals like
maximising social benefit.

Decision Points in Planning Training Evaluation

John Dopy era and Louise Pitone identified eight decision points in planning training
evaluation. They are:

Should an evaluation be done? Who should evaluate?

1) What is the purpose of evaluation? There are mainly two purposes of doing
evaluation. They are justification evaluation and determination evaluation.
Justification evaluations are undertaken as reactions to mandates, other purposes
that will make evaluation efforts more fruitful. These purposes include training
needs assessment, programme improvements and impact evaluation.

2) What will be measured? The focus of the evaluation will be on training and delivery,
programme content, materials, impact of training on individuals through learning,
behaviour or performance change. Learning can be measured through pre-test
and post-test. Evaluate the effects of training after the trainee returns to the work
place, using, changes in between or the work results as indicators.

3) How comprehensive will the evaluation be? The scope or the duration and
comprehensiveness of the evaluation is influenced by available support,
communication and evaluation purpose.

4) Who has the authority and responsibility? Who has the authority and responsibility
at different stages of evaluation will be determined by the factors like personnel,
credibility of internal staff, communication, objectivity, of internal staff to do an
evaluation regardless of results.

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 5) What are the sources of data? The most common sources of evaluation data are
reactions, opinions and/or test results of the participants, managers, supervisors,
production records, quality control, financial records, personnel records, safety
records, etc.

6) How will the data be collected and compiled? Data can be collected before training
for needs analysis or pre-testing purpose, during training programme to make
improvements along the way and after training or evaluation. Next step is selection
of treatment or control groups and determination of nature of samples. Data can
be compiled either manually or by computers.

How will the data be analysed and reported? First reporting issue is concerned
with audiences like participants or, trainees, training staff, managers, customers etc. Second
and third issues are concerned with analysis and results and accuracy, policies and format
respectively.

These decision points are intended to increase awareness of, and interest in, the
evaluation of training, to improve planning skills and to encourage more systematic evaluation
of training. Various methods can be used to collect data on the outcomes of training. Some
of these are:

a) Questionnaires: Comprehensive questionnaires could be used to obtain opinions,

reactions, views of trainees.

b) Tests: Standard tests could be used to find out whether trainees have learnt anything
during and after the’’training.

c) Interviews: Interviews could be conducted to find the usefulness of training offered

to operatives.

d) Studies: Comprehensive studies could be carried out eliciting the opinions and
judgements of trainers, superiors and peer groups about the training.

e) Human resource factors: Training can also be evaluated on the basis of employee
satisfaction, which in turn can be examined on the basis of decrease in employee
turnover, absenteeism, accidents, grievances, discharges, dismissals, etc.

f) Cost benefit analysis: The costs of training (cost of hiring trainers, tools to learn,
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 training centre, wastage, production stoppage, opportunity cost of trainers and
trainees) could be compared with its value (in terms of reduced learning time,
improved learning, superior performance) in order to evaluate a training programme.

g) Feedback: After the evaluation, the situation should be examined to identify the
probable causes for gaps in performance. The training evaluation information (about
costs, time spent, outcomes, etc.) should be provided to the instructors, trainees
and other, parties concerned for control, correction and improvement of trainees’
activities. The training evaluator should follow it up sincerely so as to ensure effective
implementation of the feedback report at every stage.

Role of Trainee in Transfer of Training

The trainee is a major stakeholder in a training programme. Factors such as active

participation, positive orientation towards the inputs received, close interaction with other
participants etc would facilitate transfer of training and realisation of its objectives. The
gains from the training would be directly proportionate to the amount of time invested by
the trainees. Several factors, of course, affect the trainee’s learning process and it is not
very difficult. to recount some of these: How enthusiastically he participates, and how
positively he would receive the inputs and how actively he exchanges notes with other
participants determines.

Ultimately, it is the trainee who is going to be a major beneficiary of training. When attitudes
change, behaviours undergo a transformation and work habits improve; the trainee benefits
immensely.

Training Scenario in Indian Industry:

Most Indian organisations have realized the importance of training—as a vital’ HR

function and as an indispensable motivational tool—and are investing their time, money
and resources so as to attract talent.

In the Retail-FMCG sector, there is chronic shortage of trainers, as well as skilled

workers. Industry majors feel that the situation is likely to continue for a while. Most B-
schools have started courses in Retail Management, Logistics Management, Brand
Management etc in collaboration with industry majors and as the Retail-FMCG sector
begins to balloon to gigantic size—expected to be a $200-250 billion industry by 2016—
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these baby steps should pave the way for a major reversal of trend in the industry. The
Banking and Insurance sectors are on the verge of a major change in the days ahead. The
entry of foreign majors in insurance sector—ICICI Lombard; HDFC Standard Life
Insurance; TATAAIG General Insurance; Bajaj Allianz, etc.—has virtually compelled many
B-schools to come out with courses aimed developing interpersonal, networking and
communication skills. The market in Telecom sector is estimated to touch Rs. 500-7Q0
crore in the days ahead. Many top players are spending a huge amount on training and
development. For example, BSNL alone spends more than 150 crore on Training and
Development of its employees through the Advanced Level Telecommunications Training
Centre and 43 other regional training institutes. Reliance, Bharti have also stepped into this
area in a big way Dhirubhai Ambani Institute of Information and Communication
Technology; Bharti School of Telecommunication Technology and Management. With the
increase in competition, availability of hugeamount of information through internet, magazines,
newspapers, TV etc., and increased awareness among customers, the demand to impart
proper training in non-technological areas like customer care and marketing has increased.
The Hospitality Sector is facing shortage of skilled chefs and experienced managers.
Personal and Environment Factors of Training

Managers require huge range of competencies such as, people management, viable
skills, business insights, analytic skills, succession planning, and resource development in
order to get success in this sector. In addition to that, employees are not enough trained on
Business Etiquettes, Courtesy, and Business Communication. Hospitality is all about handling
people. So an employee must have right attitude, tolerance, and listening skills in order to
move up the hierarchy. There is still a long way to go to inculcate good public relation,
interpersonal skills. With the increase in competition due to the coming up of major players
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like four Seasons, Shangri-La, Aman Resorts, etc. the need to train employees has increased
more than ever before. The major players are now strategising to increase the turnover of
the customers by training their employees on Communication, Dining and Business etiquettes,
etc. The Indian IT sector has witnessed phenomenal growth till recently and is expected to
generate nearly 4 million jobs by 2020 according to NASSCOM.

According to the recent review by Harvard Business Review, there is a direct link
between training investment of the companies and the market capitalization. Those companies
with higher training investment had higher market capitalization. It clearly indicates that the
companies. which have successfully implemented training programs have been able to deliver
customer goals with effective results. It shows that good training results in enhancement of
individual performance, which in turn, helps the organization in achieving its business goals.
Training is a tool that can help in gaining competitive advantage in terms of human resource.
With the. growing investment by IT companies in the development of ‘their employees many
companies have now started their own learning centers. As an example, Sun has its own
training department. Accenture has Internet based tool by the of “My Learning” that offers
access to its vast learning resources to its employees. Companies are investing in both the
technical training, which has always been an essential part in IT industry; as well as in managerial
skills development. Companies now kept aside 3.5% of revenue for training programmes.
As an example, some of the major players, like Tata Elxsi and Accenture are allocating 7%
and 3% respectively of the companys overall revenue (naukrihu.com).

Banks, Insurance Companies, Public Sector Units (PSUs)—such as BHEL, SAIL,

B, HindustanAeronautics Petroleum companies and IT companies have their own dedicated
training centres—with a separate campus and training for training their employees. Examples
include the Tata Management Training Centreys Academy, Indian Oil Institute of Petroleum
Management, The National Institute of Bank Management, National Institute of
Construction Management, The Ahmedabad Textile Industry Research Association, etc.

3.5 DEVELOPMENT

Development is an education process as it tries to enhance one’s ability to

understand and interpret knowledge in a useful way. Development is different from training
in that it is often the result of experience and the maturity that comes with it. It is possible
to train most people to drive a vehicle, operate a computer, or assemble a radio. However,

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development in such areas as judging what is right-and-wrong, taking responsibility for
results, thinking logically, understanding cause and effect relationships, synthesising
experiences to visualise relationships, improving communication skills, etc., may or may
not come through over time. Training certainly helps in improving these types of skills. But
when the intent is to enhance executives’ ability to handle diverse jobs and prepare them
for future challenges, the focus must shift to executive development.
Training Versus Development

Definition

Executive or management development is a planned, systematic and continuous

process of learning and growth by which managers develop their conceptual and analytical
abilities to manage. It is the result of not only participation in formal courses of instruction
but also of actual job experience. It is primarily concerned with improving the performance
of managers by giving them stimulating opportunities for growth and development. (Pareek;
Gupta; Rajamani; Group; Goldstein)

Features of Executive Development

• It is a planned effort to improve executives’ ability to handle a variety of assignments.

• It is not a one-shot deal, but a continuous, ongoing activity.

• It aims at improving the total personality of an executive.

• It aims at meeting future needs unlike training, which seeks to meet current needs.

• It is a long-term process, as managers take time to acquire and improve their

capabilities.
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 • It is proactive in nature as it focuses attention on the present as well as future
requirements of both the organisation and the individual.
Importance

• Executive Development has become indispensable to modern organisations in

view of the following reasons:

• For any business, executive development is an invaluable investment in the long

run. It helps manager to acquire Knowledge, Skills and Abilities (KSAs) required
to grapple with complex changes in environment, technology and processes quite
successfully. They can have a better grip over market forces and get ahead of
others in the race in a confident manner.
• Developmental efforts help executives to realise their own career goals and
aspirations in a planned way.

• Executives can show superior performance on the job. By handling varied jobs of
increasing difficulty and scope, they become more useful, versatile and productive.
The rich experience that they gain over a period of time would help them step into
the shoes of their superiors easily.

• Executive Development programmes help managers to broader their outlook, look

into various problems dispassionately, examine the consequences carefully,
appreciate how others would react to a particular solution and discharge their
responsibilities, taking a holistic view of the entire organisation.
• The special courses, projects, committee assignments, job rotation and other
exercises help managers to have a feel, of how to discharge their duties without
rubbing people (subordinates, peers, superiors, competitors, customers, etc.) the
wrong way.
Steps in the Organisation of a Management Development Programme

The following are the important steps in the organisation of a management

development programme: (Noe; Wexley; Quinnones)
Analysis of organisational development needs: After deciding to launch a. management
development programme, a close and critical examination of the present and future
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development needs of the organisation has to be made. We should know how many and
what type of managers are required to meet the present and future requirements.
A comparison of the already existing talents with those that are required to meet
the ‘projected needs will help the top management to take a policy decision as to whether
it wishes to fill those positions from within the organisation or from outside sources,

• Appraisal of present management talents: In order to make the above

suggested comparison, a qualitative assessment of the existing executive talents
should be made and an estimate of their potential for development should be
added to that. Only then can it be compared with the projected required talents.

• Inventory of management manpower: This is prepared to have a complete set

of information about each executive in each position. For each member of the
executive team, a card is prepared listing such data as name, age’, length of service,
education, work experience, health record, psychological test results and
performance appraisal data, etc. The ‘selection of individuals for a management
development programme is made on the basis of the kind of background they
possess. Such information,’ when analysed, discloses the strengths as well as
weaknesses or deficiencies of managers in certain functions relating to the future
needs of the organisations.

• Planning of individual deielopment programmes: Guided by the results of

the performance appraisal that indicates the strengths and weaknesses of each of
the executives, this activity of planning of individual development programme can
be performed.

• Establishment of development programmes: It is the duty of the HR department

to establish the developmental opportunities. The HR department has to identify
the existing level of skills, knowledge etc., of various executives and compare
them with their respective job requirements. Thus, it identifies developmental needs
and “requirements and establishes specific development ‘programmes, like
leadership ‘courses, management games, sensitivity training, etc.

• Evaluation of results: Executive development programmes consume a lot of

time, money and effort. It is, therefore, essential to find out whether the programmes
have been on track or not. Programme evaluationwill cover the areas where changes
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 need to be undertaken so that the participants would find the same to be relevant
and useful for enriching their knowledge and experience in future. Opinion surveys,
tests, interviews, observation of trainee reactions, rating of the various components
of training, etc., could be used to evaluate executive development programmes.

Methods/Techniques of Management Development Programmes

Management development programmes help in acquiring and developing, different

types of managerial skills and knowledge. Different types of techniques are used to acquire
and develop various types of managerial skills and knowledge. (See Table 10.2) .

Table : Methods of Developing Managers

1. Decision-making skills In-basket
Business game
(C) Case study
2. Interpersonal skills Role play
Sensitivity training
Behaviour Modelling
3. Job knowledge On-the-Job experiences
Coaching
Understudy
4. Organisationàl knowledge Job rotation
Multiple management
5. General knowledge (a) Special courses
(b) Special meetings
(c) Specific readings
6. Specific individual needs Special projects
Committee assignments

Decision- making Skills

The main job of a manager is to make both strategic and routine decisions. His
ability to take effective decisions can be enhanced by developing decision-making skills
through various techniques, as explained below:

1. In-basket: In this method, the participant is given a number of business papers

such as memoranda, reports and telephone messages that would typically cross a
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 manager’s desk. The papers, presented in no particular sequence, call for actions
ranging from urgent to routine handling. The participant is required to act on the
information contained in these papers. Assigning a priority to each particular matter
is initially required.(Federicksen) .

If the trainee is asked to decide issues within a time-frame, it creates a healthy

competition among participants. The method is simple anJ1 easy to follow. Trainees
learn quickly as they have to list priorities, make assumptions, assign work to
others and get things done within a time-frame. Since participants hail from various
sections, it is easy to put out inter-departmental fires. On the negative side, the
method is somewhat academic and removed from real life situations. The
participants, knowing full well that they are handling an imaginary situation, may
not be too excited about the whole exercise and may not fully commit themselves
to the task.

• Case study: This is a training method that employs simulated business problems
for trainees to solve. The individual is expected to study the information given in
the case and make decisions based on the situation.

Merits and Demerits of the Case Study Method

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 If the student is provided a case involving an actual company, he is expected to
research the firm to gain a better appreciation of its ‘financial condition and corporate
culture. Typically, the case method is used in the classroom with an instructor who serves
as a facilitator. Experienced trainers readily point out that the case study is not appropriate
where :

• Analytic, problem solving and thinking skills are most important.

• Active participation is required.

• Team problem solving and interaction are possible.

• The success of this method is closely linked to maturity and experience of the
trainer who should facilitate the groups learning, keep participant on track and
help them see the underlying management concepts in the case clearly.

• Further, it is necessary to cope up with the good case material based on real life
situation and present the same before trainees in an interesting manner.

Business games : Simulations that present actual business situations are known as business
games.
Merits and Demerits of the Business Game Method

Interpersonal Skills

A manager can achieve results only when he is able to put individuals on the right
track. He must interact with people actively and make them work unitedly. Managerial
skills in the area of inter-personal relations can be enhanced through various techniques,
viz., Role Play and Sensitivity Training;
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1) Role play. This is a technique in which some problem - real or imaginary - involving
human interaction is presented and then, spontaneously acted out Participants
may assume the roles of specific organisational members in a given situation and
then act out their roles. For example, a trainee might be asked to play the role of
a supervisor who is required to discipline an employee smoking in the plant in
violation of the rules. Another participant would assume the role of the employee.
The individual playing the supervisory role would then proceed to take whatever
action he deems appropriate. This action then provides the basis for discussion
and comments by the groups.(Balli; Test; Maier et al)
Role play develops interpersonal skills among participants. They, learn by doing
things. Immediate feedback helps them correct mistakes, change, switch gears
hats and reorient their focus in a right way. The competitive atmosphere spurs
them to participate actively, listen to what others say, observe and analyse
behavioural responses and improve their own performance by putting their textual
learning to test.

On the negative side, realism is sometimes lackng in role-playing, so the learning

experience is diminished. It is not easy to duplicate the pressures and realities of
actual decision-making on the job; and individuals, often act very differently in
real-life situatiors than they do in acting out a simulated exercise. Many trainees
are often uncomfortable in role-playing situations, and trainers must introduce the
situations well so that learning can take place. To this end, trainers should:
• Ensure that members of the group are comfortable with each other.

• Select and prepare the role players by introducing a specific situation.

• Help participants prepare; ask them to present potential characters.
• Realise that volunteers make better role players.

• Prepare observers by giving them specific tasks (e.g, evaluation, feedback.

• E guide the role play enactment over its bumps (since it is not scripted).
• Keep it short.

• Discuss the enactment and prepare bulleted points of what was learned.
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 2. Sensitivity training: This is a method of changing behaviour through unstructured
group interaction. Sensitivity training is sought to help individuals toward better
relations with others. The primary focus is on reducing interpersonal friction.

In sensitivity training, the actual technique employed is T-group (T stands for

training). It is a small group of ten to twelve people assisted by a professional
behavioural scientist who acts as a catalyst and trainer for the group. There is no
specified agenda. He merely creates the opportunity for group members to express
their ideas and feelings freely. Since the trainer has no leadership role to play, the
group must work out Its own methods of proceeding. A leaderless and agenda-
free group session is on. They can discuss anything they like. Individuals are allowed
to focus on behaviour rather than on duties.’As members engage in the dialogue,
they are encouraged to learn about themselves as they interact with others.
(Kearney)

Job Knowledge

In addition to decision-making skills and interpersonal skills, managers should

also possess job knowledge to perform their jobs effectively. Trainers acquire job
knowledge through on-the-job experience, coaching and understudy.

1) On-the-job experience: On-the-job techniques are most widely used. No other

technique may interest the trainee so much as the location of the learner is not an
artificial one in the classroom techniques. The success of these techniques depends
on the immediate supervisor and his teaching abilities. On-the-job techniques are
especially useful for certain groups like scientific and technical personnel.

Though the costs of training initially appear to be low, they may turn out to be high
when wastages of all kinds are considered under this type of training.

2) Behaviour modelling This is an approach that demonstrates desired behaviour,

gives trainees the chance to practice and role-play those behaviours and receive
feedback. The basic behaviour modelling involves the following steps:

3) Learning points: At the beginning, the essential goals and objectives of the
programme are stated. In Some cases the learning points are a sequence of
behaviours that are to be taught.
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4) Modelling: Trainees watch films or videotapes in which a model manager is
portrayed dealing with an employee in an effort to improve his performance. The
model shows specifically how to deal with the situation and demonstrates the
learning points.

5) Role playing: Trainees participate in extensive rehearsal of the behaviours shown

by the models.

6) Social reinforcement: The trainer offers reinforcement in the form of praise and
constructive feedback based on how the trainee performs in the role-playing
situation.

7) Transfer of learning: Finally,-trainees are encouraged to apply their new skills

when they return to their jobs.

Behaviour modelling can be effective. Several controlled studies have demonstrated

success in helping managers interact with employees, handle discipline, introduce
change and increase productivity. (Sim Warner .et al; Kraut) This method of learning
in isolation may prove to be inadequate but-in combination with other off-the-job
techniques may, prove to be useful.

8) Coaching. In coaching-trainee are placed under a particular supervisor who acts

as an instructor1 and teaches job knowledge and skills to the trainee. He tells him
what he wants him to do, how it can be done and follows up while it is being done
and corrects errors. The act of-coaching can be done in several ways. The executive,
apart from asking trainees to do the routine work, may ask them to tackle some
complex problems by giving them a chance to participate in decision-making. For
effective coaching, a healthy and open relationship must exist between employees
and their supervisors. Many firms conduct formal training -courses to improve the
coaching skills of their managers.

In coaching, participants, can learn by actually doing a piece of work and obtain
feedback on performance quickly.(Group; Kaye) However, there is no guarantee
that supervisors will be able to coach in an effective way. It is easy for the ‘coach’
to fall short in guiding the learner systematically, even if he knows which systematic
experiences are best. Sometimes doing the job on hand may score over learning
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 and watching. Many skills that have an intellectual component are best learned
from a book or lecture before coaching could take place.-Further, in many cases,
the learner cannot develop much beyond the limits of his own boss abilities. Coacing
would work well if the coach provides a good model with whom the trainee can
identify, if both can be open with each other, if the coach accepts his responsibility
fully, and if he provides the trainee with recognition of his improvement and
appropriate rewards.

4) Understudy. An understudy is a person who is in training to assume at a future

time, the full responsibility of the position currently held by his superior. This method
supplies the organisation a person with as much competence as the superior to fill
his post which may fall vacant because of promotion, retirement or transfer. An
understudy is ‘usually chosen by-the head of a particular department. The head
will then teach him what his entire job involves. The superior involves him .in
decision-making by discussing the daily operating problems as well.

Understudy assignments help the superior to lighten his workload by delegating

some portion of his work to a designated person. The understudy, in turn, gets an
opportunity to learn the superior’s job and get ready for challenging roles at a later
date It is beneficial from the organisation’s point of view also as it will not be at the
receiving end when an executive suddenly leaves his job. On the negative side, the
designation of a person as an understudy may spark off jealousy and rivalry among
competing subordinates. Since the understudy has been specially picked up.

• Organisational knowledge

In addition to job ‘knowledge, managers should also possess knowledge of various

jobs, products, markets, finances creditors of the organisation, etc. The techniques
of imparting organisational knowledge are job rotation and multiple management.

• Job rotation: The transferring of executives from job to. job and from department
to department in a systematic manner is called job rotation. The idea behind this is
to give them the required diversified skills and a broader outlook, which are very
important at upper management levels. The management should’ provide a variety
of job experiences for those judged to have the potential for higher ranks before

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 they are promoted. Job rotation increases ‘the inter-departmental cooperation
and reduces the monotony of the work.

• Multiple management: Multiple management is a system in which permanent

advisory committees of managers study problems of the company and make
recommendations to higher management. It is also called a Junior-board of
executives. These committees discuss the actual problems and different alternative
solutions after which the decisions are taken. Multiple management technique offers
several advantages: it helps board members to gain first hand experience in various
important as of business; it becomes easy to spot people with talent; ‘juniors get a
chance to improve their problem solving skills; and more importantly it is an
inexpensive way of training a’good ‘number of executives to do things on their
own and develop fast.

GENERAL KNOWLEDGE

In addition to job knowledge and organisational knowledge, managers should

possess general knowledge, as the external environment interacts with and influences the
business. The general knowledge includes the knowledge about the economic conditions
of the country and the world in general, in respect of major areas, such as prices, GNP per
capita income, various otherindustries, other, sectors of the economy, ‘political conditions,
social factors, etc. General, knowledge can be acquired through special courses, special
meetings and specific readings.

• Special courses: Special courses - like the workshops or executive development

programmes organised by the institutes, universities and colleges - help the trainees
to acquire general knowledge.

• Special meetings: Special meetings organised in Consumers’ Forums, ‘Voluntary

Orgañisations, etc., help the trainees develop their general knowledge.

• Specific readings: Specific articles published by various journals, specific portions

of important books are provided to the:trainees to improve their general knowledge.

Specific Individual Needs

Some trainees may be weak in some areas. Such trainees are provided with special

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facilities for development. These facilities include ‘special projects and committee
assignments. ‘.

1) Special projects: In this method, a trainee is put on a project closely related to

the objectives of his department. For example, a new recruit in a property evaluation
firm may be asked to do a small project reviewing the prospects of selling
commercial space in satellite townships (like Gurgaon, Rohtak and Ghaziabad)
nearDelhi. The project will give a first hand experience of the problems and
prospects in space selling to the new recruit.

2) Committee assignment: In this method, an ad hoc committee is appointed to

discuss, evaluate and offer suggestions relating to an important aspect of business.
For example, a group of experts maybe asked to look into the feasibility of
developing a Software Technology Park in an upcoming area by the Delhi
Development Authority. .

Other Off-the-Job Methods

• Conferences : The conference method is another commonly used method of

executive development; Topics such as human relations, safety education, customer
relations, sales training, are often discussed, debated, spoken about at conferences
specially organised and designed for the purpose. A conference is a meeting of
people to discuss a subject of common interest. The conference is structured
around a small group meeting wherein a leader helps the group identify and define
a problem, guides the discussion along desired lines and summarises the views
that repre’sent the consensus of the group in dealing with the problem. The
participants exchange notes, opinion, ideas on the subject in a systematic, planned
way. Participants are expected to air their, opinions and thoughts freely. In order
to ensure its success, (i) participants are, expected to come prepared for the
conference, (ii) the conference leader should conduct the sessions according to a
plan, giving enough room for healthy interchange of different viewpoints, (iii) the
discussion should proceed along desired lines and (iv) the size of the group should
not be too large.

• Lectures: Lectures are formal presentations on a topic by an experienced and

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 knowledgeable person. The presentation is generally supported by discussions,
case studies, audio-visual aids and film shows. It is a simple and inexpensive way
of imparting knowledge on a topic of special importance to a large audience.
There could be a speedy interchange of ideas on a specific topic. The method
may often degenerate into a kind of one-way traffic where the presenter tries to
get ahead without paying attention to the reactions of the audience. If the lecture is
not interesting enough, the audience may not participate and offer any feedback.
The listeners play. a largely non-participatory role. They may ask questions but
they never get the feel of what is being talked about. Moreover, participants do
not share each other’s experiences and hence the learning is confined to what the
presenter has to say. The method could be used effectively if the following things
are kept in mind:

• The presentation should be interesting, lively and leave. enough room for healthy
discussions midway.

• The presenter must possess excellent communication and ‘interpersonal skills.

Adequate preparation must precede the actual presentation;

• To enrich the presentation, audio-visual aids, examples, cases, and real-life incidents
should be used freely, encouraging the audience to participate freely. Better to set
time limits to the lecture, since listeners tend to switch off completely beyond a
point (say, one or two hours).

• Group discussion: In this method, papers are presented by two or three trainees
on a selected topic, followed by a stimulating discussions. The ‘topics for discussion
are selected in advance and the papers concerning the same, ‘written by various
participants, are printed and circulated beforehand. It is a variant of the lecture
method and is generally preferred where the intention is to give wide circulation
and participation to a’ number of experts sharing their experiences with a ‘fairly
large group of individuals.

• Programmed instruction (P1): It is based on certain behavioutal laws,

particularly dealing with reinforcement. Reinforcement means rewarding .a correct
‘response and punishing a wrong one. A major feature of P1 is that it offers

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 ‘immediate feedback on whether the trainee has answered questions correctly or
not.

P1 is a learner-oriented technique which presents subject matter to the trainees in

small, sequential steps, requiring frequent responses from the trainee and
immediately offering him of their accuracy or otherwise. If the response is accurate,
he takes up the next level; if not, he is asked to go back and start again. The
instructions are carefully planned moving from the simple to complex ones in a
smooth way.

A major plus point of the method is that it allows the trainee to learn in small steps
at a pace and rate suitable to him. He takes active part throughout the programme.
Printed instructions could be offered by experts, keeping individual differences in
mind. Regular feedback helps the trainer to improve material continuously. A
computer-aided format cari be placed in the hands of trainers with an instruction
manual for getting excellent results. On .the negative side, the impersonal atmosphere
may not be very stimulating. The cost of designing such programmes is generally
high. It is not suitable for trying to bring about behavioural changes.

Selection of a Suitable Method

The success of any management development programme largely depends on the

selection of the method.

1. The objectives of the programme should be kept in mind while choosing a particular
method. However, no single technique may prove to be sufficient, but only a suitable
combination of techniques may yield results.

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Suitability of Executive ‘Development Techniques

Technique Suitability
Job Rotation To develop diversified skills and broaden the outlook of
an executive.
Understudy To aid succession planning by developing the skills of
juniors according to a preset plan.

Multiple Management ‘To assist managers in expanding their outlook and

knowledge in various functional areas.

Case Study. To develop analytical, reasoning and problem-solving skills.

Role Playing To translate theoretical knowledge into action plans ‘and
to promote good human relations skills among trainees;
Behaviour Modelling To teach inter-personnel and cognitive skills.

In-basket To promote situational judgement and social sensitivity.

Business Games To develop smart thinking, quick reactions, initiative,

organising and leadership skills.

Sensitivity Training To promote self awareness and its impact on others.
Conference To improve, and expand knowledge, attitudes and develop
interpersonal skills.

Lecture To impart conceptual knowledge to a large audience

with in a short span of time.

Training and Development in Indian industry HLL

For an FMCG company like Hindustan Lever Ltd (HLL), training is a continuous
process and not merely an intervention at a mid-career level. “Training, is an integral paft
of performance development,” says Prem. Kamath, Head, Management Resources, HLL.
The FMCG giant has two management training centres in India ‘Mumbai and Bangalore
and yet another centre for officer lvel in ‘Navi Mumbai. For workmen and staff located at
the various factories and regional sales offices of HLL, there are dedicated training centres
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run by these Units themselves. “We draw up our calendar for training courses each year
starting in July and running until June next year,” says Tejas Katre, Corporate Learning
Manager, HLL. On offer are three kinds of courses. The general awareness course relates
to various aspects of the company’s operations, an overview of the challenges, a cross-
functional perspective and a module on values of the company. The second set of courses
provides the employees with a behavioural template to develop, the requisite competencies
for growth; these include programmes on leadership, team-building and problem-solving.
The third set of courses is skill based wherein the skill template for different functions—
Sales & Marketing, Finance, Technical, HR, among others—are defined and specific
courses are run to enhance the skill level in these functions. “Our training programmes are
designed to briiig in the requisite focus that enhances training on-the-job. Interspersed
with creativity workshops, management games and experiential workshops, our training
effort seeks to provide, a kind of ‘booster dose’ to our employees so, as to enhance their
performance and potential for career growth, Kamath.

Godrej Consumer Products Ltd

GCPL has placed importance on retaining its talented employees,. Two years ago
it set ‘up a parallel board of directors known as the Young Executive Board. The board,
‘with members of the managerial cadre, all below the age of 30, works in the shadow of
the main board.

Shoppers Stop

This retailing company, has tied up with Professor Douglas Tigert, a well-known
theoretician in the’field of retail marketing. “For a retailing company, training is an absolute,
necessity;” says Sanjay Badh Director, Operations, at Shoppers’ Stop. “We do a fair
amount of training across all employee categories, ‘and we have different kinds of training,”
he adds. According to him, because of the competitiveness of the industry, training is a
constant process at the company. Shoppers’ Stop, a member of International Group ‘of
Department Stores (IGDS), will be involved in the fifth IGDS Executive Seminar in Mumbai.
Participants will include 40 managers from across functions in ‘in key decision making
areas’. By analysing actual business situations, the course emphasises ways to implement
sirategy-level decisions through competitive assessment; financial and productivity analysis;
assortment planning; merchandising management; and the creation of -in effective corporate
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culture,” says Vijay Kashyap, General Manager, HR, Shoppers’ ‘Stop. (as reported by
Latha Venkatraman, June 28, 2003, Business Line).

‘Leadership Development at Infosys.employers in the world grooming worldclass

leadership ’T360 degree feedback: This is the mechanism through which the company
gathers data about an individual’s performance and ‘abilities. This information is collected
from co-workers, including peers, subordinates, managers and customers. Personal
developmè plans are prepared on the basis of this feedback. Then, each of these individuals
is assigned an ILl facui&member to help prepare the PDP and to follow it.

2. Development assignments: Identified high potential Infoscions are trained at

various functions of the company through job rotations and cross-functional
assignments. This helps employees to acquire new leadership skills outside their
own areas of expertise and experience.

3 Infosys culture workshops: These workshops are designed to fortifythe Infosys

culture a1’iongst the participants, help instill better communication skills through
sustained interaction amongst themselves, And identify with the values and processes
involved in leadership development.

4. Development relationships: This includes one-on-one interaction in actual on-

the-job work climate and leads to better sharing of knowledge and camaraderie
amongst individuals. Mentoring forms an integral part of this exercise.

• Leadership skills training: The ‘Leaders Teach Series’ are workshops that the
company’s Tier-i members, including Narayana Murthy and Nandan Nilekani hold
to acclimatise the next rung with leadership roles and to groom them through their
own rich experience.

• Feedback intensive programmes: These are akin to 360 degree feedback, but
based on formal and informal feedback from employees that an individual interacts
with,

• Systemic process learning: This helps individuals to gain an overall view of the
company and its diverse and complex systems, business, operations and processes
It is a continuous process and helps improve the individual and also the systems.

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 • Action. learning: This exercise constitutes solving real problems in real-time
conditions, but as, a team.

• Community empathy: The company stresses the need to give back to society
through involvement in various develoinental, educational and social causes. This
programme helps nurture a. social conscience amongst its leaders.

3.6 TRANSFER

A transfer is a change in job assignment. It may involve a promotion or demotion

or no change, at all in status and responsibility. A transfer has to be viewed as a change in
assignment in which an employee moves from one job to another in the same level of
hierarchy, requiring similar skills, involving approximately same level of responsibility, same
status and same level of pay. .A transfer does not imply any ascending (promotion) or
descending (demotion) change in status or responsibility.

Purposes of transfer

Organisations resort to transfers with a view to serve the following purposes:

1. To meet the organisational requirements: Organisations may have to transfer

employees due to changes in technology, changes in volume of production,
production schedule, product line, quality of products, changes in the job pattern
caused by change in organisational structure, fluctuations in the market conditions
like demands fluctuations, introduction of new lines and/or dropping of existing
lines. All these changes demand the shift in job assignments with a view to place
the, right man on the right job.

2. . To satisfy the employee needs: Employees may .need transfers in order to

satisfy their desire to work under a friendly superior, in a department/region where
opportunities for advancement are bright, in or near their native place or place of
interest, doing a job where the work itself is challenging, etc.

3. To utilise employees better: An employee may be transferred because

management feels that his skills, experience and job knowledge could be put to
better use elsewhere.

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 4. To make the employee more versatile: Employees may be rolled over different
jobs to expand their capabilities. Job rotation may prepare the employee for more
challenging assignments in future.

5. To adjust the workforce: Workforce may be transferred from a plant where

there is less work to a plant : where there is more work.

6. To provide relief: Transfers may be made to give relief to employees who are
overburdened or doing hazardous work for long .periods.

7. To reduce conflicts: Where employees find it difficult to get along with colleagues
in a particular section, department or location - they could be shifted to another
place to reduce conflicts.

8. To punish employees: Transfers may be effected as disciplinary measures - to

shift employees indulging in undesirable activities to remote, far-flung areas.

Types of Transfers

Transfers can be classified as follows:

• Production transfers : Transfers caused due to changes in production.

• Replacement transfers: Transfers caused due to replacement of an employee

working on the same job for a long time.

• Rotation transfers : Transfers initiated to increase the versatility of employees.

• Shift transfers : Transfers of an employee from -one shift to another.

• Remedial transfers : Transfers initiated to correct the wrong placements.

• Penal for transfers : Transfers initiated as a punishment for indisciplinary action

of employees.

Benefits and Problems

A summary of benefits and problems associated with transfers is given below:

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 Benefits and Problems Associated with Transfers

Transfers have to be carried out in a systematic way, with a view to avoid allegations
of discrimination and favoritism. Some of the above cited problems associated with transfers
‘could be avoided, if organisations formulate a definite transfer policy; for use at different
points of time.

Transfer Policy

Organisations should clearly specify their policy regarding transfers. Otherwise,

superiors may transfer their subordinates arbitrarily if they do not like them. It causes
frustration among employees. Similarly, subordinates may also request for transfers even
for the petty issues. Most of the people may ask for transfer to risk less and easy jobs and
places. As such, organisation may find it difficult to manage such transfers. Hence, an
organisation should formulate a systematic transfer policy. A systematic transfer policy
should contain the following items:

1. Specification of circumstances under which an employee will be transferred in the

case of any company initiated transfer.

2. Name of the superior who is authorized and responsible to initiate a transfer.

3. Jobs from and to which transfers will be made, based on the job specification,
description and classification.

4. The region or unit of the organisation within which transfers will be administered.
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 5. Reasons which will be considered for personal transfers, their order of priority,
etc.

6. Reasons for mutual transfer of employees.

7. Norms to decide priority when two or more employees request for transfers like
priority of reason, seniority.

8. Specification of basis for transfer, like job analysis, merit, length of service.

9. Specification of pay, allowances, benefits; etc., that are to be allowed to the

employee in the new job.

10. Other facilities to be extended to the transferee like special level during the period
of transfer, special allowance for packaging luggage, transportation, etc.

Generally, line managers administer the transfers and HR managers assist the line managers
in this respect.

3.7 PROMOTION

Promotion refers to upward movement of an employee from current job to another

that is higher in pay, and/or organisational level. Promotion brings enhanced status, better
pay, increased responsibilities and better working conditions to the promoted. There can,
of course, be ‘dry promotion’ where a person is moved to a higher level job without
increase in pay. Promotion is slightly different from upgradation which means elevating
the place of the job in the organisational hierarchy (a better title is given now) or including
the job in higher. grade, (minor enhancement in pay in tune with the limits imposed within
a particular grade). A transfer implies horizontal movement of an employee to another job
at the same level. There is no increase in pay, authority or status. Hence, it cannot act as a
motivational tool. Promotion, on the other hand, has in-built motivational value, as it elevates
the status and power of an employee within an organisation. (Denova; Hoyda; Mills;
Mukherjee; Zaden; Sweeney)

Purposes and Advantages of Promotion

Promotion, based either on meritorious performance or continuous service, has

powerful motivational value. It forces an employee to use his knowledge, skills and abilities

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fully and become eligible for vertical growth. It inspires employees to compete and get
ahead of others. Those who fall behind in the race are also motivated to acquire the
required skills to be in the reckoning. Promotion thus, paves the way for employee self
development. It encourages them to remain royal and committed to their jobs and the
organisation. The organisation would also benefit immensely because people are ready to
assume’ challenging roles by improving their skills constantly. Interest in training and
development programmes would improve. The organisation would be able to utilise the
skills and abilities of its personnel more effectively.

Bases of Promotion

Organisations adopt different bases of promotion depending upon their nature,

size, management, etc Generally, they may combine two or more bases of promotion The
well-established bases of promotion are seniority and merit.

Merit based promotions: Merit based promotions occur when an employee is promoted
because of superior performance in the current job. Merit here denotes an individual’s
knowledge, skills, abilities and eficiency as measured from his educational qualifications,
experience, training and past employment record. The advantage of this system are fairly
obvious:

• It motivates employees to work hard, improve their knowledge, acquire new skills
and contribute to orgañisationa! efficiency.

• It helps the employer to focus attention on talented people, recognise and reward
their meritorious contributions in an appropriate way.

• It also inspires other employees to improve their standards of performance through

active participation in all developmental initiatives undertaken by the employer
(training, executive development, etc.).

However, the system may fail to deliver the results, because:

• It is not easy to measure merit. Personal prejudices, biases and union pressures
may come in the way of promoting the best performer.

• When young employees get ahead of other’ senior employees in an organisation

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 (based on superior performance), frustration and discontentment may spread among
the ranks. They may feel insecure and may even quit the organisation.
• Also, past performance may not guarantee future success of an’ employee. Good
performance in one job (as a Foreman, for example) is no guarantee of good
performance in another (as a supervisor).
Seniority-based promotions: Seniority refers to the relative length of service in the same
organisation. Promoting an employee who has the longest length of service is often widely
welcomed by unions because it is fairly objective. It is easy to measure the length of
service and judge the seniority. There is no scope for favouritism, discrimination and
subjective judgement. Everyone is sure of getting the same, one day.
In spite of these merits, this system also suffers from certain limitations. They are:
• The assumption that the employees learn more with length of service is not valid as
employees may learn up to a certain stage, and learning capabilities may diminish
beyond a certain age.
• It demotivates the young and more competent employees and results in greater
employee turnover.
• It kills the zeal and interest to develop, as everybody will be promoted without
showing any all-round growth or promise.
• Judging the seniority though it seems to be easy in a theoretical sense, is highly
difficult in practice as the problems like job seniority; company seniority; zonal/
regional seniority; service in different organisations, experience as apprentice
trainee,’ trainee, researcher, length of service not only by days but by hours, and
minutes will crop up.
Promotion Policy
• Seniority ‘and merit, thus, suffer from certain limitations. To be fair, therefore, a
firm should institute, a promotion policy that gives due weightage to both seniority
and merit. To strike, a proper balance between the two, a firm could observe the
following points:
• Establish a fair and equitable basis for promotion i.e., merit or seniority or both.
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• A promotion policy established thus, should provide equal opportunities for
promotion in all categories of jobs, departments and regions of an organisation.

It should, ensure an open policy in the sense that every eligible employee is
considered for promotion rather than a closed system which considers only a
particular class of employees. It must tell the employees the various ‘avenues for
achieving vertical growth through career maps, charts etc.

• The norms for-judging merit, length’of service, potentiality, etc., must be established
beforehand. The relative weightage to be given to merit or seniority or both should
also be spelt out clearly. The mode of acquiring new skills, knowledge, etc., should
be specified to all employees so that they can prepare themselves for career
advancement.

• Appropriate authority should be entrusted with the responsibility of taking a final

decision on promotion.

• Detailed records of service, performance, etc., should be maintained for all

employees, to avoid charges of favouritism, nepotism, etc.

• It should be consistent in the sense that it is applied uniformly to all employees,

inspective of their background.

• Promotion policy should contain alternatives to promotion when deserving

candidates are not promoted due to- lack of vacancies at higher level. These
alternatives include upgradation, redesignation, sanctioning of higher pay or
increments or allowances assigning new and varied responsibilities to the employee
by enriching the job or enlarging the job.

• A provision for appeal against (alleged) arbitrary actions of management and its
review should be there.

• Promotions initially may be for a trial period sr as to minimise the mistakes of

promotion.

• Promotion policy, once it is formulated, should be communicated to all employees,

particularly to the trade union leaders. It should be reviewed periodically, based
on the experiences and findings of the attitude and morale surveys.
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Demotion

Demotion is the downward movement of an employee in the organisational hierarchy

with lower status and - pay. It is a downgrading process where the employee suffers
considerable emotional and financial loss in the form of lower rank, power and status,
lower pay and poor working conditions.

Causes

There are several factors responsible for demotions:

• A promotion is unable to meet the challenges posed by a new job (technically

superior, administratively complex,, involving multifarious responsibilities etc.)
• Due to adverse business conditions, organisations may decide to lay off some and
downgrade other jobs.

• Demotions may be used as disciplinary tools against errant employees.

Policy

Demotion may turn employees into mental wrecks. It may have a devastating
impact on employee morale. It is an extremely painful action, impairing relationships between
people permanently. While effecting demotions, therefore, a manager should be extremely
careful not to place himself on the wrong side of the fence. A clear cut policy may save the
day for him in most cases.. (Dale Yoder)

1. A clear list of rules along with Punishable offences be made available to all the
employees.

2. Any violation be, investigated thoroughly by a competent authority

3. In case of violations, it is better to state the reasons for taking such a punitive step
clearly and elaborately.

4. Once violations are proved, there should be a consistent and equitable application
of the penalty.

5. There should be enough room for, review.

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3.8 EMPLOYEE SEPARATION
Employee separations occur when employees cease to be members of an
organisation. The service agreement between the employee and the employer comes to an
end and the employee decides to leave the organisation. Separations can take several
forms such as: (Kumen; Labour Laws; Bayer, Bunning, Brockner; Gibson; Crofts)
1. Resignation: An employee. may decide to quit an organisation voluntarily on
personal or professional grounds such as getting a better job, changing careers,
wanting to spend more time with family, or leisure activities. The decision could;
alternatively, be traced to the employee’s displeasure with the current job, pay,
working conditions or colleagues. Sometimes an employee may be forced to quit
the organisation compulsorily on grounds of negligence of duty’ insubordination,
misuse of funds, etc. The resignation in this case, unlike voluntary separation, is
initiated by the employer. If the employee refuses to quit, he may have to face
disciplinary action
When employees resign or quit an organisation, there will be a certain amount of
disruption to the normal flow of work. Replacing an experienced and talented
person may not be easy in a short span of time. Training new recruits would take
time and may even prove to be, a prohibitive exercise in terms of costs. The HR
Department, therefore, should examine the factors behind resignations carefully.
Whenever possible, exit interviews must be conducted to find out why a person
has decided to call it a day. To get at the truth behind the curtain, departees must
be encouraged to speak openly and frankly. The interviewer must ensure
confidentiality of the information leaked out by the employee. The purpose of -the
interview must be explained clearly and the interviewer must listen to the departee’s
views, opinions, critical remarks patiently and sympathetically. Every attempt must
be made to make the parting of ways more’ pleasant (e.g., conducting interview in
a place where the employee is comfortable, giving a patient and sympathetic hearing
to the employee, wishing him success after settling all the dues, etc.). There should,
however, be no attempt to (a) defend the company against criticism or attacks,
(b) justify actions which may have annoyed, the employee, (c) attack the departee’s
views or choice of new company or job, (d) convince the employee to change his
mind about leaving etc.
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2. Retirement: Like a quit, a retirement is normally initiated by the employee.
However, a retirement differs from a quit in ‘a number of ways. First, a retirement
usually occurs a’t the end of an employee’s career. A quit can happen at any time.
Second, retirements usually result in the retiree’s receiving benefits in the form of
provident fund, pension, gratuity, encashment of earned leave, etc., from the
organisation. People who quit do not receive these benefits, (without a minimum
qualifying service period in case of voluntary separations). Finally, the organisation
normally plans retirements in advance. HR staff can groom current employees or
recruit new ones during the intervening period in a methodical way. Quits are not
easy to estimate and plan for. Employees retire from service on account of two
reasons:

• Compulsoy retirement: Government employees retire compulsorily after attaining

the age of superannuation (either 58 or 60). In the private sector, the retirement
age may well go beyond 60, depending on a person’s ability to perform well in a
competitive scenario.

• Voluntaiy retirement: In case of voluntary retirement, the normal retirement

benefits are calculated and paid to all such employees who put in a minimum
qualifying service. Sometimes, the employer may encourage the employee to retire
voluntarily—with a view to reduce surplus staff and cut down labour costs.
Attractive compensation benefits are generally in-built in all such plans (referred
to as golden handshake scheme). To reduce, post-retirement anxieties, companies
these days organise counselling sessions, and offer investment related services
(e.g., Citibank, Bank of America). Some companies extend medical and insurance
benefits to the retirees also, e.g. Indian Oil Corporation.

• Death: Some employees may die in service. When the death is caused by
occupational hazards, the employee gets compensation as per the provisions of
Workmen’s Compensation Act, 1923. On compassionate grounds, some
organisations offer employment to the spouse/child/dependent of the employee
who dies in harness.

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 The normal separation of people from an organisation owing to resignation,
retirement or death is known as ‘attrition’. It is initiated by the individual employee,
not by the company

3) Lay off. A layoff is a temporary removal of an employee from the payroll of an

organisation due to reasons beyond the control of an employer. Global competition,
reductions in product demand, changing technologies that reduce the need for
workers, and mergers and acquisitions are the primary factors behind most layoffs.
The services of the employees are not utilised during the layoff period. If the layoff
is for a temporary period (sometimes it could the indefinite) the employee is likely
to be called back to join the ranks once again. The employer-employee relationship,
therefore, does not come to an end but is merely suspended during the period of
layoff. The purpose of layoff is to trim the extra fat and make the organisation lean
and competitive.

Under the Indpstrial Disputes Act, 1947, a layoff implies the following things
(Section 2 KKK)

• The employer is temporarily unable to employ some workers on a full-time basis.

• the reasons for the refusal of employment could be traceable to shortage of inputs,
power, accumulation of stocks, breakdown of machinery, etc.

• The employer-employee relationship stands suspended during the period of lay

off.

• The employee gets (excluding holidays) only fifty per cent of his normally eligible
total basic wages plus dearness allowance during the period of lay off. (Section
25 C)

• To claim this compensation, the laid off workman (a) should not be a casual worker,
(b) his name must be there on the muster rolls, (c) he must have one year’s
continuous service, (d) he must report for work at the appointed • time at least
once a day of 60,

These conditions, however, do not apply when (i) the worker is able to find
alternative employment in a nearby location (within 5 miles), (ii) the lay off is due

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 to strike or slowing down of production by workers in another part of the
establishment, (iii) the industrial establishment is seasonal in character, and (iv)
where less than 20 workers are normally employed therein.

The Do’s and Don’ts of Laying off or Terminating Employees

Layoffs have a powerful impact on the organisation. They bring down the morale
of the organisation’s remaining employees, who are forced to live in an environment of
uncertainty and insecurity. Sometimes, even employees whose services may be essential
for the organisation, may quit fearing loss of membership - thus causing further damage to
the organisation. The company’s standing as a good place to work may suffer. It may be
difficult for the company to have the services of talented people afterwards. Layoffs,
therefore, have to be carried out in a cautious way keeping the financial, psychological and
social consequences in mind..

Lay offs affect the morale of employees in a significant way. They need to be
handled with care and lot of understanding. The criteria for laying off must be clear. Principles
of equity, justice, fair treatment, seniority, meritorious performance, etc., need to be looked
into carefully. “It is critical to communicate with the employees who will be laid off as
humanely and sensitively as possible”. A face to face meeting with the immediate supervisor
is a good idea. Dismissal through a less personal form of communication would only vitiate
the atmosphere and should be avoided. Rumours of an impending lay off can be very
dangerous to the workforce’s morale as well as to the organization’s relationships with
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customers, suppliers and the surrounding community. Clarifying the reasons why the
company is trying to downsize its workforce through a press meet would be advisable. To
prevent sabotage, proper security arrangements must be made to see that employees
leave the organisation (such as banking, computer software) without causing damage to
company’s software or hardware. Of course, using armed guards and other heavy handed
tactics should be the least preferred alternative, because they only lead to hard feelings
and resentment. Treating laid off employees with dignity and respect generally reduces the
potential for sabotage. Those who escape thjs traumatic experience, often, find it difficult
to concentrate on their job and get along with colleagues smoothly. The company should
explain the financial situation clearly and help layoff survivors to recover from the shock
quickly through certain morale-boosting steps—such as week end parties, picnics,
organizing team building events—sending a strong message that management really cares
about and recognizes them. (Gomez-Mejia et al)

4 Retrenchment: Retrenchment is the permanent termination of an employee’s

services due to economic reasons, such as - surplus staff, poor demand for products,
general economic slowdown, etc. It, should be noted here that termination of
services on disciplinary grounds, illness, retirement, winding up of a business does
not constitute retrenchment. In respect of organisations employing 100 or more
persons, the Industrial Disputes Act, 1947, makes it obligatory for the employer
to give advance notice or pay equivalent wages before the actual lay off date. To
claim 50 per cent of basic wages plus dearness allowances, the workman (who is
not a. casual worker, whose name appears on pay roll, who has completed 12
months of continuous service) must present himself on each working day at the
appointed time inside the factory/office premises. during the lay off .period. If
necessary, he might be asked to report a second time during the same day. While
laying off workman, the employer is expected to follow the first-in-last-out principle.
He should give preference to such workmen if, he advertises for re-employment
against future openings. The employer has to give three months’ notice before
retrenching the worker and get prior approval from the government as well.

• Outplacement. Employees who are retrenched/laid off may have difficulty in

finding an alternative job if the market conditions are adverse. There might be a
demand for certain category of employees possessing multiple skills, but the
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 retrenched employees may not have those ‘marketable skills’. To fill this vacuum,
some organisations offer training in such skills and assist the retrenched employees
in finding a suitable job elsewhere. Outplacement assistance includes ‘efforts made
by employer to help a recently separated worker find a job’ (Davis, p.269). Apart
from tr4ninlsome multinational firms offer assistance in the form of paid leave,
travel charges for attending interviews, search firm charges, waiving bond
requirements to the retrenched employees. Batik of America has given a ‘fat sum’
as liberal retrenchment compensation rulmning into several lakhs of rupees to all
eligible retrenched officers in 1998. It has also held counselling sessions for those
offi on issues such as how to, repay their car/house loans, where for invest their
money, etc. Search firms were also hired to-find suitable employment. When the
downsizing effort stabilised, Bank of America had even extended the former
employees’ a ‘warm welcome back home!’ Such outplacement assistance, in
whatever form it is available, assures the remaining employees of the management’s
commitment towards their welfare if a further • downsizing ever happens to take
place in future.
Merits and Demerits of Outplacement

4. Suspension: Suspension means prohibiting an- employee from attending work

and performing normal duties assigned to him. It is a sort of punishment for a
specified period and is generally resorted to only after a proper inquiry has been
conducted. During suspension, the employee receives a subsistence allowance. If
the charges against the suspended employee are serious and are proved, suspension
may lead to termination also.
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 5. Discharge and disniissaL’ Dismissal is the termination of the services of an
employee as a -punitive measure for some misconduct. Discharge also means
termination of the services of an employee, but not necessarily as a punishment. A
discharge does not arise from a single, irrational act. There could be many reasons
for it such as :

Discharge/dismissal is a drastic measure seriously impairing the earnings potential

and the image of an employee. It should be used sparingly, in exceptional cases
where the employee has demonstrated continued inefficiency, gross insubordination
or continued violating rules even after several warnings. Before discharging the
employee, advance notice of the impending danger must be given and the reasons
of discharge must be stated clearly. The employee should be given the opportunity
to defend himself. If the grounds under which an employee has been discharged
are not strong enough, there should be a provision for reviewing the case. In any
case, the punishment should not be out of proportion to the offence.

3.9 SUMMARY

After selecting a candidate, he should be placed on a suitable job. Placement is

the actual posting of an employee to a specific job. Proper placement helps an employee
to get along with people easily, avoid mistakes and show good performance on the job.
Orientation is the task of introducing the new employees to the organisation and its policies,
procedures and rules. Orientation makes the employee feel at home from day 1 and develop
a sense of pride in the organisation and commitment to the job. Employee movement
within an organisation may take the form of transfers, promotions, demotions or even
separations. Transfers and promotions are intended to make the employee versatile and
grow, over a period of time. Separations from an organisation may result from disciplinary,
economic or business reasons. The HR department’s job is to minimise the harm done to
the organisation and the affected individuals.

Research has demonstrated that companies that do not conduct layoffs,

retrenchments and dismissals in a reasonable way are less able to attractand retain good
employees in the future. Clearly, ‘reasonable’ is open to interpretation but practices that
are reasonable include outplacement aids such as resume writing assistance, career
counselling and job hunting assistance.
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3.10 GLOSSARY

• Recruitment : It is a process of searching for prospective candidates and

stimulating them to apply for jobs in an organisation.

• Training: It is an art of increasing the knowledge and skill of an employee for

doing a particular job.

• Placement: Actual posting of an employee to a specifIc job - with rank and

responsibilities attached to it.

• Induction: Introduction of a person to the job and the organisation.

• Socialisation: The process through which the new recruit begins to understand
and accept the values, norms and beliefs held by others in the organisation.

• Transfer: Employee movement that occurs when an employee is moved from

one job to another that is relatively equal in pay, responsibility and/or organisational
level.

• Promotion: Employee movement from current job to another that is higher in

pay, responsibility and/or organisation level.

• Demotion: Employee movement that occurs when an employee is moved from

one job to another that is lower in pay, responsibility and/or organisational level.

• Separation: A separation is a decision that the individual and the organisation

should part.

• Resignation: A voluntary separation initiated by the employee himself.

• Retirement: Termination, of service on reaching the age of superannuation.

• Layoff: A layoff entails the separation of the employee from the organisation
temporarily for economic or business reasons.

• Retrenchment: A permanent lay off for reasons other than punishment but not
retirement or termination owing to ill health.

• Attrition: The normal separation of people from an organisation owing to

resignation, retirement or death.
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3.11 SELF ASSESSMENT QUESTIONS

1. What is recruitment? Explain various sources of recruitment.

___________________________________________________________

___________________________________________________________

2. Explain the process of selection

___________________________________________________________

___________________________________________________________

3. Is merit based or seniority based promotion is preferred.

___________________________________________________________

___________________________________________________________

3.12 LESSON END EXERCISE

1. Write short note on

a) Induction

b) Separation processes

2. Distinguish between induction and training. Explain the importance of on-

job-training.

3.13 BOOKS RECOMMENDED

• R.P. Lynton, U. Pàreek, “ Training/br Devekpmetd’, Sage Publications, 200k.

R. Gupta et al, “The Global Mahager,”t The FinancialEvpress,Sept. 29, 1996.

• Personal Management & Industrial Relations: B.P.Singh; T.N.Chhabra And

P.L.Taneja

• Human Resource Management: V.S.P.Rao

• Personnel Management: C.B.Mamoria and S.V.Gankar

• Principles And Practice of Management: L.M.Prasad

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UNIT - IV LESSON NO. 16-20

COMPENSATION MANAGEMENT

STRUCTURE

4.1 Introduction

4.1.1 Meaning and Definition of Compensation Management

4.1.2 Principles of Compensation Management

4.1.3 Factors affecting Compensation Management

4.1.3 Types of Compensation Management

4.2 Meaning and Definition of Job Evaluation

4.2.1 Concept of Job Evaluation

4.2.2 Methods of Job Evaluation

4.2.3 Objectives of Job Evaluation

4.2.4 Limitation of Job Evaluation

4.3 Employee Morale

4.3.1 Meaning and definition of Employee Morale

4.3.2 Effects of High Morale

4.3.3 Practices to Promote Employee Morale

4.3.4 Methods for measurement of the Employee morale

4.4 Employee Motivation

4.4.1 Types of Motivation

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 4.4.2 Theories of Motivation

4.5 Stress Management

4.5.1 Types of Stress

4.5.2 Causes of Stress

4.5.3 Strategies for Managing Stress

4.6. Evolution of QWL

4.6.1 Quality of Work Life

4.6.2 Characteristics of QWL

4.7 Work Life Balance

4.7.1 Misperception towards Work Life Balance

4.8 Human Resource Information System

4.8.1 Advantages of HRIS

4.8.2 Factors affecting the HRIS

4.8.3 Steps in implementing an HRIS

4.9 Knowledge Management

4.9.1 Importance of Knowledge Management

4.9.2 Need of Knowledge Management

4.9.3 Process of Knowledge Management

4.9.4 Approaches to Knowledge Management

4.10 Human Resource Audit

4.10.1 Objectives of the Human Resource Audit

4.10.2 Advantages of Human Resource Audit

4.11 Summary

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4.12 Glossary
4.13 Self Assessment Questions
4.14 Lesson End Exercise
4.15 Further Reading

4.1 INTRODUCTION
Compensation of employees for their services is important responsibility of human
resource management. Every organization must offer good wages and fringe benefits to
attract and retain talented employees with the organization. If at any time, the wages offered
by a firm are not competitive as compared to other firms, the efficient workers may leave
the firm. Therefore, workers must be remunerated adequately for their services.
Compensation to workers will vary depending upon the nature of job, skills required, risk
involved, nature of working conditions, paying capacity of the employer, bargaining power
of the trade union, wages and benefits offered by the other units in the region or industry
etc., Considering that the current trend in many sectors (particularly the knowledge intensive
sectors like IT and Services) is to treat the employees as “creators and drivers of value”
rather than one more factor of production, companies around the world are paying close
attention to how much they pay, the kind of components that this pay includes and whether
they are offering competitive compensation to attract the best talent. Compensation is an
important factor affecting how and why people choose to work at one organization over
others. Employers must be reasonably competitive with several types of compensation in
order to hire, keep, and reward performance of individuals in the organization. Compensation
also requires balancing the interests and costs of the employer with the expectations
of employees. A compensation program in an organization should have four objectives:
• Legal compliance with all appropriate laws and regulations
• Cost effectiveness for the organization
• Internal, external, and individual equity for employees
• Performance enhancement for the organization
For employers, compensation costs must be at a level that both ensures
organizational competitiveness and provides sufficient rewards to employees for their
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knowledge, skills, abilities, and performance accomplishments. Balancing these
facets so that the employer can attract, retain, and reward the performance of
employees requires considering several types of compensation.
OBJECTIVES
After going through this lesson, you will be able to understand:
• meaning, types and principles of compensation management
• factors affecting compensation management
• concept and techniques job evaluation
• employee morale and motivation
• quality of work life balance and work life balance

4.1.1 MEANING AND DEFINITION OF COMPENSATION

MANAGEMENT
Compensation refers to a wide range of financial and non financial rewards to
employees for their services rendered to the organization. It is paid in the form of wages,
salaries and employee benefits such as paid vacations, insurance maternity leave, free
travel facility, retirement benefits etc., Monetary payments are a direct form of compensating
the employees and have a great impact in motivating employees.
The system of compensation should be managed in such a manner that it achieves
the following objectives.
• The capable employees are attracted towards the organisation.
• The employees are motivated for better performance.
• The employees do not leave the employer frequently
Gary Dessler in his book Human Resource Management defines compensation in
these words “Employee compensation refers to all forms of pay going to employees and
arising from their employment.” The phrase ‘all forms of pay’ in the definition does not
include non-financial benefits, but all the direct and indirect financial compensations.
According to Thomas J. Bergmann(1988) compensation consists of four distinct
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components: Compensation = Wage or Salary + Employee benefits +Non-recurring
financial rewards+ Non-pecuniary rewards.
Components of Compensation

1. Basic Wages/Salaries: Basic wages / salaries refer to the cash component of

the wage structure based on which other elements of compensation may be
structured. It is normally a fixed amount which is subject to changes based on
annual increments or subject to periodical pay hikes.

Wages represent hourly rates of pay, and salary refers to the monthly rate of pay,
irrespective of the number of hours put in by the employee. Wages and salaries
are subject to the annual increments. They differ from employee to employee, and
depend upon the nature of job, seniority, and merit.
2. Dearness Allowance: The payment of dearness allowance facilitates employees
and workers to face the price increase or inflation of prices of goods and services
consumed by him. The onslaught of price increase has a major bearing on the
living conditions of the labour.
The increasing prices reduce the compensation to nothing and the money’s worth
is coming down based on the level of inflation. The payment of dearness allowance,
which may be a fixed percentage on the basic wage, enables the employees to
face the increasing prices.
3. Incentives: Incentives are paid in addition to wages and salaries and are also
called ‘payments by results’. Incentives depend upon productivity, sales, profit,
or cost reduction efforts. There are:

(a) Individual incentive schemes, and

(b) Group incentive programmes.

Individual incentives are applicable to specific employee performance. Where a

given task demands group efforts for completion, incentives are paid to the group
as a whole. The amount is later divided among group members on an equitable
basis.

4. Bonus: The bonus can be paid in different ways. It can be fixed percentage on the
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 basic wage paid annually or in proportion to the profitability. The Government
also prescribes a minimum statutory bonus for all employees and workers. There
is also a bonus plan which compensates the managers and employees based on
the sales revenue or profit margin achieved. Bonus plans can also be based on
piece wages but depends upon the productivity of labour.

5. Monetary Benefits: These benefits give psychological satisfaction to employees

even when financial benefit is not available. Such benefits are:

(a) Recognition of merit through certificate, etc.

(b) Offering challenging job responsibilities,

(c) Promoting growth prospects,

(d) Comfortable working conditions,

(e) Competent supervision, and

(f) Job sharing and flexi-time.

6. Commissions: Commission to managers and employees may be based on the

sales revenue or profits of the company. It is always a fixed percentage on the
target achieved. For taxation purposes, commission is again a taxable component
of compensation.

The payment of commission as a component of commission is practiced heavily

on target based sales. Depending upon the targets achieved, companies may pay
a commission on a monthly or periodical basis.

6. Mixed Plans: Companies may also pay employees and others a combination of
pay as well as com-missions. This plan is called combination or mixed plan. Apart
from the salaries paid, the employees may be eligible for a fixed percentage of
commission upon achievement of fixed target of sales or profits or Performance
objectives. Nowadays, most of the corporate sector is following this practice.
This is also termed as variable component of compensation.

7. Piece Rate Wages: Piece rate wages are prevalent in the manufacturing wages.
The laborers are paid wages for each of the Quantity produced by them. The
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 gross earnings of the labour would be equivalent to number of goods produced by
them. Piece rate wages improves productivity and is an absolute measurement of
productivity to wage structure. The fairness of compensation is totally based on
the productivity and not by other qualitative factors.

8. Fringe Benefits: Fringe benefits may be defined as wide range of benefits and
services that employees receive as an integral part of their total compensation
package. They are based on critical job factors and performance. Fringe benefits
constitute indirect compensation as they are usually extended as a condition of
employment and not directly related to performance of concerned employee. Fringe
benefits are supplements to regular wages received by the workers at a cost of
employers. They include benefits such as paid vacation, pension, health and
insurance plans, etc. Such benefits are computable in terms of money and the
amount of benefit is generally not predetermined. The purpose of fringe benefits is
to retain efficient and capable people in the organization over a long period. They
foster loyalty and acts as a security base for the employees.

9. Profit Sharing: Profit-sharing is regarded as a stepping stone to industrial

democracy. Profit-sharing is an agreement by which employees receive a share,
fixed in advance of the profits. Profit-sharing usually involves the determination of
an organization’s profit at the end of the fiscal year and the distribution of a
percentage of the profits to the workers qualified to share in the earnings. The
percentage to be shared by the workers is often predetermined at the beginning of
the work period and is often communicated to the workers so that they have
some knowledge of their potential gains. To enable the workers to participate in
profit-sharing, they are required to work for certain number of years and develop
some seniority. The theory behind profit-sharing is that management feels its workers
will fulfil their responsibilities more diligently if Compensation policy should be
developed by taking into consideration of the views of employers, the employees,
the consumers and the community.

• The compensation policy or wage policy should be clearly defined to ensure uniform
and consistent application.

• The compensation plan should be matching with overall plans of the company.
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 Compensation planning should be part and parcel of financial planning.

• Management should inform the wage/salary related policies to their employees.

Workers should be associated in formulation and implementation of wage policy.

• All wage and salary related decisions should be checked against the standards set
in advance in the wage/salary policy.

• To manage compensation related matters adequate information/data should be

developed and stored for future planning and execution.

• The compensation policy and programme should be reviewed and revised

periodically in conformity with changing needs.
• They realize that their efforts may result in higher profits, which will be returned to
the workers through profit-sharing.

4.1.2 PRINCIPLES OF COMPENSATION MANAGEMENT

1. There general level of wages and salaries should be reasonably in line with that
prevailing in the market. The labour market criterion is most commonly used.

2. There should be definite plan to ensure that differences in pay for jobs are based
upon variations in job requirements, such as skill effort, responsibility or job or
working conditions, and mental and physical requirements.

3. The plan should carefully distinguish between jobs and employees. A job carries a
certain wage rate, and a person is assigned to fill it at that rate. Exceptions sometimes
occur in very high-level jobs in which job-holder may make the job large or small,
depending upon his ability and contributions.

4. Equal pay for equal work, i.e., if two jobs have equal difficulty requirements, the
pay should be the same, regardless of who fills them.

5. An equitable practice should be adopted for the recognition of individual differences

in ability and contribution.

6. There should be a clearly established procedure for hearing and adjusting wage
complains.

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 7. The wage should be sufficient to ensure for the worker and his family reasonable
standard of living.

8. Prompt and correct payments of the dues of the employees must be ensured and
arrears of payment should not accumulate.

4.1.3 FACTORS AFFECTING COMPENSATION MANAGEMENT:

Employers decide on what is the right compensation after taking into account the
following points. The Job Description of the employee that specifies how much should be
paid and the parts of the compensation package. The Job Description is further made up
of responsibilities, functions, duties, location of the job and the other factors like environment
etc. These elements of the job description are taken individually to arrive at the basic
compensation along with the other components like benefits, variable pay and bonus. It
needs to be remembered that the HRA or the House Rental Allowance is determined by a
mix of factors that includes the location of the employee and governmental policies along
with the grade of the employee. Hence, it is common to find a minimum level of HRA that
is common to all the employees and which increases in proportion to the factors mentioned
above.

The Job Evaluation that is a system for arriving at the net worth of employees
based on comparison with appropriate compensation levels for comparable jobs across
the industry as well as within the company. Factors like Experience, Qualifications, Expertise
and Need of the company determine how much the employer is willing to pay for the
employee. It is often the case that employers compare the jobs across the industry and
arrive at a particular compensation after taking into account the specific needs of their firm
and in this respect salary surveys and research results done by market research firms as to
how much different companies in the same industry are paying for similar roles. The
components of compensation that have been discussed above are the base requirements
for any HR Manager who is in charge of fixing the compensation for potential employees.
Hence, all HR professionals and managers must take this following aspect into account
when they determine the compensation to be paid to employees.

1. External Factors:

• Demand and Supply of Labour: Wage is a price or compensation for the services
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 rendered by a worker. The firm requires these services, and it must pay a price
that will bring forth the supply which is controlled by the individual worker or by a
group of workers acting together through their unions. The primary result of the
operation of the law of supply and demand is the creation of the going wage rate.
It is not practicable to draw demand and supply curves for each job in an
organization even though, theoretically, a separate curve exists for each job.

• Cost of Living: Another important factor affecting the wage is the cost of living
adjustments of wages. This tends to vary money wage depending upon the
variations in the cost of living index following rise or fall in the general price level
and consumer price index. It is an essential ingredient of long-term labour contract
unless provision is made to reopen the wage clause periodically.

• Labour Union: Organized labour is able to ensure better wages than the
unorganized one. Higher wages may have to be paid by the firm to its workers
under the pressure or trade union. If the trade union fails in their attempt to raise
the wage and other allowances through collective bargaining, they resort to strike
and other methods hereby the supply of labour is restricted. This exerts a kind of
influence on the employer to concede at least partially the demands of the labour
unions.

• Government: To protect the working class from the exploitations of powerful

employers, the government has enacted several laws. Laws on minimum wages,
hours of work, equal pay for equal work, payment of dearness and other allowances,
payment of bonus, etc., have been enacted and enforced to bring about a measure
of fairness in compensating the working class. Thus, the laws enacted and the
labour policies framed by the government have an important influence on wages
and salaries paid by the employers. Wages and salaries can’t be fixed below the
level prescribed by the government.

• Prevailing Wage Rates: Wages in a firm are influenced by the general wage
level or the wages paid for similar occupations in the industry, region and the
economy as a whole. External alignment of wages is essential because if wages
paid by a firm are lower than those paid by other firms, the firm will not be able to
attract and retain efficient employees. For instance, there is a wide difference
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 between the pay packages offered by multinational and Indian companies. It is
because of this difference that the multinational corporations are able to attract the
most talented workforce.

2. Internal Factors:

• Ability to Pay: Employer’s ability to pay is an important factor affecting wages

not only for the individual firm, but also for the entire industry. This depends upon
the financial position and profitability of the firm. However, the fundamental
determinants of the wage rate for the individual firm emanate from supply and
demand of labour. If the firm is marginal and cannot afford to pay competitive
rates, its employees will generally leave it for better paying jobs in other
organizations. But, this adjustment is neither immediate nor perfect because of
problems of labour immobility and lack of perfect knowledge of alternatives. If
the firm is highly successful, there is little need to pay more than the competitive
rates to obtain personnel. Ability to pay is an important factor affecting wages, not
only for the individual firm but also for the entire industry.

• Top Management Philosophy: Wage rates to be paid to the employees are

also affected by the top management’s philosophy, values and attitudes. As wage
and salary payments constitute a major portion of costs and /or apportionment of
profits to the employees, top management may like to keep it to the minimum. On
the other hand, top management may like to pay higher pay to attract top talent.

• Productivity of Workers: To achieve the best results from the workers and to
motivate him to increase his efficiency, wages have to be productivity based. There
has been a trend towards gearing wage increase to productivity increases.
Productivity is the key factor in the operation of a company. High wages and low
costs are possible only when productivity increases appreciably.

• Job Requirements: Job requirements indicating measures of job difficulty provide

a basis for determining the relative value of one job against another in an enterprise.
Explicitly, job may be graded in terms of a relative degree of skill, effort and
responsibility needed and the adversity of working conditions. The occupational
wage differentials in terms of

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a) Hardship,

b) Difficulty of learning the job

c) Stability of employment

d) Responsibility of learning the job and

f) Change for success or failure in the work.

This reforms a basis for job evaluation plans and thus, determines wage levels in
an industry.

1. Employees Related Factors: Several employees’ related factors interact to

determine his remuneration. These include:
i) Performance: productivity is always rewarded with a pay increase. Rewarding
performance motivates the employees to do better in future.

ii) Seniority: Unions view seniority as the most objective criteria for pay increases
whereas management prefer performance to affect pay increases.

iii) Experience: Makes an employee gain valuable insights and is generally rewarded.

iv) Potential: organizations do pay some employees based on their potential. Young
managers are paid more because of their potential to perform even if they are
short of experience.

4. Organizational Politics: Compensation surveys, job analysis, job evaluation and

employee performance are all involved in wage and salary decisions. Political
considerations may enter into the equation in the following ways:

Determination of firms included in the compensation survey: managers could

make their firm appear to be a wage leader by including in the survey those
organizations that are pay followers.

i) Choice of compensable factors for the job evaluation plan: Again, the job
value determined by this process could be manipulated.

ii) Emphasis placed on either internal or external equity and

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 iii) Results of employee performance appraisal may be intentionally disported by the
supervisor

Thus, a sound and objective compensation system may be destroyed by

organizational politics.

4.1.3 TYPES OF COMPENSATION MANAGEMENT:

Total compensation returns are more transactional. They include pay received
directly as cash (like base, merit, incentives, cost of living adjustments) and indirectly as
benefits (like pensions, medical insurance, programs to help balance work and life demands,
brightly coloured uniforms). Programme to pay to people can be designed in a wide variety
of ways, and a single employer typically uses more than one.

1. Direct /Base Compensation: Direct compensation refers to monetary benefits

offered and provided to employees in return of the services they provide to the
organization. The monetary benefits include basic salary, house rent allowance,
conveyance, leave travel allowance, medical reimbursements, special allowances,
bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.

• Basic Salary: Salary is the amount received by the employee in lieu of the work
done by him/her for a certain period say a day, a week, a month, etc. It is the
money an employee receives from his/her employer by rendering his/her services.

• House Rent Allowance: Organizations either provide accommodations to its

employees who are from different state or country or they provide house rent
allowances to its employees. This is done to provide them social security and
motivate them to work.

• Conveyance: Organizations provide for cab facilities to their employees. Few

organizations also provide vehicles and petrol allowances to their employees to
motivate them.

• Leave Travel Allowance: These allowances are provided to retain the best
talent in the organization. The employees are given allowances to visit any place
they wish with their families. The allowances are scaled as per the position of
employee in the organization.
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• Medical Reimbursement: Organizations also look after the health conditions of
their employees. The employees are provided with medi-claims for them and their
family members. These medi-claims include health-insurances and treatment bills
reimbursements.

• Bonus: Bonus is paid to the employees during festive seasons to motivate them
and provide them the social security. The bonus amount usually amounts to one
month’s salary of the employee.

• Special Allowance: Special allowance such as overtime, mobile allowances,

meals, commissions, travel expenses, reduced interest loans; insurance, club
memberships, etc are provided to employees to provide them social security and
motivate them which improve the organizational productivity.

• Indirect /Supplementary Compensation: Indirect compensation refers to non-

monetary benefits offered and provided to employees in lieu of the services provided
by them to the organization. They include Leave Policy, Overtime Policy, Car
policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement
Benefits, Holiday Homes.

• Leave Policy: It is the right of employee to get adequate number of leave while
working with the organization. The organizations provide for paid leaves such as,
casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.

• Overtime Policy: Employees should be provided with the adequate allowances

and facilities during their overtime, if they happened to do so, such as transport
facilities, overtime pay, etc.

• Hospitalization: The employees should be provided allowances to get their regular

check-ups, say at an interval of one year. Even their dependents should be eligible
for the medi-claims that provide them emotional and social security.

2. Indirect Compensation:

• Insurance: Organizations also provide for accidental insurance and life insurance
for employees. This gives them the emotional security and they feel themselves
valued in the organization.

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 • Leave Travel: The employees are provided with leaves and travel allowances to
go for holiday with their families. Some organizations arrange for a tour for the
employees of the organization. This is usually done to make the employees stress
free.

• Retirement Benefits: Organizations provide for pension plans and other benefits
for their employees which benefits them after they retire from the organization at
the prescribed age.

• Holiday Homes : Organizations provide for holiday homes and guest house for
their employees at different locations. These holiday homes are usually located in
hill station and other most wanted holiday spots. The organizations make sure that
the employees do not face any kind of difficulties during their stay in the guest
house.

• Flexible Timings: Organizations provide for flexible timings to the employees

who cannot come to work during normal shifts due to their personal problems and
valid reasons.

4.2 MEANING AND DEFINITION OF JOB EVALUATION

The Job Evaluation is the process of assessing the relative worth of the jobs in an
organization. The jobs are evaluated on the basis of its content and the complexity involved
in its operations and thus, positioned according to its importance.

According to Kimball and Kimball,“ Job evaluation represents an effort to determine

the relative value of every job in a plant and to determine what the fair basic wage for such
a job should be.”

Job evaluation is a process of determining the relative worth of a job. It is a

process which is helpful even for framing compensation plans by the personnel manager.

4.2.1 ADVANTEGES OF JOB EVALUATION:

Job evaluation as a process is advantageous to a company in many ways:

Reduction in inequalities in salary structure: It is found that people and their

motivation is dependent upon how well they are being paid. Therefore the main objective
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of job evaluation is to have external and internal consistency in salary structure so that
inequalities in salaries are reduced.

1. Specialization: Because of division of labour and thereby specialization, a large

number of enterprises have got hundred jobs and many employees to perform
them. Therefore, an attempt should be made to define a job and thereby fix salaries
for it. This is possible only through job evaluation.

2. Helps in selection of employees: The job evaluation information can be helpful

at the time of selection of candidates. The factors that are determined for job
evaluation can be taken into account while selecting the employees.

3. Harmonious relationship between employees and manager: Through job

evaluation, harmonious and congenial relations can be maintained between
employees and management, so that all kinds of salaries controversies can be
minimized.

4. Standardization: The process of determining the salary differentials for different

jobs become standardized through job evaluation. This helps in bringing uniformity
into salary structure.

5. Relevance of new jobs: Through job evaluation, one can understand the relative
value of new jobs in a concern.

4.2.3 OBJECTIVES OF JOB EVALUATION

1. The following are the objectives of job evaluation.

2. To secure and maintain complete, accurate and impersonal descriptions of each

distinct job or occupation in the entire plant.

3. To provide a standard procedure for determining the relative worth of each job in
a plant.

4. To determine the rate of pay for each job this is fair and equitable with relation to
other jobs in the plant, community or industry.

5. To ensure that like wages are paid to all qualified employees for like work.

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 6. To promote a fair and accurate consideration of all employees for advancement
and transfer.

7. To provide a factual basis for the consideration of wage rates for similar jobs in a
community and industry.

4.2.4 METHODS OF JOB EVALUATION

The purpose of the job evaluation is to have a satisfactory wage differential. There
are non-analytical and analytical job evaluation methods that are employed by the
organizations to realize the worth of a set of jobs.

Non-analytical Job Evaluation Methods

1. Ranking Method: This is the simplest and an inexpensive job evaluation method,
wherein the jobs are ranked from he highest to the lowest on the basis of their
importance in the organization. In this method, the overall job is compared with
the other set of jobs and then is given a rank on the basis of its content and
complexity in performing it.

Here the job is not broken into the factors; an overall analysis of the job is done.
The main advantage of the ranking method is, it is very easy to understand and is
least expensive. But however it is not free from the limitations, it is subjective in
nature due to which employees may feel offended, and also, it may not be fruitful
in the case of big organizations.

2. Job Grading Method: Also known as Job-Classification Method. Under this

method the job grades or classes are predetermined and then each job is assigned
to these and is evaluated accordingly.

For Example Class, I, comprise of the managerial level people under which
sub-classification is done on the basis of the job roles such as office manager,
department managers, departmental supervisor, etc.

The advantage of this method is that it is less subjective as compared to the raking
method and is acceptable to the employees. And also, the entire job is compared
against the other jobs and is not broken into factors. The major limitation of this

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 method is that the jobs may differ with respect to their content and the complexity
and by placing all under one category the results may be overestimated or
underestimated.

Analytical Job Evaluation Methods

1. Factor-Comparison Method: Under this method, the job is evaluated, and the
ranks are given on the basis of a series of factors Viz. Mental effort, physical
effort, skills required supervisory responsibilities, working conditions, and other
relevant factors. These factors are assumed to be constant for each set of jobs.
Thus, each job is compared against each other on this basis and is ranked
accordingly. The advantage of this method is that it is consistent and less subjective,
thus appreciable by all. But however it is the most complex and an expensive
method.

2. Point-Ranking Method: Under this method, each job’s key factor is identified
and then the sub-factors are determined. These sub-factors are then assigned the
points by its importance.

For example, the key factor to perform a job is skills, and then it can be further
classified into sub-factors such as training required, communication skills, social
skills, persuasion skills, etc. The point ranking method is less subjective and is an
error free as the rater sees the job from all the perspectives. But however it is a
complex method and is time-consuming since the points and wage scale has to be
decided for each factor and the sub factors.

The important thing to note is, the job evaluation is considered only with the analysis
of a job and not with the job holders.

4.2.3 LIMITATIONS OF JOB EVALUATION: THE LIMITATIONS OF JOB

EVALUATION ARE:

1. Though many ways of applying the job evaluation technique are available, rapid
changes in technology and in the supply and demand of particular skills have given
rise to problems of adjustment.

2. Substantial differences exist between job factors and the factors emphasised in
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 the market. These differences are wider in cases in which the average pay offered
by a company is lower than that prevalent in other companies in the same industry
or in the same geographical area.

3. Job factors fluctuate ‘because of changes in production technology, information

system, and division of labour and such other factors. Therefore, the evaluation of
a job today is made on the basis of job factors, and does not reflect the time job
value in future. In other words, continuing attention and frequent evaluation of a
job are essential.

4. Higher rates of pay for some jobs at the earlier stages than other jobs or the
evaluation of a job higher in the organisational hierarchy at a lower rate than another
job relatively lower in the organisational hierarchy often give rise to human relations
problems and lead to grievances among those holding these jobs.

4.3 EMPLOYEE MORALE AND MOTIVATION

4.3.1 Meaning and definition of Employee Morale :

Morale is the feeling of willingness, determination and spirit to accomplish a task.

A willing worker is more efficient and productive, or at least tries to work efficiently and
effectively. The magic is in the mind set, preparedness, determination and most of all, the
willing, wishful effort that he puts into his job. Morale is the word that describes all these
things.

Flippo defines Morale as “a mental condition or attitude of individuals or group

which determines their willingness to cooperate”. Yodder defines yet simply -”Morale is a
feeling, somewhat related to spirit, enthusiasm and Zeal”.

Employees with high morale are usually not only like their job, but also passionate
about

• their job,

• their career,

• their profession,

• the work they do,

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 • the output they get,

• the team they work with &

• the organisation they are with.

4.3.2 Effects of High Morale: The effects of high morale are:

• It is infectious and hence the team spirit increases.

• Generates high interest in the employees towards the job.

• Loyalty towards the organisation increases.

• Employees extend cooperation to achieve goals.

• A sense of pride prevails in the organisation.

• Employees feel the bond among themselves and with the organisation.

If the organisation is having a low morale, you can just write all the opposite
reactions to the above said effects as the impact of low morale. No team spirit, no interest,
no loyalty, no cooperation, no pride – simple. So, the overall effect will be disastrous to
the organisation.

4.3.3 Practices to Promote Employee Morale: Employee morale by itself is a

very complex phenomenon to understand.

1. Equality: Gender bias free, discrimination free work place creates high morale.
When the organisation policies and procedures have a wider thinking on equality
among the employees, the employee’s grievances comes down. This promotes
morale.

2. Just Compensation: Compensation structure on the basis of the job entrusted to

the employee gives no space to complaints against the organisation. Pay is a big
motivator, for which the first step to get employed is taken by an employee. There
is an old saying that “stomach is the way to satisfaction”. Hence, any unfairness in
pay structure will not lead to high morale.

3. Employee Welfare: Welfare schemes for employees like EPF, ESI, Paid

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 vacations, Pension schemes, perks, Education for employees children, Canteens,
sports clubs, residential quarters, transport facilities are all part of morale boosters.
TCS’s health care benefits are the best in the industry, says Mukherjee. “One of
our initiatives is called ‘M power'. As part of this, we have people managers at our
centres and they deal with issues that employees might have".

4. Job Enrichment: job enrichment and job rotation methods helps in eliminating
the stale feel of doing the same work again and again, which leads to boredom
and low morale. When job enrichment or job rotation is introduced, the new
challenge in work creates a kind of interest towards the job and the employee gets
himself involved with the job and hence the morale goes high.

5. Clear Vision: One of the important factors to improve morale is the clarity in the
vision, mission and goals of the organisation. Clear goals give clear job roles, and
hence, the individual career goals get aligned. When the employee’s personal needs
gets satisfied, his morale goes up.

6. Personal Factors: The personal factors like knowledge, skill, aspirations, age,
IQ level all plays a part in his goal gets sidelined, obviously morale cannot be
affecting him.

7. Organisational Structure and design: The organisational design should be taken

care of, to set a smooth sail of communication channels, giving ways for both
upward and downward communication. This enables a sense of empowerment
and participativeness for the employee which is an important component of building
morale.

8. Belongingness and Socialising: Encouraging socialising of employees and their

families through get-togethers and parties creates a bond between the employee
and the employer beyond work relationship. It creates belongingness feeling towards
the organisation. A Tata Consultancy Service initiative, called as ‘Maitre‘‘, reaches
beyond employees, to their families, bringing them together for a number of cultural
events. No need to say that the attrition rate in Tata group is very low, might be the
lowest in the country at times.

9. Employee as part owner: Among Indian companies, Infosys is often noted for
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 high morale and the most commonly pointed our reason behind this successful
morale rate is – share in the profit, ESOP - Employee Stock Option Plans. The
employees can be the equity share holders of the company, and become owners
of the company they work for. How does it sound? “Infosys Employees say they
are not bothered about the quantum of equity shares they will get, but are proud to
be owners of the company” - reads an article in Business Standard, 2010. Owing
to this success, Infosys reintroduced this scheme in 2010 after its discontinuation
of ESOP policy in 2003.

• Apart from these factors,

• A good and clean environment,

• Health and safety assured work floors,

• Encouraging leadership,

• Adequate rewards,

• Performing team building culture and

• Training also plays a role in building Morale.

4.3.4 Methods for measurement of the Employee morale:

There are some methods to measure morale of an organisation. It takes a lot of

analysis to see through the process of morale build up or brought down.

1. Direct Observation – By monitoring the employee’s behaviour, their outbursts,

absenteeism, late attendances, attrition rates, achievement of targets, quality of
production – all these are "give a ways" of how employees feel.

2. Records and statistics: High morale reduces complaints, conflicts, absenteeism,

employee turnover, and request for transfer etc. They are the outcome of prevalence
of low morale. By the analysis of well kept records of leave, accidents and
grievances, morale can be measured.

3. Suggestion Boxes: A suggestion box may bring out the un-say able grievance of
employees. If at all there is any grievance, like an employee threatened by a superior

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 for not being his accomplice in any fraudulent activity, the tension of keeping it
within himself may be a big torture for an employee. When an outlet is given, with
assured confidentiality, it would be a way of understanding and eliminating the
obstacles to high morale in a work place. When the suggestion box is not getting
any more remorse letter, it indicates high morale.

4. Open door Policy: When the superiors and top managers are approachable, it
gives confidence to the employees – they can approach with suggestions, and
they can approach for grievances. Top managers can observe and analyse the
pulse of employee’s morale through this system.

5. Counselling Session: Counselling is also a method to understand the level of

morale, as the counsellor comes to know the real problem for dissatisfaction towards
the job. Under this method employees are advised to develop better mental health.So
that they can imbibe self confidence, understanding and self control. This method
is used to find out the causes of dissatisfaction and then to advice the employees
remedial measures.

6. Attitude Surveys: This method is largely used in present day. Questionnaires or

interview method may be used in these surveys. The survey is to look at what is
the need for employees to get their morale heightened.

To conclude, Quantifying morale is next to impossible because morale is intangible

inner feelings. The symptoms of increase or decrease in morale can be seen and felt, but
cannot be measured accurately.

4.4 EMPLOYEE MOTIVATION

According to Peter Ducker, the “real positive motivators are responsible for
placement, high standard of performance, information adequate for self-control and the
participation of the worker as a responsible citizen in the community”. Motivation is the
driving factor that pushes us forward. Towards something we search. It gives us satisfaction
if we achieve it. Then the motivation takes another form and starts pushing us forward
again. But, the interesting characteristic of motivation is – it differs from person to person.
What motivates an employee to produce more may not work with another employee in
the same factory. For example, a gentle pat on the shoulder by the superior as a recognition
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or appreciation of work may do wonders for one employee. It may be a better motivator
than anything else for him.

But the same recognition may not satisfy another worker, who may only feel satisfied
if rewarded with money. He doesn’t attach any value to simple pat on shoulders. Hence,
what you should remember in this area of study of motivation is the motivators are in many
forms, and cannot be generalised to all.

An employee’s productivity is based on his abilities. But, often, we come across

people, who don’t perform up to their standard of productivity consistently. So, what is
that second ingredient that pushes him to perform to the full ability or pulls him from his
talents? Any idea? Yes, of course it is the element of motivation. Motivation determines
what the worker wants to do, even though he can do much better or much worse.

Motivation, a Latin word, means “move”. According to Berelson and Steiner, “A

motive is an inner state that energies, activates or moves and directs or channels behavior
toward goals”.

Generally motivation is the state of restlessness, tension or disequilibrium due to

an unfulfilled need. The need transforms itself to the desire to act upon to achieve it. Need
stimulates, acts as a complex force to move the person to realise the desired goal.

4.4.1 Types of Motivation:

In an organisation, to get the desired performance, the manager also has to act on
different modes like encouragement, appreciation, rewards, promotions, incentives and if
need arises even with force, constraint or by instilling fear of punishment.

All are various forms of motivation. What are they? Let us examine.

1. Positive Motivation: Flippo says “Positive motivation is a process of attempting

to influence others to do your will through the possibility of gain or reward”.
Mamoria gives an interesting view point on positive motivation that, “People work
for incentives in the form of four P’s of motivation: “Praise, Prestige, Promotion
and Pay-cheque”. Positive motivation is generally based on rewards. It gives a
feeling of happiness to the employees. It improves the performance.

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2. Negative Motivation: Negative Motivation also called as fear motivation, negative
motivation is based on fear and force. The fear of consequences acts as a motivator
to perform better, just to avoid the unpleasant consequences. The non-performing
workers are threatened with the fear mechanism that pushes them to move further
in their performance scale.

As the term itself indicates, the negative motivation cannot be used in all situations
and it has a lot of limitations. Negative motivation creates an unpleasant reaction
inside the minds of the employee towards the organization; it remains as an insecure
feeling. Punishment creates a hostile state of mind, which may affect the loyalty
towards the organisation. However, there are some uncontrollable situations that
need the management to depend on the “stick” treatment to keep the productivity
in control.

3. Extrinsic Motivation: The motivation that comes from the employer or external
factors is extrinsic motivation. Promotion, perks, vacations and other financial
rewards fall in this category.

4. Intrinsic Motivation: The feeling of happiness of achieving or accomplishing a

challenging task acts as a motivator to seek for the next challenge. This kind of
motivation, that comes from within is called as intrinsic motivation. Appreciation,
status, power and recognition are some of the examples of this motivation.

5. Self -Motivation: The best motivation we can get may come from us Self-
motivation. The same way, the de-motivation also comes to us from us. A bad day
means a lot – power failure, argument turned into quarrel with a friend, news of
bomb blast somewhere, heavy traffic and late to office- all makes us depressed.
This may lead to poor performance on that day. But, to get a successful career,
we should move on. Hence, it is the duty of the employee to get self-motivated,
make the life and work more interesting. One simple technique is to fix targets and
goals and try to achieve the targets. It is as simple as the great teacher Vivekananda
says “Arise, awake and stop not till the goal is reached”.

7. Group Motivation: Two heads are better than one. The enthusiasm, zeal and
motivation manifolds if passes through a group. The group plays a vital role in

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 igniting the fire of motivation and keeps it going till the task is accomplished. It is
because, the members of the group takes turns to cheer up others. The motivations
of looking others perform, competing with others, comparison on the
accomplishment all leads to better performance and effective achievements.

4.4.2 Theories of Motivation

Maslow’s Theory of Hierarchy of Needs

A theory you would have heard often in your first year of this course – Hierarchy
of needs. Abraham Maslow is the man who has contributed this wonderful yet simple
theory to understand. It is about the steps of needs, that to be satisfied before stepping on
to the next step. The following steps of need that motivates the Employee to climb up.

This hierarchy of needs is built on five steps as follows:

• Physiological Needs: It is the most basic level need in the hierarchy. One has to
fulfil this level to be in existence. It includes the basic needs like Water, food,
clothes and a shelter to sleep. A man who is in extreme hunger will not get satisfied
with a bar of gold at that moment, is it not? The satisfaction and happiness he will
attain with a bowl of rice would be immense in that situation. That is what meant
by this step.

• Security Needs: The assurance for future is the base for this step. When one
gets the confidence of his safe and secured future, he will be free of his tension of
physiological needs. The fear of losing the regular availability of physiological needs
will not allow a man to think about further achievements. This is about possessing
of resources always and getting the physiological needs fulfilled.

• Social Needs: It is often said that “man is a social animal”. Man has to belong to
other human beings, that is, a society. It’s the belongingness that gives satisfaction
to the thirst of soul. Love, affection and affiliation is the need that drives a person
to next step, once his physiological and security needs are fulfilled.

• Self-Esteem Needs: If Social Needs is about the other people loving us, then,
self -esteem is the need is to be proud of one’s own doings. Self esteem needs
exhibits Power over things or people, may be with money, control, authority,

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 designations etc. Self-esteem is finding the recognition from within.

• Self-Actualisation Needs: The top step of this need structure is the need of
self-actualisation. From “what they are” to becoming “What one is capable of” is
self actualisation. It refers to the desire of self-attainment, the desire to convert the
age old question -”what one can be” to “what he must be”. It might be anything,
like achieving a bigger goal, becoming a great leader, or even renouncing all that
earned through the way.

• Self-actualised persona feels realistic about them and about everything.

They accept whatever comes on the way, more often concerned about problems
of their external world also and helps in solving them, and they act upon the personal
responsibility and values. They tend to become continuously inspired, joyful and
peaceful with even small things that happen around them.

The groups of people in each of these steps are different. For example, Middle
level managers tend to have the needs of self-esteem and self-actualisation rather than the
lower needs. Whereas, the labourers in the same organisation feels the needs of
physiological, safety and social needs more as they cannot think or need the higher steps
without feting the lower needs fulfilled. Higher level managers, who may have achieved the
self-esteem step, may be looking for the need to optimise his self ability.

Herzberg’s Hygiene- Motivator Factors

Popularly known as two-factor theory of motivation, this theory classifies the human
behaviour into two major factors-

Hygiene / maintenance factor and Motivation factor

Fredrick Herzberg and his associates’ recommendations are familiar to almost all
managers. They had concluded in their prescriptive two-factor theory, also known as the
motivation-hygiene theory that satisfaction and dissatisfaction with jobs occur because of
different set of factors. While dissatisfaction is caused if the hygiene factors such as pay,
job security, relationships with superior and peers, status, happiness in personal life, cordial
relationships with peers and subordinates and physical working conditions are not possible
or available in an adequate measure, but their mere presence would not be sufficient to

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motivate a person. Motivation at work occurs if another set of factors like recognition,
challenging tasks, opportunity to use one’s talents and skills, demonstrate achievements,
chances to learn and grow, are made possible or available to the employees. Herzberg’s
theory has contributed to much of the enthusiasm towards job enrichment.

Douglas McGregor’s Theory X and Theory Y

The theory is based on two distinct views on the nature of human beings. According
to Douglas McGregor’s Theory X and Theory Y, different strokes are meant to be given
for different folks. The theories say that there are two main categories of workers namely
the X type and the Y type. First type of assumption is that people are basically lazy, dislike
work and wait to be told formally about what is to be done and would attempt to avoid it
whenever possible. They would require external control, constant monitoring, continuous
prodding or even punitive measures to do their work, according to Theory X. Because the
theory believed that employees dislike work, it advocated that they must be coerced,
controlled or threatened with dire consequences to achieve desired goals.

The other types of people like to work and produce results and are self-driven. In
order to make them work well, theory Y advocates that the organization will have to
merely create congenial conditions to work and provide them with the autonomy and
respect they deserve. This is also referred to as the Carrot approach, a phrase arising
from the metaphor of tying carrots before horses to make them run forward with desire, as
against the opposite approach of using “stick” to cause pain and make a horse run faster
with fear. Theory Y believes that once given the right conditions, the rest would be taken
care of by these incumbents. Theory Y views employees from a positive perspective and
believes that employees can view work as bringing pleasure as natural as rest or play and
that the average person could learn to accept or even seek responsibility.

Vroom’s Expectancy Theory

This is a process theory of motivation that helps managers to appreciate the

complexities of motivation. Victor Vroom (1964) made an important contribution to
managers’ understanding of motivation through his Expectancy Theory, which is an
alternative to the content theories. According to Vroom’s theory, individuals’effort is based
on their perceptions of certain factors in the work environment. They are termed as

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Expectancy, Instrumentality and Valence. The strength of the motivation to perform a
certain act will depend on the combination of the three factors.

Valence means attraction or repulsion of an outcome to an individual. In order for

the valence to be positive, the person must prefer attaining the outcome to not attaining it.
A valence of zero occurs when the individual is indifferent towards the outcome. The
valence is negative when the individual prefers not attaining the outcome to attaining it.
Expectancy is the expected relationship between effort and successful performance. It is
the probability that a particular action or effort will lead to a particular first level outcome,
such as production or quality. Instrumentality is the performance-reward linkage. It is the
degree to which a first-level outcome will lead to a desired second-level outcome such as
money, recognition, job security or career growth.

Adam’s Equity Theory

Stacy Adam’s (1963) advocated Equity theory states that employees should be
perceived as fair in comparison with various factors. Adams explained inequity as an
injustice perceived by a person when he compares the ratio of his outcomes in the form of
rewards to his inputs in the form of efforts, with the ratio of the inputs and outputs of
another comparable person and finds that it is to his disadvantage and that they are being
under-rewarded or over-rewarded. For example, when people of same educational
qualifications, age-group, experience-levels and levels of intelligence quotient are placed,
the first to be employed might be placed in the regular cadre, while the subsequent appointed
persons could be placed in a contractual mode of appointment. Such practices can bring
forth feelings of inequity and de-motivation among the latter.

4.5 STRESS MANAGMENT

Stress is a general term applied to various psychologic (mental) and physiologic

(bodily) pressures experienced or felt by people throughout their lives.

Stress is defined as “a state of psychological and physiological imbalance resulting

from the disparity between situational demand and the individual's ability and motivation to
meet those needs.”

Dr. Hans Selye, one of the leading authorities on the concept of stress, described

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stress as “the rate of all wear and tear caused by life.”

Stress can be positive or negative:

1. Stress is good when the situation offers an opportunity to a person to gain something.
It acts as a motivator for peak performance.

2. Stress is negative when a person faces social, physical, organizational and emotional
problems.

Factors that are responsible for causing stress are called stressors.

4.5.1 Types of Stress

Even though the new age psychologists comes out with quite an impressive
collection of technical terms for different types of stress like Time stress, Anticipatory
stress, Situational stress, Encounter stress, acute distress, chronic distress etc, let us confine
ourselves with the basic approach – the three important stress types are:

1. Eustress (Good stress )

2. Neustress (neutral stress)

3. Distress (Bad stress)

Eustress: Eustress is a positive form of stress. Let us think on situations when we

will feel tensed with happiness, thrill of enjoyment, spiraling expectation for a joyful event.
Consider the following:

An inspirational speech you listened to,

A motivational appreciation from the Boss,

Unexpected Promotion with a hike in salary,

The person you love accepting the marriage proposal,

Dinner with a role model celebrity

All these fall under the category of good stress. Eustress situations gives you stress,
anxiety and increased levels of adrenalin but you will enjoy the feel of stress and will not be
harmed by it – physically or mentally.
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 Neustress: Neustress is neither good nor bad. It is neutral stress. It will not have
any effect on our system. But the problem is, when accumulated, it may fall into either of
good stress category or bad stress category. For example, news of a film stars marriage
postponed in a neighbor country would not give us any reaction. But, if it is because of a
disaster in the same area like flood or earthquake, it slightly shakes us. If the earth quake
area is where our relatives live, now it starts to stress us. Hence, a neustress doesn’t have
any impact by itself, unless carried over or accumulated and can fall into either side of the
wall.

Distress: Distress is the most common type of stress, having negative implications.
Distress takes a toll on the body too, that is where it becomes a bad one. Physical health
is troubled by the distress, as it gives a cumulative effect and easily multiplies with whatever
comes your way with a face of problem. Usually distress is divided into two called Acute
stress and Chronic stress

Acute stress appears and disappears over a short period of time and can be
intense, while chronic stress may not appear to be intense but lingers for a much longer
period of time. Whatever be the name we give, distress certainly is a hindrance to the
performance level of the employee. I hope you have understood that there is a positive
correlation between the stress level and the performance level.

4.5.2 Causes of Stress:

The major causes of stress at work or in organization are:

1. Career Concern: If an employee feels that he is very much behind in the corporate
ladder, then he may experience stress. If he seems that there are no opportunities
for self-growth, he may experience stress. Hence, unfulfilled career expectations
are the significant source of stress.

2. Role Ambiguity: It occurs when the person doesn't know what he is supposed
to do, on the job. His tasks and responsibilities are not clear. The employee is not
sure what he is expected to do. It creates confusion in the minds of the worker
and results in stress.

3. Rotating Work Shifts: Stress may occur in those individuals who work on different

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 work shifts. Employees may be expected to work on day shift for some days and
then on the night shift. That may create problems in adjusting to the shift timings,
and it can affect not only personal life but also family life of the employee.

4. Role Conflict: It takes place when people have different expectations from the
person performing a particular role. It can also occur if the job is not as per
expectation, or when a job demands a certain type of behavior that is against the
person's moral values.

5. Occupational Demands: Some jobs are more demanding than others. Jobs that
involve risk, and danger are more stressful. Research findings indicate, job that
cause stress needs constant monitoring of equipments and devices, unpleasant
physical conditions, making decisions, etc.

6. Lack of Participation in Decision-making: Many experienced employees feel

that management should consult them on matters affecting their jobs. In reality, the
superiors hardly ask the concerned employees before taking a decision. That
develops a feeling of being neglected, which may lead to stress.

7. Work Overload: Excessive workload leads to stress as it puts a person under

tremendous pressure. Work overload may take two different forms:

a. Qualitative work overload implies performing a job that is complicated or beyond

the employee's capacity.

b. Quantitative work overload is a result of many activities performed in a prescribed

time.

8. Work Underload: In this, case, too little work or very easy work is expected on
the part of the employee. Doing less work or jobs of routine and simple nature
would lead to monotony and boredom, which can lead to stress.

9. Poor Working Conditions: Employees may be subject to poor working

conditions. It would include bad lighting and ventilation, unhygienic sanitation
facilities, excessive noise, and dust, presence of toxic gasses and fumes, inadequate
safety measures, etc. All these unpleasant conditions create physiological and
psychological imbalance in humans thereby causing stress.

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 10. Lack of Group Cohesiveness: Every group is characterized by its cohesiveness,
although they differ widely in its degree. Individuals experience stress when there
is no unity among work group members. There are mistrust, jealousy, frequent
quarrels, etc., in groups and this lead to stress to employees.

11. Interpersonal and Intergroup Conflict: These conflicts take place due to
differences in perceptions, attitudes, values and beliefs between two or more
individuals and groups. Such conflicts can be a source of stress for group members.

12. Organizational Changes: When changes occur, people have to adapt to those
changes, and this may cause stress. Stress is higher when changes are significant
or unusual like transfer or adoption of new technology.

13. Lack of Social Support: When individuals believe that they have the friendship
and support of others at work, their ability to cope with the effects of stress
increases. If this kind of social support is not available, then an employee experiences
more stress.

The main causes of stress outside work or organization are:

1. Civic Amenities: Poor civic amenities in the area in which one lives can be a
cause of stress. Inadequate or lack of public facilities like improper water supply,
excessive noise or air pollution, lack of proper transport facility can be quite stressful.

2. Life Changes: Life changes can bring stress to a person. Life changes can be
slow or sudden. Gradual life changes include getting older, and abrupt life changes
include death or accident of a loved one. Sudden life changes are highly stressful
and very difficult to cope.

3. Frustration: Frustration is another cause of stress. It arises when goal-directed

behavior gets blocked. Management should attempt to remove barriers and help
the employees to reach their goals.

4. Racial, Caste, and Religious Conflicts: Employees living in areas, which are
often prone to conflicts among people based on differences seen in their race,
caste and religion do suffer more from stress. In the case of a religion, the minorities
and lower-caste people (especially in India) are subject to more stress.

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 5. Personality: We can classify people as ‘Type A’ and ‘Type B’.

The ‘Type A’ people:

a. They feel guilty while relaxing.

b. They get irritated by minor mistakes of self and others.

c. They feel impatient and dislike waiting.

d. They also multitask and prefer to do several things at one time.

The ‘Type B’ people are exactly opposite and hence are less affected by stress
due to the above factors.

6. Technological Changes: When there are any changes in technical fields,

employees are under the constant fear of losing jobs or need to adjust to new
technologies. It can be a source of stress.

7. Career Changes: When a person suddenly switches to another job, he is under

stress to shoulder new responsibilities adequately. Under-promotion, over-
promotion, demotion and transfers can also cause stress.

4.5.4 Strategies for Managing Stress

Stress experienced by the employees in their job has negative impact on their
health, performance and their behaviour in the organization. Thus, stress needs to be
managed effectively so as to set off these harmful consequences. Strategies for managing
stress are as follows-

Organizational Strategies for Managing Stress

1. Encouraging more of organizational communication with the employees so that

there is no role ambiguity/conflict. Effective communication can also change
employee views. Managers can use better signs and symbols which are not
misinterpreted by the employees.

2. Encourage employees’ participation in decision-making. This will reduce role stress.

3. Grant the employees greater independence, meaningful and timely feedback, and

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 greater responsibility.

4. The organizational goals should be realistic, stimulating and particular. The

employees must be given feedback on how well they are heading towards these
goals.

5. Encourage decentralization.

6. Have a fair and just distribution of incentives and salary structure.

7. Promote job rotation and job enrichment.

8. Create a just and safe working environment.

9. Have effective hiring and orientation procedure.

10. Appreciate the employees on accomplishing and over-exceeding their targets.

Individual Strategies for Managing Stress

1. The employees should make a “to-do” list daily, prioritize the acts in the list and
plan the acts accordingly. Take regular breaks during work to relax you. By effective
time management, the employees can achieve their targets timely and can meet
work pressures and, thus, avoid stress.

2. Do hard work. Strive to achieve your goals but do not do it to the harm of family,
health, or peer.

3. Indulge in physical exercises. It helps in effective blood circulation, keeps you fit,
diverts mind from work pressures.

4. Encourage a healthy lifestyle. Take a regular sleep, have plenty of water, have
healthy eating habits. Promote relaxation techniques such as yoga, listening music
and meditation.

5. The employees should have optimistic approach about their work. They should
avoid connections with negative approach employees.

6. The employees should have emotional intelligence at workplace. They should have
self-awareness, self-confidence and self-control at workplace.

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 7. The employees should build social support. They should have close connections
with trustworthy peer who can listen to their problems and boost their confidence
level. This social network will help the employees to overcome stress.

8. Employee counselling is a very good strategy to overcome employee stress. Through

counselling, employees can become aware of their strengths and how to develop
those strengths; their weaknesses and how to eliminate them; and they can develop
strategies for changing their behaviour. Employees are also given career counselling
which helps in reducing their ambiguities with regard to career.

9. Find a fun way to release stress, such as, cracking jokes, playing tennis, golf, etc.

10. Do not remain pre-occupied with yourself. Turn your focus outwards. Help others.
This will release some stress.

4.6 EVOLUTION OF QWL

Studies related to QWL started in the 1950’s and evolved through different stages.
Eric Trist and his collaborators from Tavistok Institute, London is pointed as the precursors
to research on Quality of Working Life. In that decade, they had initiated a series of
studies that gave origin to a social-technique approach related to work organization. There
was a concern with worker satisfaction and welfare. However, only in the 1960’s the
movement was developed. There was a consciousness about the importance of trying
better ways to organize the work, with the objective of minimizing negative effects of jobs
over the worker. The first movement phase was extended until 1974 – in the USA - when
there was an interest fall by QWL in function of economic questions - energy crisis and
increasing inflation. The survival needs of companies made employees’ interests move
away from QWL.

After 1979 the concern with QWL resurged mainly because of the loss of American
industries’ competitiveness before their Japanese competitors. This loss of competitiveness
led to the inquiry of the management styles practiced in other countries and to relate the
programs of productivity to the efforts with the improvement of the QWL. The term QWL
contemplates aspects analyzed previously as motivation, satisfaction, work conditions,
styles of leadership, amongst others. Related to these aspects, the stack of factors that
constitute in positive and negatives points of the work is ample. There are concepts
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diversifications about QWL. Reviewing a conceptual panorama over QWL, it is found to
refer to the favourableness or otherwise of a job environment for people. The basic purpose
is to develop jobs that are excellent for people as well as for production. QWL is a
process by which an organization attempts to unlock the creative potential of its people by
involving them in decisions affecting their work and personal lives.

Analyzing the conceptualizations of the main authors who investigated the theme,
it is possible to identify three main groups that had developed common basic points in its
statements of QWL. The common conceptions were:

1. Emphasis on well-being and worker satisfaction, concomitant with the concern

with the productivity increase, effectiveness and the organizational effectiveness.

2. Valuation of workers’ participation in decision making process, at work and

questions related to the reformulation of positions.

3. Emphasis on humanist perspective to think on the people, their work and the
organization.

QWL is a term that has been used liberally over the years, to describe everything
from flexi time to self-directed work teams. QWL is designed in many organizations to be
joint union-management programs to improve organizational effectiveness and productivity
as well as working conditions. A network of labour-management committees, ably led by
a steering committee, usually guides these efforts. QWL programs in these firms are wider
in scope than Quality Circles and they often involve redesigning or “broad-banding” jobs
and/or changing the work processes. The aim of the programs is workplace wellness
among employees, organizational health and stability, and high performance work
organizations.

Introduction of the principles of QWL in many organizations have resulted in efforts

towards humanizing the workplace by improving the cleanliness of the environment,
betterment of lighting, temperature, ventilation, control of noise and dust and the use of the
knowledge of ergonomics in designing tools, machines and furniture used during work. In
effect, QWL resulted in the prevention, control and alleviation of occupational diseases,
accidents, grievances, unrest and mal-adaptive behavior of workers which included alcohol
and substance abuse, sexual promiscuity, gambling, indebtedness and various forms of
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criminal behavior. QWL initiatives may also be linked with collective bargaining issues and
thus provide for the involvement of employee unions in its steps. In many cases, QWL
initiatives have met with considerable opposition from workers and their unions because
of the perception that QWL is a means of marginalizing the union’s role with its emphasis
on individual motivation, problem solving and informal systems of participation. This is
contrast to the traditional focus of industrial relations on the management of effort-reward
bargain through formal rules and written down promises to provide better living and working
conditions.

4.6.1 Quality of Work Life

QWL refers to a favourable work situation which emphasizes on the strengthening

of relationship, sensitivity, comforts and concern for one another among employees of an
organization. QWL means “The degree to which members of a work organization are able
to satisfy important personal needs through their experience in the organization”. QWL is
defined as a process of work organizations which enables its members at all levels to
actively participate in shaping the organization, its environments, methods and outcomes.
Enhanced effectiveness of organization is assessed in terms of greater financial strength of
an organization, the strength of its internal systems and the satisfaction of its various
stakeholders. QWL and organizational effectiveness are considered to be twin goals of an
organization. Quality of work life is focused generally on motivational factors such as
flexibility in working hours, autonomy and discretion in the performance of jobs and the
very nature of the work etc. QWL has gained deserved prominence in the Organizational
Behavior as an indicator of the overall of human experience in the work place. It plays a
key role in any organization and has an effect on the people, their work, performance and
self development as well as organization’s development. It basically refers to relationship
between the employees and the ecosystem in which he works. It focuses on creating a
working environment where employees work co-operatively and achieve results collectively.
Thus, QWL is defined as the favorable conditions and environments of a workplace that
support and promote employee satisfaction by providing them with rewards, job security,
and growth opportunities. The continuous effort to bring increased labor-management
cooperation through joint problem solving to improve organizational performance and
employee satisfaction are key aspects of QWL.

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4.6.2 Characteristics of QWL:

QWL is determined by the presence of the following features that represent the
principles of security, equity, individualization, cohesiveness and democratic participation
by employees in their organization’s management. QWL might mean different elements to
people of different age groups, occupations, regions, cultures, nationalities, genders,
educational qualifications and income levels, in organizations. Therefore different people
might consider one or more of the following conditions to be more important than the
others, in determining QWL of human resources:

• Adequate and fair compensation: Wages, Salaries, incentives, bonus, social

security and perquisites should be designed in such a manner to be adequate for
all the employees to meet the needs of socially determined standards of living and
in order to ensure a just balance between effort and rewards.

• Safe and healthy working conditions: Including hours of work and rest pauses,
freedom from occupational hazards, accidents, negative stress, life-threatening
conditions and other factors detrimental to the well-being of employees.

• Opportunities at the workplace to use different capacities: Using one’s

creativity and innovation, use of multiple skills and talents, encouragement to pursue
education and professional development.

• Opportunities to learn, to grow and feel secured at the jobs: Possibilities of

self-improvement and career advancement, provision of autonomy, appreciation
of efforts and results, knowledge of the whole tasks and inclusion in decision
making stages of the work process concerning the whole organization.

• Social integration in terms of a community: This comprises of interpersonal

openness and egalitarianism; Feeling the warmth of companionship, mutual respect,
tolerance and camaraderie and being united; Being free from prejudices on the
ground of gender, language, nationality or economic class.

• Rule of Law at work place: Principles of natural justice and equity, equality,
safeguards to personal freedom and reasonable protection from violations of rights
and respect of privacy with regard to an employees’ off-the-job behavior.

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 • Work - Life Balance: This aspect includes consideration for employees’ personal
and family life, resulting in the upholding of reasonable restrictions upon schedule
of work hours and travel requirements, overtime requirements, leisure and
recreation, savings for the future, practicing one’s faith etc.

• Social Relevance of work: Work should be recognized for its contributions to

the well being of the society. Employees do not like to be mere cogs within wheels
and be paper-pushers. They are inspired by a sense of mission inherent in their
work.

4.7 WORK LIFE BALANCE

Work life balance is managing competing roles and responsibilities at work, at

home and in the community. It is a moving target many Indians are having hard time hitting.
Driven by complex changes in work and society, a growing number of workers are reporting
the “struggle’s and juggle”. Whether the challenges are on the life side of the equation, on
the work side, or on the sum total of “way too much to do and not enough time to do it”,
finding ways to manage work-life conflict is important. Creating a work-life balance is
easier said than done. But creating one, nonetheless, is important to both the worker and
the organization. The employee gets more control of their life and feels enjoyment both
personally and professionally. The organization gets accountability, enhanced productivity,
improved morale, and less organizational stress. It’s a win-win for everyone.

4.7.1 Misperception towards Work Life Balance:

A serious discussion of work-life balance can be sidelined by one of several false

interpretations of the problem. The following information will help employer and the
employee to understand the fact and fiction about the work-life balance.

1. It is a Private Issues: The personal impact is undeniable; research links work-

life conflict to increased depression, marital problems, fatigue and stress-related
illnesses. But it doesn’t stop there. These results translate into real problems for
employers, such as increased absenteeism and reduced productivity.

• It’s a Parenting Issue: Work life conflict is a growing concern all the Indians,
not just those with children at home. An increasing number of non-parents report

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 difficulty fitting in volunteer commitments, or educational, leisure or health pursuits.

• It’s a Women Employee Issue: Women are twice as likely as men to report
work-life imbalance, and with good reason; despite a massive influx into the
workforce, women retain the greater share of responsibility for child care, elder
care and domestic chores. However, a recent trend has been levels of work-life
conflict rise among men. In fact, men are more likely than women to point to work
pressures as the cause of the imbalance.

• It is a Stage in Life: The call for more work life balance comes from all sections
of the population; the university student with part-time job, the female executive
with small children and the seasoned employee easing into retirement. Work-life
balance is increasingly important to young people entering the labour market as
well.

• Work life should be Fifty and Fifty: Work life balance is rarely a partnership of
equals. More often, it is a changing relationship- one part may dominate for a
period of time, only to see the other part attracting more attention. Balance is also
personally defined: what is balance to one person may be imbalance to another.

• Work and Life are Separate Domains: Work and life issues are closely linked
and changes in one almost always affect the other.

• Technology will Help: Technology is a double-edged sword. While innovations

such as cell phones, laptops, personal digital assistants and wireless networks
allow us to work anywhere, they also allow work to follow us anywhere.

• Little can be done: Companies have been able to show clear and measurable
improvements in work-life balance by even the smallest of changes. Of course,
there is a “magic bullet”, but a willing manager or owner has plenty of tool and
resources to achieve better balance and, through it, better business.

4.7.2 Designing Work Life Balance Programme:

Formal work-life balance programs may not be necessary in any organization if

the organization know the workers, listen to their needs and try to be responsive and
flexible. This is especially true for small businesses. Otherwise the following will help in

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developing workable options with regard to work-life balance related programmes.

• Flex the Time: Flex-time arrangements are a broad category of work-life balance
options that focus on the element of time; the days, hours, start time and end time
of work. Included within this category are alternative work schedules, compressed
workweeks and voluntary part-time or reduced hours.

• Flex the Place: Technological innovation have resulted in a wide range of options
for working from home, from satellite offices or from remote locations, all collectively
known as tele-work.

• Flex the Job: May be the job itself needs to change, not just the time allocation.
Flexing the job involves a basic consideration of how you define what a job is and
how you divide these tasks into different job categories. Is there another way
employer could divide up the work tasks? Can the employer re-cluster the
repackage responsibilities to create more balanced work assignments? Job redesign
or job sharing are two options to consider. For example • Flexible work
arrangements (e.g., telecommuting, compressed workweek, part-time employment,
job sharing).

• Flex the Benefits: One-size-fits all benefit packages are not well suited to a
diverse workforce. Offering a range of benefits option and flexibility in selecting
the employee’s preferred choices or the amount of coverage allows employees to
create a personalized package tailored to meet Individual needs and wants. For
example • Child-care benefits (e.g., on- or off-site day care, vouchers, subsidies,
resource and referral services, backup/sick-child care) Elder-care benefits (e.g.,
on- or off-site daycare, vouchers, subsidies, resource and referral services, backup
care, time off) Adoption benefits (e.g., paid or unpaid leave, subsidies) Assistance
for employees’ children with special needs.

• Winning Ideas : The ideas range from simple to complex, routine to wonderfully
creative which comes from the employer and employees to be taken into
consideration while framing work-life related programmes. To create a win-win
situation get the input from the employees and your own:

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Three Steps from Employee

• Figure out What Matters to you in Your Life: Setting your life priorities is the
first step in figuring out how to achieve that work-life balance you’ve dreamed of.
Is it vacation/travel, family time, working out, time with your kids, a hobby, your
health, etc.? Once you can prioritize your list, you are on your way!

• Ask and Accept help: It’s important and okay to allow yourself to rely on friends,
family, or a partner for help when you need to focus on another priority. If you’re
too proud to ask for help, you are going to crash and burn. No one can do it all
themselves without gold bangle bracelets and a truth lasso.

• Set Boundaries: Only you can set your boundaries for your time. If you don’t
set them, someone else will and then you’ve lost control. Work isn’t going to be
there for you when you need a hug, a babysitter, a good cry. Work isn’t going to
love you back like you family, partner, or friends.

• You know that old saying: to be loved you have to love yourself first. Well,
same holds true here. If you want people to respect your boundaries, you need to
set and respect them first.

Three Steps for the Employer

• Build Rapport and Gain Respect: Building rapport with your employees is important
because it makes them feel like you listen that they are being heard. This earns you
respect. When an employee respects their boss, they are more productive.

• Don’t Demand Excellence: People don’t usually respond well to demands unless
they see a benefit at the end of the tunnel for them. Be sure to state your demands
in the form of your expectations and be sure to be clear and realistic. If you know
that Sally has to drop her kid off at day care in the morning, then don’t schedule an
8:00 a.m. meeting and expect her to be on time. That’s unrealistic.

• Encourage them to have a Life: The best way to get employees to be productive
is to encourage them to have a life and make it sounds sincere that you care that
they do.

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• Defining Work-Life Balance: The definition of work-life balance differs with
the age of the worker. For senior workers or owners nearing retirement, the balance
often includes regular vacation time and weekends away from the job. While
younger staff members enjoy vacation time, the group also defines the work-life
balance as the ability to establish individualized work hours, including evening
hours and work-from-home options, and personalized work conditions, featuring
personal desk and office area decorations.

• Create Boundaries: Small business owners have the ability to establish boundaries
for themselves and for staff members. This encourages employees to develop a
balance between work hours and personal life. Setting down company rules
incorporating regulations restricting the number of hours spent at work each week
help employees create these boundaries and keep them. As the leader of the
company, you need to model the sound work-life balance you encourage your
staff to define.

• Balanced Work Environment: Creating an environment at your small business

to encourage you and your staff to develop the appropriate work-life balance
means allowing your employees to participate in some family activities and meet
personal responsibilities that take time away from work. This flexibility includes
time off to see children in school plays, visit classes during parent days and
accompany aging family members on medical appointments. Establishing firm work
policies for this life balance also requires rules to prevent your staff from taking
advantage of the policies to avoid job duties.
• Scheduling and Planning: Creating a work-life balance involves scheduling times
for relaxation. Effective scheduling ensures that you and your staff take the relaxation
breaks by using a formal planning system for time away from work. Listing earned
relaxation time on paychecks keeps formal records and encourages use of the
time. If you don’t provide paid release time or vacations, consider adding this
option to reward employees meeting corporate standards or producing high-quality
work over a set period of time. Encouraging your staff to plan periodic events also
sets aside time for short periods of relaxation during the workday, even if it’s only
time to sit in lawn chairs and appreciate the outdoors or an extra 15 minutes
added to a lunch break.
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4.8 HUMAN RESOURCE INFORMATION SYSTEM (HRIS)

Human Resource Information System is an important element in Human Resource

development. It is a system to maintain, collect, and analyze data relating to Human
Resources of the organization. It helps managers in decision-making in respect of promotion,
wage fixing, recruitment, training and development. Human Resource Information System
acts as a decision support system. The inputs of Human Resource Information System
include the information relating to employees, their abilities, qualifications, potentialities,
creative instincts, age, pay scales, various jobs in the organization, their required skills and
qualifications to do them, the number of employees and executives manning various
positions, organizational objectives, policies and procedures etc.

Human Resource Information System can be defined as a system used to acquire,

store, manipulate, analyze, retrieve, and distribute information regarding an organization’s
Human Resources. A Human Resource Information System is not simply computer hardware
and associated Human Resource-related software. Although it includes hardware and
software, it also includes people, forms, policies and procedures, and data.

A company that does not have a computerized system still has an Human Resource
Management system; that is, the paper systems that most companies used before the
development of computer technology were still comparable with an Human Resource
Information System, but the management of employee information was not done as quickly
as in a computerized system. If a company did not have a paper system, the development
and implementation of a computerized system would be extremely difficult.

The human resource information system is a systematic procedure for collecting,

storing, maintaining retrieving and validation data needed by an organization about its
human resources. The HRIS is usually a part of the organization’s larger management
information system. The HRIS need not be complex or even computerized. But
computerization has its own advantage of providing more accurate and timely data for
decision making.

The areas of application of HRIS are many .Some of them include training
management, risk management and legal requirements, attendance reporting and analysis,
HRP, accident reporting and prevention, strategy planning, financial planning and other
related areas.
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4.8.1 Advantages of HRIS:

There are several advantages to firms in using Human Resource Information System.
They include the following:

• This enables organizations to provide structural connectivity across units and

activities and increase the speed of information transactions.

• Increasing competitiveness by improving Human Resource operations and

improving management processes.

• Collecting appropriate data and converting them to information and knowledge

for improved timeliness and quality of decision making.
• Producing a greater number and variety of accurate and real-time Human Resource-
related reports.

• Streamlining and enhancing the efficiency and effectiveness of Human Resource

administrative functions.

• Shifting the focus of Human Resource from the processing of transactions to

strategic Human Resource Management.

• Reengineering Human Resource processes and functions.

• Improving employee satisfaction by delivering Human Resource services more

quickly and accurately to them.

4.8.2 Factors affecting the HRIS:

The ability of firms to harness the potential of Human Resource Information System
depends on a variety of factors, such as:

• The size of the organization.

• The amount of top management support and commitment;

• The availability of resources.

• The Human Resource philosophy of the company as well as its vision, organizational
culture, structure, and systems.

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 • Managerial competence in cross-functional decision making, employee involvement,
and coaching.

• The ability and motivation of employees in adopting change, such as increased

automation across and between function.

4.8.3 Steps in implementing an HRIS:

As with any major change, proper planning is an absolute necessity for successful
implementation of an HRIS. The steps outlined below describe the specific procedures
involved in successfully developing and implementing an HRIS.

1. Inception of idea: The idea having an HRIS must originate somewhere the originator
of idea should prepare a preliminary report showing the need for an HRIS and
what it can do for the organizations.

2. Feasibility study: This evaluates the present system and details the benefits of an
HRIS. It evaluates the cost and benefits of an HRIS.

3. Selecting a project team: Once the feasibility study has been accepted and the
resources allocated project team should be selected. The project team should
consist of HR representatives from both management information systems and
payroll.

4. Defining the requirements: A statement of requirements specifies in detail exactly

that the HRIS will do. A large part of the statements normally deals with the details
of the reports that will be produced. Naturally, the statement also describes other
specific requirements. This typically includes written descriptions of how users
collect and prepare data, obtain approvals, complete forms, retrieve data, and
perform other non-technical tasks associated with HRIS use. The key is here is to
make sure that the mission the HRIS truly matches management’s needs for an
HRIS.

5. Vendor analysis: This step determines what hardware and software are available
that will best meet the organization’s need for the lowest price. This is a difficult
task. The best approach is usually not to ask vendors if a particular package can
meet the organization’s requirements but how it will meet those requirements.

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6. Package contract negotiation: after a vendor has been selected, the contract
must be negotiated, the contract stipulated+ the vendor’s responsibilities with
regards to software, installation, service, maintenance, training and documentation.

7. Training: Training usually begins as soon as possible after the contract has been
signed. First the HR members of the project team are trained to use the HRIS.
Towards the end of the implementation; the HR representative will train manager
from other departments in how to submit information to the HRIS and how to
request information from it.

8. Tailoring the system: This step involves making changes to system to best fit the
needs of the organization. A general rule of thumb is not to modify the vendor’s
package, because modifications frequently cause problems. An alternative
approach is to develop programs that augment the vendor’s program rather altering
it.

9. Collecting the system: Prior to start-up of the system, data must be collected
and entered into the system.

10. Testing the system: Once the system has been tailored to the organization’s
need and the data entered, a period of testing follows. The purpose of the testing
phase is verify the output of the HRIS and to make sure it is doing what it is
supposed to do.

11. Starting up: Start up begins when all the current actions are put into the system
and reports are produced. It is wise to attempt start-ups during the lull period so
that maximum possible time can be devoted to HRIS. Even though the system has
been test, some additional errors often surface during start-up.

12. Running in parallel: Even after the new HRIS has been tested, it is desirable to
run the new system in parallel with the old system for a period of time. This allows
for the comparison of outputs of both the system and examination of any
inaccuracies.

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 13. Maintenance: It normally takes several weeks or even months for HR people to
feel comfortable with the new system. During this stabilization period, any remaining
errors and adjustments should be handled.

14. Evaluation: After the HRIS has been in place for reasonable length of time, the
system should be evaluated. Is the HRIS right for the organization and is it being
properly used.

4.9 KNOWLEDGE MANAGEMENT

Knowledge management is a discipline that treats intellectual capital as a

management asset. Unlike other assets it doesn’t require specific procedures to utilize
them. Knowledge is an idea created from various sources and how those ideas can help
to improve the organizational effectiveness. Knowledge management refers to identifying
and leveraging the collective knowledge in an organization to help the organization to
compete with their competitors. In other words knowledge management system aims to
get right information to the right people at the right time, thereby providing them tools for
analysis of information and respond to them at a faster rate.

4.9.1 Importance of Knowledge Management

Knowledge management has assumed so much significant:

• Predicting Future Uncertainties: In the present competitive world, so many things

such as technology, customer preferences, marketing techniques etc. are changing
so fast, that it becomes very difficult if not impossible to make guesses about
future. Knowledge management is a must to predict future changes and to face
them.

• Keeping pace with competition: Knowledge helps in increasing the core

competencies of the business, which is essential for its survival and growth. In the
present competitive world it is very essential to keep pace with the competition.

• Use of Information Technology: Knowledge and capacity of human beings

only can make effective utilisation of latest technologies. Latest technologies can
be used and transformed into actionable business only when it is used with
knowledge.
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 • Essential for Business: Knowledge management has, in fact, become essential for
each and every process of business. Use of knowledge management helps in the
growth of every business activity and the co-ordinated.

4.9.2 Need of Knowledge Management

1) Call centres: Call centres have increasingly become the main 'public face' for
many organisations. This role is made more challenging by the expectations of
customers that they can get the answers they need within minutes of ringing up.

Other challenges confront call centres, including

• High-pressure, closely-monitored environment

• High staff turnover

• Costly and lengthy training for new staff

In this environment, the need for knowledge management is clear and immediate.
Failure to address these issues impacts upon sales, public reputation or legal
exposure.

2. Front-line staff: Beyond the call centre, many organisations have a wide range
of front-line staff that interacts with customers or members of the public. They
may operate in the field, such as sales staff or maintenance crews; or be located at
branches or behind front-desks. In large organisations, this front-line staffs is often
very dispersed geographically, with limited communication channels to head office.
Typically, there are also few mechanisms for sharing information between staff
working in the same business area but different locations. They challenge in the
front-line environment is to ensure consistency, accuracy and repeatability.

3. Business managers: The volume of information available to business management

has increased greatly. Known as 'information overload' or 'info-glue, the challenge
is now to filter out the key information needed to support business decisions. The
pace of organisational change is also increasing, as are the demands on the 'people
skills' of management staff. In this environment, there is a need for sound decision
making. These decisions are enabled by accurate, complete and relevant

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 information. Knowledge management can play key role in supporting the
information needs of management staff. It can also assist with the mentoring and
coaching skills needed by modern managers. The loss of key staff can have a
major impact.

4. Aging workforce: The public sector is particularly confronted by the impacts of

an aging workforce. Increasingly, private sector organisations are also recognising
that this issue needs to be addressed if the continuity of business operations are to
be maintained. Long-serving staff has a depth of knowledge that is relied upon by
other staff, particularly in environments where little efforts has been put into capturing
or managing knowledge at an organisational level. In this situation, the loss of
these key staff can have a major impact upon the level of knowledge within the
organisation. Knowledge management can assist by putting in place a structured
mechanism for or transferring this knowledge when staff retires.

5. Supporting innovation: Many organizations have now recognised the importance

of innovation in ensuring long-term growth (and even survival). This is particularly
true in fast moving industry such as IT, consulting, telecommunications, and
pharmaceuticals. Most organization, however, are constructed to ensure
consistency, repeatability and efficiency of current process and products. Innovation
does not tend to sit comfortably with this type of focus, and organization often
needs to look to unfamiliar techniques to encourage and drive innovation. There
has been considerable work in the knowledge management field regarding the
process of innovation and how to nurture it in a business environment.

4.9.3 Process of Knowledge Management

Followings are the steps involved in knowledge management:-

1. Identification and development of skill: The first step in knowledge management

is identification of capabilities of employees and taking steps to develop the skills
further, taking into account the future business changes.

2. Scientific Recruitment of Employees: Recruitment process has become

strategic requirement in the race to remain competitive. The recruitment of suitable
person will help in increasing knowledgeable human capital in the organisation.
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 3. Development of Human capital: The organisation should make arrangement
for the development of human capital in the organisation. Techniques such as
performance management, career development, succession planning, sharing of
creative experiences etc. can develop the human capital in the organisation.

4. Scientific Placements: The organisation should identity and evaluates the human
sources available. The knowledge and capabilities of persons should be matched
to the requirement of various jobs and business opportunities. Right man should
be placed at the right job.

5. Effective Utilisation of knowledge: Knowledge management can be useful

only if is put to practical use. In managing the organisation, the important part is to
convert the knowledge into a product or a service. Intellectual capital has to be
converted into performance to be of any use. E.g. it should result in Improvement
in qualities, more customer satisfaction and the like.

BECKMANS has proposed a comprehensive eight stage process for knowledge

management;

1. Identify

2. Collect

3. Select

4. Store

5. Share

6. Apply

7. Create

8. Sell

These stages in KM process are discussed in detail as follows:

1. Identify: the identify stage determines which knowledge is critical to success.

For each organization needs detailed knowledge about its customers, products
and services, finances, management, employees and other organizational and

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 environmental aspects. Then the related strategic and knowledge domains are
Identified. Next the existing levels of expertise are assessed for each knowledge
domain. Once the gaps between existing and needed expertise are determined,
programmes and systems can be developed to improve expertise levels.

2. Collect: The collect stage deals with the following:

• Acquiring existing knowledge, skills, theories and experience needed to create

the selected core competences and knowledge domains.

• Knowledge expertise and experience must be formalized by making it explicit.

• Practitioners should know where and how to get the needed knowledge and
expertise in the form of data base and experts system.

• Valid knowledge sources should be identified beforehand for acquiring the

knowledge and expertise.

3. Select: In the select stage, the identified and collected knowledge is assessed.
Domain experts must assess and select the knowledge to be added to the
organisation's memory. Without a proper filtering system, the corporate memory
will just be a sea of informational data. Initially one framework should be selected
as the basis for organizing and classifying knowledge to be stored in the knowledge
repository.

4. Store: Knowledge must be organized and represented into different knowledge

structures within a knowledge repository just as the data and information is
organized and represented in different types of data base. Much of this knowledge
can be represented in electronic form as expert systems.

5. Share: In the sharing stage, knowledge from the corporate memory is made
accessible to all the users. Knowledge sharing within organizations is an issue.
Hoarding knowledge is common for various reasons, such as power relations,
property right over and job Insecurity. A good example of the latter case is middle
manager fearing about this job in the future.

6. Apply: in this stage, the required knowledge retrieved and used in performing

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 tasks, solving problems, making decisions, researching ideas and learning integrated
performance support systems are needed to make available the right knowledge
at the right time, in the right form and at the right place.

The following points are worth noted in this respect:

• For easy access, natural classification systems should be built for browsing or
retrieving knowledge.

• For providing the right knowledge, the system should understand the user’s purpose
and content.

To provide the knowledge at the right time, a proactive system should be there
that monitors the user's actions and determines when it is appropriate to intervene.

• Users can also customize the format in which knowledge is presented.

• Finally, users can request references, advisory, testing and certification modules
for the same.

7. Create: The create stage captures new knowledge through many avenues. This
stage also covers how to elicit non verbal, unconscious knowledge from domain
experts and turn it into documented formal knowledge. In this stage, new sources
and insight are formalized and captured by the knowledge management process
and made available to those who need the knowledge.

8. Sell: Selling stage can be possible only if considerable maturity is achieved in the
earlier seven stages. In this stage, internal knowledge bank of the organization can
be sold to the outsiders.

4.9.4 APPROACHES TO KNOWLEDGE MANAGEMENT

The various approaches to the knowledge management are as follows:

1. Mechanistic approaches to knowledge management: Mechanistic

approaches to knowledge management are characterized by the application of
technology and resources to do more of the same better. The main assumptions of
the mechanistic approach include:

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 • Better accessibility to information is a key, including enhanced method of access
and reuse of document (hypertext linking, database, full-text search, etc.)
Networking technology in general (especially intranets) and groupware in particular,
will be key solutions.

• In general, technology and sheer volume of information will make it work.

• Assessment: Such approaches are relatively easy to implement for corporate

"political" reasons, because the technologies and techniques— although sometimes
advanced in particular areas—are familiar and easily understood. There is a
modicum of good sense here, because enhanced access to corporate intellectual
assets is vital. But it's simply not clear whether access itself will have a substantial
impact on business performance, especially as mountains of new information are
placed on line. Unless the knowledge management approach incorporates method
of leveraging cumulative experience, the net result may not be positive, and the
impact of implementation may be no more measurable than in traditional paper
models.

2. Cultural/ behaviouristic approaches to knowledge management: Cultural/

behaviouristic approaches, with substantial roots in process re-engineering and
change management, tend to view the "knowledge problem" as a management
issue. Technology--though ultimately essential for managing explicit knowledge
resources—is not the solution. These approaches tend to focus more on innovation
and creativity (the "learning oranization") than on leveraging exist or explicit.

Assumptions of cultural/behaviouristic approaches often include:

• Organizational behaviours and culture need to be changed ....dramatically. In our

information-intensive environments, organizations become dysfunctional relative
to business objectives.

• Organizational behaviours and culture can be changed, but traditional technology

and methods of attempting to solve the "knowledge problem" have reached their
limits of effectiveness. A "holistic" view is required. Theories of behaviour of large-
scale systems are often invoked.

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• It's the processes that matter, not the technology

• Nothing happens or changes unless a manager makes it happen.

• Assessment: The cultural factors affecting organizational change have almost

certainly been undervalued, and cultural/behaviouristic implementations have shown
some benefits. But the cause-effect relationship between cultural strategy and
business benefits is not clear, because the "Hawthorne Effect” may come into
play, and because dependable predictions about systems as complex as knowledge-
based business organizations can't be made. Positive results achieved by cultural/
behaviouristic strategies may not be sustainable, measurable, cumulative, or
replicable...and employees thoroughly "Dilbertized" by yet another management
strategy may roll their eyes.

3. Systematic approaches to knowledge management: Systematic approaches

to knowledge management retain the traditional faith in rational analysis of the
knowledge problem: the problem can be solved, but new thinking of many kinds
is required. Some basic assumptions:

• It's sustainable results that matter, not the processes or technology... Or your
definition of "knowledge".

• A resource cannot be managed unless it is modeled, and many aspects of the

organization's knowledge can be modeled as an explicit resource.

• Solutions can be found in a variety of disciplines and technologies, and traditional

methods of analysis can be used to re-examine the nature of knowledge work and
to solve the knowledge problem.

• Cultural issues are important, but they too must be evaluated systematically.
Employees may or may not have to be "changed", but policies and work practices
must certainly be changed, and technology can be applied successfully to business
knowledge problems themselves.

• Knowledge management has an important management component, but it not an

activity or discipline that belongs exclusively to managers.

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 Assessment: Unrepentant rationalists in the business would are taking a systematic
approach to solving the "knowledge problem". Systematic approaches show the most
promise for positive cumulative impact, measurability, and sustainability.

4.10 HUMAN RESOURCE AUDIT:

Human Resource audit is a systematic examination and analysis of an

organizational workforce to develop an understanding of the current staffing situation. The
Human Resource audit compares the past with the present labour specifications to identify
trends and patterns in multiple aspects, including turnover, training, absence, and
diversity. It helps to identify key information about Human Resource operations,
including how well they work, and where improvement may be needed. It is a useful tool
in Human Resource planning. The information provided in an audit or skills inventory can
be useful in identifying a number of workforce trends. A periodic HR audit can qualify its
effectiveness within an organization. HR audits may accomplish a variety of objectives,
such as ensuring legal compliance; helping maintain or improve a competitive advantage;
establishing efficient documentation and technology practices; and identifying strengths
and weaknesses in training, communications and other employment practices.

4.10.1 Objectives of the Human Resource Audit

• To review the performance of the Human Resource Department and its relative
activities in order to assess the effectiveness on the implementation of the various
policies to realize the Organizational goals.

• To identify the gaps, lapses, irregularities, short-comings, in the implementation of

the Policies, procedures, practices, directives, of the Human Resource Department
and to suggest remedial actions.

• To know the factors which are detrimental to the non-implementation or wrong

implementation of the planned Programmes and activities.

• To suggest measures and corrective steps to rectify the mistakes, shortcomings if

any, for future guidance, and advise for effective performance of the work of the
Human Resource Department.

• To evaluate the Personnel staff and employees with reference to the Performance
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 Appraisal Reports and suggest suitable recommendations for improving the
efficiency of the employees.

• To evaluate the job chart of the Human Resource Managers, Executives,

Administrative Officers, Executive Officers, Recruitment Officers, whether they
have implemented the directives and guidelines for effective Management of the
Human resources in their respective Departments.

4.10.2 Advantages of Human Resource Audit:

Several benefits associated with Human Resource audit are listed below. An audit
reminds member of HR department and others its contribution, creating a more professional
image of the department among manager and specialist. The audit helps clarify the
department’s role and leads to greater uniformity, especially in the geographically scattered
and decentralized HR function of large organisations. Perhaps most important, it finds
problems and ensures compliance with a variety of laws and strategic plans in an organization.

Identifies the contribution of Human Resource department to the organization:

• Improves the professional image of the Human Resource department.

• Encourages greater responsibility and professionalism among member of the Human

Resource department.

• Clarifies the HR department’s duties and responsibilities.

• Stimulates uniformity of HR policies and practices.

• Finds critical HR problems.

• Ensures timely compliance with legal requirements.

• Reduces human resource cost through more effective Human Resource procedure.

• Creates increased acceptance of needed change in the Human Resource

department.

• Requires thorough review of Human Resource department’s information system.

Besides ensuring compliance, the audit can improve the department’s image and

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contribution to the company. Operating managers may have more respect for the department
when an audit team seeks their view. If the comments of manager are acted on, the
department will be seen as being more responsive to their needs. And since it is service
department, these actions may improve its contribution to organizational objectives.

4.11 SUMMARY

Compensation is the underlying goal of paid employment. Every employee

works for pay and strives to maximize his earnings. Compensation is directly
linked to productivity, motivation and morale. Human Resource Development and
Productivity are complementary to each other. Motivation, the process of stimulating
people through the possibility of gain or reward, to take desired course of
action in the interests of the organization applies to the entire class of drives,
desires, needs, wishes and similar forces. Motivation is enhanced by a fair and
decent compensation, accompanied by any of the proven incentive systems. A
blend of motivation and competence in a system of high standards of quality of work lives,
would serve to help to achieve constant productivity augmentation and prevention of
dysfunctional stress and promotion of overall organizational effectiveness. It is also
understood that, the work life is to improve the quality of the personal life, but it also
should be imbibed with one’s basic values and in return it will reflect in the quality of the
living standard- work life as well as personal life.

4.12 SELF ASSESSMENT QUESTIONS

• Comparsation : Gary Dessler in his book Human Resource Management defines

compensation in these words “Employee compensation refers to all forms of pay
going to employees and arising from their employment.” The phrase ‘all forms of
pay’ in the definition does not include non-financial benefits, but all the direct and
indirect financial compensations.

• Job Evaluation : It is the Process of evaluating the relative worth of the jobs in an
organisation.

• Morale : It is a mental condition or attitude of individuals or group which determine

their willingness to coperate.

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 • Stress is a general term applied to various psychologic (mental) and physiologic
(bodily) pressures experienced or felt by people throughout their lives.

4.13 SELF ASSESSMENT QUESTIONS

1. Define compensation management?

___________________________________________________________

___________________________________________________________

2. What are the types of compensation?

___________________________________________________________

___________________________________________________________

3. What are the methods of job evaluation?

___________________________________________________________

___________________________________________________________

4. What is knowledge management?

___________________________________________________________

___________________________________________________________

4.14 LESSON END EXERCISE

1. Define compensation management in detail.

2. Give in brief the advantages of Human Resource Audit.

4.15 FURTHER READING

• A Framework for Human Resource Management: Desseler Gary

• Human Resource Management: Rao VSP

• Personnel Management: C B Mamoria

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UNIT - V LESSON NO. 21-25

INDUSTRIAL RELATIONS
STRUCTURE

5.1 Introduction

5.1.1 Meaning and Definition of Industrial Relations

5.1.2 Characteristics of Industrial Relations

5.1.3 Objectives of Industrial Relations

5.1.4 Approaches to Industrial Relations

5.2 Meaning and Definition of Trade Unions

5.2.1 Nature and Characteristics of a Trade Union

5.2.2 Problems of Trade Unions

5.2.3 Types of Trade Unions

5.3 Industrial Disputes

5.3.1 Causes of Industrial Disputes

5.3.2 Settlement of Industrial Disputes

5.4 Collective Bargaining

5.4.1 Features of Collective Bargaining

5.4.2 Pre- requisites of Collective Bargaining

5.4.3 Process of Collective Bargaining

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5.5. Workers’ Participation in Management

5.5.1 Objectives of Workers’ Participation in Management

5.5.2 Forms of Workers’ Participation

5.6 Summary

5.7 Glossary

5.8 Self Assessment Questions

5.9 In-Text Questions

5.10 Further Reading

5.1 INTRODUCTION

Industrial relations are concerned with the relationship between management and
workers and the role of the regulatory mechanism in resolving any industrial dispute. As
per Dale Yoder Industrial Relations refers to the relationship between management and
employees, or employees and their organization that arise out of employment. Teed and
Metcalfe observed Industrial Relations are the composite approach of the attitudes and
approaches of the employers and employees towards each other with regard to planning,
Supervision, direction and unification of the activities of a set up with less friction and more
co-operation with mutual effort for others well-being. The essence of good industrial relation
lies in the bringing up of good labour relations which gives a forum to understand each
other (employer, employee) properly creates co-operative thinking and working to achieve
the goal of the organization. A good Industrial Relations increases the morale of employers
and goods them to give their maximum, each think of their mutual interest which paves
way for introduction of new methods, developments and leading to adoption of modern
technology. This progressive ways when designed with their mutual interest and consent
develops many incentive propositions, effective participators forum is created in
management. Profit are shared, workers get their dues in the organization leading to job
satisfaction which is needed for good relations. Good industrial relation increase production,
improves quality of work and products efficiency of workers increased. The relationship
between employer and employee or trade unions is called Industrial Relation. Harmonious
relationship is necessary for both employers and employees to safeguard the interests of
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the both the parties of the production. In order to maintain good relationship with the
employees, the main functions of every organization should avoid any dispute with them or
settle it as early as possible so as to ensure industrial peace and higher productivity. Personnel
management is mainly concerned with the human relation in industry because the main
theme of personnel management is to get the work done by the human power and it fails in
its objectives if good industrial relation is maintained. In other words good Industrial Relation
means industrial peace which is necessary for better and higher productions.

OBJECTIVES

After going through this lesson, you will be able to understand:

• meaning, objectives and approaches of industrial relation

• problems of trade unions

• causes of industrial disputes

• settlement of industrial disputes

• forms of workers participation

5.1.1 Meaning and Definition of Industrial Relations

“Industrial strife constituent militant and organized protest against existing industrial
conditions, they are symptoms of industrial unrest in the same way that boils are symptoms
of disorder of body.”

Industrial Dispute Act – 1947

“Industrial Dispute is any dispute or difference between the employees and

employers or between employers and workmen or between workmen and workmen,
which is concerned with the employment or terms of employment or with the conditions of
labour of any person.”

The International Labor Organization (ILO) stated that “industrial relations deal
with either the relationships between the state and employers’ and workers’ organizations
or the relations between the occupational organizations themselves”.

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From the various definitions given above, we understand that:

• Industrial relations are an outcome of employer-employee relationship in an

organization.

• Industrial relations facilitate harmonious relationships in an organization by setting

a framework for the management and the employees.

• Industrial relations are based on mutual compromise and adjustment, for the benefit
of both the parties involved.

• The state and the legal system also have a role to play in the maintenance of a
conflict- free industrial environment.
• The different parties in the system with a well-defined role are the management,
the employees and the unions.

5.1.2 Characteristics of Industrial Relations

1. Industrial Relation do not emerge in vacuum they are born of employment

relationship in an industrial setting. Without the existence of the two parties, i.e.
labour and management, this relationship cannot exist. It is the industry, which
provides the environment for industrial relations.

2. Industrial Relation are characterised by both conflict and co-operations. This is

the basis of adverse relationship. So the focus of Industrial Relation is on the study
of the attitudes, relationships, practices and procedure developed by the contending
parties to resolve or at least minimize conflicts.

3. As the labour and management do not operate in isolations but are parts of large
system, so the study of Industrial Relation also includes vital environment issues
like technology of the workplace, country’s socio-economic and political
environment, nation’s labour policy, attitude of trade unions workers and employers.

4. Industrial Relation also involve the study of conditions conductive to the labour,
managements co-operations as well as the practices and procedures required to
elicit the desired co-operation from both the parties.

5. Industrial Relations also study the laws, rules regulations agreements, awards of
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 courts, customs and traditions, as well as policy framework laid down by the
governments for eliciting co-operations between labour and management. Besides
this, it makes an in depth analysis of the interference patterns of the executive and
judiciary in the regulations of labour–managements relations. In fact the concepts
of Industrial Relations are very broad-based, drawing heavily from a variety of
discipline like social sciences, humanities, behavioural sciences, laws etc.

5.1.3 Objectives of Industrial Relation

Following are the important objectives of industrial relation:

1. To safeguard the interest of labour and management by securing the highest level
of mutual understanding and good-will among all those sections in the industry
which participate in the process of production.

2. To avoid industrial conflict or strife and develop harmonious relations, which are
an essential factor in the productivity of workers and the industrial progress of a
country.

3. To enhance productivity to a higher level in an era of full employment by lessening

the tendency to high turnover and frequency absenteeism.

4. To establish and nurse the growth of an Industrial Democracy based on labour

partnership in the sharing of profits and of managerial decisions, so that ban
individuals personality may grow its full stature for the benefit of the industry and
of the country as well.

5. To eliminate, as far as is possible and practicable, strikes, lockouts and gheraos

by providing reasonable wages, improved living and working conditions, said fringe
benefits.

6. To establish government control of such plants and units as are running at a loss or
in which productions has to be regulated in the public interest.

7. Improvements in the economic conditions of workers in the existing state of

industrial managements and political government.

8. Control exercised by the state over industrial undertaking with a view to regulating

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 production and promoting harmonious industrial relations.

9. Socialisations or rationalization of industries by making the state itself a major

employer.

10. Vesting of a proprietary interest of the workers in the industries in which they are
employed.

5.1.4 Approaches to Industrial Relations

Though there are different approaches to industrial relations, the basics of

management of good relations remain the same across all the approaches. These different
approaches help in viewing industrial relations from different perspectives. The different
approaches to industrial relations are:

• Psychological approach

• Sociological approach

• Human relations approach

• Socio-ethical approach

• Gandhian approach

• Systems approach

1. Psychological Approach: According to this approach, most of the problems in

industrial relations arise because of the differing perceptions and attitude of the
management and the workers. The perception of both parties (workers and
managers) regarding a particular aspect varies and as a result, some minute issues
aggravate into major problems. The different personalities and strained inter-group
and interpersonal relationships add fuel to the fire and increase the disharmony in
the system.

2. Sociological Approach: This approach considers the industry as a social system.

The work behavior of individuals is closely influenced by social factors that impact
an individual’s life in society. These differences among individuals, a result of their
social upbringing and association, create conflict and competition among the
members of an industrial society.
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3. Human Relations Approach: This approach holds that the handling of human
resources is different from handling material, physical or financial resources. It
lays emphasis on the human aspect and the way human feelings influence the work
relations and behaviour of employees in the organization.

4. Socio-Ethical Approach: This approach states that industrial relations apart from
having sociological ramifications, also has an ethical base. Hence the workers and
the management should work in mutual cooperation and realize their moral
responsibility towards the organizational objectives. Understanding each other’s
problems and constraints can help in resolving conflicts peacefully.

5. Gandhian Approach: According to this approach, industrial problems should be

solved peacefully using non-violent methods. In the same way, problems in the
industry should be solved through satyagrahas and non-violence rather than resorting
to violent deeds and crimes.

6. Systems Approach: The basic elements of the system approach are the
participants, environmental forces and the output. There are three aspects major
participants namely, the workers, the management and their representatives. The
interaction between these three results in significant strata that are referred to a
subsystem of an industrial relations system.

Parties to Industrial Relations: The major parties to IR are the employees,

employee representatives, employers, associations of employers, government and
courts and tribunals.

Employees: The employees are the pillars on which the organization is built.
They are the chief contributors to the organizational objectives, and are the
organization’s most valuable resource. To maintain harmonious industrial relations,
employees have to be satisfied with the organization, its policies and procedures
and their jobs.

Employers and their Associations: The employers or their association should

act as the part of the support system alike the labour unions so that the organization
can achieve the unique capabilities to undertake pro-active activities for the future.

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 Trade Unions: Trade unions constitute the employee representative bodies in an
organization. Trade unions enjoy power and status based on the support of the
employees. Their power is used as a weapon in regarding the organization’s
industrial environment and having their demands accepted by the management.
These demands usually relate to increase in wages, improvement in working
conditions, and additional benefits and welfare measures. In some cases, trade
unions also have a political affiliation, which adds to their power.

The Management: The management plays a critical role in the industrial relations
of an organization. Management policies can help in maintaining high employee
morale and in preventing industrial conflicts and disputes.

The Government: The government has a limited role to play in industrial relations.
It provides a basic framework within which the management, the trade unions and
the employees are expected to work for the common good of the organization.
The government comes into the picture only when the three players fail to do this
and is unable to sort out their differences. The government then intervenes as a
mediator through the process of conciliation, arbitrator and adjudication.

5.2 MEANING AND DEFINITION OF TRADE UNIONS

It is a well known fact that in every industrial community there are two distinct
classes the employees and the Employers, without whom production at a large scale is not
possible. Both these parties usually have contradictory motives, which creates many
problems. Over the ages, the teeming millions which constituted a sizeable chunk of industrial
society have struggled hard to achieve a greater measure of protection against inhuman
treatment meted out to them by employers. They have learned to make themselves secure
against ills over which they believed to have little control. In fact individually the labourers
can do little to bring about the kind of reforms they believe desirable. They are effective
only if they act in united ways. Trade unions constitute the employee representative bodies
in an organization. Trade unions enjoy power and status based on the support of the
employees. Their power is used as a weapon in regarding the organization’s industrial
environment and having their demands accepted by the management. These demands
usually relate to increase in wages, improvement in working conditions, and additional

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benefits and welfare measures. In some cases, trade unions also have a political affiliation,
which adds to their power.
The trade union is an association, either of employees or employers or of
independent workers. It is a relatively permanent combination of workers and is not
temporary or casual. It is an association of workers engaged in securing economic benefits
for its members.
“A trade Union is the continuous association of wage earners for the purpose of
maintaining or improving the conditions of their working lives.” (Webb)
According to Section 2(h) of Indian Trade Union Act, ”Trade union is an
combination whether temporary or permanent formed primarily for the purpose of regulating
the relation between workmen & employers workers & workers or between employers
& employers or for imposing restrictive conditions or conduct of any trade or business
and include any federation of two or more trade unions.”
It seems that this definition is very wide in which association of employers is also
included but generally trade unions are referred to association of workers. Hence, we can
say that trade unions are continuous associations of wage earners for maintaining and
improving the condition of workers life, better health and status in the industry and as well
as in society.
5.2.1 Nature and Characteristics of a Trade Union
The employer‘s association or professional bodies were not included in any of the
above definitions. The employee‘s unions are different from that of the employers or
professional bodies. The employee‘s unions are primarily concerned with the terms and
conditions of employment of their members. The employer‘s associations on the other
hand are concerned among other things with influencing the terms of purchase of services
in favour of their members. Hence, the two should not be placed in one category. The
associations of professional members also differ fundamentally from employees unions.
Professional associations include self employed as well as the employees where as trade
unions consist only of the people who are employed by others. In India the term Trade
Union refers besides employee‘s organizations to employers association also. Similarly in
Britain, even the associations of professional people such as Artists Federation of Musicians
Unions are also recognized as Trade Unions.
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 Thus trade unions are a major component of the modern industrial relation system.
A trade union of workers is an organization formed by workers to protect their interests.
i.e. improve their working conditions etc. All trade unions have objectives or goals to
achieve, which are contained in their constitution and each has its own strategy to reach
those goals.

Trade Unions are now considered a sub-system which seeks to serve the specific
sub-groups interest and also considers itself a part of the organization, in terms of the
latter‘s viability and contribution to the growth of the community of which it is a part. The
characteristics of trade unions are:

1. Association of Employees: A trade union is essentially an association of employees

belonging to a particular class of employment, profession, trade or industry. For
example, there are unions for teachers, doctors, film, artistes, weavers, mine workers
and so on.

2. Voluntary Association: An employee joins the trade union out of his free will. A
person cannot be compelled to join a union.

3. Permanent Body: A trade union is usually a permanent body. Members may

come and go but the trade union remains.

4. Common Interest: The member of a trade union have certain matters of common
interest-job security, better pay and working conditions and so on, which bring
them together.

5. Collective Action: Even when an individual employee has any grievance over
certain management decisions, the matter is sorted out by the intervention of the
trade union. Employees are able to initiate collective actions to solve any problem,
concerning any particular employee or all the employees.

6. Rapport with the Management: The trade union seeks to improve relations
between the employees and employers. The officials of the trade union hold talks
with the members of the management concerning the problems of the employees
in order to find an amicable solution. It is thus possible for the employees to have
better rapport with the management.

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 7. Association of Employers: Employers can also constitute trade union. Alike the
employee union to employers’ union too ensures advantage for its members. At
the time of negotiation and arbitration, employers’ union plays a vital role.

8. State Agency: Neither the employee nor the employers unions are the agents of
the State. Either of the unions is only being governed by the Trade Union Act,
1926.

5.2.2 Types of Trade Union:

Trade unions may be classified in various ways:

• Business Unions: It is that emphasis upon the economic advantages to be

bargained through collective action and thus aim at improving the wages, working
hours and conditions of workers and similar other objectives largely through the
process of collective bargaining.

• Predatory Unions: It is that serve as a means for the enrichment of its leaders
who pay only secondary attention to the advancement of interests of members. Its
distinctive characteristic is the ruthless pursuit of the target by whatever means
deemed appropriate at the time regardless of ethical or legal codes or effect upon
those outside its own membership. Such a union may employ any of the business,
friendly, revolutionary or violent methods for the achievement of its objectives.

• Dependant or Company Unions: These are unions that rely upon the support
of the employer or company management or the other large groups and hence
they are likely to pay secondary importance to the interests of members.

• Friendly unions: These are unions which are idealistic, conservative and law
abiding and they mainly aspire to elevate the moral, intellectual and social life of
workers to improve the conditions under which they work, to raise their material
standard of living and provide them security against unemployment, accident,
disease or old age. They depend upon the process of collective bargaining for the
attainment of their objectives.

• Revolutionary unions: These are unions that are extremely radical both in view-
point and action. They are class conscious and tend to repudiate the existing

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 institutional order, especially individual ownership of productive means and the
wage systems. They are strongly inclined towards strike and violence and look
upon unionism and socialism as the two wings of the labour movement.

Another viewpoint classifies trade unions into following categories:

• Craft Unions: Crafts unions are the simplest form of trade unionism. They are
usually formed of workers with the same craft, training and specialization, no matter
in what industry or trade they are employed.

• General labour unions: General labour union aim at becoming all embracing
organizations accepting as a new member practically any wage earner whatever
the place or character of his work or whatever his industrial qualifications may be.

• Industrial unions: Industrial unions organize workers belonging to an industry or

a group of related industries or service.

• Federations of trade unions: These are combination of various unions for the
purpose of gaining strength and solidarity. Such federations may be local, regional
or state-wise national and international.

Unions affiliated with the federation are described as affiliated unions and those,
which are unaffiliated, are known as independent unions.

5.3 INDUSTRIAL DISPUTES

An industrial dispute means any dispute or difference between employers and

employers or employers and workmen or between workmen and workmen, which is
connected with employment or non-employment or terms of employment or conditions of
labour, of any person. Every human being (say, a worker) has certain needs. E.g., economic
needs, social needs and needs for security. When these needs do not get satisfied, there
arises a conflict between labour and capital. A conflict means a struggle or clash between
the interests of the employer and the workers. When an industrial conflict (which otherwise
is general in nature) acquires a concrete and specific display or revelation, it becomes an
“industrial dispute”. A conflict takes the shape of Industrial Dispute as soon as the issues of
controversy are submitted to the employer for negotiations.

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 Industrial disputes are conflicts, disorder or unrest arising between workers and
employers on any ground. Such disputes finally result in strikes, lockouts and mass refusal
of employees to work in the organization until the dispute is resolved. So it can be concluded
that Industrial Disputes harm both parties employees and employers and are always against
the interest of both employees and the employers.

As per Patterson, “Industrial strife constituent militant and organized protest against
existing industrial conditions, they are symptoms of industrial unrest in the same way that
boils are symptoms of disorder of body.”

Industrial Dispute Act – 1947 defines Industrial Disputes, “Industrial Dispute is

any dispute or difference between the employees and employers or between employers
and workmen or between workmen and workmen, which is concerned with the
employment or terms of employment or with the conditions of labour of any person.”

5.3.1 Causes of Industrial Disputes

Some of the common causes of Industrial disputes have been listed below:

Psychological Causes

• Difficulty in adjusting with each other (i.e., employer and worker)

• Clash of personalities

• Authoritarian Leadership (administration)

• Demand for self-respect and recognition by workers.

• Strict discipline

Institutional Causes

• Non recognition of the labour union by the management.

• Matters of collective bargaining.

• Unfair conditions and practices.

• Pressures workers, not to become members of union, etc.

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Economic Causes

i) Terms and conditions of employment

• more hours of work

• Working in night shifts

• Promotion, layoff, retrenchment, dismissal, etc.

ii) Workers conditions

• Environmental conditions such as too hot, too cold, noisy, dirty, messy, etc

• Improper plant and workstation layout

• Old and trouble giving machines

• Frequent changes in products, etc

iii) Wages and other benefits

• Inadequate wages

• Undesired deduction from wages

• Poor fringe benefits

• No bonus or other incentives, etc.

Denial of legal and other rights of workers

Not proceeding as per labour laws and regulations, standing orders, etc

Violation of already made mutual agreements (i.e. between employer and workers)

Other Causes:

1. Close mindedness of employers and employees; one thinks to extract maximum

work with minimum remuneration, other thinks to avoid work and get more
enhancements in pay and wages.

2. Irrational wage, wage system and structure not mutually acceptable.

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 3. Poor working environment, low presence of safety, hygiene conditions and vitiated
atmosphere for smooth working.

4. Meagre human relations and lack of skillfulness on the part of management

personnel.

5. Lack of control over the situations, erosion of discipline which rebounds on the
performances of the workers and the industry as a whole.

6. Introduction of new technology, automation, mechanization, computerization etc.

without proper consultations with the workers [Preparations and discussions with
the workers are the essential parts that create friendly work climate].

7. Nepotism, unequal workloads, disproportionate wage and responsibilities.

8. Adoption of unfair labour practices either by the employers or by the employees

and unions.

9. Unjustifiable profit sharing and disregarding workers as co-shares of the gains of

the industry.

10. Frequent union rivalries over membership and foisting up of fake unions.

11. Strikes, lock out, lay off, and resulting retrenchment due to high handedness on
the part of the concerned parties.

12. Throwing away the agreements and arrived settlements.

13. Militancy of the unions

14. Partitioned attitude of the government

15. Vested interests of the political parties who may indirectly control some the unions
for their own gains or to get a hold on the industry.

5.3.2 Settlement of Industrial Disputes:

To resolve industrial disputes, a number of approaches come on the surface. These

approaches constitute those machineries that are used to settle industrial disputes and
ensure healthy relations within industries.

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i. Voluntary in Built Approaches
ii. Approaches based on conciliation [Conciliation Machineries]
iii. Mediators / Arbitrators approach [Arbitration Machinery]
iv. Approach based on Adjudication [Adjudication Machineries]
i. Voluntary in Built Approaches: These approaches basically revolve around
workers’ participation in management. These are
1. Joint management councils
• Help to promote productivity and general benefits of both management and workers
• Give employees a better understanding in the working of industry and of the process
of production.
• Satisfy the workers’ urges for self expressions and thus lead to better industrial
relations.
2. Workers’ participation in management In 1972 workers’ participation in
industry was highlighted. It was encouraged to create awareness among the workers
about the objectives of the organisation and action plans to accomplish the same.
It was contemplated that the scheme should be operative both at the shop floor
and at plant levels in all public sector undertakings.
3. Collective Bargaining Here representatives of workers and management discuss
and bargain their necessities under win-lose or win-win conditions. The process
of bargaining takes place to settle issues related to wage, financial matters, working
conditions etc.
ii. Approaches based on Conciliation [Conciliation Machineries]
The statutory conciliation machineries are
1. Works Committee
2. Conciliation officers
3. Board of conciliation
4. Courts of Inquiry
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1. Works Committee: It is the committee formed by the representatives of workers
and the employers at workshop level. Equal number of representatives both from
the employers and the workers constitute this committee. The works committee’s
duty is to promote measures for securing and preserving amity and good relations
between employers and the workers. It tries to resolve problems, arising out of
the matter of common interests or concerns. The committee endeavours to compose
any material differences of opinion with respect to such items that project the
common interests of both the parties. The main function is to endorse measures
for defending and protecting harmony and good relations and for this purpose
take steps that ensures adjustments between employers and workers so that situation
many not turn into industrial dispute.

2. Conciliation Officer: It is a recognised process of settling mutual conflict between

individuals and groups. Conciliation officer can call for documents and summon
witnesses. He or she tries for the settlement through conciliation proceedings. The
conciliation officer will hold conciliation proceedings. He or she will be assisted by
the employers and the employees (He or she cannot adjudicate) to arrive at a fair
and just settlement. He or she is to play the role of an advisor and friend of both
the parties. He or she investigates and induces the parties to come to fair and
amicable settlements. If no settlement is reached then he or she will submit the
detailed report to the government.

3. Boards of Conciliation: Certain disputes (where the conciliation officer fails)

may be referred to the Board. The Board shall consist of a chairman and 2 or 4
other members. It shall investigate the dispute and try for a right settlement. The
Board has the powers of a civil court. The Board shall send a report and
memorandum of settlement to the suitable government.

4. Courts of Inquiry: The right government may by notification in the Official Gazette
form a Court of Inquiry for investigating either the issues related with conditions of
employment or any relevant matters of industrial disputes. The Court consists of
at least 1 person who shall be the chairman or 2 or more members may be included.
In that case 1 of them shall be appointed as the chairman. The court has the power
to enter the premises and enjoy the power of Civil Court.

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iii. Mediators / Arbitrators approach [Arbitration Machinery]

In arbitration both the parties seek the help of a third knowledgeable party for a
decision. Arbitrators are chosen by both parties with consensus. This is voluntary
arbitration. If there is disagreement to get a consensus candidate, court may order
for an arbitrator who is to be accepted by the parties. The arbitrator enjoys the
power of Civil Court.

iv. Approach based on Adjudication [Adjudication Machineries]

1. Labour court

2. Industrial Tribunal
3. National Tribunal

1. Labour Court: It is one of the adjudicating machineries. It consists of one person,

appointed as presiding officer of labour court. It provides machinery for investigation
and settlement of industrial disputes. It makes provisions for constitution of a
adjudication machinery besides the authorities of investigation and settlement of
industrial disputes. Normally labour court adjudicates the matters that are specified
in the Second Schedule of the I.D.Act, 1947.It passes award within the reasonable
period as prescribed by the Act. Labour court’s proceedings are the judicial
proceedings. It is deemed to be a civil court and its award is binding upon the
parties.

2. Industrial Tribunal: One or more industrial Tribunals may be formed by the

appropriate government as per the needs. Government by notifying in the Official
Gazette may constitute the Industrial Tribunal that adjudicates the matters as
specified in the Second Schedule or the Third Schedule of the ID Act It is formed
for a limited period. A person shall be appointed as the presiding officer if and only
if he or she meets the prescribed qualifications as specified in the Act. It enjoys
powers alike the Labour Court. In addition it can appoint the assessors and can
award cost to the deserving party or parties as the case may be. Matters of the
Third Schedule that Industrial Tribunal deals within the scope of the disputes are
many. Some of these, under employee wage and benefits, are mentioned here for
the purpose getting an idea. These contain:
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 a. Wages, including the period and mode of payment,
b. Compensatory and other allowances,
c. Hours of work and rest intervals,
d. Leave with wages and other holidays,
e. Bonus, profit sharing, P.F. and gratuity.
3. National Tribunal: The opinion of the Central Government is the essential
requirement for the formation of National Tribunal. If at any time the Central
Government thinks that industrial disputes bear the National importance(s) or
industrial establishments across the country may be interested then the same by
making appropriate Gazette notification constitutes one or more National Tribunals
to adjudicate the related matter or set of matters. The Central Government appoints
one person only in the said Tribunal after the fulfilment of the prescribed qualifications
as per the Act. The duties and powers of this Tribunal are more or less similar to
Industrial Tribunal and Labour Court. However jurisdictions of the Labour Court
and Industrial Tribunal are likely to be ceased on the occasion of the references of
disputes to the National Tribunal. The order, award or settlement of the National
Tribunal are binding upon the parties concerned and are considered to be the
decree of the Civil Court.

5.4 COLLECTIVE BARGAINING

Collective bargaining takes place when a number of work people enter into a
negotiation as a bargaining unit with an employer or group of employers with the object of
reaching an agreement on the conditions of the employment of the work people.
Collective Bargaining is a process in which representatives of two groups (employers
and employees) meet and try to negotiate an agreement which specifies the nature of
future relationship (pertaining to employment) between the two. Collective bargaining is a
bipartite mechanism where union on behalf of the employee and management on behalf of
the employers sit together to initiate a process whereby both the parties attempt to agree
on something the first party cares in exchange of some other thing the second party concerns
about. Usually in industry the collective bargaining moves around employment conditions
and HR policy-centric matters to wage and compensation linked issues. Thereby, collective
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bargaining establishes some kind of relation between employees’ union and the employers
where both the parties try to settle the dispute through amicable negotiation. A dispute is a
very natural because under such condition one party thinks that other is going to affect the
interests of the same. Collective bargaining is a state of affairs that resolves the differences
between the employers and the employees relating to indispensable issues of employment
provisions and through face to face interactions of the representatives of the workers and
the employers within the process of bargaining, both the parties try to settle up the disparities,
amicably, with the avoidance of mutually incompatible interests as far as possible (Yoder,
1975).

Collective bargaining is probably the most effective method of resolving industrial

disputes. It occurs when representatives of a labour union meet management representatives
to determine employee’s wages and benefits, to create or revise work rules, and to resolve
disputes or violations of the labour contract.

The bargaining is collective in the sense that the chosen representative of the
employees (i.e. the union) acts as a bargaining agent for all the employees in carrying out
negotiations and dealings with the management.

5.4.1 Features of Collective Bargaining

Randle observes: “A tree is known by its fruit. Collective bargaining may best
be known by its characteristics.”

The main characteristics of collective bargaining are:

1. It is a group action as opposed to individual action and is initiated through the

representatives of workers. On the management side are its delegates at the
bargaining table; on the side of workers is their trade union, which may represent
local plant, the industry membership or nation-wide membership.

2. It is flexible and mobile, and not fixed or static. It has fluidity and ample scope for
a compromise, for a mutual give-and-take before the final agreement is reached
or the final settlement is arrived at.

3. It is a bi-partite process. The employers and the employees are the only parties

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 involved in the bargaining process. There is no third party intervention. The
conditions of employment are regulated by those directly concerned.

4. It is a continuous process which provides a mechanism for continuing and organized

relationships between management and trade unions. “The heart of collective
bargaining is the process for a continuing joint consideration and adjustment of
plant problems.”

5. It is industrial democracy at work. Industrial democracy is the governance of

labour with the consent of the governed workers. The principle of arbitrary
unilateralism has given way to that of self government in industry. Collective
bargaining is not a mere signing of an agreement granting seniority, vacations and
wage increases. It is not a mere sitting around a table, discussing grievances.
Basically, it is democratic: it is a joint formulation of company policy on all matters
which directly affect the workers.

6. Collective bargaining is not competitive process but is essentially a complementary

process, i.e. each party needs something that the other party has, namely, labour
can make a greater productive effort and management has the capacity to pay for
the effort and to organize and guide it for achieving its objectives.

In the words of Davey: “Collective bargaining is a complex process. It involves

psychology, politics and power of the work group. It frequently involves a contest between
sovereign institutional entities whose survival requirements are, in some instances related
and in other instances, independent of, or in conflict with, one another.”

5.4.2 Pre-requisites for Collective Bargaining

1. There should be careful selection of negotiation teams and issues. The team should
have a mixed composition, including productions finance and IR experts. It should
be headed by personnel and industrial relations specialists of sufficient seniority,
who has adequate authority to commit the enterprise and take decisions, without
frequent referrals to top management. For instance, many organizations have a
vice-president personnel or director-personnel heading the team with a brief to
commit the organization up to a certain amount which can be spread out depending
on the negotiating depending on the negotiating situation based on union demands.
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 2. It is important for the management to recognize the union and to bargain in more
good faith, in unionised situations. This can put pressure on the union to formulate
plans and demands in a systematic way. Strong unions and progressive
managements can help create an atmosphere of mutual confidence.

3. The negotiating teams should have open minds, to listen and appreciate the other’s
concern and point of view and also show flexibility in making adjustments to the
demands made.

4. The need to study adequately or do ‘homework’ on the demands presented, i.e.

to gather data on wages and welfare benefits in similar industries in the geographical
area.

5. Both the management and union should be able to identify grievances, safety and
hygiene problems on a routine basis and take appropriate remedial steps.

6. Trade unions should encourage internal union democracy and have periodic
consultations with the rank and file members.

7. Trade unions should show their equal concern regarding both quantity of work
output as agreed upon and quality of work. They should show their full commitment
towards the viability of the firm and its products/services. Periodic discussions
may be necessary between the management and the unions to interpret the
provisions of the contract and clarify doubts.

5.4.3 Process of Collective Bargaining

The process of collective bargaining involves six major steps:

1. Preparing for negotiations

2. Identifying bargaining issues

3. Negotiation

4. Reaching the agreement

5. Ratifying the agreement

6. Administration of the agreement

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• Preparing for Negotiation : Careful advance preparations by employers and
employees are necessary because of the complexity of the issue and broad range
of topics to be discussed during negotiations. Effective bargaining means presenting
an orderly and factual case to each side.

• Identifying Bargaining issues : The major issues discussed in collective

bargaining fall under the following four categories:

• Wage related issues : These include such topics as how basic wage rates are
determined, cost of living adjustments, wage differentials, overtime, wage
adjustments and the like.

• Supplementary Economic benefits: These include such issues as pension plans,

paid vacations, paid holidays, health insurance plans, retrenchment pay,
unemployment pension, and the like. Institutional Issues: These consist of the
rights and duties of employers, employees, unions, employee’s stock ownership
schemes and QWL programmes.

• Administrative Issues: These include such issues as seniority, employee discipline

and discharge procedures, employee health and safety, technological changes,
work rules, job security, training and the like.

• Negotiating : Preparations having been made and issues been identified, the
next logical step in the collective bargaining process is negotiation. The negotiation
phase begins with each side presenting its initial demands. The negotiation goes on
for days until the final agreement is reached.

• Settlement and Contract Agreement : After an initial agreement has been made,
the two sides usually return to their respective constituencies to determine whether
what they have informally agreed upon is acceptable.

In this stage, the union-negotiating team explains and puts the agreement to the
union members for a vote. If voted, this agreement is formalized into a contract. It
is important that the contract must be clear and precise.

• Administration of the Agreement :The agreement must be implemented

according to the letter and spirit of the provisions of the agreement. Faulty

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 implementation or violation of any provision leads to disputes. The HR must play
crucial role in the day to day administration of the contract. He or she advises on
matters of discipline and works to resolve grievances arising out of the agreement.

5.5 WORKERS’ PARTICIPATION IN MANAGEMENT

The concept of workers’ participation in management is a broad and complex

one. Depending on the socio-political environment and cultural conditions, the scope and
content of participation may change. Various terms have come to be used to denote different
forms and degree of participation.

For example, joint consultation, labour-management cooperation, co-determination,

joint decision making, workers’ participation in industry and workers’ participation in
management. These terms or their variants have been interpreted and explained differently.
In any case, a common thread running through all interpretations is the idea of associating
employees in managerial decision- making.

The International Institute for Labour Studies defined WPM as “the participation
resulting from practices which increase the scope for employee’s share of influence in
decision making at different tiers of organizational hierarchy with concomitant assumption
of responsibility”.

5.5.1 Objectives of Workers’ Participation in Management:

The main objectives of workers‘participation in management include:

i. To promote increased productivity for the advantage of the organization, workers

and society at large;

ii. To provide a better understanding to employees about their role and place in the
process of attainment of organizational goals;

iii. To satisfy the workers‘social and esteem needs; and

iv. To strengthen labour management co-operation and thus maintaining industrial

peace and harmony.

v. To develop social education for effective solidarity among the working community
and for tapping latent human resources.
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 vi. An ideological point of view to develop self-management in industry.

vii. An instrument for improving efficiency of the company and establishing harmonious
industrial relations.

viii. To build the most dynamic human resource.

ix. To build the nation through entrepreneurship and economic development.

x. To improve the quality of working life by allowing the workers greater influence
and involvement in work and the satisfaction obtained from work.

xi. Development of human personality

xii. Development of leader from within the industry.

xiii. Development of working class.

xiv. Creation of a just egalitarian society.

xv. Facilitate self-development of worker.

5.5.2 Forms of Employee Participation

Worker participation is a situation where workers are involved in some way with
decision-making in a business organization. Worker participation can take many forms.
There might be a Consultative Council in the Company, where trade unions and management
meet regularly to discuss points of mutual interest. Workers can be organized in quality
circles and meet regularly in small groups to discuss ways in which their work could be
better organized.

Marchington (1995) has identified five forms of employee participation:

1. Downward communications

Downward communications (team briefing and meetings) take place from managers
to employees in order to inform and ‘educate’ staff so that they accept management
plans.

2. Upward problem solving

Upward problem solving is designed to tap into employee knowledge and opinion,
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 either at an individual level or in small groups. The aims are to increase the stock
of ideas in an organization, to encourage cooperative relationship at work, and to
legitimize change. Attitude surveys, quality circles, suggestion schemes and, total
quality management/customer care committees come into this category.
3. Task participation
Task participation and job redesign processes engage employees in extending the
range and type of tasks they undertake. Approaches to job design, such as horizontal
job redesign (extending the range of tasks undertaken at the same level) job
enrichment, vertical role integration (taking greater responsibility for supervisory
duties) and team working (where the team organizes its own work so that it becomes
‘self managed’) may be used.
4. Consultation and representative participation
Consultation and representative participation enables employees take part through
their representatives in management decision-making. One of the aims of
management in encouraging this form of participation is to use it as a safety valve
- an alternative to formal disputes - by means of which more deep-seated employee
grievances can be addressed. Joint Consultative Committees and the appointment
of worker directors falls into this category;
5. Financial involvement/participation
Financial involvement or participation takes the form of such schemes as profit
sharing and employee share ownership. Some companies also use gain sharing as
a means of involvement. The general purpose of Financial Participation is to enhance
employee commitment to the organization by linking the performance of the firm
to that of employee. Employee is more likely to be positively motivated as he or
she has a financial stake in the company by having a share of profit or by being a
shareholder.
a) Co-ownership
In this scheme, the workers are involved in management by making them
shareholders of the Company. Thus, workers share the capital as well as profit.
This may be done by inducing them to buy equity shares. The management may
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 promote the scheme by allowing the worker to make payment in installments. It
may also advance loans or even give financial assistance to such workers to enable
them to buy equity share. Workers may also be allowed to leave their bonus with
the Company as shares (bonus shares). Participation through ownership has the
distinct advantage of making the worker committed to the job and to the
organization. It also offers recognition of the claim of the dignity of labour as the
worker is viewed as partner in the business. This would, in turn, create a sense of
belongingness among workers and stimulate them to contribute their best for the
continued progress of the Company.

b) Workers’ Participation in Management. Productivity Bargaining

In this scheme workers’ wage & benefits are linked to productivity. Information
on Company performance is provided to employees as part of the scheme and
they are encouraged to discuss with their managers or team leaders the reasons
for success or failure and methods of improving performance. A standard
productivity index is finalized through negotiations initially. Workers do not have
to perform at exceptionally high levels to beat the index. If they are able to exceed
the standard productivity norms, they will get substantial benefits. The aim of such
schemes is to educate employees and gain their commitment. Without such
agreement, workers may not realize the importance of raising productivity for
organizational survival and growth.

c) Gain sharing

A form of contingent compensation where owners and employees share in

productivity gains, as an incentive for improvement. Gains are determined by
agreed-upon measures of organizational performance. Gain sharing typically
provides for a long term distribution to manufacturing or similar units of a set
percentage of the costs saved through the often substantial revamping of production
processes. Gain sharing programs encourage teams within a firm to solve
fundamental problems within their specific area of expertise.

1. Works Committees

The Industrial Disputes Act, 1947, provides for the setting up of bipartite Works
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 Committees as a scheme of workers participation in management, which consists
of representatives of employers and employees. The Act provides for these bodies
in every undertaking employing100 or more workmen. The aim of setting up of
these bodies is to promote measures for maintaining harmoniums relations in the
work place and to sort out differences of opinion in respect of matters of common
interest to employers and employee. The Bombay Industrial Relations Act, 1946,
also provides for these bodies, but under the provisions of this Act they can be set
up only in units that have a recognized union and they are called Joint Committees.
The workers directly elect their representatives where there is a union.

• Functions

The Works Committees /Joint Committees are consultative bodies. Their functions
include:

1. Discussion of conditions of work like lighting, ventilation, temperature, sanitation,

etc.,

2. Discussion of amenities like water supply for drinking purposes, provision of

canteens, medical services, safe working conditions, administration of welfare
funds, educational and recreational activities.

3. Encouragement of thrift and savings.

4. It promote measures for securing and preserving amity and good relations between
the employers and workmen and to comment upon matters of their common interest
or concern and endeavour to reconcile any material difference of opinion in respect
of such matters.

• Structure

The Works Committees have, as office bearers, a President, a Vice- President, a

Secretary and a Joint Secretary. The President is a nominee of the employer and
the Vice-President is the workers’ representative. The tenure of these bodies is
two years. The total strength of these bodies should not exceed 20. The employees’
representatives have to be chosen by the employees.

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 • Joint Management Councils/Committee (JMCs)

The Second Five-year Plan recommended the setting up of Joint Councils of

Management consisting of representatives of workers and management. The
Government of India deputed a study group (1957) to study the schemes of
workers’ participation in management in countries like UK, France, Belgium and
Yugoslavia. The Indian Labour Conference (ILC) considered the report of the
study group in its 15th session in 1957 and it made certain recommendations:

(i) Workers’ participation in management schemes should be set up in selected

undertakings on a voluntary basis.

(ii) A sub-committee consisting of representatives of employers, workers and

government should be set up for considering the details of workers’ participation
in management schemes. This committee should select the undertakings where
workers’ participation in management schemes would be introduced on an
experimental basis.

• Objectives

The objectives of JMCs are as follows:

(i) To increase the association of employers and employee there by promoting cordial
industrial relations;

(ii) To improve the operational efficiency of the workers;

(iii) To provide welfare facilities to them;

(iv) To educate workers so that they are well prepared to participate in these schemes;
and

(v) To satisfy the psychological needs of workers.

A tripartite sub-committee was set up as per the recommendations of Indian Labour

Conference, which laid down certain criteria for selection of enterprises where the JMCs
could be introduced. They are:

(i) The unit must have 500 or more employees;

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 (ii) It should have a fair record of industrial relations;

(iii) It should have a well organise trade union;

(iv) The management and the workers should agree to establish JMCs;

(v) Employers (in case of private sector) should be members of the leading Employers’
organisation; and

(vi) Trade unions should be affiliated to one of the central federations.

It was observed by the sub-committee that if the workers and employers mutually
agree they could set up JMCs even if these conditions are not met. The sub-committee
also made recommendations regarding their composition, procedure for nominating workers
representatives, the membership of JMCs etc. The details of these aspects have to be
worked out by the parties themselves. A draft model was drawn up regarding the
establishment of JMCs. This sub-committee was later reconstituted as the “Committee on
Labour- Management Co-operation” to advise on all matters pertaining to the scheme.

Board Level Participation (1970)

Following the recommendations of Administrative Reforms Commission, the

Government has accepted that representatives of workers be taken on the Board of
Directors of public sector undertakings. It was introduced in Hindustan Antibiotics Ltd,
Hindustan Organic Chemicals Ltd, National Coal Mines Development Corporation,
BHEL, National Textile Mills, Newsprint and Paper Mills, etc. The worker Director was
supposed to be elected by all the workers of the company through secret ballot. After the
nationalization of banks, the government advised all nationalized banks to appoint employee
directors to their boards – one representing employees and the other representing officers
– having a tenure of 3 years. The scheme required verification of trade union membership,
identification of the representative union and the selection of a worker director who is
chosen out of a panel of three names furnished to the government by the representative
union within a prescribed period. In some of the banks, the scheme could not be introduced
smoothly after 1971 owing to difficulties in verifying union membership figures. A study of
the scheme in the nationalised banks by the National Labour Institute has indicated that it
has failed in promoting cordial relations between labour and management.

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Shop and Join Councils

The 1975 scheme has come into existence after the emergency was declared in
June 1975. It had envisaged the setting up of Shop Councils at the shop/ departmental
level and Joint Councils at the enterprise level. These were to be introduced in manufacturing
and mining units employing 500 or more workers – whether in public, private or cooperative
sector. The actual number of Shop Councils in an enterprise was to be decided by the
employer after consultations with the recognised union/ workers. The chosen workers’
representatives must be actually working in the shop or department concerned .The
Chairman of the council will be elected by management and the Vice-Chairman by the
workers’ representatives. The Council shall function for 2 years and will meet regularly to
discuss matters relating to safety, discipline, physical working conditions, welfare measures,
productivity norms and targets, absenteeism, flow of communication etc. The Joint Council,
having tenure of two years, shall be constituted for the whole enterprise consisting of
representatives of both the management and the labour. The chief executive shall be the
Chairman of the council and the representatives of workers shall nominate the Vice-
President. The Council will meet once in a quarter to discuss matters which remain unsolved
by shop councils including: schedules of working hours, holidays, optimum use of materials,
productivity standards, training facilities to develop skills of workers, awards to workers
for creative suggestions, general health, safety and welfare of workers, etc.

Apart from manufacturing and mining units, commercial and service organisations
(such as railways, hospitals, P&T, state electricity boards) were also covered in the 1977
scheme. Both the schemes evoked considerable interest and were introduced with a lot of
enthusiasm, covering a wide spectrum of public and private sector units. However, after
the emergency was lifted, most of the councils became defunct. Several operational
problems surfaced from time to time, including:

(a) Inadequate sharing of information,

(b) Absence of a participative culture,

(c) Indifferent attitude of management,

(d) Lack of interest on the part of workers,

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 (e) Failure to clarify the norms for the nominations of representatives,

(f) Absence of a single union interested in a bipartite consultative process etc.

Adding Article 43A in the Indian Constitution

In view of the growing acceptance of the importance of workers’ participation in

management for increasing productivity, maintaining industrial peace and accelerating the
pace of economic development, Article 43A was inserted in the Indian Constitution under
the Directive Principles of the State Policy in 1977. The Article provides that the State
shall take steps, by suitable legislation or any other way, to secure the participation of
workers in the management of undertakings, establishments or other organizations engaged
in any industry.

The New Scheme (1984)

A new scheme of workers’ participation in management was prepared and notified

in 1984 after reviewing the progress of various schemes in industry. It was applicable to all
central public sector enterprises. It was decided that workers would be allowed to
participate at the shop level, then plant level and the board level. The mode of representation
of workers’ representatives was to be determined by consultations with the concerned
unions. A wide range of work related issues (personnel, welfare, plant, operations, financial
matters, etc.) were brought within the ambit of the councils. The Ministry of Labour
constituted a tripartite committee to review the working of the scheme and to suggest
corrective measures.

Participation of Workers in Management Bill, 1990

The Participation of workers in Management Bill was introduced in the Rajya

Sabha on 30th May 1990. This Bill had been referred to the Parliamentary Standing
Committee on Labour and Welfare. This Bill is still under consideration of the Standing
Committee. The bill aims at providing participation of workers in management at shop
floor level, establishment level and board of management level.

I. Shop floor council (plant level)

Except for industries having one shop floor, all other industries are required to
have shop floor council in accordance with the rules.
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• Functions: It carries out functions specified in Schedule I of the Bill which include:

(i) Production facilities

(ii) Storage facilities

(iii) Materials economy

(iv) Operational problems

(v) Wastage control

(vi) Hazard and safety problems

(vii) Quality improvement

(viii) Cleanliness

(ix) Monthly targets and production schedule

(x) Cost reduction programme

(xi) Formation & implementation of work systems

(xii) Design group working

(xiii) Welfare measures.

II. Establishment council

Every industry is required to set up an establishment council at establishment level.

• Functions: An establishment council can exercise powers as specified in Schedule

II of the Bill, which includes:

(A) Operational Area:

(i) Evolution of productivity schemes

(ii) Planning, implementation, fulfilment and review of monthly targets and

schedules

(iii) Material supply & its shortfall

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 (iv) Storage and inventories

(v) House keeping

(vi) Improvement in Productivity

(vii) Encouragement and consideration of suggestion

(viii) Quality of technological improvement

(ix) Machine utilisation, knowledge and development of new product

(x) Operational performance figure, etc.

(B) Economic and Financial Areas:

(i) Profit & loss statement and balance sheet

(ii) Review of operating expenses, financial result and cost of sales

(iii) Plant performance in financial terms.

(C) Personnel Matters:

(i) Absenteeism

(ii) Problems of women workers

(iii) Initiation of supervision of workers’ training programme

(iv) Administration of social security schemes

(D) Welfare Areas:

(i) Operational details

(ii) Implementation of welfare schemes

(iii) Safety measures etc.

(E) Environmental Areas:

(i) Extension activities and community development projects

(ii) Pollution control.

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 III. Representation of Board of Management

“The representatives of workmen are to constitute 13% and those of other workers
12% of the total strength of the Board of Management.” The bill provides for a
monitoring committee to advice on matters of administration of the Act and scheme
under it.

5.6 SUMMARY

Trade unions are the associations of employees working as an agent of working

class. These unions not only safeguarding the financial interest of the workers but also
providing the other benefits such as cultural, political, social and psychological within their
broader preview. Trade unions adopts both the aggressive as well as federal measures to
solve the problems. In India the trade union activities is regulated by the Trade Union Act
1926. But Indian trade union movement is suffering from several problems such as low
membership, multiplicity of trade unions and financial crisis etc. If workers want to strengthen
the trade union movement in India and want to ensure better condition of the labour then
they have to take corrective measures specified in the text. The widening scope of collective
bargaining embraces various issues. The collective bargaining procedure involves variation,
preparation, stages, critical situations, drafting and designing of contract and contract
administration. It reveals several prerequisites for collective bargaining. It also reveals
several similarities and dissimilarities across developed and developing countries. At present,
trade unions are irritant rather than threat to management. Accordingly, concept of collective
bargaining has changed with growing power of employers and dwindling fortunes of trade
unions.

5.7 GLOSSARY

• Worker's Participation in Management :

“The participation resulting from practices which increase the scope for employee’s
share of influence in decision making at different tiers of organizational hierarchy
with concomitant assumption of responsibility”.

• Collective Bargaining :

Collective bargaining takes place when a number of work people enter into a

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 negotiation as a bargaining unit with an employer or group of employers with the
object of reaching an agreement on the conditions of the employment of the work
people.

5.8 SELF ASSESSMENT QUESTIONS

1. Define industrial relations ?

2. Explain industrial dispute ?

3. Describe the nature and scope of collective bargaining ?

4. Describe the characteristics & classification of collective bargaining ?

5.9 IN-TEXT QUESTIONS

1. Discuss in brief the types of collective bargaining ?

5.10 FURTHER READING

• Designing and Managing Human Resource Systems: Udai Pareek and T V Rao

• Personnel Management: C.B. Mamoria

• Human Resource Management: P. Subha Rao

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