SET A 7.

Based on Human Relations – HR Management is

concerned with the motivation of human resources. The
HR101 – HUMAN RESOURCE MANAGEMENT managers should give attention to the different needs,
perceptions and expectations of employees.
Chapter 1: Introduction to Human Resource
Management Functions of Human Resource Management
Objectives of Human Resource Management 1. Managerial Functions
1. To ensure effective utilization of human resources * Planning – steps taken in determining in advance personnel
requirements, personnel programs, policies, etc. After
2. To establish and maintain an adequate organizational
determining how many and what type of people are required, a
structure of relationship among its members
personnel manager has to devise ways and means to motivate
3. To generate maximum development of human resources them.

4. To ensure respect for human beings * Organizing – organizing the operative functions by
designing structure of relationship among jobs, personnel and
5. To ensure reconciliation of individual/group goalswith those physical factors. Personnel manager performs (a) preparation
of the organization of task force, (b) allocation of work to individuals, (c)
6. To identify and satisfy the needs of individuals integration of the efforts of the task force, (d) coordination of
work of individuals with that of the department.
Human Resource Management (HRM) – A relatively new
approach to managing people in any organization. * Directing – concerned with initiation of organized action and
stimulating the people to work. The personnel manager directs
4 Main Activities of HRM: the activities of people of the organization to get its function
performed properly.
1. Acquisition
* Controlling – provides basic data for establishing standards,
2. Development
makes job analysis and performance appraisal.
3. Motivation
2. Operative Functions
4. Maintenance of Human Resources
* Procurement of Personnel – concerned with the obtaining
Features of HR Management of the proper kind and number of personnel necessary to
accomplish organizational goals.
1. Inherent Part of Management – If a manager is to get the
best of his people, he must undertake the basic responsibility * Development of Personnel – this has to do with the
of selecting people who will work under him. increasing skills of the employees necessary for proper job
performance through training.
2. Pervasive Function – HR Management is not a
responsibility that a manager can leave completely to someone * Compensation to Personnel – determination of adequate
else. However, he may secure advice and help in managing and equitable remuneration of personnel for their contribution
people. to organization’s objectives

3. Basic to all Functional Areas – Every manager from top to * Maintaining Good Industrial Relation – intended to reduce
bottom, working in any department has to perform the strife, promote industrial peace, provide fair deal to workers
personnel functions. and establish industrial democracy.

4. People Centered – It is concerned with all categories of * Record Keeping – personnel manager collects and maintains
personnel from top to the bottom of the organization. information concerned with the staff of the organization.
Blue−collar workers (Working on machines and engaged in
* Personnel Planning and Evaluation – evaluation of
loading, unloading, etc.) White−collar workers (Clerical
performance, personnel policy of an organization and its
Employees, Managerial and Non−managerial personnel,
practices, personnel audit, morale, survey and performance
professionals)
appraisal.
5. Personnel Activities or Functions – Includes manpower
planning, employment, placement, training, appraisal and
compensation of employees Chapter 2: Human Resource Planning
6. Continuous Process – It must be performed continuously if Human Resource Planning - can be defined as the process of
the organizational objectives are to be achieved smoothly. determining manpower requirements and the means for
meeting those requirements in order to carry out the integrated transfers. Allocation of human resources should be so planned
plan of the organization. that available manpower is put to full use to ensure smooth
functioning of all departments.
Objectives of HR Planning
4. Estimating Manpower Gaps − Net human resource
1. Ensure optimum use of human resources currently
requirements or manpower gaps can be identified by
employed;
comparing demand and supply forecasts. Such a comparison
2. Avoid balances in the distribution and all allocation of will reveal either deficit or surplus of human resources in
human resources; future. Deficits suggest the number of persons to be recruited
from outside whereas surplus implies redundant to be
3. Assess or forecast future skill requirements of the redeployed or terminated. Similarly, gaps may occur in terms
organization’s overall objectives; of knowledge, skills and aptitudes. Employees deficient in
4. Provide control measure to ensure availability of necessary qualifications can be trained whereas employees with higher
resources when required; skills maybe given more enriched jobs.

5. Control the cost aspect of human resources; 5. Matching Demand and Supply − It is one of the objectives
of human resource planning to assess the demand for and
6. Formulate transfer and promotion policies. supply of human resources and match both to know shortages
and surpluses on both the side in kind and in number. This will
Human Resource Planning Activities
enable the human resource department to know about
1.Forecasting − projecting future manpower requirements overstaffing or understaffing.

2.Inventory of Present Manpower Resources − assessing the HR Planning Three Periods

extent to which these resources are employed optimally
1. The short-range or immediate future − may refer to
3.Anticipating Manpower Problems – projecting present current situation and experiences and may even concern issues
resources into the future and comparing them with the forecast such as overtime and replacements. If there has been previous
of requirements to determine their adequacy, both planning for human resource such plans can serve as a guide in
quantitatively and qualitatively. the immediate future. If not, a beginning should be made at
once.
4. Planning – preparation of the necessary programs of
requirements, selection, utilization, training, development, 2. The mid-range − has a different time span in various
transfer, promotion, motivation and compensation to ensure companies. It can be as short as a few months or as long as
that future manpower requirements are properly met. several years. Most would agree upon a 2−3 years period as a
mid−range.
Steps in Human Resource Planning
3. The long-range future − could be five years, while 10 to 15
1. Analysis of Organizational Plans and Objectives − years span could be used for a perspective plan. Long−range
Human resource planning is a part of the overall plan of an plans must be made on the basis of various trends in the
organization. Plans concerning technology, production, economy and in the labor market, and on long−term trends of
marketing, finance, expansion and diversification give an idea production in the company.
about the volume of future work activity. Each plan can further
be analyzed into sub− plans and detailed programs. It is also HR Information System − HRIS is a system that maintains,
necessary to decide the time horizon for which human resource collect, and analyzes data relating to human resources of the
plans are to be prepared. The future organization structure and organization. HRIS includes the information relating to
job design should be made clear and changes in the employees, their abilities, qualifications, potentialities,
organization structure should be examined so as to anticipate creative instincts, age, pay scales, various jobs in the
its manpower requirements. organization, their required skills and qualifications to do
them, the number of employees and executives manning
2. Forecasting Demand for Human Resources − Human various positions, organizational objectives, policies and
resource planning starts with the estimation of the number and procedures, etc.
type of personnel required at different levels and in different
departments. Chapter 3: Recruitment and Selection Process
3. Forecasting Supply of Human Resources − to deal with Recruitment − Means search of the prospective employee to
allocation of persons to different departments depending upon suit the job requirements as represented by job specification−
the work−load and requirements of the departments. While a technique of job analysis. It is the first stage in selection,
allocating manpower to different departments, care has to be which makes the vacancies known to a large number of people
taken to consider appointments based on promotions and and the opportunities that the organization offers. In response
to this knowledge, potential applicants would write to the ideas into the enterprise. This will improve the overall working
organization. The process of attracting people to apply in of the enterprise.
called recruitment.
4. Competitive Spirit − If a company can tap external
Sources of Recruitment sources, the existing staff will have to compete with the
outsiders. They will work harder to show better performance.
1. Internal Sources − Refers to the recruitment from within
the company. The various internal sources are promotion; Demerits of External Sources
transfer, past employees and internal advertisements.
1. Dissatisfaction among Existing Staff − External
2. External Sources − Refers to the practice of getting suitable recruitment may lead to dissatisfaction and frustration among
persons from outside. existing employees. They may feel that their chances of
promotion are reduced.
* Casual Caller or Unsolicited Applications − Can be
claimed when the organizations, which are regarded as good 2. Lengthy Process − Recruitment from outside takes a long
employers, draw a steady stream of unsolicited applications in time. The business has to notify the vacancies and wait for
their offices applications to initiate the selection process.
* Media Advertisement − When advertisement in newspapers 3. Costly Process − It is very costly to recruit staff from
or trade and professional journals is generally used when external sources. A lot of money has to be spent on
qualified and experienced personnel are not available from advertisement and processing of applications.
other sources
4. Uncertain Response − The candidates from outside may not
* Employment Agencies − Employment exchanges runby the be suitable for the enterprise. There is no guarantee that the
Government are regarded as a good source of recruitment for enterprise will be able to attract right kinds of people from
unskilled, semi−skilled and skilled operative jobs. external sources.
* Management Consultants − They maintain a data bank of Interview − Is an oral examination of candidates for
persons with different qualifications and skills and even employment. No selection process is complete without one or
advertise the jobs on behalf their clients to recruit the right type more interviews. Interview is the most common and core
of personnel. method of both obtaining information from job− seekers, and
decision−making on their suitability or otherwise.
* Educational Institutions or Campus Recruitment − Big
organizations maintain a close liaison with the universities, The effectiveness of the interview as a screening device can
vocational institutes and management institutes for recruitment be improved by taking care of certain aspects like the
to various jobs following:
* Recommendation − Applicants introduced by friends and ● The interview should be based on a checklist of what to look
relatives may prove to be a good source of recruitment. for in a candidate. Such a checklist could be based on proper
job analysis. Each critical attribute which the interview seeks
* Labor Contractors − Workers are recruited through labor
to evaluate may be assigned specific weights.
contractors who are they employees of the organization.
● It is desirable to prepare a specific set of guidelines for the
* Telecasting − The detailed requirements of the job and the
interview.
qualities required to do it are publicized along with the profile
of the organization where vacancy exists. The use of T.V. as a ● The interviewers need to train to evaluate performance in the
source of recruitment is less as compared to other sources. interview objectively. Also, all interviewers need to develop
common understanding about the criteria measures, their
Merit of External Sources
purposes and weights.
1. Qualified Personnel − By using external sources of
● The interviewers may use past behavior to predict future
recruitment the management can make qualified and trained
behaviors and obtain additional information to attempt such
people to apply for vacant Jobs in the organization.
linkages more meaningfully.
2. Wider Choices − When vacancies are advertised widely a
● There should be proper coordination between the initial and
large number of applicants from outside the organization
succeeding interviews.
apply. The management has a wider choice while selecting the
people for employment. ● The interview (even stress interview) should be conducted in
a related physical setting.
3. Fresh Talent − The insiders may have limited talents.
External sources facilitate infusion of fresh blood with new Background Investigation − The background investigation in
selection process may include verification of reference from
past teachers, employers or public men; public men; police 1. To impart to new entrants the basic knowledge and skill they
verification; and, medical examination. need for an intelligent performance of definite tasks;
Background verification is sought to guard oneself against 2. To assist employees to function more effectively in their
possible falsification by applicant. But given the acute skill present positions by exposing them to the latest concepts,
shortages and competitive pirating strategies of employers it is information and techniques and developing the skills, they will
possible for some of them to give clean chit to those whom they need in their particular fields;
wish to get rid of and be unfair to those whom they are not
3. To build up a second line of competent officers and prepare
prepared to lose.
them to occupy more responsible positions;
Screening Strategies for HR
4. To broaden the minds of senior managers by providing them
Screening − Is the process of choosing a qualified person for with opportunities for an inter−change of experiences within
specific role who can successfully deliver valuable and outside with a view to correcting the narrowness of the
contributions to the organization. outlook that may arise from over− specialization;
1. Multistage Selection Strategy − This combines a number 5. To impart customer education for the purpose of meeting the
of assessment tools as part of the process. The human resources training needs of Corporations, which deal mainly with the
department is responsible for validating each assessment tool public. In a nutshell, the objectives of training are to bridge the
and ensuring that it is legitimately related to the requirements gap between existing performance ability and desired
of the open position. performance.
Examples of different stages in a multistage selection Developing an Effective Employee Training Program
strategy:
1. Defining needs, goals and objectives − Training (a
a. Personality tests performance improvement tool) is needed when employees are
not performing up to a certain standard or at an expected level
b. Skills tests
of performance. A successful training needs analysis will
c. Interview and sample work performance This strategy is identify those who need training and what kind of training is
paired with either a conjunctive or compensatory strategy. needed. It is counter− productive to offer training to
individuals who do not need it or to offer the wrong kind of
2. Compensatory Selection Strategy − This method training. A Training Needs Analysis helps to put the training
administers all assessment tools to applicants at the same time, resources to good use.
or at least all of them are administered before a candidate is
eliminated or selected. 2. Define short- and long-term goals of training

Reference − Check As a selecting official, you are responsible 3. Develop Individual training modules
for conducting reference checks prior to making a final
4. Implementation of the Training Program
selection. Checking references before making a final decision
can save time, money, and effort, since it reduces the likelihood 5. Evaluate Training Results
of making an inappropriate selection. Some applicants provide
Level 1: Reaction − This level measures how your trainees
false or exaggerated information. Prepare a reference check
(the people being trained), reacted to the training.
form in advance and write notes on it while completing a
reference check. Level 2: Learning − At level 2, you measure what your
trainees have learned. How much has their knowledge
Chapter 4: Training & Development
increased as a result of the training?
Human Resources Development (HRD) − Focuses on both
Level 3: Behavior − At this level, you evaluate how far your
training employees for their current jobs and developing skills
trainees have changed their behavior; based on the training
for their future roles and responsibilities. HRD activities
they received. Specifically, this looks at how trainees apply the
include: training for managers, supervisors, and teams; tuition
information.
reimbursement programs; customer service training;
performance management; harassment prevention training; Level 4: Results − At this level, you analyze the final results
360−degree reviews (multi−rater feedback system); career of your training. This includes outcomes that you or your
coaching. organization have determined to be good for business, good for
the employees, or good for the bottom line.
Objectives of Training and Development in the
Organization Employee Development – Is a key contributor to a company’s
competitive advantage by helping employees understand their
strength, weaknesses and interests and by showing them how
new jobs and expanded job responsibilities are available to due to age, temperament or motivation, or the inability of a
them to meet their personal growth needs. This helps retain person to adapt him to technological changes.
valuable managers who might otherwise leave to join clients or
7. Personal Growth: Employees on a personal basis gain
competitors. It is also important for all employees, not just
individually from their exposure to educational experiences.
managers.
Again, Management development programs seem to give
Development − Refers to formal education, job experiences, participants a wider awareness, an enlarged skin, an
relationships and assessment of personality and abilities that enlightened altruistic philosophy, and make enhanced personal
help employees prepare for the future. growth possible.
Training and Development
Most employee development and training programs fall The following methods are generally used to provide training:
under the following categories:
On-The-Job Training Methods − This type of training is
− Management Development Career Development imparted on the job and at the workplace where the employee
is expected to perform his duties. It enables the worker to get
− Basic Skills
training under the same working conditions and environment
− Professional Skills and with the same materials, machines and equipment’s that he
will be using ultimately after completing the training. This
− Technical Training follows the most effective methods of training the operative
− Supervisory Skills − The managers are continuously engaged personnel and generally used in most of the individual
in training their subordinates. They should ensure that any undertaking.
training programmed should attempt to bring about positive * Job Experience − This is the oldest method of on−the− job
changes in the (i) Knowledge, (ii) Skills, and (iii) Attitudes of training. Learning by experience cannot and should not be
the workers. eliminated as a method of development, though as a sole
NEED AND IMPORTANCE OF TRAINING approach; it is a wasteful, time consuming and inefficient. In
some cases, this method bas proved to be very efficient though
1. Increasing Productivity: Instruction can help employees it should be followed by other training methods to make it more
increase their level of performance on their present job meaningful.
assignment.
* Coaching − On−the−Job coaching by the superior is an
2. Improving Quality: Better−informed workers are less important and potentially effective approach is superior. The
likely to make operational mistakes. Quality increases may be technique involves direct personnel instruction and guidance,
in relationship to a company product or service, or in reference usually with extensive demonstration.
to the intangible organizational employment atmosphere.
* Job Rotation − The major objective of job rotation training
3. Helping a Company Fulfill its Future Personnel Needs: is the broadening of the background of trainees in the
Organizations that have a good internal educational organization. If a trainee is rotated periodically from one job to
programmed will have to make less drastic manpower changes another job, he acquires a general background. The main
and adjustments in the event of sudden personnel alternations. advantages are: it provides a general background to the trainee,
training takes place in actual situation, competition can be
4. Improving Organizational Climate: An endless chain of
stimulated among the rotating trainees, and it stimulates a more
positive reactions results from a well−planned training
cooperative attitude by exposing a man to other fellow problem
programmed. Production and product quality may improve;
and view−points.
financial incentives may then be increased, internal promotions
become stressed, less supervisory pressures ensue and base pay * Special Projects − This is a very flexible training device.
rate increases result. The trainee may be asked to perform special assignment;
thereby he learns the work procedure. Sometime a task force is
5. Improving Health and Safety: Proper training can help
created consisting of a number of trainees representing
prevent industrial accidents. A safer work environment leads,
different functions in the organization.
to more stable mental attitudes on the part of employees.
Managerial mental state would also improve if supervisors * Apprenticeship − Under this method, the trainee is placed
now that they can better themselves through under a qualified supervisor or instructor for a long period of
company−designed development programs. time depending upon the job and skill required. Wages paid to
the trainee are much less than those paid to qualified workers.
6. Obsolescence Prevention: Training and development
This type of training is suitable in profession, trades, crafts and
programmed foster the initiative and creativity of employees
and help to prevent manpower obsolescence, which may be
technical areas like fitter, turner, electrician, welders, − Non−financial Rewards
carpenters etc.
Compensation Administration − Is a segment of
* Vestibule Training − Under this method, actual work management or human resource management focusing on
conditions are created in a classroom or a workshop. The planning, organizing, and controlling the direct and indirect
machines, materials and tools under this method is same as payments employees receive for the work they perform.
those used in actual performance in the factory. This method
Basic Components of Compensation Program
gives more importance to learning process rather than
production. 1. Base Pay − Refers to the cash that an employer pays for the
work performed. Minimum salary paid, can also be interpreted
Multiple Management − Emphasizes the use of committees
as a fixed amount paid to an employee.
to increase the flow of ideas from less experience managers
and to train them for positions of greater responsibility. The A) Wages are hourly rates of pay regulated by the Labor
McCormick & Company of Baltimore, U.S.A. developed the Standards of the Department of Labor and Employment
program. The company claims that the plan has increased together with the National Wages and Productivity Committee
employee efficiency, reduced labor turnover and absenteeism, (NWPC).
and enabled the company to pay higher wages than those
prevailing in the area and industry. In this method; a junior B) Salaries which are usually paid to managers and
board authorized to discuss any problem that the senior board professionals, are annual or monthly calculations of pay that
may discuss, and its members are encouraged to put their mind usually have less relation to hours worked.
to work on the business a whole, rather than too concentrate to 2. Wage and Salary Add-ons − Include cost−of−living
their specialized areas. adjustments (COLAs), overtime, holiday and other premium
OFF-THE-JOB TRAINING METHODS wages, travel and apparel/ clothing allowances, and a host of
related forms of premiums and reimbursements. Wage and
Following is the off the job training techniques: salary add−ons are used to compensate employees for work
above and beyond their normal work schedules or to reimburse
− Special Courses and Lectures
them for expenses related to their jobs.
− Conferences
3. Incentive Payments − Refer to fund’s employees receive
− Case Studies for meeting performance or output goals as well as to seniority
and merit pay. Companies provide these forms of
− Brainstorming
compensation to influence employee behavior, improve
− Laboratory Training productivity, and reward employees for their years of service
or their strong job performance.
− Simulation
4. Benefits and Services − Include paid time off, health
− Role−playing insurance, deferred income such as pension and profit− sharing
− Gaming programs, company cars, fitness club memberships, childcare
services, and tuition reimbursement.
− Sensitivity Training
Variable Pay − typically represents a payment made by an
Chapter 5: Compensation, Wage, Salary employer to an employee based on performance results.
Administration and Benefits Employees usually receive this type of compensation in
addition to their base pay.
Compensation Plan (CP) − Under RA No. 6758 is an orderly
scheme for determining rates of compensation of government Pay Compression − Pay compression (wage compression or
personnel. It was crafted to attract, motivate and retain good salary compression) occurs when employees with the same
and qualified people to accomplish the Philippine skills and experience are paid differently. Sometimes, new
Government’s mission, and mandates to encourage personal hires or employees with less experience may end up being paid
and career growth, and to reward good performance and length significantly more than tenured employees with more
of service. experience. This often occurs when the market price for the job
rises quickly, forcing employers to pay more to land qualified
Compensation Plan Components candidates than they had previously.
− Basic Pay / Salaries When these market changes outpace merit and other annual
− Fringe Benefits increases, you may end up needing to pay more to attract a new
candidate than you're currently paying more tenured
− Incentives employees in the same job in your organization.
What causes pay compression? In defined-benefit plans the employer promises a fixed
pension level, either in terms of a dollar amount or a percentage
Inflation: Pay compression can be caused by the inflation rate
of earnings scaled to seniority.
over time. For instance, Employee A earns Php50k a year for
Job B and gets a 3% raise for 5 years, landing them just under Defined-contribution plans specify the amount an employer
Php58k a year. Meanwhile, Employee X joins the company will set aside in an investment fund for the benefit of each
after that 5-year period, and because the market rate for Job B employee.
has changed over time, they are hired at Php65k. The
Factors Affecting Wage and Salary Administration
difference between the Php58k and Php65k is pay
compression. 1. Demand and Supply: Demand for and supply of labor and
its availability will have a great influence on the determination
Hot jobs: If there is high demand for a specific skill set or level
of wages rates. If there is a shortage of labor, the wages
of seniority, the market rate for such jobs can be driven up.
demanded will be high. If, on the other hand labor is plentiful,
This could cause previous employees in similar roles to appear
workers will be too willing to work at low rates of wages.
underpaid or below market.
2. Organization’s Ability to Pay: This is a major affecting
Competition: Sometimes, companies need to compete to get
factor in determining wage and salary structure of an
the best talent, and will pay high sums to land a perfectly-
organization. Financial position and soundness of an
skilled employee. While the employee reaps the reward and
organization can put it in a position to offer attractive
may be a great hire, the organization runs the risk of pay
compensation package. Generally, wages in most of the
compression.
organization decide through collective bargaining and
Fast-growth companies: Organizations hiring new roles organization’s ability and capacity to pay attractive wages
quickly (especially hot jobs) may run into pay compression if depends upon over all financial soundness and economic
they don’t have a roadmap for all their new hires, especially condition of an organization.
compared to older, established companies with refined
3. Prevailing Market Rate or “Going Wage Rate”: This is
compensation structures.
practically the major factor that induces any organization to
Tight job market: If employers are having a hard time filling take it as a base while determining wage and salary structure
jobs with qualified candidates, then new hires could potentially for it. Prevailing market rate is also known as ‘most
earn more due to increased demand. comparable rate of wage’, and most popular method for wage
rate determination, especially for lower cadre positions.
What Problems Can Emerge from Pay Compression?
4. Productivity: Productivity is measured in terms of output
Increased Turnover – more tenured or experienced
per man hour. It is a result of several factors such as
employees may be a flight risk because they feel their
technology, labor efforts, method of doing work, management
production and contributions are being undervalued compared
contribution and support and so on. Productivity has always
to their inexperienced coworkers. The cost of replacing veteran
remained as base for wage differences since it is a base which
employees with the highest levels of institutional knowledge
is apparently justifiable and acceptable to all in the
likely outweighs the cost of managing their salaries.
organization.
Reduced Revenue – when employees feel they are being
5. Cost of Living: It is always expected that there has to be
underpaid, they can quickly lose interest in their
adjustment in pay rates in accordance with prevailing cost of
responsibilities, leading to decreases in engagement and
living. The changes in the cost−of−living affect purchasing
productivity. This has a direct correlation to output, and
power of the person. Trade union also considers this as a base
ultimately, revenue. Whether they leave or not, poor
for collective bargaining on wage issues.
productivity and engagement can be contagious with other
employees if not addressed. 6. Trade Union’s Bargaining Power: Generally, the
mechanism for fixing of wages for majority of worker is
Three Legally required benefits:
collective bargaining or negotiation, and collective bargaining
− Social Security and negotiations depends upon the trade union’s strength, it
may dictate its terms on wage fixation and revision over a
− Workers’ Compensation period of time and vice versa.
− Unemployment Compensation 7. Job Requirements: From the organizational perspective
Pension and Retirement Plans: appropriate job analysis and job evaluation exercise is a base
for the wage determination and revision. It is quite obvious also
− Defined−benefit plans that wages to be paid to the workers should be in accordance
− Defined−contribution plans
with the duties, responsibilities and the efforts likely to be put − At least the minimum wage per region and/or sector (RA
for job performance. 6727 or Wage Rationalization Act).
8. Management Attitude: Attitude of employer or − Holiday wage and overtime pay for work during holidays or
management towers the working community of the rest days
organization does influence in wage determination and
− Overtime pay when working in excess of 8 hours
revision at an appropriate time. Some reputed and professional
organization does prefer to pay wage in accordance with their − Service Incentive Leave: 5 days of vacation per year of
reputation or prestige of an organization in the market. service
9. Psychological and Social Factors: Psychologically person − Parental leaves (Maternity, Paternity and Solo parent leaves)
perceives wages and compensation package as sole parameter
for success or failure in the life. Compensation package plays − Other Leaves
significant role in the employees’ pride, moral, motivation and − 13th month pay
psychological engagement and involvement in the work.
Socially and ethically also people feel that “equal work should − Separation pay
carry equal pay” i.e. wage should be in accordance with efforts
Intrinsic vs Extrinsic Rewards
and workers should not be felt like being cheated.
Intrinsic reward is intangible; it might be the sense of
10. Legislative Considerations: Legislative provisions do
satisfaction you get from mastering a new skill or the
provide protection to the working community by fixing bottom
successful completion of a complex project or from working
line for wage payments. The state legislative framework
on a project that has personal significance or meaning.
regulates wages and provides for certain benefits to the
workers. Legislation like Minimum Wages Act of 1936, Extrinsic reward is something that comes from an external
provides for statutory minimum wages to be prevails in the source—for example, your instructor at school or your
industrial organization. manager at work. Extrinsic rewards can be financial (a bonus,
incentive, or commission) or non-financial (praise, a training
Methods of Wage Payments
badge, a development opportunity, or a coveted project
Basically, there are two methods for wage payments,viz. assignment).

1. Time rate wage system; and Intrinsic Motivation – within

2. Piece rate wage system. - Autonomy

- Mastery
Wage plan should contain following ingredients: - Purpose
1. It should be simple and understandable Extrinsic Motivation – outside
2. It should be capable of easy computation - Compensation
3. It should be capable of motivating the employees - Punishment
- Reward
4. It should be attractive enough for new talent in the
organization.
5. It should be fair, just and stable to all the employees. Chapter 6: Performance Appraisal

Compensation Structure in the Philippines Performance appraisal − Is the systematic evaluation of the
individual with respect to his performance on the job and his
Labor and Social Legislation potential for development. Performance appraised is
concerned with determining the differences among the
The Labor Code of the Philippines, otherwise known as
employees working in the organization.
Presidential Decree No. 442, governs all employee− employer
relations, their rights and obligations. Payroll Salary Steps in Appraising Performance:
Compensation and Benefits in the Philippines as provided
under the Labor Code of the Philippines and other relevant 1. Establishing Performance Standard: The process of
laws. evaluation begins with the establishment of Performance
Standards. While designing a job and formulating a job
Payroll Salary Compensation, Benefits, Wage and Wage- description, performance standards are usually developed for
Related Benefits Overview the position. This standard should be very clear and not vague,
and objective enough to be understood and measured. This
standard should be discussed with the supervisors to find out responsibilities and authority may be delegated to the
which different factors are to be incorporated. Weights and subordinates. Attempts may also be made to recommend for
points to be given to each factor and these then should be salary increases or promotions, if these decisions become
indicated on the Appraisal Form, and later on used for plausible in the light of appraisals. It should be noted that the
appraising the performance of the employees. above details may vary from organization to organization, but
these steps usually form the principal steps/features of a sound
2. Communicating Performance Expectations to
evaluation program.
Employees: The next important step is to communicate the
aforesaid standards to the concerned employees. Their jobs and Methods or Techniques of Performance Appraisal
jobs−related behavior should be clearly explained to them. It Traditional Methods of Performance Appraisal:
should be noted that job related behaviors are those critical
1. Ranking Method: Ranking method is the oldest and
behavior that constitute job success. The employee should not
simplest method of rating. Here, each employee is compared
be presumed to guess what is expected of him. It should be
with all others performing the same job and then he is given a
noted that here communication means that the standards have
particular rank i.e. First Rank, Second Rank etc.
been transmitted to the employee and he has received and
understood them a two−way communication, i.e., transference 2. Grading Method: Under this method of performance
of information from the manager to the subordinate regarding appraisal, different grades are developed for evaluating the
expectations, and feedback from the subordinate to the ability of different employees and then the employees are
manager that this information has been received and placed in these grades. These grades may be as follows: (i)
understood in same context and contents. Excellent; (ii) very good; (iii) Good; (iv) Average; (v) Bad; (vi)
Worst.
3. Measuring Actual Performance: The third step is the
measurement of actual performance. To determine what actual 3. Manning Comparison Method: This method was first used
performance is, it is necessary to acquire information about it in USA army during the 1st World War. Under this method,
we should be concerned with how we measure and what we few factors are selected for analysis purposes. These factors
measure. Four sources of information are frequently used to are: leadership, dependability and initiative. After that a scale
measure actual performance: personal observation, statistical is designed by the rate for each factor. A scale of person is also
reports, oral reports and written reports. developed for each selected factor. Each person to be rated is
compared with the person in the scale, and certain scores for
4. Comparing Actual Performance with Standards: The
each factor are awarded to him/her. In other words, instead of
next step is comparison of actual performance with the
comparing a whole man to a whole man personnel are
standards. By doing so the potentiality for growth and
compared to the key man in respect of one factor at a time. We
advancement of an employee can be appraised and judged.
can use this method in job evaluation. This method is also
Efforts are made to find out deviations between standard
known as the Factor Comparison Method. In performance
performance and actual performance.
appraisal, it is not of much use because the designing of scale
5. Discussing the Appraisal with the Employee: After is a very difficult task.
comparing actual performance with standards, the next step is
4. Graphic Rating Scale Method of Performance
to discuss periodically the appraisal with the employee. Under
Appraisal: This is the very popular, traditional method of
these discussion good points, weak points, and difficulties are
performance appraisal. Under this method, scales are
indicated and discussed so that performance is improved. The
established for a number of fairly specific factors. A printed
information that the subordinate receives about his
form is supplied to the rater. The form contains a number of
performance assessment has a great impact of his self−esteem
factors to be rated. Employee characteristics and contributions
and on his subsequent performance. Conveying good news is
include qualities like quality of work, dependability, creative
considerably less difficult for both the manager and the
ability and so on. These traits are then evaluated on a
subordinate than when performance has been below
continuous scale, where the rater places a mark somewhere
expectations.
along the scale. The scores are tabulated and a comparison of
6. Initiating Corrective Action: The final step is the initiation scores among the different individuals is made. These scores
of corrective action whenever necessary. Immediate corrective indicate the work of every individual.
action can be of two types. One is immediate and deals
Modern Method of Appraisal and Career Development
predominantly with symptoms. The other is basic and delves
into causes. Immediate corrective action is often described as 1. Management by Objective (MBO): It was Peter F.
putting out fires whereas basic corrective action gets to the Drucker who first gave the concept of MBO to the world in
source of deviation and seeks to adjust the difference 1954 when his book The Practice of Management was first
permanently. Coaching and counseling may be done or special published. Management by objective can be described as, a
assignments and projects may be set. Persons may be deputed process whereby the superior and subordinate managers of an
for formal training courses, and decision−making
organization jointly identify its common goals, define each 7. Paperwork: Some supervisors feel that performance
individuals major areas of responsibility in terms of results appraisal is paperwork. They make such complaints because
expected of him and use these measures as guides for operating many a times, performance appraisal reports are found only in
the unit and assessing the contribution of each of its members. the files rather than rendering any practical use.
2. Human Asset Accounting Method: This technique refers 8. Fear of Spoiling Relations: Performance appraisals may
to money estimates to the value of a firms internal human also affect superior−subordinate relations. As appraisal makes
organization and its external customer goodwill. If the superior more of a judge rather than a coach, the
well−trained employees leave a firm, the human organization subordinate may look upon the superior with a feeling of a
is worthless; if they join it, its human assets are increased. if suspicion and mistrust.
distrust and conflict prevail, the human enterprise is devalued.
9. Stereotyping: This implies forming a mental picture of a
If team work and high morale prevail, the human organization
person on the basis of his age, sex, caste or religion. It results
is a very valuable asset.
in an over−simplified view and blurs the assessment of job
3. Behaviorally Anchored Rating Scales (BARS): This performance.
method is also called behavioral expectation scales. These are
10. Negative Approach: Performance appraisal loses most of
the rating scales whose scale points are determined by
its value when the focus of management is on punishment
statements of effective and ineffective behavior. They are said
rather than on development of employees.
to be behaviorally anchored in that the scales represent a range
of descriptive statements of behavior varying from the least to 11. Individual Differences: Some people are more distinct
the most effective. A rater must indicate which behavior on while some are very liberal in assigning the factors, points or
each scale best described an employee performance. number to the employees. They are unable to maintain a fair
distinction between two individuals. It also nullifies the utility.
Limitations of Performance Appraisal
The main limitations of Performance Appraisal are
explained below: JOB ANALYSIS
1. Time Consuming: Performance appraisal is a time taking Job Analysis − Is a systematic study of how a job discovers its
affair. It is a very lengthy process under which different forms specifications, skill requirements, etc. for wage− setting,
are to be filled in and various observations are required to be recruitment, training, or job simplification purposes.
noted in a careful manner.
Job Description − It is a list of job’s duties responsibilities,
2. Lack of Reliability: Reliability implies stability and reporting relationships, working conditions, and supervisory
consistency in the measurement. Lack of consistency over time responsibilities.
and among different raters may reduce the reliability of
performance appraisal. Job Specification − It is a list of human requirements that is
the requisite education, skills, personality, and so on and
3. Incompetence: Raters may fail to evaluate performance another product of a job analysis.
accurately due to lack of knowledge and experience. Post
appraisal interview is often handled ineffectively. Job Evaluation – is the systematic process of determining the
relative value of different jobs in organization. The goal of job
4. No Uniform Standards: The standards used for appraisal evaluation is to compare jobs with each other in order to create
purpose are not uniform within the same organization. This a pay structure that is fair, equitable, and consistent for
makes the rating unscientific. Similarly the rating is done on everyone. This ensures that everyone is paid their worth and
the basis of an overall impression, which is not proper. that different jobs have different entry and performance
requirements.
5. Absence of Effective Participation of Employees: In
performance appraisal effective participation of concerned JOB ANALYSIS → JOB EVALUATION → PAY
employee is essential. In many methods of appraisal, he is EQUITY
given a passive role. He is evaluated but his participation or
self−evaluation is rather absent.
6. Resistance of Employees to Appraisal: Employees oppose
the system as they feel that the system is only for showing their
defects and for punishing them. The managers resist the system
as they are not willing to criticize their subordinates or have no
capacity to guide them for self−improvement or
self−development.
Job Evaluation Process – 4 steps/phase Phase 2. Design & development
In the next phase, the evaluation elements and levels are
determined. This often happens through a workshop. In this
phase, it is important to identify elements that are relatively
timeless. Keep in mind: the job scheme is relevant for as long
as the elements it is based on are relevant.
Because of the cost and effort to create a job scheme, they
could stay relevant for well over 25 years. Once this is all done,
data on the different roles in the organization is collected.
Phase 3. Validation & modeling
In the third phase, the results from the data collection are
analyzed and the weightings of the different elements are
discussed. This may require some fine-tuning as initial
definitions may skew the results. Next, a pay grade structure is
drafted, and jobs are categorized. There will always be a set of
jobs that do not match the pay grade structure. An example
could be specialist roles in artificial intelligence and machine
learning that are very scarce while crucial for the company’s
future. These may have to be put on a different
Phase 4. Communication and Roll-out
In the final phase of the job evaluation process, the structure is
Phase 1. Planning & diagnosis implemented. Best practices are to explain to everyone affected
why their pay grade structure may have changed. There should
In this phase, the job evaluation project is started with an initial
also be an opportunity to appeal decisions that are perceived as
workshop. During this workshop, the evaluation is scoped and
unfair. Here it is important to hear and investigate what
approaches for evaluation are decided on. In terms of scope,
employees have to say. This phase will be easier if there is buy-
decisions need to be made on cost, time constraints, the degree
in from the organization. Also note, lowering salaries for
of rigor applied, administration, tooling & software, how much
workers may not be possible as wages could be protected under
external help is required, how to build on previous projects,
national labor laws or it may prompt people to leave the
and how job evaluation will be used to support equal pay.
organization. Taking all of this into account will be an
The organization also needs to decide on their job evaluation administrative challenge.
scheme. There are multiple schemes with different degrees
of customization.
4 Common Job Evaluation Methods
● Proprietary. This is an existing framework, created by
consultants. It has been tried and tested, is easy to implement, Qualitative
and requires low internal effort. The con is that it may not suit
every organization and creates dependence on the supplier. 1. Ranking Method/ Paired Comparison (job to job
comparison) – jobs are paired for each pair the most impactful
● Customized. This builds upon an existing framework like an job is chosen. This results in a forced ranking of different jobs
(outdated) job framework that is already in place and builds on based on their seniority. This approach is only recommended
top of that. This provides a good starting point, leads to faster for smaller organizations with fewer than 100 jobs.
implementation, and helps to create employee buy-in. Its
biggest con is that the framework needs to be sufficiently 2. Job Classification (job to predetermined grade
revised as it may otherwise not suit the organization. comparison) − Jobs are ranked based on a predetermined
grade comparison. An example classification is a CEO, vice
● Tailor-made. This is a fully customized scheme, developed president, director, manager, and operator. This is a
in-house with the help of external advisors. It leads to a great predetermined ranking that many US-based organizations use.
fit with the organization, the participatory process leads to buy- Grades are created among job families (e.g., marketing, HR,
in and enables alignment with a competency framework. The sales).
drawback is that the process will take longer and is a costly
exercise. Next, benchmark jobs are identified, data collection Quantitative
is planned, and a communication plan is created.
3. Factor-Comparison Method (job to job comparison)− * Preparing and Introducing Job Analysis − There are a vast
Jobs are ranked on a series of factors, the most frequently used number of different techniques in identifying jobs and
factors being knowledge & skills, communication & contacts, methodology processes that HR can use to ensure an employee
decision making, impact, people management, freedom to act, is performing at their best.
working environment and responsibility for financial
Methodology 1: Interview
resources. Each factor is assigned points and the total number
of points indicate the job’s ranking. * STRUCTURED INTERVIEWS − Follow a systematic
approach where employees are interviewed accurately and
4. Point-Factor Method job to predetermined grade
consistently, following a present format.
comparison) − Jobs are assessed on required know-how,
problem-solving abilities, and accountability. Each factor is * UNSTRUCTURED INTERVIEWS − Without a present
assigned points and the total number of points indicates the structure, with no specific questions.
job’s ranking.
Market Pricing − Assessing rates of pay by reference to
market rates for comparable jobs leading to pricing the job Methodology 2: Questionnaires
based on what it is worth. Does not take internal equity into * Used for job analysis, collect data about all aspects that
account, nor the fact that the internal value of a job may differ influence how a job is completed, including both internal and
from their market value. Market pricing can perpetuate external factors.
marketplace inequalities, defeating the purpose of the job
evaluation.
The supervisor or HR specialist normally collects one or Methodology 3: Observation
more of the following types of information via the job
* This method enables job analysts to observe employees in
analysis:
their daily routines.
* Work Activities − The specialist collects information about
the job’s actual work activities, example: cleaning, selling,
teaching and may also include the how, why and when the Here are some of the main purposes of job analysis:
worker performs each activity.
JOB DESIGNING AND REDESIGNING − The job analysis
* Human Behaviors − Specialists may collect information methods, HR managers, and job analysts can work to improve
about human behaviors like sensing, communicating, deciding job specifications, increase professional output and incite
and writing. company growth.
* Machine, Tools, Equipment and Work Aids − This ● Human resource recruitment and selection
category includes information regarding tools used, materials
processed, knowledge dealt with or applied, and services ● Determining training needs
rendered. ● Establishing a compensation management policy
* Performance Standards − The employer may also want ● Conducting performance reviews
information about the job’s performance standards,
management will use the standards to appraise employees. ● Job analysis takes a lot of planning, structuring and analysis

* Job Context − Included here is information about such CONDUCTING THE JOB ANALYSIS
matters as physical working conditions, work schedule, and the
● GATHER JOB ANALYSIS DATA − the following are Job
organizational and social context for instance, the number of
Analysis Data that must be collected information on the
people with whom the employee would normally interact.
following areas:
* Human Requirements − This includes information
● DUTIES AND TASK − The basic unit of a job is the
regarding the job’s human requirements, such as job− related
performance of specific tasks and duties. Information to be
knowledge of skills and required attributes.
collected about these items may include frequency, duration,
* Planning the Job Analysis − Planning is the systematic effort, skill, complexity, equipment, standards, etc.
process of establishing need and then working out the best way
● ENVIRONMENT − This may have a significant impact on
to meet the need, within a strategic framework that enables you
the physical requirements to be able to perform a job.
to identify priorities and determine your operational principles
especially job analysis. ● TOOLS AND EQUIPMENT − Some of duties and tasks
are performed using specific equipment and tools.
● RELATIONSHIPS − Supervision given and received.
Relationships with internal or external people.
● REQUIREMENTS − The knowledge, skills, and abilities
(KSA’s) required to perform the job.

The Responsibility Charting Theory

There are three (3) basic assumptions in any
role, they are:
1. Role Conception − what a person thinks
his/her job is and how the person has been
taught to do it.
2. Role Expectation − What others in the
organization think the person is responsible
for, and how he/she should carry out those
responsibilities.
3. Role Behavior − What a person does in
carrying out the job.

Developing Job Description and Job

Specifications
● Draft Job Descriptions and Specifications
● Job Description writing Guide

ADDIE Training Process

Analysis.
Design.
Development.

Implementation.

Evaluation.

BIG Five Personality (OCEAN)

Openness

Conscientiousness

Extroversion

Agreeableness

Neuroticism