Human Resource Management

Q.1. Answer any five. (2 marks)

1. Differentiate term HRM & SHRM.

Ans –

• Concept of HRM
1) Organisations are made up of people and functions through people. Without people
organisations cannot exist.
2) Among the various factors of production like money, material, men and machines in an
organisation, human resource is considered to be the most important factor.
3) This is because the efficient use of other physical resources like land and capital is
dependent on how the human factor is used on various operations.
4) Except men, all other resources depreciate with time. Man is the most valuable resource
which appreciates with time if a right environment is given to him and hence termed as
"human resource".
5) Human resources consist of those groups of people who are ready to provide their
services for the benefit of the organisation.
6) According to Michael J. Jucius, “Human resource are a whole consisting of inter-
related, inter-dependent, and interacting physiological, psychological, sociological, and
ethical components".
7) Human resource always remains central to the organisations as dynamic and effective
people can construct dynamic enterprises.
8) Organisational objectives can only be accomplished through the talented people.
Therefore, in order to remain competitive in the dynamic environment, it should be the
constant endeavour of organisation to energise, assist and train their workers to
maintain utmost efficiency.
9) It can be defined as acquiring the right talent, training and developing them and
motivating them to sustain in the workforce to effectively attain the objectives of the
organisation.
10) According to Edwin B. Flippo, "Human resource management is the planning,
organising, directing, and controlling of the procurement, development, compensation,
integration, maintenance, and separation of human resources to the end that individual,
organisational, and social objectives are accomplished".

o Objectives of HRM
1) To Assist in Securing the Goals Set by the Organisation: The main aim of HRM is
to assist the employees in achieving the desired organisational goals. If it fails to do so,
its existence will come to an end.
2) To Help the Employees in Securing the Personal Goals for Individual Growth:
HRM not only focuses on the organisational goals but it equally tries to explore and
 develop the capabilities of the employees by training and development so that
employees can achieve their personal as well as organisational goals. This not only
enhances the efficiency of the employees but also increases the loyalty of the employees
towards the organisation.
3) To Make Maximum Utilisation of Employee's Potential: The essence of the HRM
lies in its basic function of effectively matching the skills of the employees with the
work assignments in the organisation. This helps to fully explore the capabilities of the
employees for the benefit of the organisation and its stakeholders.
4) To Enhance Job Satisfaction: Various programmes of human resources welfare have
been framed and implemented by the HRM in order to enhance the quality of life. This
helps in increasing the job satisfaction of the employees.
5) To Improve Quality of Work Life: It is the duty of HRM to make organisation a
pleasant place for employees. This is important as organisational performance cannot
be enhanced without improving the quality of work life.
6) To Update the Employees regarding Managerial Policies: One of the most important
duties of HRM is to update the employees with the internal policies, feedback of
customers, opinions of the management and also to generate creative ideas from the
workforce.
7) To Fulfil Social Responsibility: The HRM function also ensures fulfilment of the
social responsibility of the organisation towards the different groups of the society,
while adhering to the moral and legal norms.
8) To Maintain Discipline among Employees: HRM also focuses on the maintenance of
discipline among the employees in the organisation by giving them incentives based on
their performance. It tries to create employee-friendly atmosphere in which the focus is
on healthy working style.
9) To Increase Organisational Productivity: HRM tries to enhance the overall
productivity of the organisation by effective utilisation of available resources.
10) To Focus on Quality Performance: The critical task of HRM in every organisation is
the assignment of the right job to the right candidate at the right time. This brings
efficiency in the working system of the organisation and enhances quality performance.
11) To Develop Harmony in the Work Culture: HRM makes continuous efforts to fill the
gap between individual and organisational goals. This results in building cordial
relationship within the organisation and the employees for the achievement of the
desired objectives of the organisation as a whole.
12) To Create Respectful Environment: HRM must ensure that a respectful environment
of dignity, trust and happiness exists within the organisation for everyone. If such an
environment is lacking then there are chances of crisis within the organisation.

o Application/Scope of HRM
1) Procurement: It consists of recruiting prospective employees and then selecting the
most appropriate ones for the desired posts in the organisation. This is followed by their
induction and settlement into their respective positions.
 2) Training and Development: It is necessary for the employees to perform well in
realistic situations. The employees are encouraged to participate in committees and
board meetings, which will aid their development.
3) Job Analysis and Job Description: These are prepared to hire qualified employees by
studying the job requirements of the organisation and assigning definite functions to
jobs. They also act as a base for wage determination.
4) Compensation/Rewards: Compensation is provided to the employees for their work.
The amount of compensation which is to be given to the employees is ascertained by
job analysis and job evaluation. It involves determining wage rates, methods of wage
payment, and performance appraisal.
5) Employee Records: Employee records are maintained to collect details of all
employees about their work, e.g. training job performance, aptitude payment records,
their achievements, etc.
6) Welfare: In HRM, the welfare aspect is focused on providing good working conditions
to the workers. It includes programmes for health and safety, sanitation facilities,
entertainment facilities, accommodations, education, security, etc.
7) Industrial Relations: HRM helps in maintaining cordial relations in the industry. It
comprises of aspects such as collective bargaining, workers' participation in
management, dispute resolution, grievance management, etc.

o Functions of HRM

I. Managerial Functions

Manager's first and foremost job is to manage people. All the managers regardless of their
departments carry-out managerial functions. Managerial functions of human resource
management are as follows:

1) Planning: It is concerned with pre-planning of activities to be done in future. It is the

process of taking any action after thinking about it. Planning is related to strategy
formulation of personnel programmes and changes in advance that will help in the
achievement of organisational goals. HRP (Human Resource Planning), hiring,
selection, T&D (Training and Development) are some of the HR functions which
require planning.
 2) Organising: It is the procedure of aligning people and other resources so that they can
work together in order to achieve a goal. For this, firms generally need to establish
relationships among the employees so that they can mutually contribute to fulfil the
organisational goals.
3) Directing: Directing is concerned with telling employees to perform a specific task and
make sure that the work done is as per the given directions. The voluntary and effective
co-operation of employees for the fulfilment of organisational goals is possible through
right direction. It is the responsibility of the human resource management to motivate,
develop communication network, integrate people, maintain discipline and resolve
employee grievances in a quick and proper way.
4) Coordinating: Coordination among the people is essential at all levels of management.
Achievement of organisational objectives is possible only through the coordination
among the groups and their activities. Developing, interpreting, and reviewing policies
and programmes of the employees are the responsibility of human resource department.
The last decisions may be taken by the line managers but personnel department can
give suggestions for improvements.
5) Controlling: Controlling is the process of examining and verifying if everything is as
per the set plans standards. Some of the means through which human resource
management functions can be controlled and made effective are auditing of training
programmes, analysis of labour turnover records, directing morale surveys and
conducting separate interviews.

II. Operational Functions

Operational functions are the special activities which human resource people have to perform
for each and every department of the organisation. These are the regular functions of the human
resource department. It focuses on all activities of the organisational workforce from their HR
planning till their exit. These functions are as follows:

1) Employment: It deals with acquiring and hiring the potential candidates for the
attainment of objectives of the organisation. Job analysis, manpower planning,
recruitment, selection, induction, and placement, etc. are the activities which are
included in the employment function.
2) Human Resource Development: HRD is the procedure of building and transforming
the knowledge, skills, creativity, attitude, etc., according to the existing and upcoming
requirements of the job and organisation. It consists of performance evaluation, training
and development, career planning and development, etc.
3) Compensation: Compensation is about motivating employees by providing them
reasonable and satisfactory remuneration so that they can work more effectively.
Employee benefits, bonus, incentives, and social security benefits are the components
of compensation package. Job evaluation and wage and salary administration are the
processes of compensation management.
4) Human Relations: It is the procedure of integrating people through interaction at the
workplace. It helps people to work collectively in a team to gain high productivity and
satisfaction in terms of money, mind, and society. It involves dealing with employee
 grievances timely by a well-developed grievance handling procedure, disciplinary
action, and employee counselling to give them relief from stress, frustration, etc.

• Concept of SHRM
1) The term Strategic Human Resource Management (SHRM) is made up of two words -
'Strategic' and 'Human Resource Management'.
2) The term 'Strategic' means formulating an extensive decision plan which gives direction
to the organisation and helps the organisation to utilise its resources appropriately.
3) 'Human Resource Management' is a planned process of development and an integrated
strategy to effectively use its human resources, for fulfilling organisational goals.
4) It can be represented as: Strategic Human Resource Management = Strategic + Human
Resource Management
5) Therefore, Strategic Human Resource Management (SHRM) refers to the human
resource management in a proactive manner, and describes the organisational
objectives and strategies in order to make effective utilisation of human resources for
attaining the business goals.
6) SHRM can be also defined as a planned sequence of human resource operations and
activities designed to attain organisational objectives.
7) Developing high performance human resource management functions which are able
to increase strategic value to the business of an organisation is the key function of
strategic human resource management.
8) According to Dessler, "Strategic human resource management means formulating and
executing human resource policies and practices that produce the employee
competencies and behaviours the company needs to achieve its strategic aims".

o Objectives of SHRM
1) To Develop Strategic Competencies: SHRM aims to build up organisational strategic
competencies to make sure that the company has desirable standards, competent and
highly motivated employees for achieving sustainable competitive advantage.
2) To Give Sense of Direction: SHRM guides the organisation in the right direction, so
that the business requirements of the organisation and the individual as well as the
mutual requirements of its employees are fulfilled by the creation and attainment of
consistent and practical HR policies and programmes.
3) To Achieve Integration: The objective of SHRM is to form a consolidated framework
so that the organised HR system can work harmoniously in accordance with the
strategic objectives of the organisation.
4) To Formulate Business Strategy: SHRM is aimed at establishment of business
strategies by focusing on the measures through which the organisation can use the
capability of its employees for increasing the benefits.
o Importance of SHRM
1) Helps the Firm in Achieving Cost-Effective Engagement of Labour: SHRM helps
the organisation to get labour force at lower cost. This in turn, results in increased
competitive edge of the organisation.
2) Enables the Firm to Meet Changing Needs: Changing requirements and demands of
the customers are met effectively and on time by the flexible structure and vibrant
policies of SHRM.
3) Helps in Exploitation of Emerging Opportunities: With the help of SHRM,
competitors can be predicted by scanning the external environment continuously and
making use of the arising opportunities.
4) Provides Clear-Cut Goals, Direction, and Future Focus: SHRM helps an
organisation to establish in specific goals, directions, and to focus on future prospects.
This is achieved by aligning business strategy to the HR practices of the organisation.
5) Helps the Organisation in Planning and Executing Organisational Changes: It
gives the organisation a platform for planning and executing various changes in the
organisation effectively in order to get the positive results from the employees.
6) Ensures Optimum Utilisation of Organisational Resources: SHRM makes sure that
the organisational resources are best utilised. This is achieved by identifying the
strengths of the organisation and matching them with the opportunities available
outside.
7) Develops, Manages, and Sustains Skills and Knowledge: SHRM helps in building,
managing and nourishing the knowledge and skills of its employees, which increases
the possibility of the organisation to attain the strategic advantage over its competitors
for a longer duration of time.
8) Enhances Coordination: SHRM significantly improves co-ordination between the
various functional departments and the top management. This is because HR functional
strategies are associated largely with corporate strategies. It also helps the organisation
in recognising the goals and the initial performance deviations so that they can be timely
averted
9) Develops a Base for Measurement: SHRM necessitates the development of an
experimental base for determining the effectiveness of different HR practices and
policies of the organisation.
10) Helps to Motivate Employees: SHRM helps to motivate employees to work hard and
enhance organisational productivity and output. This is done by giving different types
of incentives to the employees. Incentives motivate the employees to work hard so that
they can get the promised incentives from the organisation.
• Difference between HRM & SHRM

Basis of Traditional HRM Strategic HRM

Difference

1) Responsibility Staff employees are responsible Line and HR managers are

for HR for conducting HR programmes. responsible for people-oriented
Programmes programmes.

2) Focus of It focuses on employee relations Its main focus is on partnerships

Activities and helps to motivate employees with internal groups (employees)
and productivity in compliance and external groups (customers,
with company laws. stakeholders, public interest
groups).

3) Role of HR Role of HR is reactive and HR performs proactive and

transactional in nature. transformational roles and acts as a
change leader.

4) Initiative for Traditional HR is unconsolidated Strategic HR executes change

Change and not harmonized with major initiatives in accordance with many
issues and hence is a slow, other HR systems and hence is a
disorganized, and partial flexible, fast, and organized
concept. concept.

5) Time Horizon It is a limited concept confined to As per the requirement, this concept
a short period of time. considers short-, medium-, or long-
term timeframes.

6) Control Control is regulatory and is done Control is essential due to its

through rules, policies, and flexible nature.
procedures.

7) Job Design This concept follows scientific There is flexibility in job design,
management principles like cross-training is conducted, and
division of labor, specialization, teams and groups work in
and independence, etc. compliance.

8) Important Its real investment is on capital, Its real investment is on

Investments economies, production, and Knowledge, Skills, and Abilities
technology. (KSAs) of employees.

9) Accountability It is accountable to the cost It is accountable to the investment

center. center.
2. Format of Job Description.

Ans –

• Job Description
1) Job description is a written statement which answers the questions such as what the job
holder does, how the job is done, under which circumstances it is done, and the most
important one, why it is done?
2) It gives information about the job like job content and working conditions.
3) It is descriptive in nature and explains the functions and responsibilities necessary to
do a certain job specific along with its objectives and areas of work.
4) According to Robert Kreitner, "Job description is a concise document that outlines the
role expectations and skill requirements for a specific job".
5) According to Swansburg, "A job description is a contract that should include the job's
functions and obligations and tell the incumbent to whom he or she is responsible".

• Contents of Job Description

1) Job Identification: Job identification, also known as organisational position, includes
the job title, alternative title, departments, divisions, plant and code number of the job.
The job title recognises and designates the job appropriately. The department, division,
etc. indicate the name of the department and its location. The location shows the name
of the place.
2) Job Summary: It delivers two significant objectives. Firstly, it gives a brief definition
which is helpful as additional identification information. Secondly, it is used as a
summary to direct the readers for understanding the detailed information about the job.
It provides the reader a 'fast and short explanation' of the job content, generally in a few
sentences.
3) Job Duties and Responsibilities: It clearly describes the duties and responsibilities to
be carried-out during job with an appropriate understanding of primary, secondary and
other duties. It is also considered vitai for any job. It also notifies about the time limit
of the job and sub-jobs.
4) Relation to Other Jobs: It helps in identifying the job in the organisation by putting
the job below or above in the job hierarchy. It also shows an idea of the vertical
relationship of work and process.
5) Supervision: The extent and the nature of supervision needed in each job are also
indicated in the job description. Under this, the number of persons to be monitored are
given alongwith their job titles and the level of supervision involved in the form of
general, intermediate, or close supervision.
6) Machines, Tools and Materials: Job description also comprises of the machines, tools
and materials required for performing the job. It shows the nature and difficulty of the
job and aids in the execution of the training programmes.
7) Working Conditions: It gives the knowledge about the working environment such as
heat, cold, dust, wetness, moisture, fume, odour, oily condition, etc. in which the job
holders have to perform their work.
 8) Hazards: It gives an idea about the kinds of risks to life and limbs and their chances of
happening, etc.

• Specimen of Job Description

Title Compensation Manager

Job Code HR/1234

Department HRD

Summary Responsible for properly designing and administrating employee

compensation plans.

Duties 1) To conduct job analysis. 2) To make job descriptions for the present and
future job positions. 3) To evaluate job descriptions. 4) To act as a
Chairperson of the Job Evaluation Committee. 5) To ensure that the
organizational rate of compensation matches with the policy of the
organization. 6) To conduct salary surveys from time to time and relate the
salary with employee performance. 7) To develop and execute employee
performance appraisal programs. 8) To develop and implement employee
benefit programs.

Working Eight hours per day. Six days a week.

Conditions

Reporting Director, HR Department.

• Guidelines for Writing Job Descriptions

Since job descriptions can be used for many different purposes, employers should take care to
write them as comprehensively as possible. Following guidelines must be considered while
writing job descriptions:

1) Use Logical Sequence in Arrangement of Roles and Duties: Start with the task
including the percentage of time assigned to each task and be consistent.
2) Be Brief and Specific: Specific and brief description about the job should be given.
Avoid using generalised statements. Give a clear and brief description of job task and
duties.
3) Mention Duties Clearly and Briefly: When each duty is mentioned clearly and briefly
in the job description, everybody can have a quick look on the description and it
becomes easy for them to identify each and every task properly. Further, each and every
task should be identified as "essential" or "non-essential".
4) Avoiding Unnecessary and Ambiguous Words: Keep sentence structure as simple as
possible and avoid the use of unnecessary words that do not contribute in giving
 relevant information. For example, "Handle mail" can be written as "sort mail" or
"distribute mail".
5) Avoid Listing Each and Every Duty: Begin the job description by using the phrase
"primary duties and responsibilities include...." and then carry forward from there.
Finish the job description by using the phrase "perform other related duties and
responsibilities, as required".
6) Use Particular Examples of Tasks When Necessary: It becomes easy for the reader
to understand the scope of task and duties, when appropriate examples of task wherever
required are used in the job description.
7) Avoid Technical Language: A good job description should use commonly known
terms and should include the job responsibilities that are easily understandable to
everyone.
8) Express the Number of Task Appearing Frequently: Each task should be allotted an
estimated time by using a known technique of making a column on the left side of the
task with comparable percentages.
9) List Duties Individually and Briefly and Avoid Narrative Paragraphs: We are not
writing an English essay. Therefore, narrative paragraphs should be avoided in order to
list task and duties individually and briefly. This will make the job description clear and
understandable.
10) Avoid the Reference of Particular Individuals: Do not include references of
particular individuals in the job description, instead use references of job titles and
positions.
11) Objectivity and Accuracy in Job Description: Avoid describing those personnel who
were dismissed for poor performance and who were promoted for extraordinary
performance.
12) Refer to Job Titles Rather than Individuals: For an easy description it is advisable
to refer to job titles rather than referring to individuals. For example, "Report
to..........Manager" instead of "Report to Mr. ABC".
13) Ensure that all the Information is Job-Related and as per Equal Employment
Opportunity Laws: A job description should follow the laws and rules of equal
employment opportunity while writing it. This helps in preventing the possibility of
legal problems arising in future.
14) Eliminate Meaningless Articles like "a" and "the" while Drafting Job Description:
The lengthy job description does not mean that the importance of the job will increase.
Therefore do not draft a job description in a lengthy and comprehensive manner. One
or two pages are sufficient for job descriptions.
15) Begin Each Duty with Action Verbs: Begin a sentence with an action verb and include
one descriptive word indicating its main function which is to be done and thus the
degree of responsibility is easily conveyed to the reader. For example, compare
"authorises" to "under the authorisation of".
• Uses of Job Description
1) Developing Job Specifications: Job description helps in building-up the job
specifications, which are supposed to be valuable for planning, recruiting, training and
hiring people with the necessary skills for the job.
2) Group Discussion: Preliminary drafts can be utilised as the base for a fruitful group
discussion, especially, if the process begins from the executive level.
3) Orientation of New Employees: Job description is useful for orienting new staff
members towards their basic job responsibilities and functions.
4) Developing Performance Standards: Job description is the basic document for the
purpose of developing performance standards.
5) Job Evaluation: Job description helps in evaluating the job as a wage and salary
administration method.
6) Helps a Manager during Interview: A job description helps the manager in framing
appropriate questions to be asked while conducting an interview.
7) Vehicle for Organisational Changes: It becomes a medium of organisational change
and upgradation. It helps the top management in delegating the responsibilities.

3. Define Job Enrichment.

Ans –

• Job Enrichment
1) The concept of job enrichment was introduced by Herzberg, which mainly deals with
increasing the various elements of the job or increasing the responsibilities, challenges
and scope of the job consciously.
2) It can be seen as one of the methods for motivating employees by focusing on the
requirements of challenging and interesting work.
3) According to this concept, in order to facilitate the inherent satisfaction from the
performance of the jobs, the jobs should be re-designed.
4) When it is implemented effectively, a vertically enhanced job is resulted from
increasing the contents of the variety of jobs, adding more challenges, combining the
various functions from different organisational levels, providing more freedom and
pride to the employees.
5) With reference to a certain job, some discretionary powers are assigned to the
employees for making operational decisions and thus providing them a greater feeling
of higher status, power, and influences.
6) For motivating the employees, Herzberg focused on job enrichment in his two factor
theory. The findings of his work were:
a. Higher level of satisfaction is accomplished from the employees by those jobs
which are enriched and it results in lower turnover and absenteeism.
b. Greater productivity is obtained from the employees having enriched jobs.
c. Greater skills and talents are possessed by those individuals who are working
on enriched jobs.
 7) According to Sirota and Wolfrom, "Job enrichment is the designing of a job to provide
a worker with a great responsibility, more autonomy in carrying out that responsibility,
closure a complete job and more timely feedback about his performance".

• Features of Enriched Job

1) Direct Feedback: Employees should be given a direct feedback for their performance.
Information with reference to the results accomplished by them should be facilitated
immediately. Either with the help of supervisor or in jobs itself, the job evaluation can
be done.
2) Client Relationship: The job enrichment can be availed when a client is served by an
employee. These clients can either be inside or outside the organisation.
3) New Learning: More learning opportunities are facilitated with the help of enriched
job. The feeling of mental growth should be felt by the employees. The employees
involved in intellectual work are said to have an enriched job.
4) Scheduling Own Work: Enrichment can be promoted by facilitating the employees to
decide the scheduling of their own work. Self-scheduling can be understood as a
freedom of deciding which job has to be done when. In comparison to the employees
working on the routine jobs, the employees with the creative work have greater
opportunities of having self-scheduling of assignments.
5) Distinctive Experience: In comparison to other jobs, some distinctive features or
qualities are associated with the enriched jobs.
6) Better Management of Resources: By providing the control of employees over their
resources and expenses, job enrichment can be facilitated.
7) Direct Communication Authority: The direct communication of an employee with
others who use his output can be facilitated with the help of an enriched job.
8) Personal Accountability: It will be the responsibility of the employees to be
accountable for the outcomes of the enriched jobs. Good works will be praised and poor
works will be blamed. Thus, from all the features mentioned above, one can point out
that in order to enrich a certain job, the management can utilise the following methods:
a. Adequate freedom is provided to the employees for taking decisions related to
work methods, sequences, speed, etc.
b. Greater responsibility.
c. Motivating employees to involve in managerial decision-making.
d. Proper feedback to the employees.
e. Pointing out the significance of the work in the finished product of the
organisation.
f. Sufficient advantages are provided to the employees. Both extrinsic and
intrinsic rewards should be given to the employees according to the
motivational patterns.
g. Employees should be provided sufficient welfare impetus from the
management. Employees should be having the feeling that the management is
concerned and sincere for their benefits.
• Need of Job Enrichment
1) De-Layering Organisations: De-layering of the organisations is possible through job
enrichment. Thus, the activities performed by the supervisor earlier are now being
conducted by the sub-ordinates, as they have improved their skills and competencies.
2) Greater Motivation: The level of motivation of employees increases when the sense
of trustworthiness is created among them by assigning greater responsibility in the
organisation. This will result in greater productivity, improved work completion,
adherence to organisational rules and management.
3) Developing New Skills: By increasing the responsibilities of an employee, the
opportunity of trying new tasks is provided and thus new skills will be learnt by the
employees. The various advertising tests of products, testing pricing and placement can
be developed by an employee who is responsible in taking decision related to the
advertising of internal products in the email or newsletter of the organisation under
some job enrichment situations.
4) Providing Recognition: By facilitating greater chances of personal recognition,
accomplishment and individual growth and achievement, various problems can be
tackled down effectively with the help of job enrichment.
5) Creating Interesting and Challenging Jobs: A greater sense of challenges, authority,
responsibility, meaning, and chances for accomplishment can be facilitated with the
help of job enrichment.
6) Facilitates Feedback: The feedback can be provided to the employees with the help of
job enrichment. The regular performance appraisal is conducted for the employees,
which keeps them aligned with organisational objectives and knowing their strengths
and weaknesses. Employees establish their performance parameters themselves which
can be used to evaluate their future performances as a benchmark. There is no direct
involvement or intervention of top management in this activity.
7) Controlled Turnover and Absenteeism: Not only the satisfaction of the employees is
accomplished with the help of job enrichment by facilitating them to execute the
enriched activities with lesser supervision and greater responsibilities, but it also results
in controlled absenteeism, turnover, and cost.
8) Lesser Boredom: The routine activities create boredom among the employees. A
variety in the duties of the employee can be added with the help of job enrichment
which controls the boredom during work execution. Job enrichment not only controls
the boredom but also provides a chance to the employees to extend their skills beyond
what they were normally doing in the organisation.
9) Better Decision-Making: The decision-making ability of the employees can be
improved with the help of job enrichment by taking their view regarding factory layout,
style of working and various methods.
10) Psychological Development: Psychological development of employees is facilitated
by the job enrichment. By providing greater responsibility and challenges, the
development of employees is focused in all the methods of job enrichment.
• Techniques of Job Enrichment
1) Establishing Natural Work Units: In most of the organisations, the products or services
are provided by the employees but they do not have any identification with their work. Thus, a
worker does not have any significance for the job. By establishing natural work units in which
some ownership is fixed to the employees, this feeling can be eradicated. Two core job
dimensions are resulted from the formation of natural work units which are task identity and
task significance.

2) Creating Worker-Client Relationships: There is almost no chance where there is a direct

contact between the worker and the ultimate user of the products and services. By providing
this kind of interaction, the job commitment and motivation can be improved significantly.
There are three core job dimensions which can be created by establishing worker-client
relationship which are skill variety, feedback and autonomy. As workers have chances of
utilising the interpersonal skills in maintaining and managing the client relationship, skill
variety is improved. As the individual is assigned the responsibility of deciding the
management of client relationship, the autonomy is improved. As the employee has the
opportunity of receiving both criticism and praise for his performances, the feedback is
improved.

3) Merging of Tasks: The assumption of having greater motivation by merging various simple
tasks to create a new and larger work module can be used to develop the concept of merging
of tasks. Skill variety and task identify are the two main elements of combining tasks.

4) Vertical Loading: When there is a reduction of gap between the performance and
controlling aspects of the jobs, vertical loading is resulted. Specifically, the lower-level
employees are assigned the responsibilities which were earlier restrained for the management.
Increased autonomy in resulted from the vertically loaded jobs and personal responsibility and
accountability for the results of efforts of employees are created.
5) Providing Feedback Channels: In order to provide the chance of monitoring the
performance, the employees are provided with various methods of giving feedback. One of the
main issues related to human resource which can be effectively handled through this is the
inability of explaining the employees about how well they are performing.
4. Define the term Training & Development.

Ans –

• Concept of Training
1) Human resource management has various functions such as manpower planning,
recruitment, selection, compensation, etc. but training is one of the most important
functions of human resource management.
2) Training can be defined as the systematic attempt to enhance the specific skills, desired
behaviour, and knowledge of employees which are necessary for performing a job
effectively.
3) Employee training begins soon after the orientation process and it is for a short time
period.
4) It is essential for the growth of the organisation as well as for the employees.
5) According to Dale S. Beach, "Training is the organised procedure by which people learn
knowledge and/or skill for a definite purpose".
6) According to H. John Bernardin, "Training is any attempt to improve employee
performance on a currently held job or one related to it".
7) According to Edwin B. Flippo, "Training is an act of increasing the knowledge and
skills of an employee for doing a particular job".
8) According to Planty, Cord and Efferson, "Training is the continuous, systematic
development among all levels of employees of that knowledge and their skills and
attitude which contribute to their welfare and that of the company".

o Objectives of Training

1) To Increase Employee Efficiency: Training aims to increase the efficiency of the employee
by imparting the skills needed to perform the task in a better way. It reduces the gap between
the actual and desired performance.

2) To Upgrade Employee's Skills: In this ever changing environment of technical

advancement, organisations are required to keep a close watch on the different activities and
changes occurring within its environment. Here, the job of keeping the employee fully armed
with the information and skill needed for the performance of a specific task becomes more
necessary. Training is essential to keep the employee updated in advance and incorporate the
technological changes in accordance with the systems and procedures of the organisation.

3) To Avoid or Delay Managerial Obsolescence: If there is no initiative taken on the part of

the managers in adopting the recent trends of technology, it will be considered as a failure of
the management to cope up with the changes within the environment. This failure also reduces
the organisational performance. Hence, training aims to avoid such situation in the
organisation.
4) To Prepare Employees for Undertaking Higher Positions: Training generally aims to
prepare the employees to handle more responsibilities by imparting additional skills required
for the performance of a challenging task. It increases the confidence of employees to perform
in a better way.

5) To Reduce the Employee Turnover: Training aims to reduce the employee attrition rate by
simply infusing enthusiasm and motivating them to perform their job in a smooth manner. At
the same time, the employees are rest assured about the career progress. Training stimulates
and restores dedication among employees for the organisation. Thus, managers are supposed
to facilitate proper training programmes, especially for the bright employees.

6) To Achieve Organisational Excellence: Training sharpens the existing skills of the

employees which ultimately results in better performance of the employees, reduced rate of
accidents, lower breakdowns of the machines and ultimately a more competitive organisation
with a skilled workforce. All these factors enhance the organisational sustainability by creating
a pool of educated and skilled workforce who can help the organisation in managing the
competitive edge.

o Process of Training

1. Assessment of Organisational Objectives and

Strategies:

1) Before starting training process, it is important to

assess the objectives and strategies of the
organisation.
2) Organisations should be clear about their business
goals, strategies, and their vision.
3) Unless and until all these things are clear, the
organisation will not be able to assess the potential
and weakness of its workforce.

2. Training Needs Assessment:

1) Many organisations spend a lot of money on various
training and development courses.
2) But such a huge investment on these processes is useless until the management is aware
about the needs of these training programmes.
3) Therefore, training needs should be identified to help the employees to deal with present
as well as future challenges of the company.

3. Establishment of Training Goals:

1) The goals of training programme play a significant role as without them any training
programme cannot be constructed and the effectiveness of that programme cannot be
measured.
2) Thus, after assessing the needs of the training, it is necessary to establish apparent and
assessable training purpose that can be understood easily by the employees.
 3) Though the attitude of any individual is unpredictable but still setting up a certain
standard can help the organisation to achieve the expected results.

4. Designing Training and Development Programme:

1) Once the goals for the training series are established, the process of training design
starts.
2) It is the basis for a successful training and development programme.
3) For this, most experienced and specialised instructors are hired who search for the most
appropriate content that may be required within the programme.
4) It includes a brief introduction about the entire programme and then the details are given
such as what is the need for this training, how this training can prove to be beneficial
for them, what impact this training is going to have on their skill improvement, etc.

5. Execution of Training Programme:

1) After designing of instructional programme, it is the time for the execution of this
programme.
2) To carry-out training process, firstly an organisation has to search for a common place
where the trainees can be called, and then the other arrangements are done such as
timings, space, etc.
3) Finally the programme is conducted under the guidance of expert and the progress of
trainees is observed by the supervisors.
4) The trainers engaged for this programme should have perfect knowledge about the
company's history, its objectives, and its working environment. He should also have
good communication and creative skills.
5) But implementation of any training programme is not an easy task and thus brings
certain problems with it.
6) Sometimes, the problems are related to the managers as they do not want to waste their
efforts in such training programmes and hence it becomes really difficult to find
appropriate instructors.

6. Evaluation of Results:

1) Since an organisation invests a lot of money on training and development process; their
results have a great impact on the productivity of the organisation, therefore, evaluation
of training is necessary.
2) Evaluation results mainly ensure whether the training process has proved to be useful
to the employees as well as to the organisation or not.
3) Though, there are large numbers of organisations who take this process very leniently,
but if the assessment is done systematically it enhances the performance of the
employees as well the organisation.
o Types of Training

1) Induction Training: Induction training, also known as orientation training is conducted

with an aim to introduce the new employees to the organisation and its culture. This training
plays a very important role in making them comfortable and settling them quickly within the
environment of the organisation. Under this training method, new staff is introduced with the
goals and objectives of the company, rules and regulations to be followed, activities to be
performed by them, expectations from them, policies to be undertaken, etc.

2) Competency-Based Training (CBT): It is a kind of vocational training in which new

employees are trained according to the standards of the organisation. It does not focus on the
individual development, but determines the capabilities of the individual at the workplace after
giving proper training. It prepares the new employees for the competitions that they may face
in future.
3) Knowledge Training: Employees working in any corporation must have thorough
knowledge about the job they are going to perform. Thus, knowledge training is given to new
employees to improve their knowledge and understanding regarding any particular issue of the
organisation. This type of training not only motivates the employees to perform better, but also
helps in maintaining more efficient and attentive staff that further prepares the organisation
against various competitions.

4) Skills Training: There are certain basic skills that are required by an individual in his entire
working period in the company. These skills such as self-management, coordination,
leadership, computations, communication, etc. are imparted through lectures, workshops,
counselling, apprenticeship and various other methods within the company itself. This kind of
training programme is very common in organisations.

5) Cross-Functional Training: It is usually given to the employees who can undertake job
responsibilities of other departments easily. There are few methods, by which this type of
training can be given to the employees, like job rotation, in which the employees are asked to
perform different jobs of same functional area, in different sections of the organisation for
certain time duration, so that they can understand the working of other departments also.
Besides this, good performers can also guide other employees on how to deal with other
departmental functions.

6) Team Training: Content tasks and group processes are the two fields which come in this
type of training. "Content tasks" are aimed at specifying the objectives of the team such as cost
management, profit-making, and problem-solving, etc.

While the aim of "group processes" is to reveal the manner in which the group members work
as a team, the way of interaction, resolve conflicts, etc. Organisations adopt various training
methods like adventure learning in order to develop esprit de corps among the group members.
7) Creativity Training: In today's competitive world, every organisation needs innovative and
experienced candidates for their company. One who thinks out of the box is considered as most
creative person and this is what organisations are searching for.
Thus, the corporate sectors use various brainstorming methods and creativity training
techniques to provide such training to new employees, which make them pioneer, and more
competent with outstanding performance.

8) Diversity Training: Diversity training focuses on increasing awareness about cultural

diversity among the employees and how pleasant working conditions can be developed in a
cross-cultural working environment. This type of training helps employees to cope up with the
cross-cultural sensitivity issue.

o Methods of Training

I. On-the-Job Training

1) On-the-job training methods are based on the concept of learning by doing.

2) In this method, trainees are provided with real job settings to do their jobs.
3) In some situations, they are given sole responsibility to handle the issues on their own
and this is how they learn by doing their task.
4) Also, the new employees gain knowledge of what is to be done from the existing
employees and improve their skills under the guidance of experienced ones.
5) This type of training method has become very popular and is used by most of the
corporations.

1. Job Instruction Training (JIT): Under this training process, trainees are given instructions
systematically one-by-one. These instructions are given by the experienced trainers who are
well-known with the techniques and procedures to be used and the functions to be performed
during the job. In this training method, the learners first observe their instructors while
performing the task and then follow them by performing the task on their own. This helps the
trainers to easily point out the faults committed by the trainees and rectify them as soon as
possible.

2. Apprenticeship: It follows the principle of "earning while learning". In this method, an

expert and experienced person gives his knowledge and skills to the trainee who desires to
learn that skill. Once the trainee has completed apprenticeship programme, trainee can apply
for the permanent job, if there is any.
3. Job Rotation: It is that process in which the employees are given the opportunity to perform
the functions of other departments in the organisation. When the employees are rotated from
one department to another department or from one division to other division, they gain new
knowledge and experience about the different jobs performed by different people in the
organisation.

Job rotation takes place either in the form of promotions in which the employees are promoted
from lower level to higher level or in the form of lateral transfers, in which only the job
responsibility changes, but not the position of the employee. Thus, this training method is the
best way to transform an employee to an expert.

4. Coaching: The guidance given by the superiors of the organisation to their subordinates is
called coaching. Besides being an unofficial and unplanned training method, it improves the
bonding between the employees and their superiors. The senior manager acts as a coach or
instructor and guides the employees about how to perform the task and how the mistakes done
can be rectified. Later, they also evaluate the performance of these employees.

5. Understudy: It is the method of preparing the trainees to perform the responsibilities of his
trainer or to occupy the position of his senior in future. In this method, when the superior or
manager is about to get separated from the organisation due to the reasons of transfers,
resignation, retirement etc., his position is allotted to that employee who has received training
under him. This method is different from coaching in the sense that the manager can select
employee from his department for understudy....

6. Mentoring: In this method, training is given by a specialised and experienced person. In

organisations, mentoring is usually done by senior employees where they try to enhance the
skills of junior employees. Many organisations use mentoring as a nurturing tool which fosters
the understanding and proficiency of their employees.

II. Off-the-Job Training

1) Unlike on-the-job training methods, off-the-job training methods are not based on the
concept of 'learning by doing' but it follows the rule of 'learning by gaining knowledge'.
2) Under this method, the trainees are called upon in a classroom which may be situated
inside the company or some outside place such as institutes or centres to provide the
training.
3) Because of outside location, trainee can learn freely without the stress of job work.
4) The main focus of this guidance is to improve the knowledge of the new employees.

1. Lectures: When there is a requirement of imparting technical knowledge to the new

employees, lecture method proves to be the best way to clear the notion, ideas and hypothesis
to the trainee. It is a one-way communication method in which the mentor collects the entire
relevant data for the trainees and conveys a lecture using various teaching aids such as models,
chart papers, visual aids, audio aids, etc. Thus, it is the simplest method of providing knowledge
to the trainees.
2. Simulations: This training method depicts a real-life situation of the job that may have
happened in the organisation in the past such as damage to any valuable thing, any serious
enquiry that may have adversely affected the company, any mistake that had costed the
company a lot, etc. Several realistic examples can be shown to the trainees to prepare them to
handle the situations accordingly.

By this, the organisation prepares the trainees well in advance about what may happen on the
job and how they have to deal with these types of situations. This method is used in those
industries where on-the-job training can be expensive or destructive, such as, in an aeronautical
industry.

3. Case Study: Under this method, the real business cases are framed and they are provided to
trainees. Trainees have to discuss it and give their ideas on how they would have tackled that
situation. This method is called case study method and is one of the very common ways of
imparting knowledge based on actual business situations.

4. Role-Play: In this method, trainees are provided with an imaginary or real problem which
is generally concerned with the organisation. They are asked to assume identity of a particular
person and behave as if they are in that particular situation. In order to enhance their managerial
skills, employees can make use of various visual aids and tips given by their mentor while
executing their performance.

5. In-Basket Exercise: In this method, the trainee is given all the relevant things like letters,
reports, records, etc. that are needed by managers. The trainee is given a specific situation
which managers confront regularly. He is asked to assess the situation, prioritise the things,
justify his reasons and give final decision on the issues raised during the exercise.

The exercise gives the manager a snapshot of learner's ability to perform the executive
functions and roles in the job. The whole exercise is video-recorded and the concerned
candidates are tested on the grounds of proposed set of their skills and abilities such as of
problem-solving ability, time management, etc.

6. Conferences: A structured method of communicating thoughts to a large number of

audiences who are attending the event is called as a conference. Experts from specific fields
come together to share their views on a common topic and also obtain answers to their
questions, if they have any.

7. Seminar: Another word for 'Seminar' is "Seed Plot" which means it is a base ground for
gaining knowledge. These are conducted by experienced and expert people who not only
prepare the topic of discussion and deliver it in front of learners but also help them to share
their ideas and explore their views towards the topic of discussion. Since, it is focussed on any
particular topic, learners are able to understand the things more clearly and respond effectively.

8. Group Discussion: It is one of the very common training methods adopted by numerous
organisations. Under this method, a topic is given to the group of trainees and they are asked
to actively participate in it and give their outlook towards the issue. The discussion topic is
given on the spot and thus, no time is given to the trainees to prepare the topic.
This method not only helps in solving the problem related to an organisation but also creates a
higher rate of interest and enthusiasm among the trainees as they are able to share good
experience and gain new ideas and knowledge about the subject.

9. Sensitivity Training: As by name, sensitivity training, it is very clear that this training is
related to emotions and sentiments. It is also called as T-group training or laboratory training.
The assessment is based on the behaviour of 'one for the other'. This training is carried out to
make employees get aware of and respect the feelings and emotions of other co-trainees.

10. Syndicates: Syndicate training method has proved to be very useful for training higher
management. In this training method the employees form a group and get united to execute any
particular function. This method includes numerous groups who work altogether to achieve the
organisational training goals.

o Concept of Management Development

1) Now-a-days, more than ever, the focus of organisations is on human resource, and in
this competitive global business environment, human resource is an asset that plays a
predominant role in positioning the company on the top of the others.
2) If organisations want to succeed and grow, efficient managers and executives who are
capable of enhancing and updating their skills to match fast-changing needs are
required in such a business environment.
3) Management development is defined as a systematic process that enables the managers
to develop their abilities in order to attain sustained development and growth.
4) Management development is an educational process with the long-term objectives of
imparting theoretical and conceptual knowledge to managerial staff.
5) It is not concerned with developing operational skills and technical know-how. Thus, it
focuses on a broader educational canvas and has long-term outcomes as goals.
6) According to Dale S. Beach, "Management development is a systematic process of
training and growth by which individuals gain and apply knowledge, skills, insights
and attitudes to manage orientation effectively".
7) According to Flippo, "Management development includes the processes by which
managers and executives acquire not only skills and competency in their present jobs
but also capacities for future managerial tasks".

o Objectives of Management Development

1 Top Management

1) To widen the perception of every manager about his position, role and responsibilities
within the organisation and outside it.
2) To enhance the thought process and the ability to analyse in order to pinpoint the
problems and make the best decisions which are for organisation's good.
3) To recognise technical, institutional and economic influences in order to tackle business
related issues.
 4) To determine various problems generally faced by the organisation and foresee future
problems precautionary actions can be taken.
5) To gain knowledge about problems related to human relationships.

2. Middle Line Management

1) To be absolutely clear about managerial duties and activities.

2) To develop problem-analysing abilities and corresponding competencies to take the
required action.
3) To acquaint managers with the effects of business laws, financial accounting and
business statistics on managerial functioning.
4) To impart knowledge of all aspects of managerial problems and be acquainted with, and
be aware of the importance of interdepartmental relations.
5) To understand the role of motivation and interpersonal relationships in performing
management functions efficiently.
6) To inculcate a sense of responsibility among managers to play leadership roles
effectively.
3.Middle Functional Executive and Specialists

1) To enhance the knowledge of business operations and functions in particular areas like
marketing, finance, production, and human resource.
2) To increase the level of expertise in management techniques like operations research,
quality control, work study, etc.
3) To stimulate out-of-the-box thinking so as to establish improved methods and
procedures.
4) To understand various organisational functions.
5) To comprehend problems related to human relations.
6) To develop problem-solving ability in one's functional domain.

o Management Development Process

1) Once the organisation has taken the decision to change the job profile of an employee,
it begins to prepare for planning and implementation of some specific management
development programmes.
2) Opting to promote an employee, considering him for taking extra responsibilities,
deputing him for a challenging assignment, developing his existing work profile are
some examples of changes in job profile.
3) In such cases, a need-based and object-oriented management development programme
is very important.
4) In general, process of management development involves three steps as shown in
figure.
Step 1: Evaluating the Organisation's Strategic Needs:

1) First and foremost, a management development process of an organisation consists of

the assessment of its potential managerial requirements.
2) This assessment is based on the organisation's business strategies. For example,
introduction of a new product, market growth, merger and acquisition, etc. and a
strategic response to a competitor's activity, impose the managers to develop novel
skills and gain additional knowledge.
3) However, determining the number and quality of the skills needed by the managers for
future plans of the organisation is not an easy task.
4) The reason for this is that business strategies are mostly devised as immediate, intuitive
or incremental responses of an organisation to external developments rather than as
intentionally pre- planned and calculated action.

Step 2: Assessing Competencies and Skills of Managers:

1) In the next step, the existing competencies and skills of managers are assessed with
respect to organisation's future strategies.
2) In this step, fundamental competencies like the manager's present ability to deliver
results and his aptitude are assessed.
3) Generally, performance evaluation techniques are used to assess the competency levels
and skill deficiencies of managers.
4) The skill gaps, so determined, usually constitute the basis for drawing up the
management development programmes.

Step 3: Formulating Strategies for Development of Managers:

1) In the last step, the organisation makes a decision about the method of proceeding with
the process of development of managers to meet its future requirements in terms of
management functions.
2) It makes a decision regarding the fundamental aspects of the management development
programmes, such as their aims, advantages and the costs to achieve these benefits,
methods, assessment techniques, location and timings.
3) Often, the type and size of the organisation, the prevalent environment, the level of
technological advancement and the management philosophy have substantial bearing
on the management development activities.
4) The needs, type, and procedure of management development are generally focused
around the individual employee. For example, few organisations choose to adopt a pre-
designed development programme with result-oriented evaluation systems.
Management development programmes can be specific, different and customised for
each organisation.
 5) On the other hand, some other organisations possibly will ensure availability of ample
support and opportunities for their managers to develop themselves in their profession
with minimal concern for customs and formalities.
6) Similarly, learning capacity of managers and the opportunities at their disposal may be
different for different managers. For example, some managers may have high levels of
motivation and enthusiasm for acquiring new skills or inherently better communication
skills as compared to others. Some managers may have efficient superiors who may
have excellent abilities to inspire and train others while other managers may not be as
lucky in such matters and may not get sufficient opportunities and an environment
conducive to grow their job. It is therefore necessary for an organisation to evaluate the
developmental requirements of managers on a case-to-case basis.

o Methods of Management Development

I. On-the-Job Methods
1. Coaching: In this method, the trainee is coached by a supervisor who instructs the trainee
and imparts job- related knowledge to him.

2. Job Rotation: Job rotation is a method of development which is specifically used for
managers to match the manager's present skills and the skills which are necessary for the future
job.

3. Understudy: This technique is a type of management modelling in which a present or

prospective manager is assigned to work with a senior manager for a particular time duration.
An individual may undergo the process of understudy when the organisation aims to develop
an individual for a higher managerial post. For obtaining broader base and perspective,
understudies are rotated among various managers.
4. Mentoring: Mentor is defined as a wise and trusted guide or advisor. In an organisation, a
senior manager acts as a mentor to a junior member of staff. Thus, mentoring has a vital role
in conveying knowledge and skills from a senior manager to a junior employee. Such skill sets
may include technical know-how, relationship skills, tact and diplomacy. Mentoring is
therefore important for the growth of both the management personnel and the organisation.
5. Committee Assignments: It is also referred to as junior board or multiple management. A
junior board is set-up to act as a shadow of the board of directors to enable young managers
get some insight into the intricacies involved in managing a company insights about decision-
making, strategy conceptualisation and policy formulation. The junior board is aimed at
grooming young and energetic managers for efficiently shouldering higher responsibilities in
future, which also helps succession planning.

6. Planned Progression: It is a method used by organisations to give managers a clear picture

of their way to growth and development. Managers are made aware of their present status vis-
a-vis their skills, knowledge and performance and also of a corresponding idea about the future.
A manager thereby knows the inputs that may be required for progress to the achievement of
his goal.

For example, a Junior Engineer may have information about his progress path from his present
position to becoming a Senior Engineer and then a Head of Department and finally Works
Manager. It may be erroneously viewed by the progressing manager as a frictionless path to
the top; however, actually it is a stepwise approach that requires various tasks to be performed
efficiently at every stage. A negative point in this approach is that the employee's attention on
the next level may turn out to be a distraction for the present task, affecting his present
performance.

7. Creation of "Assistant-to" Positions: Creating an "Assistant-to" position is often opted for

in order to widen the outlook of a trainee by assigning him a position that enables him to assist
and work closely with an experienced manager, who can then observe the trainee closely to
determine his developmental needs. The manager can assign specific jobs to the trainee with
an aim to evaluate the trainee's competency on the specific job, as well as his decision-making
abilities. This method can give better results if the manager is also an adept trainer, as he can
develop skills of the trainee until the trainee becomes capable of shouldering managerial
responsibilities.

8. Temporary Promotions: Many a times, an individual is appointed as an "acting" manager

in place of a manager who, e.g., may be on a leave or on an outstation duty or when a post has
fallen vacant. Temporary promotion is a win-win situation for the organisation and the acting
manager. Organisation gets benefited as the managerial post is now being looked after and is
no more empty, while in turn the acting manager gets the benefit of experience and
developmental opportunities. Such a practical experience, in contrast to theoretical knowledge,
can be extremely valuable for the acting managers because they get on-the-job training for a
senior-position task. However, if the acting manager is lacking the enthusiasm to learn or the
skills to deliver results, neither the acting manager nor the organisation gets benefited.

II. Off-the-Job Methods

1. Case Study: Case study is a very useful technique, particularly for developing an executive's
decision- making and analytical skills.

2. Incident Method: Incident technique, devised by Paul Pigors, aims to develop intellectual
ability, practical judgement skills, and social awareness of managers. Incidents are modelled
on the basis of actual situations that had occurred in other organisations. In this technique,
trainees are developed using a group process.

3. Role-Playing: Role-playing is a technique that helps the executives to understand

individuals better. This method enables trainees to learn from imaginary experiences that they
get through role-playing.

4. In-Basket Technique: This method helps to develop organising, planning and problem-
solving skills. The in-basket technique places executives in real-life situations wherein they are
asked to execute typical management activities and tasks which are required to be carried-out
on a daily basis, in the normal course of their job.

5. Business Games: This method helps to develop organisational ability, quick thinking and
responses, and leadership qualities.

6. Sensitivity Training: Sensitivity training aims to develop an executive's ability to respond

to effective changes in his interpersonal environment. It includes sensitivity to emotional
feelings of self and others. An important benefit desired is increased awareness in executives
about their own behaviour and how others see their actions, better sensitivity to other's
behaviours, and a better understanding of various group processes.
7. Simulation: Simulation effectively helps to develop decision-making skills, which can be
put to good use for solving problems in the shortest possible time.

8. Grid Training: The managerial grid, a six-phase technique, was conceptualised by R.R.
Blake and Jane S. Mouton of U.S.A. It takes into account five principal managerial styles; these
styles represent different combinations of the two attributes, viz., "concern for people" and
"concern for production". This technique helps to develop quality of leadership in executives
over a long timeframe.

9. Conferences: Attitudes are deeply ingrained in a person's psyche; hence it is difficult to

bring about radical changes in attitudes. This method develops an executive's ability to modify
his attitudes, as and when need arises, for the benefit of the organisation.
10. Lectures: Lecture is a mode of delivery of information from a lecturer to the audience. It
is used for management development since earlier times. This is best suited to transmit more
knowledge in a short time period to a large pool of managers. Its drawback is that it is a one-
way transmission of information and hence does not enable active participation of the audience.

11. Special Projects: In this technique, a trainee is assigned a project which is linked closely
to the objectives and targets of his department. An example of such a project is the "action
learning" project, which is so called because the trainees on this project can learn through
action. In this project, the management generates real problems for the trainees to tackle.
Trainees might also be provided a written assignment that specifically mentions the aims, target
dates, action plans and the name of the supervisor for keeping an eye on the assignment until
its completion.
o Importance of Management Development
1) It enhances leadership qualities and problem-solving abilities of managers.
2) It facilitates the development of those trainees who have a good grasp of the
fundamental principles of management, possess the capability of working in a team,
leading a team as well as coordinating the worker's activities with time, familiar with
resources and machinery to become an effective supervisor.
3) It enhances the efficiency of supervisors in training and developing their workers, both
old and new. This is done to make them competent to perform their present and future
tasks to adapt according to the changing strategies and goals of the organisation.
4) It promotes and maintains good relations between managers and labour by fostering
better understanding of organisational rules and policies, including the correct
interpretation and implementation of the collective bargaining agreements.
5) It promotes and helps to maintain excellent employee relations by providing training
with regard to interpersonal relationships, inspiring them to achieve better performance
by understanding their strengths, weaknesses and personal characteristics, and by
encouraging them to maintain proper attitude towards their work.

• Difference between Training and Development

Basis of Difference Training Development

1) Nature Training is mainly Development is concerned with

concerned with the enhancing theoretical and
improvement of practical, conceptual knowledge of managers.
technical, and mechanical
skills of the trainees.

2) Emphasis Training emphasizes the Development programs emphasize

proficiency and behavior of the enrichment of knowledge of
employees that may be learners regarding non-technical
required for a specific job. functions. It also improves
employees' understanding.

3) Relevance Training programs are more The development process is more

relevant and beneficial for relevant for higher authorities such
non-managerial staff. as managers and supervisors.

4) Focus Training focuses on Development focuses on preparing

preparing learners for trainees for upcoming job
current job opportunities. opportunities.

5) Goals The main goal of training is Development processes aim at

to attain short-term achieving growth and retaining it
objectives. for a longer duration.
6) Orientation Training plans are The development process is
occupational and mainly personnel-oriented and inspires
job-oriented. managers and executives to become
more inventive, enthusiastic, and
loyal to the organization.

7) Process Training is conducted for a Development is a long-term process

particular duration and is a that continues for the entire lifetime
short-term process. of an individual in one way or
another.

8) Growth Growth mainly occurs in the Development programs focus on the

Opportunity particular skills of the overall growth of personnel.
trainees.

9) Motivation Motivation in training In development programs,

programs is given by employee growth completely
external factors such as the depends on internal motivation.
organization and the trainer.

10) Training is not voluntary but Development programs for

Voluntary/Imposed obligatory for employees to management are voluntary and
fulfill company standards. cannot be forced on higher-level
employees.

11) Relationship with The correlation between the Employees clearly understand the
Career Development learning process and career association between individual
advancement is uncertain to development and career
employees. advancement.
5. Define the term selection.

Ans –

• Selection
1) Selection refers to a process in which individuals are picked-up from the pool of job
applicants possessing the required knowledge and skills for the job to be performed in
an organisation.
2) Selection is a process which includes various phases such as exploring the applicants
in order to check whether they are suitable for the job or not, picking-up the right ones
from the pool of applicants and eliminating the rests.
3) Therefore, selection can be regarded as a negative process in its application, as its main
aim is to reject as many unsuitable individuals as possible; so as to get the right and
appropriate candidates for the organisation.
4) According to Dale Yoder, "Selection is the process by which candidates for employment
are divided into two classes those who will be offered employment and those who will
not".

• Selection Process

1. Screening of Applicants (Application Forms or Application Blank):

1) Screening of applicants includes filling up the application forms by the candidates.

2) These application forms contain information about the applicants such as personal bio-
data, achievements, experience, etc.
3) This kind of information is utilised in order to get the right candidate, who is eligible
for the vacant position.
4) It can also be used for maintaining a permanent record of the candidates who are
selected.
5) After screening all the applicants, only those candidates are allowed for further
selection process, who are meeting the job requirements and the standards set by the
organisation.
6) In case, the candidates matching the job requirement are more than the vacant positions,
organisation goes only for few chosen candidates for further selection process.
2. Selection Tests:

1) Every organisation has its own rules for the selection process, to generate the required
information about the candidate, or to reject the candidates who are not qualified for
the interview.
2) Generally, selection tests support the information provided by the applicants in the
application forms.
3) A selection test may provide useful information in terms of their aptitude, hobbies,
personality, etc., which is not possible to get through an application form.

3. Selection Interviews:

1) Selection tests are followed by a personal interview with the candidate.

2) The main purpose of a personal interview is to fully evaluate the candidate for the job.
3) It also gives a chance to the candidate to gain all the information about the organisation.
4) Sometimes, a preliminary interview takes place before conducting the tests.

4. Medical Examination:
1) Medical examination is performed in order to observe the candidate's endurance or
tolerance level under pressure, as there are several jobs which require a lot of patience.
2) Medical examination evaluates whether the candidate possesses these traits or not.
3) It identifies the deficiencies of selective and qualitative placement for a positive cause
and not for rejection only.
4) It also indicates the suitability of a candidate for a job, and prevents his transfer to other
job positions.
5) A medical examination is performed to place the right candidates at the right jobs,
where they can function without any kind of ill-effect or loss to their health.
6) It is generally performed by the organisation's own physician or a medical officer
authorised by the organisation.

5. Reference Check and Background Verification:

1) Selection procedure includes this step of a reference check and background verification
for the purpose of bringing out more information regarding the candidate.
2) Organisations request the candidates for some references from whom they can gain
some more information. This information may be concerned with their background,
character, working, etc.
3) These references may include ex-employers of the candidate, people from educational
institutions of the candidate, or some other important people who know the candidate's
attitude and skills.
4) In India, references are not supposed to be of much importance due of their subjectivity,
but they are an important source of valuable information, which cannot be obtained
from any other source.
6. Hiring Decisions or Approval by Appropriate Authority:

1) Finally, based on the above steps, the appropriate candidates are recommended for
selection by the personnel department or selection committee.
2) However, the personnel department or selection committee may hold the responsibility
of finalising the candidates for the job; sometimes organisations have their own staff to
recommend the candidates for final selection by the top management.
3) Generally, organisations assign different authorities to approve the final selection of
candidates.
4) On receiving the approval, the candidates are told about their selection in the
organisation, and are requested to report to the concerned personnel.

• Importance of Selection
1) Selects Suitable Candidate: Selection process aims at choosing the most appropriate
candidate who meets all the requirements of a position. The best candidate is chosen
only after rejecting all the unfit applicants through a systematic process of selection.
2) Verifies Applicant's Capabilities: Selection process helps to match job requirements
with the applicants' profile in order to select the best candidate.
3) Places Right Candidate at Right Job: Selection process helps to choose the right
candidate for the right job so that he can contribute his best efforts towards the
achievement of organisational goals by giving a standard performance as desired.
4) Generates Information about Candidate: Selection also helps in extracting
information regarding the candidate with a view to compare him with other candidates
in order to reach to a correct decision.
5) Saves Cost: The match between right candidate and job requirement is very crucial in
order to enhance the employee's work performance. Any mismatch in this respect can
result in high loss to the organisation. It can be in terms of money, time and any other
factors such as cost of training, cost of operating, etc. With the passage of time,
employee may lose interest in the job and even resign, as a result of dissatisfaction. It
is possible that a frustrated employee may pass on some negative and misrepresented
news pertaining to the organisation, which may result in an immense loss in the long
run. Hence, continuous observation of the 'fit' between the candidate's abilities and the
job requirements is necessary for an effective selection procedure.
• Factors Affecting Selection:

1. Internal Environmental Factors:

1. Size of the Organisation: Selection process is influenced by the size of the

organisation. For example, small organisations use more informal selection process in
comparison to the big organisations, which generally rely upon the formal and
systematic selection process.
2. Type of the Organisation: Organisations that have a complicated structure
significantly require a refined working structure. Most organisations split their
organisational structure into three basic types. One type is a line structure where specific
duties are set to be performed from top to bottom. In line and staff structure, duties are
defined by staff and line, i.e., with staff departments supporting the line managers. A
department organisational structure functions with the help of departments, with people
specialised in human resources, marketing, engineering and finance. Selection process
varies with the type of organisational structures.
3. Nature of Social Pressure: Selection process is influenced by the social pressure as
well, because selection of human resource is greatly influenced by legislation, executive
orders, and court decisions, etc., as every organisation has to function within the society
under some social and legislative terms and conditions.
4. Applicant Pool: Selection process is affected by the pool of applicants. It can be an
effective process only if the applicant pool is large and comprises of competent
applicants for a specific job position. Number of applicants selected for a specific
position when compared with the total applicants gives the selection ratio.
5. Speed of Decision-Making: Selection process is affected by the time provided for
making the selection decision. Organisations can averse the legal problems by strictly
following the selection policies and procedures.
2.External Environmental Factors:

1. Nature of the Labour Market: Selection process is affected by the nature of the labour
market as well. For example, selection process will be short and simple, if there are
very few applicants having required knowledge and set of skills, and vice versa.
2. Trade Unions: Trade unions also affect the selection procedure of an organisation. For
example, trade unions sometimes recommend some of the applicants for a job, and even
demand for their selection.
 3. Government Regulations: Organisations need to follow the selection norms defined
under the regulations prescribed by the government. Thus, government rules and
regulations such as legislation also affect the execution of the selection procedure in an
organisation.

• Barriers to Effective Selection

1) Diversity of Selection Approaches: The variety of selection approaches and tests
represent that there is no one perfect way to choose the managers.
2) Changing Organisational Environment: Organisational environment has a tendency
to change with the period of time. Organisational environment is also influenced by the
designated personnel. Everyone has its unique working style and as a result, they
introduce different managerial values and styles as and when they come into power.
Thus, the techniques and instruments used for selection purpose are not a definite way
to forecast what people will do, even if they have the capability of doing it.
3) Time and Cost Expenses: Most important elements in the selection and recruitment
process are the time and cost incurred while taking HR decisions. It becomes necessary
to recognise these elements such as advertising expense, agency fee, cost of test
material, time spent in the interview process, cost incurred in reference checking,
medical examinations, etc.
4) Perception: Another barrier in selecting right candidate is the lack of ability to
understand others correctly. Selection requires an individual or a group to measure and
compare the respective competencies of others, with an objective of choosing the right
candidate for the job. However, our views are much personalised in nature. Everyone
perceives the world in a different manner. Our restricted perceptual ability is clearly an
uncertain barrier to the logical selection of people.
5) Fairness: Fairness in selection process needs that there is no discrimination and
biasness against any individual on the basis of religion, region, race, gender, etc.
However, the attempts to reduce the gap have not been very effective. The less number
of women and other underprivileged sections of society in the middle and senior
management positions and open discrimination on the basis of age in job
advertisements and in the selection process are visible examples of discrimination.
6) Validity: In order to forecast the job performance of a candidate, the validity of a test
is used. A valid test can easily find the gap between the candidates who are able to
perform well and those who are not. Therefore, any validated test cannot forecast the
job success accurately. It can only increase the chances of success.
7) Reliability: An interview is said to be reliable only when it is generating consistent
results again and again in the simultaneous situations. Similar to a validated test, a
reliable test may fall short to forecast the job performance accurately.
8) Pressure on Selectors: Sometimes, candidates are selected only because of the
pressure created on selectors by the politicians, bureaucrats, relatives, friends, and peers
for selection purpose. Obviously, the candidates selected are not well fit for the job.
Generally, the selection meetings of public sector undertakings take place because of
this pressure.
6. Explain the concept of manpower Inventory.

Ans –

7. Define Salary and Components of salary.

Ans –

• Salary
1) Salary is something which is of a fixed in nature and is paid by an employer to an
employee on monthly basis.
2) It is mainly given to the white-collar workers or professionals.
3) It can also be specified in an employment contract that is done between the employee
and the employer. Salary is different from a piece wage.
4) Salaries are very important in running and sustaining a business because it is important
to pay a salary to attract and retain the right candidate for the organisation. Thus, due
to this reason it is also called as personnel expense or salary expense.

• Components of Salary

1. Basic Salary: The basic salary is the base component of the salary. It normally contains 35
to 50% of the total salary. It is a certain amount which is paid without having any deductions.
It is decided on the basis of position of the employee and also the industry to which he/she
belongs. The other components of salary like allowances, etc., are also based upon basic salary.
The basic salary is subject to tax laws.

2. HRA: HRA is the acronym for House Rent Allowance. The HRA is a component of salary
and this amount is paid by the employer to the employees. The amount of HRA is mentioned
in the terms of employment. This HRA is given by the employer to the employee in order to
meet the cost of rent which employee pays for staying in the location, where business operates.
Some tax exemptions are allowed by the income tax department to employees on the amount
of HRA, such as, section 10 (13 A) and Rule 2A. Further, the total amount of HRA is not
deductible because HRA is an allowance and hence employee must pay some tax on it.

3. Dearness Allowance: The DA (Dearness Allowance) is one of the components of total salary
paid by the employer to the employee against the services rendered by them. For example, the
pension or pay structure which is usually followed in India includes basic salary in addition
with housing allowance or dearness allowance. This dearness allowance is a percentage of
employee's salary or pension. This percentage is analysed and revised after every six month.
Generally this dearness allowance is given to pensioner and employees for helping them against
the price raise.

4. Conveyance Allowance: The conveyance allowance is paid to an employee to travel from

one place to another in the discharge of duties for the organisation. When any free conveyance
is not provided by the organisation then this allowance becomes tax-free. On the other hand, if
the organisation is providing some form of transport facility then this conveyance becomes
taxable in the hands of the receiver.

5. Leave Travel Allowance: Leave Travel allowance is one of the benefits that an organisation
provides to its employees. It is provided so that the organisation may retain the best of its
employees. This allowance allows the employees to go to a place of their choice along with
their families. This can be availed every year. It also depends on the designation of the
employee.

6. Fixed Medical Allowance: This allowance is paid on a fixed basis to employees. It does not
depend on the actual medical expenditure incurred by the employee. It is fully taxable. On the
other hand, the monthly payment that is made to a Managing Director in the form of medical
expense falls within the definition of "perquisites" under section 17(2).

7. Provident Fund: Provident fund is the payment which an employee receives after his
retirement or when he resigns from the organisation. Both employee and employer contribute
equally in the provident fund. The provident fund is mainly given with the objective to secure
the future of employees after retirement. At least 12% of an employee's basic salary is
automatically deducted and goes to the Employee Provident Fund every month.

8. Special Allowance: Special allowances can include items like mobile allowance, meal
allowance, dress allowance, club memberships/card memberships, etc. These benefits are
provided to employees to provide them social security and also to make them comfortable
within the organisation. This increases their productivity.

9. Professional Tax: The State Government applies professional tax to all those who are
earning a salary. This also includes professionals like Chartered Accountants, Doctors and
Lawyers. The professional tax varies from one state to another. The maximum amount of
professional tax that can be charged is ₹2,500 in a year. Employers normally deduct the
professional tax from the salaries of employees and deposit it to the state government. The
State Government further uses this fund in the maintenance of the Employment Guarantee
Scheme and the Employment Guarantee Fund.

10. ESIC: The ESIC scheme needs to be extended when the company has 10 or more
employees (this is 20 in the states of Maharashtra and Chandigarh) and where these employees
are earning a salary less than *21,000 per month. The employer needs to make a contribution
of 4.75% of gross salary and the employee a contribution of 1.75% of gross salary.

• Ways of Defining Salary Components

The various components of salary can be defined in many ways. Some of the ways of describing
the salary components are:

1) Lumpsum: This is the simplest method. In this, there is an allocation of a certain

amount to every component of salary. This is done on an ad hoc basis.
 2) Based on Conditions: This type of salary description is most common. Very often it is
important to specify salary on the basis of various things like city, grade or designation
of the employee. Here the allocation of amounts to different salary heads is done with
the help of a formula.
3) Variable: This is the part of the salary which depends on the attendance, performance
and various other things. It varies from month to month. Here, sometimes a rate is
specified and only the unit' is changed.

• Difference between Wages and Salary

Wages Salary

1) Wages are paid according to the number 1) Salary is paid to the employee irrespective
of hours worked by the employee. In other of hours worked by him. The amount is fixed
words, the employee needs to be physically and is paid monthly.
present and working in terms of hours to
earn wages.

2) The recipients of wages are not 2) Only permanent employees are paid salary.
permanent.

3) Employees who are paid wages are called 3) The other name for salary-based employees
'non-exempt' employees. is 'exempt' employees.

4) Overtime is paid to wage-based 4) The chances of getting overtime are very

employees. less for salary-based employees.

5) The amount paid to wage-based 5) No deduction in salary takes place for

employees is deducted if they take leaves. salary-based employees for leaves or time-
offs.

6) Calculation of wages is done on an 6) Annual calculation is done in case of salary.

hourly or daily basis.

7) Wage-based workers are not entitled to 7) Salary-based employees enjoy the

paid holidays, sick leaves, casual leaves, entitlement to paid holidays, sick leaves, etc.
etc.

8) No benefits or perks are given to wage 8) A wide range of benefits, perks, and
earners. rewards are received by salary-based
employees.

9) A relatively high employee turnover is 9) The positions which face lesser employee
noticed amongst wage-based employees. turnover are taken up by salary-based
employees.
8. Human Resource Information system.

Ans –

• Human Resource Information System

1) Human Resource Information System is an organised process of collecting, storing,
maintaining and accessing data related to human resource and different activities that
are significant for the organisation.
2) An HRIS comprises of a database in the form of files. There are one or more relevant
files in which the required data is stored, and a database management system, which
acts as a guide with the help of which the system user can access the data any time.
3) Thus, HRIS provides tools which enable users to enter new data as well as edit old data.
4) Further, such programmes give users the option to choose from a wide range of pre-
defined reports, which can either be viewed on computer screen or in printed form.
5) These reports may relate to various HRM issues such as compensation planning,
succession planning, etc.
6) Generally, HRIS also include tools for system administrators or users to produce
provisional reports and choose particular cases or subsets of cases for demonstration.
7) According to Walker, "HRIS is a systematic procedure for collecting, storing,
maintaining, retrieving, and validating data needed by an organisation about its human
resources, personnel activities, and organisation unit characteristics".
8) According to Boyett et al, "The main intent of Human Resource Information System
(HRIS) is to keep an accurate, complete, updated database that can be used when
needed for reports, record-keeping, and automating routines and tasks such as
application tracking".

• Objectives of HRIS
1) To improve the capability of HRM to influence and adapt according to the new and
evolving prospects and problems arising in the business areas.
2) To guarantee proficient storage, collection, and distribution of information related to
HR in a computerised working environment.
3) To form an information hub of HR for the entire organisation. This hub bridges the gap
between people and information.
4) To create an integrated system to gain an effective and useful integration of all the HR
functions and efficient use of human resources.
5) To assist in prompt dissemination of information and aid in making valuable decisions
so that the available human resource can be used efficiently.
6) To facilitate the human resource managers to utilise their valuable time in more
important problems by freeing them from day-to-day tasks through Employee Self-
Service System (ESS). Through ESS, the employees can gain access to the required
information about training, payroll, etc., without the help of the HR manager.
7) To reduce the cost and wastage related to manual record-keeping and increase the
accuracy, reliability and validity of records.
 8) To facilitate future-planning and formulation of policies, both at micro and macro level.
At the organisational level, HRIS creates the base for HRM, specifically, HRP.
9) To help in evaluation and regulation of HR supply and demand disparity and assessment
of the policy on deployment and growth of human resource.
10) To give useful insight on strategic decisions taken throughout the enterprise like
rightsizing, redundancy, technological change, competency profiling, etc.

• Components of HRIS
1. Input:

1) The HRIS consist of inputs like information of the employee, procedures and policies
of the company and some other information related to an employee.
2) All these information are stored in the system for further use.
3) This particular component is useful in providing needed human resource information
to HRIS.
4) In order to collect important information about human resource, various elements like
policies, strategies and measures should be developed and the questions "when, where,
and how data should be gathered?" must be answered.
5) After data collection, information should be fed into the system and then it should be
verified in order to ensure its correctness.
6) With the help of data validation tables it is easy to determine whether the information
is acceptable or not.
7) The system must be capable of updating and making changes in data validation tables.

2. Transformation:

1) The function of transformation is linked with the computer and comprises of written
programmes or software, which instruct the system about what should be done, when
it should be done and how it should be done.
2) The function of transformation is important for updating the information saved in 970
various storage devices.
3) The system should be updated from time-to-time, as continuous changes take place in
HR information.
 4) When fresh information is incorporated in HRIS, it becomes obvious to keep the old
information in the form of record for future use.

3. Output:

1) The end result of the new and processed data is the output for the HR information
system. For example, it involves generation of employee reports that contain
information about their age, gender distribution in an organisation, etc.
2) This HRIS function is well-known since maximum users of HRIS are not engaged in
gathering, editing and updating human resource data; rather they are involved in using
information and reports generated by the HRIS.
3) It is the demand of the output function which determines the kind of software to be
used.

• Steps in Implementing HRIS

Step 1) Inception of Idea: The need for HRIS must be felt. The originator must make a primary
report supporting the requirement for HR information system and highlight how it can help the
organisation.

Step 2) Feasibility Study: This study helps in assessing the existing system and future benefits
of HR information system. It also supports in assessing cost-benefit analysis of HRIS and ROI
calculations. A proper feasibility study helps the management in making decisions based on
facts and figures.
Step 3) Selecting a Project Team: After the acceptance of feasibility study and allocation of
resources, the next step is to pick a good project team. This project team should comprise of a
human resource representative, who is knowledgeable about the organisation's HR functions
and management information systems.

Step 4) Defining the Statement of Requirements: It gives precise details about the
performance of the human resource information system. A major portion of this statement is
generally concerned with the specific reports that are to be generated. Similarly, the statements
also elaborates other requirements which contain written details about the ways of collecting
and preparing data by the users, getting approvals, completing forms, restoring data, and
performing other assignments that are non-technical in nature and required for HRIS. The main
objective is to ensure that the aim of HRIS is properly linked with the organisational needs.

Step 5) Vendor Analysis: The main purpose of this step is to identify the best suitable software
and hardware to be applicable as per the organisational needs, at the least price. Vendor analysis
involves discussions with vendors on how their HR information system fulfils the
organisational needs..
Step 6) Package Contract Negotiation: After getting the final offer from the vendor, the
contract specifying the price, delivery, duties of vendors regarding installation, maintenance of
service, employees training, etc., are negotiated.
Step 7) Training: After the signing of contract training is started at the earliest. Firstly, project
team members of HRIS are given proper training to use HRIS system. Later, the project team
members train other managers from various departments on how to give and retrieve
information from HRIS.
Step 8) Tailoring the System: In this step, suitable changes are done in HRIS so that it can
best suit the organisational needs. A better approach is to create new programmes that
supplement the vendor programme without making changes in it, as alterations may generate
problems.

Step 9) Collecting the Data: Before starting the system, data should be collected and stored
into the system.

Step 10) Testing the System: The system testing starts after the system fits properly into the
organisational needs. Its main objective is verifying the end-result of HRIS and ensuring that
the system is doing exactly the same as per the instructions.

Step 11) Starting Up: HRIS starts after all the recent actions are fed into the system and reports
are generated. It is good not to start-up during the peak season so that proper time and attention
can be given to the HRIS. There are possibilities that some errors may crop-up even after testing
the system.

Step 12) Running in Parallel: It is safe to run the existing system in parallel with the new
system for some time so that in case of any malfunctioning of the new system, the work is not
hampered. It also facilitates to compare the results and problems of both the new and the
existing system.

Step 13) Maintenance: Once the system has been installed, proper maintenance, performance
monitoring and secrecy of records should be carried-out. It generally takes several months for
human resource personnel to get accustomed with the new HRIS.
Step 14) Evaluation: After executing the system for a certain period of time, the performance
of HRIS is examined and if required, corrective measures should be taken. It should be checked
that whether implementation of HRIS is in accordance with the organisational needs or not.

• Advantages & Uses of HRIS

1) Using Human Resources Properly: The main benefit of HRIS is that it helps in utilising
the human resources to their best possible extent. Since the employee activities are clearly
visible in the database, it prevents duplicacy in employee's work.

2) Managing Ample Data: The basic function of HRIS is to manipulate, retrieve, store, and
distribute the huge amount of data in a very short span of time. Due to this HRIS is also called
the editor, record-keeper, and transaction processor. HRIS can keep track of abundant data,
which needs integration of both accuracy and high speed. These features are impossible to
achieve while working manually.
3) Minimising Labour Cost: HRIS reduces the need of labour in the human resource
department to a great extent. With the decrease in labour, the recurring labour cost is also cut
down to minimum. For example, mechanising the human resource processes like recruiting
employees through an applicant tracking system reduces the cost and time per hire
significantly.

4) Speedy and Effective Human Resource Decisions: HRIS has a decision support system
which produces numerous alternative decisions for a given problem. It enables the managers
to take the best possible decision in a very prompt and efficient manner. Since, the decision is
taken on time, the organisation can take advantage of the arising business opportunity without
any delay.

5) Improved Monitoring and Control over Human Resources: When comparing with, the
manual environment, the managers in an HRIS organisational environment are seen to have a
better control over their subordinates. Their ways of supervision are also comparatively more
advanced. The main reason behind this is that HRIS scrutinises the employee's actions all the
time. The managers save time as they do not need to physically supervise the employees. The
organisation saves supervision cost, as no physical supervision is needed.

6) Optimum Confidentiality and Security: When it comes to confidentiality and security,

most of the organisations face the problem regarding the safety of employee data. HRIS has
the option to restrict the access of employee data, keeping the records to be safe. Passwords or
other such authorisations can be used to prevent unauthorised access to data in an HRIS enabled
organisation.

7) Anytime, Anywhere Access: While working on HRIS, the user can access data anytime,
anywhere, with numerous channels for job performance and reporting. The users need not to
be present in the premises to access the data. HRIS can be accessed from anywhere via web, e-
mail, SMS, etc.

8) Better Focus on Strategic Activities by Managers: As HRIS has mechanised the day-to-
day tasks of HR managers like work scheduling, attendance tracking, etc., the managers now
have ample time to focus on tasks of strategic planning. The human resource manager can now
perform his/her top level managerial functions by actively focusing on strategic decision-
making processes, using HRIS. Thus, HRIS has totally changed the job responsibilities of
managers by equipping them with tools of strategic planning and control, to perform and
accomplish their tasks with more ease.

9) Better Statutory Compliance: An HRIS ensures that all the statutory compliances are put
into effect and followed as they are formulated under the HRIS. When an employee is
performing an HR activity and even if, unintentionally he neglects any statutory provision, the
organisation may face legal problems. HRIS helps to overcome such kind of problems.
• Disadvantages of HRIS
1) Needs Huge Investment: HRIS proves to be costly for the firms in respect of finance and
human resource requirements. Many times, the personnel who design HRIS are ignorant about
the actual needs of the user, which creates a gap between the demand and supply for the user.
A lot of effort, time and communication from HR manager are required for a useful HRIS.
2) Unsuitable for Computer Illiterates: There are a number of people who are not well versed
with the knowledge of computers. HRIS could be a problem for them. In such a case,
organisations need to make its employees computer-literate at all levels so that HRIS can be
used by each and every employee.

3) Depends on Intelligence of Humans: Nothing can replace human beings, not even a
computer. Involvement of human beings will always be crucial as computers can only help
human beings in their tasks. The quality of output is based on the correctness of the input and
the kind of queries forwarded, i.e., Garbage-In Garbage-Out (GIGO).
4) Requires Online Update: In certain organisations, the system is updated weekly, i.e., in
batch mode. Online facility in a multi-user work environment should be developed so that the
reports produced are exact and accurate and as per the need of the organisation. It is also
believed that old information becomes obsolete and is of no use any further.

9. Define Hard and Soft HRM.

Ans –
Hard HRM focuses on the strategic and quantitative aspects of human resource management,
treating employees as resources that need to be managed efficiently to achieve business
objectives.

Soft HRM takes a more human-centered approach, emphasizing employee well-being,

motivation, and development as a means to achieve organizational success.

Feature Hard HRM Soft HRM

Employee View Resource/cost Asset/investment

Decision-Making Centralized Decentralized

Focus Short-term goals Long-term development

Employee Involvement Low High

Training & Development Minimal Significant

Motivation Approach Financial rewards Job satisfaction, engagement

10. List the inputs and outputs of an HRM Model.

Ans –

11. What are the various components of a salary structure?

Ans – See Question No. 7

12. State the various sources of recruitment for executives.

Ans –

• Recruitment
1) Recruitment can be defined as the process of finding out prospective candidates for
filling actual or projected vacancies in an organisation.
2) Recruitment enables the organisation to obtain the number and types of individuals
required for its continuous working.
3) Normally, it is an effort to gain the interest of the candidates looking for jobs, find the
candidates interested in the job and create a group of potential employees, with the help
of which the management can choose the suitable person for the job.
4) The process of recruitment is one of the most significant aspects for operating a
business successfully.
5) The quality of the workers determines the performance of an organisation, and
therefore, individuals who effectively manage all the functions of the organisation are
more suitable for it.
6) Even though, changes can be brought in some incompetent employees by training and
rigorous supervision, recruitment of capable and passionate people is undoubtedly
preferred.
7) By appointing the right person on the right position, great amount of time, energy, and
money can be saved. Therefore, it is necessary for a manager to recruit high-quality
employees in order to fulfil the organisational needs.

• Objectives of Recruitment
1) Business Growth: Recruitment is mandatory for the business to grow, since a business
which is recruiting indicates its growth. Also, the needed skills for the next stage of
business development and the current skill set required can be attained only by
recruiting efficient employees. For example, e-commerce, i.e., purchasing and selling
on the internet is one of the growth areas that have encouraged firms to hire web
designers and specialists in information technology.
2) Filling Vacancies caused due to Staff Turnover: Every business faces staff turnover
at some point of time. For example, chain stores like Sainsbury's and ASDA have an
ongoing recruitment process for car parking Nattendants, check out staff, and other staff
 members. People will have numerous reasons to leave jobs (e.g. higher studies) and
need to be replaced regularly. Hence, to fill in these openings, recruitment is required.
3) Changing Job Roles: In the present world, work is changing continuously. The skills
that seem to be of value today might turn redundant next year and a new set of skills
will be needed. Thus, new opportunities will be constantly created and businesses will
keep on recruiting new employees.
4) Internal Promotion: Organisations practice motivating their employees to go for more
challenging and higher paid jobs within the organisation. The ones who succeed to
move up in the hierarchy need to be replaced by new employees.
5) Increasing Workload: When the amount of work increases, the business requires more
employees and also those who are more skilled. Current employees can be encouraged
to develop new skills through trainings which will be a boon for their career growth,
increase their loyalty towards the organisation by prompting them to stay with the
organisation for a longer duration and fill the skill gap. Employee referral scheme also
proves to be beneficial for the employee where the employee can refer friends, relatives
or acquaintances possessing the skills desired for a post and earn incentives.

• Sources and Methods of Recruitment

I. Internal Sources

This is the process of filling job openings by choosing from the pool of existing workforce in
the organisation. Following methods or techniques can be used while recruiting internally:

1. Transfer and Promotion: Transfers and promotions are ways of filling organisational job
vacancies internally. Internal movement within the same grade, from one job to another is
called as transfer. Whereas, the movement of an employee from a lower level position to a
higher level position alongwith the changes in work, responsibilities, status and value is termed
as promotion.
2. Job Posting: It is an in-house method of recruitment in which notices of vacant jobs are
posted at important places of the organisation such as employee lounges, cafeterias, elevators,
etc., and employees are provided with a large amount of time to apply for the available jobs.
Nowadays, job posting is being used as one of the most creative way of recruitment in
organisations. Various organisations consider job posting as an in- built part of an effective
career management system. Thus, it is considered to be the easiest and most commonly used
method by employers to inform employees about job openings.
3. Employee Referrals: Using of personal contacts to fill a job opportunity is known as
employee referral. It is a reference from an existing employee regarding a candidate, be it a
friend or a close relative. It is considered to be an "it takes one to know one" approach. A major
problem with this method is that it encourages favouritism, i.e., candidates of one's community
or caste is selected, who may or may not be suitable for the job.

4. Former Employees: Former employees are increasingly becoming a feasible source of

recruitment as the employers mostly contact former employees. They are more trusted as an
internal source because they have relation with the company. Many of the retired employees
may be interested to return to work on a part- time basis or may propose someone who would
like to work for the organisation. At times people who have left the company for upbringing
their family or to complete college education are enthusiastic to return to work after fulfilling
their individual objectives. Individuals who had left the job earlier for other jobs may be
interested to return for a high salary package. For attracting retirees or others who had worked
earlier in the organisation, use of job sharing and flexitime programmes can be beneficial.
Recruiting former employees, is beneficial in the sense that organisation already knows about
their work ethics.
5. Previous Applicants: Not only the internal sources but also those who have applied for jobs
earlier can be contacted again. It is a fast and cheap way to fill unpredicted or unexpected job
vacancies. Candidates who have attended "walk-in" may also be considered. Earlier walk-ins
are likely to be more appropriate for filling unskilled and semi-skilled jobs. For example, a firm
which required two cost accountants may contact the previous qualified applicants. This
particular action can fulfil the needs of the firm and in turn will also help those individuals who
are dissatisfied with their present job at other organisation.

II. External Sources

Organisations can fulfil the job positions from outside through the following methods or
techniques:
1. Direct Methods: In these methods, the recruiters are sent to educational and professional
institutions in order to build public contacts and exhibits. Various direct methods are:

1) Campus Recruitment: Campus recruitment is a method in which recruiters visit the

campus and placement cells of educational institutions such as engineering and
management colleges in order to get the qualified candidates. Recruiters get a large
number of candidates to choose from and candidates can select the job post which suits
them from the available job options.
2) Scouting: Scouting is a method in which representatives are sent by the human resource
department to those places where recruitment activities are going on. They get in
contact with the prospective candidates who are searching for jobs. Applicants go
through an initial interview. Job fairs, indoctrination seminars are some of the other
ways of this particular method.
 3) Recruitment at the Factory Gate: It is a method of direct recruitment in which a
notice is posted outside the factory gate, stating the information regarding the job
vacancies.

2. Indirect Methods:

1) Advertisements: In modern times, this medium has become equally vibrant, energetic
and creative as consumer advertising. The advertisements usually provide a brief
outline of the job responsibilities, compensation package, growth opportunities in the
organisation, etc. This method is suitable when the Hr organisation wants to reach a
large target group and desires a good number of qualified individuals who are
cosmopolitan in distribution.
2) Employees Trade Associations/Clubs: Meetings, conferences, seminars, and other
social functions of employee trade associations/clubs are more ways of spotting suitable
candidates.
3) Professional Associations: Professional associations/bodies of major professionals
like Doctors, Engineers, Auditors, Chartered Accountants, and Managers also provide
abundant opportunities to discover potential candidates for technical, scientific and
managerial cadre vacancies.
4) Other Reputed Firms: Nowadays, it has become a trend to recruit human resources
from well-known firms. Few companies and firms have established good reputation on
productivity, efficiency, and industrial harmony. Many firms have made efforts to
discover appropriate candidates from such firms for filling job positions.

3. Third Party Methods:

1) Private Employment Agencies: They are used extensively and charge very little fee
from an applicant. They concentrate on specific occupations such as general office help,
salesmen, technical workers, accountants, computer staff, engineers and executives.
These private agencies work as middlemen between employees and employers.
2) State or Public Employment Agencies: These are also known as Employment or
Labour Exchanges. They provide a clearinghouse for jobs and job information along
with a wide range of services such as counselling, jobs searching, and information about
the labour market, workers and pay rates.
3) Schools, Colleges and Professional Institutions: All these provide opportunities for
recruiting their students. These general and technical/professional institutions provide
blue-collar, white-collar and managerial personnel.
4) Professional Organisations or Recruiting Firms or Executive Recruiters: They
keep entire information records about employed executives. These consulting firms
suggest highly competent individuals for managerial, marketing, and production
engineers' posts.
5) Trade Unions: Trade unions offer manual and skilled workers in ample quantity. In
few organisations, formal agreements are made to give priority to the candidates
recommended by the trade unions during the recruitment process.
 6) Casual Labour or Applicant at the Gate: Many industries are dependent on the casual
labourer who daily marks his presence on factory gate or employment office.
7) Unconsolidated Applications: There are certain job posts for which small numbers of
candidates apply. In such a case, organisations can search the application forms of those
candidates who have approached the organisation for the vacancies available by their
own efforts.
8) Voluntary Organisations: These organisations such as private clubs and social
organisations might also supply employees like who are physically handicapped,
widowed or married women, aged persons, retired people, etc.
9) Computer Data Banks: When a company needs a specific type of employee, job
descriptions and job specifications are uploaded into a computer, where they are
matched with the resume data stored therein.

• Recruitment Process
The recruitment process involves different activities through which competent potential
candidates are searched as specified by human resource planning, job description and job
specification.

1. Recruitment Planning: Recruitment planning is the initial step of the recruitment process.
It involves determining the following:

1) Number of Contacts: Organisations always intend to attract more than the required
candidates as they want to make the best choice out of a larger number of candidates.
It is also done because many candidates are not willing to join the organisation and a
few of them may not be fulfilling the selection criteria. So, whenever a recruitment
programme is thought of, the organisation has to think about the quantity of applications
it should get in so as to fill all its vacancies with suitable candidates.
2) Type of Contacts: It involves the type of people to be made aware about the job
vacancies according to the job description and job specification.

2. Identifying Recruitment Sources: Once a recruitment plan is finalised representing the

number and type of potential candidates; they must be attracted in such a way that they offer
themselves for employment. Hence, it is essential to identify the sources from which these
candidates can be attracted.
3. Contacting Sources: After the final decision about the sources of selecting the potential
candidate, the procedure of contacting these sources is initiated. Recruitment is a two-way
process and there are mainly two parties, i.e., recruiter and a recruitee. Based on the information
about the candidate, recruiter can select the candidate. Similarly, the recruitee, on the basis of
the information about the organisation, takes the decision to join the organisation or apply
somewhere else. Hence, the organisation must choose which information is to be shared with
the candidates, especially in case of external sources.

4. Application Pool: The final aim is to attract more and more candidates so as to maintain
flexibility in selection, no matter what method of recruitment is used. The organisation starts
receiving applications from potential candidates as soon as the sources of recruitment are
contacted. The type of organisation, kind of jobs, and the conditions in specific human resource
markets determine the number of applications.

5. Selection Process: The process of classifying applicants, in order to hire those who are more
competent for the job, is called selection. Selection process requires extremely specialised
techniques. Thus, the selection process involves expert employees who are proficient in using
selection tests, conducting interviews, etc. 6) Evaluation and Control: It is necessary to enhance
the efficiency of recruitment attempts in future. It should be kept in mind that recruitment is an
expensive process, involving costs such as the recruiter's salary, advertising costs, managers'
salaries and various other costs. It is thus necessary to, eyaluate the process of recruitment.

• Factors Affecting Recruitment

I. External Factors: These factors or forces are those factors which cannot be controlled by
the organisation.

1) Supply and Demand: A significant factor in the recruitment process is the manpower
supply, both inside and outside the organisation. If demand of the professionals in the
company is more and supply of professionals in the market is low, then the company
will have to rely on internal sources by training and developing employees.
2) Unemployment Rate: Growth of the economy is another factor that affects the
availability of applicants. Lack of jobs in the company and surplus labour in the market
can give rise to a situation of unemployment.
3) Labour Market: Employment conditions in the area where the organisation is situated,
affects the recruiting activities of the organisation. Ordinary attempts like displaying
job vacancies on notice boards or announcement in the official meetings, etc., will
attract more candidates than needed at the time of recruitment.
4) Image/Goodwill: Employer's image can also act as a hindrance for recruitment. The
activities of the organisation are the basis for building organisational image. It becomes
easier to attract and retain employees for an organisation if it has a positive image and
goodwill as an employer than for an organisation with negative image
5) Political-Social-Legal Environment: Recruitment practices are directly influenced by
various government regulations which keep out favouritism in hiring and employment.
For example, legislation for reservation in employment for scheduled castes, scheduled
tribes, physically handicapped, etc., have been introduced by the Government of India.
In addition, trade unions play significant role in recruitment. This hampers the
management's freedom to choose the potential candidates. Recruitment sources can be
 limited by union's regulations if the candidate does not fulfil the criteria set by the
union.
6) Competitors: The recruitment function is also influenced by the recruitment policies
of the competitors. Generally, organisations change their recruitment policies to match
up with the competitors' policies, so that they can compete in the market.

II. Internal Factors: The factors that can be regulated by the organisation itself are called
internal factors.

1) Human Resource Planning: How many employees are to be recruited and what
qualification they should have is decided with the help of effective human resource
planning.
2) Recruitment Policy: The aims of recruitment are stated in the recruitment policy of
the organisation. It also gives an outline for the execution of recruitment programme.
3) Size of Firm: Another vital factor that affects the process of recruitment is the size of
the organisation. If the organisation is planning to increase its operations and expand
its business, it will plan for hiring more employees to carry-out its functions.
4) Cost: Recruitment expenses are borne by the employer, therefore, organisations try to
make use of that source of recruitment which gives more output in less cost.

13. What are the various types of promotion you know?

Ans –

• Promotion
1) Promotion is a term which is very commonly used in every organisation.
2) When a person moves to a higher position because of his/her good performance, this
movement from a lower to a higher level position is called promotion.
3) Promotion basically occurs when the internal employees are entitled to a higher post in
the same organisation and are selected for the same.
4) Besides that, a company can also hire candidates externally for the vacancies available
in the organisation.
5) According to Paul Pigors and Charles A. Myers, "Promotion is advancement of an
employee to a better job- better in terms of greater responsibility, more prestige or
status, greater skill and especially increased rate of pay or salary".

• Principles of Promotion
1) Promotions are not done on a random basis. An organisation cannot pick any of the
employees and promote that employee according to their wish.
2) There are certain criteria that have to be followed to promote the most deserving and
eligible candidate that can work in the interest of the entire organisation.
3) Thus, there should be a proper lay out or a policy that should be followed by the
organisation to carry on the promotion procedure.
4) It is known that personnel at different levels of an organisational hierarchy make
different demands on a promotional system.
 5) Normally, organisations prefer those promotional systems which make provision for
the placement of existing and trained personnel. This helps in filling the vacancies with
the most suitable candidate within the organisation itself after a careful judgement by
the top management of the company.
6) Thus, it can be said that formulating a promotional policy is essential for selection of
efficient employees in an organisation.

A sound promotion policy should be based on the following principles:

1. Uniformity: Promotional opportunities should be uniformly distributed throughout the

organisation. Uneven distribution of promotional opportunities may make the
employees disrespect the promotional policies of the organisation. Thus, the
promotional opportunities at different levels and departments should be in equal ratio
to the external recruitment.
2. Consistency: A promotion policy must include promotions on a regular basis.
Promotions should be given by the organisation time to time so that employees get
motivated to work hard. A larger gap between two promotions may discourage an
employee, diminishing the enthusiasm to work in the interest of the company.
3. Fair and Impartial: Promotion policy should be unbiased and fair, i.e., there should
be no scope for any doubts or suspicion in the minds of other employees. Management
should be completely responsible for the selection of most suited individual for the
promotion.
4. Planned Activity: Promotion policy should be well planned in advance. Promotion
charts may be prepared by the management to assess the efficiency of employees of the
organisation. Moving in a planned manner will help in correct assessment, avoiding any
kind of chaos or misunderstanding on the part of the management.
5. Definite Basis: The promotion policy should be based on any of the following criteria-
either merit based promotion or seniority based promotion. The management can also
follow merit cum seniority criteria for the smooth functioning of the organisation as
well as the employees, but the basis should be specific and clearly mentioned.
6. Right to Appeal: The promotion policy must provide the employees right to question
the fairness of promotion given to the existing employees by the management.
7. Sanction: Different departmental heads should be given right to propose the name of
potential candidates having good performance records for the vacancies available in the
organisation. In this way other departments cannot point out the biasness on behalf of
the management. Thus, all promotions should be first sanctioned by the concerned
departmental heads and then finally by the management. Thus, it will lead to
uninterrupted working of the organisation.
8. Follow-up: A sound promotion policy must involve regular follow ups and counselling
of the promoted employee. A brief interview should take place between the promoted
employee and new superior to see whether everything is going well or not. In fact,
promotions can also be made for a trial period so that if in case promoted employee
proves out to be inefficient he can be reverted back to his previous post and previous
pay scale.
• Types of Promotion
1) Horizontal Promotion: It is a type of promotion in which the employee remains in the same
classification of job but with more responsibility and increased salary. For example, an analyst
becomes a senior analyst after being promoted horizontally.

2) Vertical Promotion: In vertical promotion, there is a change in the rank, responsibilities,

salary, and classification of job. For example, an Assistant Supervisor is promoted to the
position of a Manager. In this context, there is an increase in responsibility and accordingly
there is an increment in the pay as well as upward movement in organisational hierarchy.

3) Dry Promotion: When there is an increase in responsibilities and rank but there is no salary
increment or other financial benefits, such type of promotion is called dry promotion. For
example, when a Professor of a college is promoted as Head of the Department, there is an
increase in the grade but no financial increment.

4) Open versus Closed Promotion: In case of open promotion systems, all the employees are
allowed to apply for the promotional vacancies in the organisation. But when only limited
candidates are allowed to apply for such promotional vacancies, such systems are called closed
promotional systems.

• Basis of Promotion
1) One of the most debatable issues that a human resource management faces in an
organisation is to decide the basis of promotion, i.e., whether to promote on the basis
of merit or on the basis of seniority.
2) Each employee working in an organisation has his/her own viewpoint.
3) Some employees think that promotion should be based on merit while some want it on
a seniority basis.
4) At this point, it becomes really difficult for the organisations to choose a basis of
promotion by which it can satisfy the needs of the employees as well as its own
requirement.
5) To tackle this problem, an idea of promotion on merit-cum-seniority basis is introduced.

The various basis of promotion are explained below:

1. Promotion on Merit Basis:

1) When the promotion is based on merit, several factors of an employee are taken into
consideration.
2) Some of them are employee's skill, knowledge, ability, efficiency and aptitude which
are being measured from qualification, experience and past employment record.
3) If an employee gives his best performance and is able to show the power of being
competent enough, then he is promoted irrespective of his age and experience in the
organisation.
o Advantages of Promotion on Merit Basis
1) It encourages the existing employees to work hard and improve their performance
continuously, as they will realise that their hard work would be rewarded accordingly.
2) It encourages the spirit of competition among the existing employees and such
employees give new ideas for the betterment of the organisation. In this way, a pool of
competent people working in an organisation can be built, which helps in creating
competitive advantage for the organisation.
3) The employees having higher knowledge and those who think out of the box can be
better utilised at higher levels. In this way, human resources are utilised to the maximum
in an organisation if they are given a better opportunity.
4) Promotion on the basis of merit not only encourages other employees to acquire new
skills and knowledge which in turn improves their overall development, but also
improves the employee turnover which can be considered as a golden handcuff for the
organisation.

o Disadvantages of Promotion on Merit Basis

1) There is a lack of objective criteria. Factors such as traits, skills, attitudes, and efficiency
are vague, which in turn creates a great problem in merit based promotion. In order to
get promotion, employees work hard but once promoted they become casual towards
their work.
2) When promotion is based only on merit basis, its validity and reliability is in question.
Methods used for judging the abilities of employees like confidential reports and
performance evaluation ratings are prone to biasness. This is the reason why this basis
of promotion is opposed by the union leaders as they disagree with the management's
judgement.
3) This is a fact that a person gets mature with the age and needs time to gain experience
in a particular field. In order to become emotionally competent, a person has to be
mature enough. But this fact is generally ignored by organisations when they follow
merit based promotion.

2. Promotion on Seniority Basis:

1) The strategy of promotion on the basis of seniority, basically involves length of service
or experience of an employee at the same post and in the same organisation.
2) A very simple logic for promoting on the basis of seniority is the great knowledge,
experience and skills acquired by an employee after working for a long duration of time
in the same organisation.
3) In other words, it can be said that this system follows the custom that the senior ones
should be given the first chance to get the benefits and privileges as they are connected
with the organisation from a long period of time.
4) Thus, this strategy of promotion follows the policy of "first come-first serve".
o Advantages of Promotion on Seniority Basis
1) It is an easier method as compared to the merit based promotion as an employee can be
easily promoted to a higher position by measuring the length of service and simply
considering the seniority.
2) This system is fully supported by the union leaders as being senior their chances of
getting promoted is increased. Thus, they trust the management's action as they believe
that there is no chance for partiality and unfairness in the judgement.
3) It gives an opportunity to all the existing employees of an organisation of getting
promotion to a higher level.
4) This system satisfies the senior employees to the maximum as they occupy a respectable
position and nobody can point out their inefficiency. This will further reduce the
complaints and controversies that existing employees may have in their mind regarding
the promotion.
5) This system creates the opportunity for the employees to gain more knowledge and
skills with the increase in the length of their service.

o Disadvantages of Promotion on Seniority Basis

1) Learning with the length of service is not a real fact. After a certain age the learning
ability starts diminishing. There is a certain age limit till which a person can gain
knowledge and acquire skills. Thus, opportunities must also be given to the young blood
as they have better ideas and great enthusiasm.
2) Young, fresh and competent employees get discouraged creating non-dynamic
environment in the organisation, further resulting in increased employee turnovers.
3) It kills the enthusiasm and interest of young or even the senior employees, as they know
well in advance that their promotion is confirmed without any hard work and
improvement.
4) An organisation's workforce consists of mostly non-dynamic and old blood manpower
will gradually diminish the effective working of the organisation and will hamper the
growth of the organisation.
5) Promotion on the basis of seniority, like it seems, is not an easy task as a many problems
crop-up while measuring seniority of employees such as the number of days or hours
should be taken into consideration while calculating length of service or not. Disputes
over the length of service are created by the employees in the case of same joining date
but different joining time.

3. Promotion on Merit-cum-Seniority Basis:

1) Sometimes, promotions based solely on merit or seniority may create problems for the
organisation or even can hamper the smooth functioning of the company.
2) Thus, many organisations have started adopting the policy of promotion on merit-cum-
seniority basis in order to take the dual advantage.
3) An organisation can follow the probable combinations of merit and seniority basis, for
the effective functioning of the company.
4) These combinations may fulfil the needs of employees as well as the organisation. The
combinations are as follows:
a. Senior most employees out of all other employees having maximum merit
factors can be promoted. This combination will give adequate importance to
merit-based promotion as well as it will satisfy the senior personnel of the
organisation.
b. An organisation can provide vacancies for a particular position asking those
employees to apply for the vacancy having a minimum length of service. This
will reduce any kind of confusion or dispute among the young as well as senior
employees and there will be no discrimination on the basis of merit or seniority.
c. An organisation should promote only those employees who are competent in
order to derive maximum benefit of both merit and seniority as a basis of
promotion.
5) Generally, organisations follow seniority-based promotion for the employees at the
lower positions and merit- based promotions for the employees of the higher
designations.
6) The reason is that, at lower designations, job knowledge factors like technical skills,
mechanical skills, etc., play a vital role whereas at higher positions, personality traits
like leadership skills, problem-solving skills, decision-making skills, etc., play an
important role.
7) Thus, the best way is to adopt a proper combination of merit and seniority as a basis for
promotion. This will take care of employees' needs as well as organisational objectives.
14. List out the types of incentives.

Ans –

• Incentives
1) Incentives are the monetary benefits which are paid to workers as a reward of their
excellent performance. Incentives are also known as payments by results.
2) Incentives are different from wage and salary in the sense that they differ for every
individual based on his performance; while wage and salary is fixed, irrespective of an
individual's performance.
3) Incentive systems are tools to support the individual or group behaviour at work.
4) A good quality incentive system also motivates the employees to be creative and
innovative. It promotes a sense of loyalty among those employees who are competent
and productive. Incentives can be monetary and non-monetary in nature.
5) According to Burrack and Smith, "An incentive scheme is a plan or programmes to
motivate individual for good performance. An incentive is most frequently built on
monetary rewards, but may also include a variety of non-monetary rewards or prizes".

• Prerequisites of Effective Incentive

In order to achieve the desired organisational objectives an incentive plan or scheme must be
constructed on the following fundamentals:

1) Motivation: It is a natural phenomenon that nobody does anything without purpose.

Therefore, an incentive plan should motivate the employees to perform better.

2) Definite and Quantifiable Objectives: Incentive schemes should have specific and
quantifiable objectives to facilitate a good control and to maintain energy.

3) Reduction in Production Cost: The incentive scheme should lower down the production
cost.

4) Easy to Understand: The scheme should be easy for the workers to understand. They should
be able to compute their wages at their own.

5) Payment for Increased Production: The incentive scheme should minimise the wastage of
raw material and defective work. On the contrary, good and increased production should be
rewarded.

6) Simple to Administer: For the management, the incentive scheme must be easy to
administer, with low cost and effort.

7) Efficacy: The scheme should be such that it can create a link between effort and efficiency
to attain the desired objectives.
8) Guarantee of Minimum Wages: At the time of choosing an incentive scheme, it should
ensure the minimum wages in case of unavoidable circumstances which are beyond the control
of workers.
9) Technical Standards to Attain the Levels of Performance: One of the basic prerequisites
of a good incentive scheme is that its standards should be developed on a scientific ground.
This makes the rules to be objective. On the other hand, these standards should be realistic and
attainable, so that they can inspire workers to enhance productivity.
10) Compliance with Policy and Labour Law: An incentive plan should be in accordance
with the labour laws and should not be against any policy or regulation of the country. aws a

11) Unrestricted Wages: An incentive system should ensure that the workers would put a
considerable effort to increase the production and in turn their wages will be increased.

12) Reducing the Labour Turnover and Absenteeism: The incentive scheme should be
lucrative so that workers are regular to their job on a long-term basis.

13) Well Timed Disbursement of Incentives: Incentives should be disbursed as soon as the
assigned task gets accomplished. This motivates the employees to further ask and eagerly wait
for such challenging tasks.

• Advantages of Incentives
1) Enhances the Productivity: The foremost benefit with the incentive system is the increased
efficiency of the employee, which in turn increases the productivity of the organisation. For
example, salespersons are given incentives based on their sales volume in many organisations.
The incentives are a source of motivation for them to maximise their sales. Many organisations
also give their productive employees a good amount of money in the form of bonus, in order
to keep them motivated.

2) Promotes Safety at Workplace: Incentive system motivates the employees to work with
all safety measures, thereby avoiding any risk of life in the organisation. This in turn, makes
the workplace more secure to work and at the same time also saves the organisational cost
which could have incurred in case of any mishap.

3) Boosts Employee Morale: Incentives also infuses zeal and energetic attitude among the
workers to contribute cheerfully for the achievement of organisational objectives. For example,
if an employee does overtime for six months, then he should be given bonus for his efforts.
Employees, if given rewards feel that organisation is appreciating their hard work, which in
turn motivates them to work more hard than before and ensure their loyalty towards their
organisation.

4) Increases Employee Commitment: The incentive for high-quality work makes employees
committed towards their organisation. Incentive system in any organisation shows that the
employees as an asset, which in turn makes the employees, feel appreciated and valued.

5) Accomplishment of the Set Targets: Employers can set rational goals and give rewards to
their employees using an incentive system. Incentive system also helps the employee to achieve
the set objectives of the organisation.
6) Decreases the Total Expenses of Organisation: The incentive system aims to reduce the
total cost of an organisation, by motivating the employees to increase the efficiency and to
reduce labour cost.

7) Decreases the Labour Turnover Ratio: It is quite evident that people would like to come
to work and remain in the job for longer time-span, if their hard work is valued and appreciated.
Ultimately, this kind of approach also reduces the labour turnover ratio.

8) Creates Team Spirit: Incentive system promotes better efficiency and production, reduces
stressful work environment and facilitates in building team spirit among employees.

• Disadvantages of Incentives
1) Leads to More Expenses: The quality of the product or service cannot be assured in the
absence of strict and vigilant supervision. The process of strict monitoring and supervision
increases the expenses of the organisation.

2) Increases Danger of Accidents: Sometimes, in order to earn the incentives, employees go

beyond their capacity to perform and therefore avoid following safety rules. This increases the
chances of accidents in the organisation.

3) Leads to Higher Labour Costs: Incentive systems usually incur more expenses on the
labour, especially when they are being paid by the result, e.g., paper-making and coal mining
industries.

4) Creates Feeling of Jealousy among Workers: The workers who perform well are being
rewarded exceptionally well, in comparison to those who are not able to perform well. This
creates a feeling of jealousy among those workers whose performance is low.

5) Induces Fear in Workers: Incentives create a feeling of fear in the workers, in case any
technological upgradation is implemented in the organisation. For example, introduction of
new machine develops a feeling of fear among the workers that whether or not they will be
able to produce high output as required for getting incentives while working with the new
machines.

6) Standards are Based on Past Performance: Generally, the past performance is set as a
benchmark to measure the actual performance of the worker which is not an easy task. Many
organisations play safe by fixing a standard of performance, which is the average of
performance in the past years, but it cannot be considered as a perfect basis of setting a
performance standard.

15. What is vestibule training?

Ans –
16. What is succession planning and how is it different from career planning?

Ans –

• Career Planning
1) The process that enables individuals to choose their career goals and the way through
which he can achieve those goals is called career planning.
2) From organisation's perspective, career planning assists the employees in planning their
careers in such a way which is beneficial for the organisation as well.
3) Career planning crafts a pathway of growth and development of the employee from the
time he joins the organisation, till the time he retires.
4) It also identifies potential employees who can be useful for the organisation and train
them for their roles.
5) Managers use it as a technique for career mapping of employees who have recently
started working.
6) Identification, growth, planned-employment and re-employment of talents are needed
for career planning.
7) According to Schwind, Das and Wagar, "Career planning is the process of enhancing
an employee's future value".

o Characteristics of Career Planning

1) Participative Process: Being a participative process, career planning assigns jobs on
the basis on merit only. This results in enhancing employee's self-esteem and efficiency.
2) Monitors Employee's Abilities and Attitudes: Career planning monitors employee's
abilities and attitudes, hence, it makes possible to group people on the basis of their
views and ideas and assign them a supervisor who can understand and believe in them.
This results into stronger bonds within groups and helps organisation find employees
who are capable and are eligible for internal promotions.
3) Developmental Process: Career planning is not an event but a technique that helps
develop human resources and manage them in a manner that utilises their maximum
potential.
4) Continuous Process: Career planning is not a single time activity; rather it is a
continuous process.
5) Life-Long Learning Process: Career planning ensures learning throughout life. It
comprises of decision- making ability, personal development, self-management and
securing employability.

o Objectives of Career Planning

1) To Attract and Retain Talented Employees: Career planning ensures that the
organisation's pool of talent is sustained, employees stay in their jobs for long-term and the
turnover rate is minimised. The employees feel motivated as they witness growth in their
careers and get promoted and become loyal towards the organisation. A healthy corporate
culture develops and flourishes as employees grow within the organisation. It also saves the
cost of hiring new employees.
2) To Know Each Employee's USP: Every employee has a USP (Unique Selling Proposition)
and career planning helps to identify them and plan their careers according to their skills,
capabilities and their eagerness to get trained and taught in order to get promoted in that field.

3) To Guide and Persuade Employees: The guidance and persuasion provided by career
planning helps employees to know their capabilities. It also enlightens employees about their
personal interests, skills, strengths and weaknesses and their impact on the job.

4) To Foresee Future Vacancies: Career planning foresees vacant job positions at managerial
level that might arise in the future as a result of resignation, retirement or death, etc. Thus, it
proves to be a useful tool for human resource demand forecasting as it plans ahead and saves
the organisation from any kind of mismatched hiring for managerial position.

5) To Assist in Growth and Development of the Organisation: Career planning helps in

growth and development of the organisation as well as it recognises the employees that could
be used to fill future vacancies. Hence, it starts working on their development, prior to the time
the need arises. If career planning is done effectively, job enlargement can also be done so that
any requirement arising in the future due to job design and technological upgradations can be
easily met. It also ensures increased productivity and development of the organisation.

o Process of Career Planning

1. Identification of Individual Needs and Aspirations:

1) People work in order to satisfy their needs and aspirations.

2) Personalising process usually proves useful from the employee's point of view.
3) Personalising process is the process that provides self-actualization to the person,
considering organisation to be just an agent.
4) Self-actualisation implies to the attainment of life's objective, i.e., satisfying needs and
desires that are displayed in the form of achieving wealth and status, which gives
respect in the society.
5) Challenging job, career growth, higher designation, etc., are some of the means which
helps in attaining self- actualisation.
 6) Such type of satisfaction must be targeted while making a career plan of an employee.
7) The employee views this identification of needs and desires as the beginning of his
career.

2. Identification of Organisational Needs and Opportunities:

1) The emphasis of the employee is on personalising process and that of the organisation
is on socialising process.
2) Socialising process is the process where the organisation meets its needs, considering
employee to be an agent.
3) As a result, while doing career planning for an employee, organisation focuses on
fulfilling its own needs and considering those chosen opportunities that can be given to
the employee.
4) By preparing a long-term human resource plan, organisation analyses the opportunities
it can provide to its employees. Hence, it is not possible to provide every employee with
the type of career he desires and demands.
5) This trend might prove to be disturbing for both the employee and the organisation.
6) To overcome such a situation it is better to do a thorough scanning of the skills and
capabilities of the employees during the selection process itself, and thereby hire only
those individuals whose needs and desires match with the organisational requirements.

3. Assessment of Individual Strengths and Weaknesses:

1) Assessment of strengths and weaknesses of an individual is a very crucial aspect of
career planning.
2) Every individual has certain strengths and weaknesses that need to be identified before
placing him on a career path.
3) Strengths denote those characteristics that help the individual grow and achieve his
work-life's objectives such as career goals. Weaknesses denote those characteristics that
prove to be a barrier in the achievement of those goals.
4) It is generally seen that individual's desires do not match their strengths. They
exaggerate their desires as compared to the strengths they possess. Hence, an analysis
of an individual's strength and weakness is required, taking into account organisation's
needs and opportunities.
5) For analysing strengths, an important point to remember is that strengths keep on
changing with time as the individual's learning and experience also increases. Hence,
both present and prospective strengths of an individual should to be analysed.

4. Placement on Career Path:

1) Post assessment of strengths and weaknesses comes the task of placing the individual
on the selected career path.
2) The rational progression of designations that the person would hold in due course of
time in the organisation defines his career path.
3) There are two elements of a career path, i.e., line and ladder.
 4) The specific field in which an individual is likely to be placed (marketing, sales,
production, finance, human resource, etc.) is called the Line. Line comprises of various
designations put together in the order of hierarchy.
5) When an individual is placed on the selected career path, it shows the way he would
move in the hierarchy. This placing is done by scrutinising the needs, strengths and
weaknesses of the individual and the opportunities in the organisation. Hence, every
employee of the organisation has a career plan.

5. Review of Career Plans:

1) The activity of career planning ultimately results in defining the best career plans that
have a long-range orientation.
2) While developing a career plan, postulations are made regarding the future
environmental activities that might impact human resource.
3) However, the techniques used to forecast human resource management might not
always prove accurate. This might end up disturbing the career plans. This can be
avoided by maintaining an integral approach of reviewing the career plans of employees
from time-to-time.
4) This cyclic assessment is mandatory as it ensures whether employee needs are matching
with job needs or not. This in turn assures that career plans are contributing to the
successful deployment of human resources.
5) This also helps the employees in analysing the movement of the organisation, the
prospective changes and the talent they require in order to adjust with the changing
organisation.

o Importance of Career Planning

1. Employees: The following reasons illustrate the importance of career planning for
employees:

1) Defines Clear Career Path: Career planning helps employees understand available
career prospects, foresee growth opportunities, and determine necessary efforts. It
enables them to choose a suitable career based on their skills and benefit from training
programs for greater responsibilities.
2) Facilitates Self-Development: While organizations provide resources, self-
development is key. A clear career path encourages individuals to enhance their skills,
helping them reach new heights in their careers.
3) Enhances Productivity: Career dissatisfaction reduces efficiency. Engaging job
content increases motivation and productivity. Effective career planning aligns
employees with roles best suited to their skills, fostering job satisfaction and self-
development.
2. Organisation: The following are the reasons due to which career planning is useful for the
organisation:

1) Ensures Talent Availability: Successful organizations prefer developing internal talent

for managerial roles over external hiring. This requires structured career planning to
support employee growth.
2) Attracts and Retains Talent: A well-planned career path attracts skilled employees by
promising growth. It also reassures new hires that they are valued and offered a career,
not just a job.
3) Promotes Positive Organisational Image: Organizations with strong career planning
create a positive market reputation. Satisfied employees enhance the company’s image,
making it a desirable employer.

• Succession Planning
1) Succession planning is a process of filling future vacancies in the organisation.
2) It is a continuation of leadership which includes identifying the candidates best suited
for the post of future leaders and preparing them for the responsibilities of that post.
3) The main purpose of this planning is to select suitable person for filling the vacant
position at appropriate time.
4) Various aspects are considered while succession planning process such as re-assessment
of organisational policies, analysing the existing human resources, estimating future
charges and motivating the employees to prepare themselves to replace the leaders, who
are about to retire or leave the organisation.
5) According to Bohlander and Snell, "Succession planning is the process of identifying,
developing and tracking key individuals for executive positions".

o Characteristics of Succession Planning

1) Maintains Equilibrium between Individual and Organisational Needs: Succession

planning gives equal importance to the organisational as well as individual requirements.
Individuals working in any organisation need to maintain the balance between their career and
family. Thus, this method helps the employees to take a career decision by which they can
easily fulfil the necessities of their family members, and also work according to the changing
requirements of the company.

2) Increases Experience by Lateral Movement: Earlier, organisations were more

hierarchical, having more management levels. Employees had chances of promotions
alongwith heavy increment in salary as well as status, but today the organisations are absolutely
opposite. In organisations, only job rotation takes place at the same level without any cash
benefit. In such situation, succession planning plays a critical role, as it fulfils the expectation
of the employees of moving to higher positions with increased status and wealth. It also assures
the employees to secure their career and use best career opportunities.
3) Focused on Roles, Not Jobs: Succession planning creates both job opportunities and role
opportunities. Previously, people were only promoted to become specialists, but now the main
hunt is for those employees who can perform different roles with high potential. Thus, there is
a need to cluster jobs by role, level, and functions in order to identify the most capable and
adjustable candidates who can play these roles efficiently.

Since job is a combination of role, tasks and rank, it develops the skills of the employees to
perform any role. Besides focussing on short period substitution, this planning also prepares
the employees to stay with the organisation for a long duration of time.

4) Competencies: In order to evaluate the potentiality of an employee, several organisations

have started developing competency-based frameworks, which help in assessing the technical
as well as general competencies of the employees. Integration of succession plans with these
competency-based frameworks can prove to be very useful for the organisation as it determines
the appropriateness of the behaviour and the skills possessed by the employee for the higher
roles.

5) Associated with Business Planning: In succession planning, managers are considered as

shapers of organisation's future and HR is considered as facilitator which shows a close
relationship among them. Succession planning and business planning go hand in hand. Thus,
while implementing succession planning main emphasis should be given on various aspects
related to the organisational plans such as healthy future building of the organisation, changes
that may occur, effect of those changes on the organisation as well as on the employees and
skills required to handle such changes.

o Objectives of Succession Planning

1) Sustain Performance of the Organisation: A proper and systematic planning is required

to motivate an organisation in hard times. This function is performed by succession planning
as it sustains the organisation's performance even during the uncertain circumstances and helps
to achieve the gods and objectives established by it.

2) Deal with Voluntary Separation: In the situation when the employees leave the company
willingly or voluntarily, it becomes really difficult for the organisation to handle such situation
as it is not prepared for it in advance. Thus, by implementing succession planning, organisation
can train such employees who can suitably fill up the vacancies of the company. This prepares
the organisation to manage the voluntary separation (individual or group) effortlessly.

3) Facilitate Employees Realise their Future Career Plans: Every individual has certain
future career plans that he desires to achieve as early as possible. Succession planning help the
employees to achieve their career goals by providing them with the opportunity of handling
higher positions and responsibilities in future, and even prepares them to take up those
responsibilities.

4) Boosts Morale of Employee: Succession planning can also be termed as morale booster as
it inspires the employees to work hard, so that they become eligible for higher positions after
the training given by the company. In case of several available positions, company prefers its
own employees to fill up those vacancies which give current employees a path of career
development. In case when an organisation needs less number of existing employees, it goes
for job rotation method in different departments of the company thus, increasing their chances
of promotion.

5) Develops Competency of Leadership: Interaction between the superiors and subordinates

is the best way of identifying the employees having the ability of being a good and potential
leader. By using succession planning technique, organisation provides on-the-job training to
the employees to build the leadership skills which may prove out to be beneficial for them in
future.

o Succession Planning Process

1. Pre-Planning:

1) It is done by HR department managers in order to train such employees who have high
level of potentiality, but are unable to utilise it in right direction.
2) This potentiality forms the basis for their selection to a high level position that may
become vacant in future.
3) It is a step-by-step process from the designing of the plan till its implementation.
4) It includes informing the selected employees about the key roles they need to play in
development of leadership and their accountability towards the organisation.
5) Some managers avoid performing this task as they feel that they will be deprived of the
promotional opportunities, but they should understand that by identifying and
developing good leaders, they provide benefit to the organisation, which in turn rewards
them for performing their tasks effectively.
2. Assessment:

1) The management should identify the suitable future leaders of the organisation on the
basis of their performance and potentiality considering the established leadership
competencies.
2) Rating and profiling are two ways by which the managers develop a framework of
performance and potential of an employee.
3) Managers are required to maintain employee profile which includes the entire career
history of the employee, functions performed by him, his strengths and his
developmental needs.
4) Further, managers are also required to develop a rating system to assess the potential of
an employee.
5) Finally, the best development programmes are conducted to improve the potential of
the employee.

3. One-on-One and Group Meetings:

1) The best way to identify the high potentials of the organisation and their developmental
methods is one on one discussion, i.e., collecting information from variety of people of
the organisation.
2) This method reduces any kind of biasness, as it is carried-out between the HR personnel
and the leaders of the organisation.
3) Person who is conducting this discussion not only reviews the potential profile and
performance grid of the future leader, but also prepares a replacement chart showing
the vacant position, suitable employee and his current preparations for becoming future
leader.
4) Group session by organisational leaders is also a good way of reviewing the potential
employees of the company.
5) Discussing their findings with higher authorities can prove to be more beneficial.
6) It not only helps in finding whether the employee selected for future vacancies is most
appropriate or not, but also fills up any kind of gaps or issues that exist among the
employees and higher authorities.
4. CEO Discussion:

1) Regular discussions must take place between the business leaders and CEO on the high
potentials of the organisation and the ways to develop their potential, so that they can
be utilised in the future effectively.
2) CEO must ensure that the needed resources such as time and money are available
whenever required.

5. Ongoing Review:
1) Succession planning is a continuous process which does not end even, if a pool of future
leaders are selected and developed.
2) Every time a higher position gets vacant, a new employee is given an opportunity to
show his potential.
 3) Thus, it is the responsibility of the organisation to identify the talent of various
employees and retain those employees, who are capable of performing the role of future
leaders and develop their skills accordingly.
4) Any lacking on the part of organisation can deprive it of potential employees who can
perform the role of future leaders effectively. Just because, their talent is not recognised
appropriately in their organisation but somewhere else, they may move towards better
opportunities.
5) Besides this, replacement chart should be updated and re-assessment of succession
planning should be done on either quarterly or semi-annual or annual basis.

o Types of Succession Planning

1. Role-Based:

1) Role-based succession planning deals with those positions of the organisation that are
very important for its success.
2) It prepares the present employees to replace the positions of middle-level managers and
upper-level managers.
3) For example, if the management is searching a suitable candidate for the post of CEO,
it will first assess the performance of the managers working directly under the CEO and
then move on to other managers.
4) Thus, by following this path they are able to get the most suitable candidate having the
qualities required for that particular position.
5) Organisations can also opt for training programmes, if needed.

2. Individual-Based:

1) This succession planning is based on the potentialities of an individual.

2) Employee who is having great knowledge and high potential is trained by the experts
of the organisation to enhance his skills and make him fit for the upcoming
opportunities.
3) In order to increase his experience, he is also given various tasks to perform, so that he
can use his skills. By this, organisation can easily retain its talented employees.

3. Pool-Based:

1) Unlike individual-based succession planning, this method does not focus on the
capabilities of an individual, but on the potentialities of the group of individuals, so that
several positions can be filled simultaneously.
2) Pool-based planning can be classified into two broad categories - internal pool planning
and external pool planning.
o Importance of Succession Planning

1) Provides Leadership Continuity: The employees currently working in the company are
well aware about the importance of organisational goals and objectives. That is why,
organisations prefer them as future leaders as they can help the organisation to meet the goals
and handle the various challenges that may arise in future. Continuation of leadership using
succession planning not only provides excellent experiences to the current employees in the
form of promotion, but also improves the standard of the company using the knowledge of
these employees as well as one who are about to retire.

2) Improves Reputation: Succession planning not only attracts the employees within the
organisation, but also the people from outside as when they realise that a company is using
succession planning, it is preparing and training the employees for future opportunities.
Implementation of this process displays the efficient and systematic working of the
organisation, increasing the confidence of the outside candidates in the organisation.
Succession planning not only guides the current employees to choose right career in the same
organisation, but also creates various opportunities and vacancies when the organisation
expands. It also attracts numerous candidates having high potential within them as they know
that career in such organisations will secure their future. Thus, it can be said that it is a good
recruitment technique and improves the reputation of the company.

3) Eliminates Confusion: Succession planning focuses on smooth replacement of one leader

in place of the other, who is about to leave the company or already has left it. As the
organisation follows a proper path in choosing the most appropriate candidate for any vacant
position that may become available in future, this eradicates any sort of confusion about who
is going to carry-out the responsibility of the leadership.

4) Builds Confidence: Succession planning alongwith building a healthy future of any

organisation also builds up the future of the employees. It boosts up the confidence level of the
employees by giving them job security and various opportunities to move above in their
position. Employees work hard to perform better and explore new ideas as they know one who
will perform good will be surely given a right position at right time.

5) Saves Time: Succession planning is money as well as time saving method as training and
promotion are given to the most capable employees already working in the organisation. Thus,
the interviewing, recruitment, selection and training cost of external candidates are reduced.
Beside this, since the most potential among the current employees are forwarded for future
vacancies, it minimises the burden of management to a large extent. Thus, it helps them to
focus on other significant issues related to the company.
• Difference between Career Planning and Succession Planning

Basis of Career Planning Succession Planning

Difference

Meaning Career planning helps employees Succession planning prepares

recognize their strengths and employees in advance by
weaknesses to choose a suitable developing their skills to take on
occupation within the organization future responsibilities for vacant key
that aligns with their goals. positions.

Objective Focuses on employee growth and Identifies the most suitable

development by providing candidates for critical positions that
opportunities that contribute to may become vacant in the future.
individual progress.

Duration A long-term process that continues A short-term process for employees

until the employee's retirement. but a long-term strategy for the
organization.

Scope Beneficial for the entire workforce. Primarily focused on higher

management and key leadership
roles.

17. Name any 4 functions of HRM.

Ans – See Question No. 1

18. Define succession planning.

Ans – See Question No. 16

19. Give 2 points of difference between training and development.

Ans – See Question No. 4
20. What is Job specification?

Ans –

• Job Specification
1) Job specification also known as job requirement is a by-product of job analysis.
2) It covers all the human qualities to be considered such as physical, personal,
psychological responsibilities to be acquired, academic qualifications, experience, etc.
3) It converts the job description into human qualifications so that the job can be done in
a more efficient way.
4) It aids in hiring the right person for the right position.
5) According to Edwin B. Flippo, “A job specification is a statement of the minimum
acceptable human qualities necessary to perform a job properly".
6) According to Dale Yoder, "Job specification as a summary is a specialised job
description, emphasising personnel requirements and designed specially to facilitate
selection and placements".

• Contents of Job Specification

1) Physical Characteristics: It consists of age, health, strength, size of the body, body
weight, poise, vision, etc.
2) Psychological Characteristics or Special Aptitudes: It covers qualities such as
manual dexterity, ingenuity, mechanical aptitude, judgement, etc.
3) Personal Characteristics or Fruits of Temperament: It includes personal
appearance, good and pleasing manners, emotional stability, aggressiveness or
submissiveness, etc.
4) Responsibilities: It involves supervision, responsibility for process, production and
equipment, safety of other people, preventing loss in monetary terms, etc.
5) Other Features of Demographic Nature: Age, sex, education, experience, language
ability, etc.

• Objectives of Job Specification

1) To Findout Prospective Candidate: Job specification helps in searching the potential
candidate for a vacant position. It helps in evaluating the resume more rapidly and impartially.
It also helps in making a list of relevant questions for interview.

2) To Attract Candidates: It is necessary to make the job specification professional and a good
representative of the organisation's image to the candidate. For this purpose, the job
specification must be active and precise to attract talented candidates.

3) To Set-Up Competency of Organisation: When an organisation has set-up its core

competency, the job specification assists in executing the various competency programmes.

4) To Identify Competencies: It helps the employers in recognising the accurate duties and
skills of the employee. It also makes the prospective candidates capable of ascertaining their
capacity of satisfying the job requirements.
5) To Eliminate Discrimination: It helps in preventing the violation of equal employment
opportunities laws. It sets a standard of basic skills needed for a job description and specifies
the basic required qualifications or experience.

• Specimen of Job Specification:

Specimen of Job Specification of Compensation Manager is given below –

Category Details

Educational A degree or diploma in personnel management/HRM or any other

Qualification related disciplines from a recognized institution.

Work Experience Minimum experience of 2 years in a similar post in a leading industry.

KSA 1) Knowledge and expertise in compensation administration, job

(Knowledge, analysis, compensation survey techniques, and performance appraisal
Skills, and issues. 2) Skills in writing job descriptions, conducting interviews for
Abilities) job analysis, making group presentations, and performing statistical
calculations. 3) Ability to organize and conduct meetings.

Work Orientation The post may require 10 percent of traveling.

Factors

Age Maximum 30 years.

• Guidelines for Writing Job Specification

1. Specifications for Trained versus Untrained Personnel:

1) Job specifications written for trained employees should be straightforward.

2) If the position of an accountant, counsellor or programmer, etc., needs to be filled, the
job specification might emphasise mainly on characteristics like duration of prior job,
quality of trainings relevant to the job, and performance in the prior job. Hence, it is
easy to determine the human requirements for hiring trained people for the job.
3) Whereas, in making job specifications for untrained personnel (intending to give them
on-the-job training), the problems are of a more complex nature.
4) Qualities like personality, physical traits, interests or sensory skills must be specified.
These qualities display that the person has the potential to perform or to be trained to
perform the job.
2. Specification Based on Judgement:

1) Job specifications are usually a result of educated guesses of HR managers and

supervisors. These judgements or educated guesses are attained using numerous
methods.
2) The job duties can simply be assessed and the human skills and traits needed for the job
can be derived from that.
3) Job description can also be chosen from the list of competencies available on the web
portals like www.jobdescription.com. (For example, competencies like "plans and
oversees the organisation's advertising and promotion activities" and "performs variety
of clerical duties" are listed in a usual job description).
4) Another available option is O*NET where the job listings are available with educational
qualification, experience, and necessary skills.
5) Common sense is must while compiling the human requirements for a job. Job specific
human traits, which can be derived out of job analysis, such as manual dexterity and
qualification, are very crucial.
6) On the other hand, the fact which cannot be ignored is that, certain work behaviours are
applicable to nearly every job, even if, those behaviours might not be evident in any job
analysis.

3. Job Specification Based on Statistical Analysis:

1) The most secure but difficult approach is specification based on statistical analysis. This
targets to statistically determine the relation between:
a. Some human traits or predictors like intelligence, finger dexterity, or height; and
b. Some criteria or signs of job effectiveness like performance rated by supervisor,
etc.
2) Below mentioned are the five steps involved in the procedure:
i) Evaluate the job and find ways to determine job performance;
ii) Choose personal traits such as finger dexterity which forecast successful
performance; iii) Assess candidate for the specified traits;
iii) Compute the successive job performance of these candidates;
iv) Perform statistical analysis of job performance and human trait (e.g., finger
dexterity) relationship. The aim here is to find if the latter is forecasted by
the former.
3) This is a more justifiable approach than that of judgemental since the legislation of
equal rights forbids the use of traits which are incapable of distinguishing between low
and high job performers.
4) For example, hiring standards which discriminate on the basis of race, gender, religion,
age, or national origin need to be shown in order to forecast job performance. This is
ideally done using a study of statistical validation. Practically, most of the employers
depend more on the judgemental approach.
• Difference between Job Description and Job Specification

Basis of Job Description Job Specification

Difference

Meaning A well-written statement that defines A written summary of minimum

roles, tasks, duties, and responsibilities qualifications, appropriate skills,
expected to be performed in a particular knowledge, and a set of
job. It is a primary tool to collect job- characteristics required by an
related data. individual to fit in a job.

Objective Helps the organization gather data Helps candidates determine

related to a particular job so that it can whether they are eligible to apply
be advertised. for a particular job position.

Importance Helps in better job performance within Facilitates employee development.

an organization.

Orientation Focuses on tasks and responsibilities to Focuses on specific human

be performed on the job. qualities required for a job.

21. Define Recruitment.

Ans – See Question No. 12

22. Name any 4 components of salary.

Ans – See Question No. 7

23. What is HR Accounting.

Ans –

• HR Accounting
1) Human resource accounting can be defined as a system of accounting which considers
human resources as an asset and all the financial expenses on human resources such as
wages, salary, training, etc. are recorded in the books of accounts.
2) The value of human resources is also recorded in the books of accounts just like other
physical possessions.
3) Assessment, budgeting and reporting the cost of human resources helps the organisation
in accurately documenting its assets and thus, is very mandatory part of every business
association.
4) A financial report of any organisation completely depends on the cost of manpower
working in that organisation.
5) According to Flamholtz, "Human resource accounting is the measurement of costs and
value of the people for the organisation"

• Objectives of HR Accounting
1) Human resource accounting is one of the best ways to measure the expenses done by
an organisation on the human resources and the exact value of these resources. All the
decisions regarding the manpower working ^in a particular organisation are based on
the HRA.
2) It helps the organisation to plan an estimated budget for human resource expenses well
in advance which includes acquisition cost, training cost, cost for expansion of the
human assets, salaries and wages, etc.
3) In order to estimate the value of human resources, an organisation has to follow certain
principles and procedure as per the standards set by the human resource department.
4) It helps the administration to scrutinise whether the available human resources are
utilised in the best possible way or not, i.e., there should be the optimum utilisation of
the workforce. There should be no exploitation of labour in the organisation.
5) In case there are any upcoming changes in the value of the human assets working in an
organisation, HRA gives an indication to the authority in advance so that appropriate
steps can be taken to preserve most od valuable human assets of the organisation.
6) The HRA system helps the management of any organisation to judge the employees on
the basis of their performance and their standards and provide them with incentives
accordingly.
7) Once the management has entire mathematical information about the human assets of
the organisation, they start considering it as an important part of all their decisions. This
further improves the managerial ideology as the organisation becomes clear about the
economical effects of the human resources.
• Process of HR Accounting
Step 1: HR Accounting Objectives:

1) Every organisation has to accomplish a certain set of goals.

2) These goals and the organisational requirements are the foundation for setting the
objectives of the human resource accounting system.
3) The objectives of the HRA system include a problem-free budgeting system defining
the cost of human resource and providing exact information about the value of human
resources to the management for its optimum utilisation.
4) This information is generated from different departments of the organisation.
5) It is the responsibility of all the departments dealing with human resource management
to clearly describe the functions performed by them, the various decisions made by
them and the basis for these decisions.
6) Once this information is given by different departments of the organisation, it becomes
easier to define the objectives of HRA system.

Step 2: Developing HRA Measurements:

1) There are mainly two methods by which human resource

accounting measurements can be made. They are
explained below:
a. Either the management can go for one particular
measurement method or a number of methods for
the measurements; and
b. Monetary or non-monetary methods can also be
used as standards for measuring the cost or value
or both of human resources.
2) Before implementing any of these methods, the validity
and consistency of these methods must be checked.

Step 3: Developing HR Accounting Database:

1) The human resource accounting system is based on certain factors such as time
management sheets, the cost of each employee working in the organisation, various
psychological factors, etc. These factors form the database for HRA system.
2) In some situations, it becomes mandatory to re-structure the entire organisation's
accounting system to classify the human resources cost independently, otherwise the
expenses incurred will be considered under administration and general expenses.

Step 4: Pilot Testing the System:

1) After the systematic achievement of first three steps, i.e. the objectives are set,
dimensions are developed and adequate database is available for HRA system, the next
step is the pilot testing of the accounting process.
2) Pilot testing means pre-checking the working of the system before finalising it as a part
of the organisation.
 3) Management's co-ordination and co-operation throughout the process of pilot testing is
essential for its success.

Step 5: Implementing the Human Resource Accounting System:

1) This is the last step of the HRA process.

2) In this process, organisation introduces the entire workforce and staff with the new
accounting system.
3) The importance and different methods of HRA are specified to the employees so that
they become familiar with the new concept and accept it wholeheartedly.
4) How this HRA can be beneficial for them should be mentioned explicitly.
5) Responsibilities of managing HRA system are given to the deserving candidates.
6) HRA can easily carry-out any kind of modifications just by making few adjustments
and improvements in the system.
7) For the smooth functioning of HRA system, frequent reviewing is essential, as it will
prepare the system to adapt itself to the changing requirements of the organisation.

• Methods of HR Accounting
There are different methods that contribute to human resource accounting system. These
methods can be classified into two main categories:
1. Monetary Measurement Methods:

Monetary measurement methods are aimed at measuring the value of people as organisational
resources in monetary terms. The performance of an employee, the number of promotions and
transfers, the productivity of worker and profits made by an employee for the organisation are
some of the ways by which the value of an employee can be measured in financial terms.

2. Non-Monetary Measurement Methods: These methods include those features of human

resource which cannot be calculated monetarily, but they affect the organisation financially.

o Monetary Measurement Methods

1. Historical Cost Method:

1) Brummet, Flamholtz and Pyle developed the historical cost method.

2) Historical cost is the cost incurred in the acquisition and development of human
resources over a period of time and then finally combined together to identify the actual
cost of HR as an asset and estimate depreciated cost of human resources.
3) Under this method, human resources are treated similar to physical resources.
4) When any part of physical possession gets expired, the cost of that expired portion is
reduced from the value of that physical asset.
5) Similarly, some fraction of the value of an employee is also depreciated every year as
an expense incurred against the profits gained.
6) Here the cost incurred for the processes of recruitment, training, development,
promotion, etc., are considered as an investment in HR and are reduced every year till
the employee stays with the organisation.

2. Replacement Cost Method:

1) Rensis Likert and Eric G. Flamholtz introduced this method to compute the value of
employees working in an organisation by evaluating the cost incurred while replacing
the current employees with the new staff.
2) Under this method, management predetermines the expenses incurred, if in case,
current employees are to be replaced by the other suitable and qualified person.
3) Besides this, their recruitment cost, training cost, selection cost and development cost
are also calculated.
4) Unlike historical cost method, it is based on the development expenditure of the
employees rather than their historical value.

3. Opportunity Cost Method:

1) Hekimian and Jones developed this method when they saw the willingness of various
managerial employees to hire a large number of people and adding their value in the
investment base.
2) Opportunity cost approach gives importance to human resources as it is based on the
'opportunity cost concept of economics'.
3) There is a direct link between the shortage of human resources and the opportunity cost.
4) The surplus employees and the employees at the top do not have any opportunity cost.
5) Thus, opportunity cost method is not applicable for the entire human resources.

4. Capitalisation of Salary Method:

1) This method was developed by Lev and Schwartz in the year 1971. It is also called as
the present value of the future earning model.
2) According to them, there was a close relation between the salary of the employee and
the worth of that employee to the organisation.
3) This method was based on two assumptions, first was that the future earnings of an
employee can be used as a substitute for his present value and second that the employee
is going to continue with the organisation till his retirement period.
 4) This technique includes the following steps:
i) First, the employees are categorised into groups as per their age, experience,
skills, etc.,
ii) Then, the annual income of each group of employees is calculated, and
iii) Finally, the present value of each group over the future income is assessed
using the proper discount rate and the following formula is suggested by the
experts:

Where,
V = Value of the individual who is r years old,
T = Individual's retirement age,
I (t) = Individual's annual earnings till his retirement, and
r = Rate of discount.
5) Various well-known organisations such as Bharat Heavy Electricals Ltd. (BHEL),
Cement Corporation of India (CCI), Steel Authority of India (SAIL), Southern
Petrochemicals Industrial Corporation Ltd. (SPIC), Infosys, etc. have adopted this
method for the valuation of HR.

5. Economic Valuation Method:

1) The economic valuation method is another method which can be used to evaluate the
cost of human resources working in an organisation.
2) Under this method, future earnings that can be generated by the employees in his service
is calculated.
3) This cost is subtracted from the present cost incurred on them on various functions such
as recruitment, selection, training, etc.
4) The result obtained by performing this calculation is the economic cost of the
employees.

6. Return on Efforts Employed Method:

1) Organisation's benefit or return completely depend upon the efforts made by employees
of that organisation.
2) Under this method, the gains provided by the employees for the organisation in terms
of profits, productivity, etc., are measured.
3) The factors which are taken into consideration during this kind of valuation are
designation, experience, skills, etc.

7. Adjusted Discounted Future Wages Method:

1) This method was introduced by Hermanson under which compensation value of an

employee is adjusted to the value of that employee in the organisation.
 2) The discounted future wages are adjusted by an efficiency factor, which is used to
determine the relative effectiveness of the organisation's human resources.
3) The following steps are involved in measuring the worth of human resources as per this
method:
a. First, wages and salaries of all employees at various hierarchical levels are
calculated for the subsequent five years.
b. Then the present value of the wage and salary payments at the rate of return is
calculated.
c. Average efficiency ratio for a particular period is determined. The time duration
is generally past five years.
d. Finally, the present value of future services of the organisation's human capital
is calculated. This is done by multiplying the discount value (step ii) by the
organisation's efficiency ratio (step iii).
4) The efficiency ratio can be calculated by using the following formula:

If Efficiency Ratio = 1: The organisation's average rate of return is equal to the rate of
return of the economy. It means that the value of HR is equal to the industry's value.
If Efficiency Ratio > 1: The organisation's returns are higher than the normal earnings
of the organisations. This means the value of the human resource is more than the
industrial average.
If Efficiency Ratio < 1: The organisation's return is lower than the normal income. The
value of the human resource is less than the industrial average.

8. Reward Valuation Method:

1) Reward valuation method was introduced by Flamholtz and is considered as an

improved form of capitalisation of salary method.
2) This method considers the fact that an employee may quit the job before his retirement
or in the case of demise and his role can also change in his entire professional career.
3) According to this method, the current and the actual value of an employee is the
expected realisable value of the employee.
4) The assumption underlying this expected realisable value is that there is no link of the
total cost incurred on an employee to his value in the organisation at a specific time
frame.
5) The value of an employee can be determined by the current value of the services that
he can provide in the future during his employment in the organisation.
o Non-Monetary Measurement Methods

1. Skills Inventory:

1) Skill inventory means a record of capabilities. It classifies employees as per their skills.
2) Employees' behaviour and their skills are the easiest way by which they can be
evaluated.
3) These abilities are judged on the basis of employees' qualification, training acquired,
experience gained and other additional talents.
4) On the basis of their potentiality, the assessment is made about how much longer their
services can be best utilised.

2. Performance Evaluation Methods: Another way by which human resources can be

evaluated is on the basis of performance. The two methods by which performance evaluation
can take place is as follows:

1) Rating: Under this method, certain scale is set to evaluate the performance of a worker.
Ratings are given to the employees on the basis of degree of intelligence they possess,
professional knowledge and interpersonal proficiency they are having, their ability of
judging the situations, etc.
2) Ranking: Under this method, individuals are evaluated on the basis of one or more
aspects. Rankings are considered as another form of rating. For example, when an
evaluator is asked to appraise the workers on the basis of their leadership qualities, in
this situation; ranking can be done.

Types of procedure that can be followed for ranking are:

a. Simple Ranking: It is the simplest procedure in which evaluator ranks the

employees on specific dimensions and ranks them from higher to lower rank.
For example, in case of punctuality, one who is most punctual is given the
highest rank and one who is late maximum times is given the lowest rank.
b. Alternative Ranking: Under this ranking method, one person with the highest
value and one with the lowest value are selected. A similar procedure is followed
for all other persons. This makes the ranking method simple and reliable.
c. Paired Comparison: In this method, every employee is compared with other
employees and then the ranking is done. In this way, the best one can easily be
picked up from the better ones.
3. Potential Assessment:

1) Potential assessment, as the name denotes, is the evaluation of the capability of the
human resource of an organisation for the future.
2) The main approach used for assessing potential is trait approach. This approach focuses
on identifying the traits possessed by the workers, which are required for a particular
job position and also determines the degree of their presence in the workers.
3) As development of an individual depends upon his potentiality, therefore potential
assessment plays a very critical role in calculating the value of human resources non-
monetarily.

4. Attitude Measurement: Attitude is the mirror of one's personality. Organisations following

attitude measurement techniques can easily understand the viewpoints of their employees like
whether the employees are satisfied with their job or not, are they happy with the working
conditions, do they want increment in their salary, or are they satisfied with the organisational
as a whole, etc. These are certain questions that can be answered easily by evaluating the
attitude of the employees. By the study of attitude, management can also obtain information
about the feelings of the employees working under them. One of the very common methods of
determining this perspective of an employee is questionnaire method, in which several
questions can be asked and the employee can respond from the given options.

For example,
i) Excellent (iv) ii) Good (ii)

iii) Average (iii) iv) Below Average (i)

5. Subjective Expected Utility:

1) This concept of 'subjective expected utility' consists of two more concepts, viz., utility
and subjectivity.
2) First, utility means the value of any resource or usefulness of that resource for its user.
Second, subjectivity means individual's own point of view regarding the possibility of
any event.
3) There are various psychophysical methods by which utility and subjective probability
can be calculated. Some of these methods are paired comparison, ranking methods, and
magnitude estimation.
4) The magnitude estimation method is concerned with allocating numbers to denote a
property's magnitude. If a property is assigned a zero number, then it indicates that the
value of property is nil but if the number assigned is high, it means that property has a
high value.
• Advantages of HR Accounting
1) Facilitates Scheduling and Implementing HR Policies: HR policies of an organisation
include policies regarding HR functions such as training, promotions, demotions, transfer, etc.
Proper scheduling and implementation of these policies is very important for the smooth
functioning of every organisation. This function is controlled by an HRA system of an
organisation.

2) Helps in Calculating ROI: HRA is an accounting system which recognises the expenditure
made on the human resources of an organisation. Once the investment is calculated, an
organisation can easily ascertain the exact Return on Investment (ROI) by calculating the
profits made by the organisation. This will help the management to determine how much they
should spend on the human resources to achieve maximum ROI.

3) Motivates Employees: Employees get motivated to improve themselves once they come to
know their real value in the eyes of HRA system of the organisation. The amount invested on
them will inspire them to increase the output in proportion to the investment made on them by
the organisation.

4) Sign of Good Health of the Organisation: HRA serves as an indicator of the well-being of
any organisation. The amount of investment made on the human resources of any organisation
helps in measuring the amount of profits that may be earned in future.

5) Improves Process of Decision-Making: HRA works as a centre to gain information

regarding the actual value of human resources working in an organisation. This information
helps the management to take appropriate decisions regarding the organisational issues.

6) Helps in Determining the Need of Recruitment: HRA reports about the chances of getting
returns and how much expenditure should be made on the manpower of the organisation. If the
profits are high, demand for recruiting new employee's increases and if no profits are gained
no further recruitment takes place. These decisions are completely based on the information
provided by the HRA.

7) Ascertains Negative Effects of the Programmes: HRA system also helps the management
in determining the negative effects of several programmes running in an organisation.

• Limitations of HR Accounting
1. Non-Availability of Standards: The main problem faced by the organisation is non-
availability of proper standards that are required to evaluate the cost incurred on human
resources. Institute of Chartered Accountants of India (ICAI) must formulate certain criteria to
measure the value of human assets.

2. Trade Union Resistance: Estimating the value of human resources may give rise to
industrial conflict and resistance by the union leaders. The reason for this opposition can be the
biasness on the part of management while estimating the value of the human assets. Thus,
before introducing HRA in an organisation, all the employees and leaders must be made aware
about the importance of HRA and how it can be beneficial for them.
3. Expensive: While introducing HRA in an organisation, the first thing which should be kept
in mind is that it should be cost effective. If its adoption is affecting the profit of the
organisation, then this system is useless. Thus, the expenditure made on this system should be
made sensibly otherwise it can incur additional cost to the organisation.
4. Variety of Methods Create Confusion: There are many methods which can be used to
calculate the cost incurred on human resources. This creates misunderstandings, so
management should exercise a particular method to evaluate the HR cost to avoid any kind of
uncertainty.

5. Results in Dehumanisation: If the human asset valuation is not done correctly, it may result
in exploitation of workforce. The evaluation done by the HRA should be useful for the
organisation, but not at the cost of partiality towards the employees.

6. Uncertainty about Continuance of Employees: Unlike machinery, one cannot expect the
workforce to stay within the organisation for a lifetime. Situations may arise that may force the
employees to leave the job. Thus, it can be said that stability of an employee in any organisation
is not certain. But this uncertainty increases the vacancies in the organisation, troubling the
estimation of human resource accounting which further disturbs the working of entire
organisation.

7. Lack of Perfect Knowledge about Future Receiving of HR: Future is unpredictable and
full of uncertainties. Nobody is sure whether an investment will be profitable or not. Thus,
sometimes evaluation on imaginary basis creates a great problem for HRA system. Therefore,
one can say that there is a lack of perfect knowledge regarding future earnings of any
organisation.
24. What is a grievance?

Ans –

• Concept of Grievance
1) Grievance can be referred to as a feeling of discontentment and dissatisfaction that an
employee has regarding his employment.
2) When an employee has a complaint and is neglected, then a feeling of injustice and
discrimination arises in an employee. When this feeling grows up it takes the form of a
grievance. Thus, it is essential to deal with dissatisfaction.
3) For doing this, organisation should take into consideration grievance management.
Grievance management is the procedure through which the manager deals with the
grievances of his employees during his service. Grievance management makes it
possible to identify prospective problems of the employees.
4) Without grievance management, it is impossible for the management to deal with
employee problems and respond to them. Thus, grievance management plays an
important role in making organisational working relationships effective.
5) According to Dale Yoder, "Grievance is a written complaint filed by an employee and
claiming unfair treatment".

o Forms of Grievances

1. Factual:

1) The relationship of employer and employee is based on the organisation's employment

contract.
2) It is the employment contract which specifies the norms that define the limits of
employee's expectation from the organisation to meet his requirements and
expectations.
3) When these expectations are not met by the organisation, the employee gets
disappointed with his job. This type of disappointment is known as factual grievance.
4) These grievances are due to faulty implementation of organisational policies.
5) For example, salary hike is promised to employee after one year but not given.

2. Imaginary:

1) Imaginary grievance arises when an employee is dissatisfied due to his wrong

perception, negative attitude and incorrect information.
2) This wrong perception can have long-term impact on the organisation.
3) It may develop a negative image of the organisation in front of his employees which
may decrease their work efficiency. Therefore, this type of grievance should be dealt
immediately.

3. Disguised:

1) When an employee is not aware about the reasons for his dissatisfaction, then he has a
disguised grievance.
 2) Generally, employee's psychological needs like need for appreciation, friendliness,
authority, success, etc., are not met.
3) For example, an employee who is dissatisfied with the work conditions of the company
may desire some appreciation and praise from his co-workers.
4) Hence, disguised grievance must also be given due consideration because if they are
neglected, they can have harmful consequences.

o Causes of Grievances

I. Management Practices:

1. Management Style: The autocratic style of management at one end and participative style
on the other may cause grievance among the workforce in an organisation. For example, the
workforce composed of extremely qualified people may not appreciate an autocratic style as in
the present scenario, participative style is more appreciated. Thus, the style and practices would
need to be adapted according to the current situation.

2. Social Distance: The relationship between the workers and manager is characterised by
social distance. This is because there may be differences in class and cultural orientations
between management and workers. Managers view the workers as someone who is on a much
lower social scale. In such circumstances, grievance system would not work in an effective
way as the workers are hesitant with their grievances.
3. Implementation of Personnel Policies: If the personnel policies do not serve the purpose
for which they are formed, it may be a reason for grievance. There may be several
contradictions in personnel policies which may lead to grievances, e.g., matters related to
employee remuneration, seniority, overtime, assignment of personnel to shifts, etc.

4. Communication Gap: Lack of communication between the employees and management

can also cause grievance. Matters that concern the employees or group of employees should be
informed to them.

For example, information about proposed actions of the management which it intends to take
in future, location of new-plant, lay-offs and mergers, the key decisions about the introduction
of new schemes or new ways of working. If the employees are aware about the proposed actions
then they will understand the consequences of the management actions which in turn will lead
to less number of grievances.

5. Supervisory Practices: Faulty supervisory style, such as, lack of consistent application of
personnel policies, biasness in applying rules and decisions, etc., can create pressure on
employees and could lead to grievances. For example, setting-up of challenging individual or
group task without consulting the staff members can build pressure and cause grievance.
II. Grievances Resulting from Personal Maladjustment:

1. Negative Attitude of Employee: It has been observed that employees having a negative
attitude complain frequently and are careless, casual and inconsiderate of others. They provoke
others, to join them and give rise to unnecessary grievances.

2. Health Problems: Employees suffering from health issues like depression, mental tension
may find an outlet by airing their grievances. When a person is already tensed due to ill health,
minor concerns take the form of grievances.
3. Impractical Expectations: In any organisation, employees having high esteem often
develop over- confidence and are over-ambitious. These traits are main causes of grievances.
III. Working Conditions:

1) Rigid production standards,

2) Mismatch of the skills of the worker and the requirement of the job,
3) Lack of adequate tools, machines and equipment to successfully complete a given task,
4) Changes in work-hours or techniques,
5) Poor rapport with the supervisors,
6) Bad conditions of workplace like unavailability of drinking water, damaged
workstations, inadequate sanitation facilities, etc., and
7) Poor disciplinary system (too much or too less discipline, both are equally harmful).

• Grievance Handling Procedure in Indian Industry

1) Grievance handling procedure or grievance redressal procedure is the formal system
for dealing with employee grievances.
2) It involves several steps through which an affected employee can take his grievance to
successively higher levels of management for redressal.
3) It is a valuable tool in the hands of the management to keep a check or relevant
analytical information about the condition of the organisation's health.
4) A grievance handling procedure is essential in a large organisation because the number
of employees and the hierarchical levels are more.
5) As a result, the manager is unable to keep an eye on each individual or be involved in
every working areas of the organisation.
6) In a small organisation, communication, knowledge and contact is possible to a larger
extent, therefore, the need of a formal grievance procedure is reduced.

Steps involved in grievance handling procedure are –

Step 1) Identification of Grievances: Those grievances of employees which are not being
disclosed must be recognised by the management.

Step 2) Define Correctly: After identifying the grievances, management should correctly
define them.
Step 3) Data Collection: Every data related to grievance must be gathered from all sources
and after that it should be classified as facts, data, opinions, etc.

Step 4) Analyse and Solve: After data collection, analysis of information must be done in
order to develop alternative solutions and select the best solution.

Step 5) Prompt Redressal: After the analysis of grievances, it must be redressed immediately
by implementing the solution in a speedy manner.

Step 6) Implementation and Follow-Up: There should be follow-up after the implementation
of the solution to check the effectiveness of the solutions.

o Model of Grievance Handling Procedure

National Commission on Labour has suggested a model of grievance redressal procedure which
includes following steps –

1) First of all, the distressed worker approaches the foreman and communicates his
grievance verbally.
2) The worker will approach the supervisor, if he is not satisfied by the redressal of his
grievance by the foreman.
3) Within 48 hours, the supervisor must provide a reply. The worker will proceed towards
the next step if the supervisor is unable to provide a satisfactory reply in the given
timeframe or if the reply is not accepted by the worker.
4) In the next step, worker contacts the Head of Department either alone or alongwith the
representative of his department. He has to respond within three days.
5) If the worker does not get the answer or is not satisfied with the response of the
departmental head, he can appeal to the Grievance Committee. The representatives of
the employer and the employees constitute the Grievance Committee.
 6) The committee makes its recommendations and forward it to the manager within seven
days after intimation of grievances.
7) The management shall implement the agreed decisions, if any, decided by the
committee.
8) When there is any unanimous decision, the members of the committee place their views
before the manager of the worker for his decision. The worker is informed about the
decision within three days by the manager.
9) When the worker is not satisfied, he can make an appeal against the manager's decision
which has to be again decided within a week.
The worker may be accompanied by the union official for discussion with the manager. If no
decision is taken, then within a week of the receipt of the management's decision, both the
union and management can take the grievance to voluntary arbitration.

o Grievance Resolution Methods

1. Collective Bargaining: In this method of grievance resolution, issues of various employees
are resolved together.
2. Mediation: It is a voluntary method of grievance handling which comes into play when the
grievance stays as it is even after the formal procedure is undertaken to resolve it. But, it is
used before opting for an unbiased third party redressal, i.e., arbitration.

3. Conciliation: According to The International Labour Organisation, "conciliation is the

practice by which the services of a neutral third party are used in a dispute as a means of helping
the disputing parties to reduce the extent of their differences and to arrive at an amicable
settlement or agreed solution. It is a process of rational and orderly discussion of differences
between the parties to a dispute under the guidance of a conciliator". In other words, it is a
process in which a third party, after analysing the conflict, proposes a solution to the conflict
with an intent that both the parties involved in conflict give their consent to it. Main motive
behind this method is to resolve the disputes as soon as possible in order to avoid lock-outs,
strikes, etc. or to reduce its duration, if it happened.

4. Arbitration: This process of grievance handling takes place with the help of an unbiased
third party, which studies the issue and provides the parties with an impartial solution.
Arbitration should not be confused with the formal court system. And, hence its decisions are
not compulsory all the time.

5. Adjudication: In this method also the grievances are resolved by the interference of a third
party but here the third party is employed by government and its decisions are also binding.
Sometimes, the consent of parties involved is asked before referring the grievances to
adjudication and sometimes, government can refer it on its own.
o Advantages of Grievance Handling Procedure
1) It brings out grievance issues in front of the management so that remedial actions can
be taken.
2) Timely intervention by the management prevents minor grievances from assuming big
proportions and becoming dispute.
3) It provides a formalised outlet for the employee's psychological release to reduce their
discontentment. The grievance system may or may not be used by the worker for his
own emotional release in a particular system. However, it builds within him a sense of
emotional security as the system is there for his support.
4) It facilitate in the establishment and maintenance of conducive working environment.
5) It helps the management to identify the attitudes and feelings of employee regarding
the organisational policies, rules and practices so that essential upgradations in policies
and rules can be done.
6) It closely monitors arbitrary management actions. As the manager knows that his
actions can be scrutinised and challenged, he will be more cautious while coming to a
decision.

o Disadvantages of Grievance Handling Procedure

1) The procedure can be lengthy and costly.
2) Lack of people skills to deal with grievances at every stage.
3) Different procedures are followed in organisations. There can be hostile action from the
management against grievant employees.
4) Final decisions can be withheld by the management. This causes frustration among
employees.
5) The members may not react promptly and become dependent on the "the union" to look
after all the issues.
Q.2. Answer any two. (5 marks)

1. Explain the Recruitment process.

Ans – See Question No. 12

2. Explain the succession Planning process.

Ans – See Question No. 16

3. Explain the KIRKPATRICK MODEL of training.

Ans –

• Training Evaluation
1) The process of calculating the amount of utility obtained from the time, money and all
the positive efforts applied for providing training is termed as training evaluation.
2) The evaluation of the training for a particular programme aims at determining the future
need of the programme, any kind of alterations required for the programme, etc.
3) Evaluation is not only limited to the teachers, trainers, policy-makers, but it important
for the learners as well.
4) Evaluating training programmes is one of the most crucial activities carried out in
organisations to determine whether the worth of the training programmes being
executed.
5) According to Hamblin, "Evaluation of training is defined as any attempt to obtain
information (feedback) on the effects of training programme and to assess the value of
training in the light of that information".

• Objectives of Training Evaluation

1) Its focus is on determining the extent to which the goals of training programmes have
been achieved.
2) It helps in spotting the strength and weaknesses of the training programme.
3) It is conducted to collect data and help in assisting the future programmes related to
marketing field.
4) It ensures whether or not the training programme was specific as per the requirements.
5) It helps in selecting the specific participant or members for future programmes.
6) It also helps in spotting the most appropriate members among all the participants.
7) It helps in preparing database that can provide support to the management in making
decisions.
8) 8), It helps to determine the validity of tests, cases and exercises used in the training
programme.
9) It facilitates the comparison of cost and benefits of training programme.
10) It determines whether or not the training programmes were the right solution for the
training need identified.
• Training Effectiveness Model

I. Kirkpatrick Model of Training Effectiveness

Donald Kirkpatrick developed the famous Kirkpatrick Model to evaluate the effectiveness of
training.

The Kirkpatrick model states that every evaluation must start with the first level and then move
along the subsequent stages only when it is feasible in terms of time and budget.

The foundation of every next level's evaluation is the information gained from the previous
level. Therefore, every consecutive level depicts a more accurate standard of the usefulness of
the training course.

However, each of these levels needs a more diligent, meticulous and laborious study. A proper
evaluation or assessment at each level describes if the prerequisite need of the training course
was fulfilled.

Performing the evaluation of all levels is very important. Actually, the worth and utility of
conducting training evaluations at every level is very well described in the Kirkpatrick model.

o Evaluation Criteria of Kirkpatrick Model

Donald Kirkpatrick designed a model which explains the training evaluation by the help of
following levels:

1. Reaction: Reaction involves measuring the satisfaction of the participants. It calculates the
amount of actions they take in future, based on their learning during the training. The trainees
are asked whether the resources provided in the training were useful or not. The trainees'
reaction to the training programme is very crucial.
2. Learning: Learning evaluation means identifying the level of learning acquired by the
participants in terms of skills, facts, principles, techniques, etc. It can be assessed with the help
of paper-and-pencil tests, job simulations, and skill practices. Learning step questions about
what the trainees have learnt during the training programme.
3. Behaviour: In this level, the focus is on how the training programme has changed the
trainees' behaviour in a positive way. Trainees are made to answer whether the training
programme has helped them in any kind of positive change in the job. The main point here is
to see if the trainees are able to apply the things, they have learned during training, on the job.

4. Result: Result is the final level of the Kirkpatrick model. It revolves around only one major
thing that what has been the outcome of the training programme. The main focus here is on
assessing the utility, profitability and improvement in customer services.

II. CIRO Model

Another distinctive way of training evaluation which was developed by Warr, Bird, and
Racham is CIRO model. It is also a four-level approach, which is explained below:

1. Context Evaluation: Context evaluation means gathering information regarding the

insufficiency of performance, evaluates the information, and ascertains training needs.
Considering all these things, the aims are set for the rest three levels.

2. Input Evaluation: It involves acquiring and utilising information regarding the available
training resources to make a proper choice between them. It involves assessing both the internal
and external resources available in order to make their optimum utilisation for the realisation
of the set goals. It also helps to choose what kind of training method should be opted.

3. Reaction Evaluation: The basic aim of reaction evaluation is to acquire and utilise
information collected about the participant's reaction to enhance the process of human resource
development. The main point here is that this kind of evaluation is based on participant's
subjective input; however, it can prove to be useful and productive if the information is
gathered in a systematic and objective way.

4. Outcome Evaluation: It involves gathering and utilising information regarding the training
outcomes. It is considered to be the most vital part of the evaluation. For making outcome
evaluation to be effective, careful preparation needs to be done beforehand. It involves four
stages:

i) Defining trend objectives.

ii) Opting or creating some measures of those objectives.
iii) Doing the measurements at the correct time.
iv) Evaluating the outcomes and utilising them for improvement in future programmes.
III. Cost-Benefit Analysis

Training outcomes can be evaluated through cost-benefit analysis. In this, cost and benefits are
compared after the completion of the training programme. The four stages of cost-benefit are
as follows:

1) Determining Training Cost: The direct cost of training such as trainer's fee, materials,
facilities or any other administration activities is determined.

2) Identify Potential Saving Results: In this stage, benefits such as employee retention, better
customer facility, fewer errors, and the basic potential savings are determined.

3) Compute Potential Savings: In this stage, the dollar cost is assigned to each of the potential
savings.

4) Conduct Cost and Saving Benefits Comparison: Finally, the cost and savings per
participant is calculated and their relation to business performance is assessed.

IV. ROI in Training

1) After Kirkpatrick has established his model for the approach of training evaluation,
some other theorists like Jack Philips with the help of Kirkpatrick developed the new
level of training evaluation approach.
2) They coined that level as ROI of training, i.e., Return on investment of the training.
3) Earlier, it was suggested that ROI of training should be included in the fourth level, i.e.,
the result level of Kirkpatrick model.
4) This incorporation is only significant if the concept of ROI is overlooked and only the
result level is considered.

o Process of Calculating ROI

Steps involved in calculating ROI:

1. Determining Costs: While calculating ROI of the training programme, the cost involved in
the training is determined.

2. Determining Benefits: The benefits of training programme cannot be calculated on the basis
of reaction of the trainees or the learning they have gained through training programme or even
on the basis of the change in their behaviour. The real benefit can be obtained by the amount
of performance enhanced by the training, which is the most difficult thing to measure.

3. Calculating ROI: After determining the cost of the training programme and estimating the
benefit of the training, the final step is to calculate the ROI of the training. ROI of the training
can be calculated by the formula given below:
The higher the ratio of result to cost is, the greater will be profit to the organisation.

o Difficulties in ROI Evaluation

1) Training costs are well known in advance, i.e., prior to conducting the training.
However, the advantages may be sought about gradually over a' course of time.
Determining a particular point of time when one can try to estimate the effect of training
is very difficult.
2) Sending people to acquire training without forcing preconditions to gather information
to report the effect are very difficult for the managers.
3) There is a possibility of prejudice in the data to be gathered on the monetary value of
performance, making it difficult to present the authentic and real scenario.
4) Costs incurred for conducting training programmes are known to the company and are
expressed in monetary terms. However, the advantages obtained are usually moderate,
intuitive and cannot be measured and quantified in monetary terms.
5) The consequences of evaluation may be harmful to the Human Resource Development
team and to budget the support from senior executives of the company. There are
several reasons for the way people perform at work and training is only one out of all
those reasons.
6) Trainer in-charge of providing training does not have time management skills and
accounting proficiency, in order to carry out a cost-benefit analysis. In addition,
demands for information damages productivity levels of the firm.

• Methods of Training Evaluation

1. Questionnaires: Questionnaire is a systematic process of gathering information for any
research. In questionnaires, a set of questions is given to people in order to collect facts and
figures for any particular research. They are the easiest tool for collecting the data for any
research. They are used to collect subjective information. Questionnaire, if properly designed,
can give the most accurate information.

2. Tests: Test is the basic parameter for evaluating the training and development of the
organisations. Significant use of test is the backbone for any organisation and its effectiveness.
Generally, tests include written test which is conducted to test the trainees' knowledge and
performance.

3. Attitude Surveys: It is a very different type of questionnaire for gathering the information
related to training evaluation. It gathers information regarding employee attitude about
workplace, policies, procedures, supervisors, and the organisation. To see the changes in
attitude, before-and-after programme measurements are done.

4. Interviews: Interviews are a very helpful source of training evaluation, but these are not
used often like other methods. Training staff, the participant's supervisor, or an outside third
party can organise the interviews. An interviewer can get answers to those questions which
cannot be acquired from the questionnaire, but for conducting an interview, interviewer should
be skilled.

5. Focus Group: The focus group is a small-group discussion in which group members provide
their inputs. It is conducted by a qualified facilitator. It is basically designed to seek qualitative
judgments on a specific topic. It is useful when to evaluate the quality of a training programme
and evaluating the change in behaviour as a result of the training.

6. Observations: Observation method is very much related with attitude surveys and it is a
continuous process of observing the employee starting from the beginning till the end. After
observation, evaluators record the changes in the behaviour of employees. Observation yields
relevant data for training evaluation and it also helps the evaluators to identify the context of
the programmes and inter-personal relations amongst them. For observation to be effective, it
is very important that the personnel acting as observers should have proper training.

• Barriers in Training Evaluation

1. Time Consuming: This is the major barrier that affects the training evaluation. It takes a lot
of time to collect data for training evaluation. However, this perception is wrong as most of the
data is collected in the earlier phases of the training programmes, i.e., designing, developing,
and delivering. If these phases are done systematically, the information generated at these
phases can act as a valuable source of data during the evaluation phase.

2) Fear of Collecting Data: Another barrier of evaluating training programme is that it can
reveal those facts and findings of the training programme, which can show its ineffectiveness.
This can be a problem for the trainers who are busy in maintaining their budgets neglecting,
the important aspects of training.
3. Cost Incurred in Training Evaluation is High: Training programme itself requires great
cost to get performed and a much higher cost is required to conduct the activity of evaluation
process too. In this way, the budget gets higher and this becomes one of the barriers of training
evaluation.

4. Define the concept of manpower inventory. How the manpower inventory is prepared?
Ans –
5. What is Human Resource Audit? How does it help an organization in preparing Human
resource planning?

Ans –

• Concept of HR Audit
1) Every organisation needs a technique by which it can check the different activities and
outcomes of various individuals working in that organisation. This operation is
performed by process of audit.
2) An audit is a method by which financial records of any department are assessed and
verified systematically, which is done on a regular basis by the finance department.
3) But in the context of HR department, it can be defined as an activity which is aimed at
assessing the effectiveness of the all human resource policies, procedures and activities
performed by the individuals working in the organisation at regular intervals.
4) It is not only the method of measuring monetary records but it is also a planning device.
There are many functions that take place in the organisation such as recruitment,
deployment, training, development, promotions, retaining capable employees, etc.
5) HR audit helps to improve these functions by identifying the available prospects so that
an organisation can exploit it and become more successful. HR audit also serve as a
developing tool by which it not only enhances the performance of their human assets
but also develops the organisation.

• Characteristics of HR Audit
1) HR audit is an analysis process to check the proper functioning of human resources
working in an organisation.
2) It is an investigating tool which studies about the people working in the organisation,
policies followed by them, the functions and activities performed by them. If there is
any gap in the actual and standard performance, then HR audit identifies and fills it.
3) It is a measuring device that not only computes the performance of the individuals of
the organisation, but also checks whether there is lack of compliance on the part of HR
department or not. It is the responsibility of HR audit to manage the detected fault as
soon as possible.
4) HR audit is usually conducted once in a year and is carried-out either by the
organisational experts, or by the external professionals specialised in human resource
management, having an exact understanding of auditing.
5) The reports prepared by HR audit are forwarded to the higher authorities so that if in
case there is any error in the report, it can be detected and corrected on time.

• Objectives of HR Audit
1) HR audit looks after the effective functioning of the HR department of the organisation.
It evaluates the systematic implementation of policies and procedures in human
resource department and also evaluates its working environment.
2) HR audit rectifies the mistakes done by human resource while performing their tasks
and provides suitable corrective measures as soon as possible.
 3) It checks whether the HR functions are carried-out as per the set policies and procedures
of the organisation or not.
4) It measures the errors as well as positive aspects of the HR department. It ensures
whether HR department is following the policies regarding the recruitment, training,
placement, promotion, workplace environment, employee grievances, etc., according
to the organisational rules and regulations or not.
5) It is the responsibility of HR audit to assess all the functions of the corporation and
search out for those functional areas and activities which require cost-cutting. These
functions include staffing of new employees, selection, training, holding-on of potential
employees, separation of human resource, etc.
6) HR audit also helps in maintaining discipline among the employees by evaluating their
behaviour and actions frequently and making them realise their responsibility towards
the benefit of the organisation.
7) It also identifies those areas of HR department which need revival or improvement.
Thus, the steps are taken to improve the performance of the HR employees. As a result,
if improvement in performance is observed, they are rewarded accordingly.
8) It helps in making HR administration a computable concept, i.e., which can be
calculated in figures, rather than considering it as a theoretical concept.
9) Certain problematic employees may take legal actions against the organisation; HR
audit also prepares for such lawsuits in advance to face such people effectively.

• Process of HR Audit
1. Identifying the Objectives of HR Audit:

1) Setting up of definite objectives is the first task

carried-out in an organisation.
2) But before setting up the objectives, HR audit
assesses the functions and activities to be carried-
out under the HR department, compliances of law
and order undertaken to guide their principles and
actions and ensuring that these HR strategies are in
line with the corporate strategies.
3) For the proper evaluation, it is necessary that the
organisation's aim, schedule and the planning made
by HR audit should move on the same track.

2. Developing a Rough Audit Plan:

1) An auditor before implementing auditing process

should have an idea about the following things:
what he has to do, which policies should be
preferred, which areas are to be focussed more,
what are the best means by which relevant
information can be gathered, etc.
 2) Thus, an assessor prepares framework of his audit plan so that he can have a rough idea
about the manpower required, expected cost incurred and the tools and equipment
required for the entire audit procedure.

3) Collecting Background Data:

1) An auditor must have appropriate information about the internal as well as the external
factors that may influence the HR auditing process. This information is known as
background data.
2) External factors include the competency level of the particular organisation, the legal
environment and the entire summary of the organisation.
3) Internal factors include the set objectives, the policies followed by the organisation for
achievement of these objectives and the performance of the human resource in different
divisions of the organisation.
4. Determining the Technique of Data Compilation:

1) In this step, information is gathered by HR auditors from various sources using different
techniques.
2) Some of the techniques used for data collection are interview method, questionnaire
method, task force method, observation method, etc.
3) Auditor can opt for one or more than one technique at a time.
4) Besides this, time required and cost of assessment is also decided in advance so that
auditing process can take place effortlessly and effectively.

5. Finalising the Audit Plan:

1) In case there is a requirement of any improvement in the rough audit plan prepared by
the auditor, changes can be made at this stage before finalising it.
2) Background data and knowledge gained can also be useful in upgrading the pre-planned
auditing plan.
3) It is the sole responsibility of the assessor to have a clear cut understanding about the
goals to be achieved, techniques to be used, areas to be covered and time and cost
required for entire auditing process and then finalising the audit plan.

6. Collecting Complete Audit Data:

1) In this process, the assessor gathers all the significant information from various sources
and combines them together to analyse the virtues as well as the shortcomings of the
HR department.
2) Once HR auditor receives all the data regarding the working of the human resource
management, this data is then compared with the final audit plan.
3) The assessor should keep in his mind that till this stage, he should have to collect
complete data in order to perform auditing function smoothly.
7. Developing an Audit Report:

1) After gathering entire data regarding the HR functioning, an assessment programme is

conducted within different areas of HR department.
2) These areas cover the recruitment, training, advancement, rewards, retention, transfers
and retirement functions of the HR department.
3) Alongwith this, working atmosphere, functioning of employees, the objectives of the
HR unit, policies and strategies undertaken by HR audit and HRIS are also included
during the evaluation.
4) After this, a detailed audit report is prepared by the auditor after covering the entire
valuation procedure.

8. Decision Based on the Audit Report:

1) This is the concluding stage in which the organisation makes appropriate decisions after
seeing the final audit report.
2) Management even asks for auditors recommendations so that decision making process
becomes easier for them.
3) In case, some changes are required in setting the objectives of HR department or in the
strategies or in the performance of the employees, HR auditor's suggestions can prove
to be very constructive for the authority.

• Types of HR Audit
1. Time Period:

1) Most of the organisations follow an irregular audit, i.e., the time period is not fixed for
auditing; it can take place once in a year or may be once in three years.
2) But as per the changing time, audits should take place on fixed time-period and
regularly so that constant check can be kept on the functioning of the employees.

2. Conduct: In this type of auditing, assessment can be carried out by any of the following:

i) Internal Audit: This type of audit takes place within the organisation and is performed
by internal management in order to assess and control the working of the HR
department.
ii) External Audit: The external audit may take place within the organisation premises or
even outside it. It is carried-out by external professionals who are specially hired for
this purpose. Unlike internal audit, the outcome of evaluation from the external audit is
always unbiased.

3. Purpose: As per the purpose required, audits can be divided into the following:

i) Compliance Audit: A compliance audit checks whether all the departments are
following the rules and regulations of the organisation or not.
ii) Best Practices Organisation Audit: In this audit, the tasks executed by HR department
are compared with the 'best practices' of the other organisation. Efforts should be made
to make their practices to be the 'best practices' among all other similar organisations.
 iii) Strategic Audit: Strategic audit evaluates the contribution of HR practices in achieving
strategic goals of the organisation. It also checks the improvements made in the
performance of the employees by providing them proper working condition.
iv) Job Specific Audit: This audit focuses on specific function performed by the HR
department. These functions include recruitment, training, salary, promotion, etc.

• Methods of Collecting Information for HR Audit

1. Interview Method:

1) In order to recognise the perspectives of various authorities, HR auditor regarding the

expansion plans and expected growth of the organisation in future conduct face-to-face
interviews with HR professionals.
2) Interview method is one of the best ways by which auditor can inspect the people
working at the higher authorities.
3) It further evaluates whether or not the human resource is ready for certain changes in
the working strategies and conditions, in order to achieve organisational goals.
4) Regularly conducting such interviews helps in improving the organisational traditions,
working methods, and planning system of the organisation.

2. Questionnaire Method:
1) Another method by which HR audit can easily collect information from the employees
is questionnaire method.
2) By this method, auditor can discover various aspects of the organisation, e.g., whether
the employees are happy with the working conditions, are the human resource policies
being followed systematically, what are the positive and negative points of HR
department staff, how does the senior staff behave with the employees, etc.
3) But one thing that should be kept in mind before designing this questionnaire is that it
should be beneficial for the organisation and should be conducted within the time and
cost permitted by the organisation.

3. Observation Method:

1) Supportive environment plays an important role in proper working of any organisation.

Thus, HR audit should also observe the environment in which the employees are
working.
2) It includes a cafeteria, training centres, residential area and even the surroundings of
the organisation.
3) HR audit, with the help of observation method, evaluates the degree to which a healthy
atmosphere is present in the organisation.

4. Analysis of Previous Records:

1) HR audit can also analyse the previous records of the employees to know their outlook
towards the organisation.
 2) Besides this, profile of employees including the life history and professional reliability,
can also help in assessing the employees' perspective regarding the HR development.
3) Various training programmes can also be conducted to determine the number of
employees participating in it, what was the employees' feedback regarding the
programme, what did they learn that was relevant for the organisation, etc.
4) Thus, these training programmes can be the assessment tools to gain information related
to human resource development.

5. Workshop Method:

1) Interactive programmes and workshops can be carried-out within the organisation to

assess the various human resource development systems like potential appraisal,
performance appraisal, coaching, counselling, mentoring programmes, etc.
2) In workshop method, a large group of employees is taken and then it is divided into
small groups in order to conduct the SWOT analysis on various dimensions of human
resource development systems.
3) Each and every, group has to make a presentation on a particular topic. The
representative member from each group gives the presentation in front of all the other
groups for further discussions and suggestions.

6. Task Force Method:

1) A task force means a group of individuals who are assigned with the responsibility to
investigate problems and issues taking place in the HR department.
2) The main purpose of this method is to devise corrective measures to the problems,
which are working as an obstacle in the path of HR development.
3) HR auditor has a right to constitute this task force.

6. Distinguish between job evaluation and performance appraisal.

Ans –

7. Explain the advantages and limitations of HRIS in detail.

Ans – See Question No. 8

8. Explain the process of selection.

Ans – See Question No. 5 (From Main Question No. 1)

9. Explain HR Audit.

Ans – See Question No. 5

10. Examine any 3 types of employee’s separation.

Ans –

• Separation
1) Separation involves ending the employment relationship with an employee.
2) Simply, it can be denoted by 'termination of employment'. It is also known as employee
turnover.
3) The employment of an employee is terminated when an employee even after getting
the notice is not in a position to improve his/her performance or when an employee
behaves in an unethical manner or is involved in any type of misconduct.
4) Employees are separated from their job due to resignation, lay-off and dismissal.
5) In sick industries and loss-making business ventures, separations are most commonly
visible. When the market demands are not adequate, it leads to decrease in activities of
production, thereby leading to separation of employees. Both the parties (employer and
the employee) feel the pain of separation. Therefore, separation should be managed
carefully.

• Types of Separation
1) Voluntary Separation: When an employee decides himself to end up his relationship with
the organisation, it is called voluntary separation.

2) Involuntary Separation: When the employer asks the employee to leave the organisation,
it is called involuntary separation. In such case, the employee feels that he has been treated
unfairly and he looks for the legal protection to tackle it.
I. Resignation

1) Resignation is a particular situation when an employee takes himself the decision of

leaving his job or he is forced by the organisation to quit his job.
2) In case of voluntary resignation, the employee decides to quit his job on his own.
3) On the other hand, resignation is involuntary when the employer asks the employee to
leave his job or face disciplinary procedure.
4) Although in the case of disciplinary action, the domestic enquiry process should be
followed instead of forcing an employee to resign from the job.
5) The main reason for this is that if a domestic enquiry process is not followed then the
employee can seek union help or can approach the court and claim that the resignation
was forcefully obtained from him.
6) If the organisation is facing a high frequency of resignation, then it must conduct exit
interviews in order to know the actual causes of such frequent resignations.

o Reasons for Resignation

1. Dissatisfaction: Employees resign from the job due to dissatisfaction from the job. The
dissatisfaction can be due to nature of work, compensation, benefits, discrimination, welfare
facilities, working hours, work environment, etc.

2. Domestic Problems: Employees resign due to problems in their personal lives which include
wedding, pregnancy, family responsibilities, transfer, etc.

3. Personal Situations: Problems related to health, conveyance, cash gain, injury, early
retirement, etc. are some of the personal situations due to which employee resigns from his job.

4. Promotional Gains: A person may resign from his job due to lack of growth opportunities
in the organisation or if he finds a more attractive job offer in some other organisation.

II. Retirement
1) Retirement is the process of separation of employees from the organisation when they
have reached at a predetermined age.
2) The predetermined age in organisations is usually 58-60 years.
3) When an employee attains this age, he is discharged from rendering his services to the
organisation.
4) It is the sole responsibility of an organisation to have clear rules for the process of
retirement.
5) The organisations should also assist the employees to adjust after retirement.
6) The problem of unemployment is solved through retirement because when the
employees of an organisation retire, the job positions become vacant thereby providing
an opportunity to the fresh candidates to apply for the vacant positions and grab the job.
7) Retirement is an important phase in the life of an employee and it also leaves a
significant effect on the organisation where he has devoted many years of his life.
 8) Therefore, a retired employee must be honoured and various retirement benefits like
gratuity, insurance, provident fund, etc., must be given to him as soon as possible.
9) Some organisations also give monthly pension to its retired employees, alongwith the
other benefits.

o Types of Retirements

Retirements can be of following types:

1. Premature Retirement: This type of retirement is given to an employee if he becomes

physically challenged because of any accident or illness. The organisation can offer retirement
to the employee before the employee has reached the predetermined age of retirement by
providing all the retirement benefits.

2. Forced Retirement: This type of retirement is given to an employee, if he has violated

certain employment terms, or he is involved in any serious kind of misconduct for which he is
found guilty and his charges are proved in the court. In such a case, the organisation can force
the employee to opt for retirement, before the retirement age, without providing any retirement
benefits to him.

3. Compulsory Retirement: In this type of retirement, an employee has to retire compulsorily

after reaching a predetermined age. The age for retirement in State and Central Government is
58 or 60. However, in private organisations, an employee can work until he finds himself
appropriate to perform the work and organisation can also re-appoint the employee.

III. Lay-Off

1) Temporary termination of the employee from his job for a certain period of time is
known as lay-off.
2) After the fixed time duration, the employee can re-join work on being called by the
employer.
3) Section 2 (kkk) of the Industrial Disputes Act, 1947, defines "lay-off as the failure,
refusal or inability of an employer to give employment to a worker whose name is
present on the rolls but who has not been retrenched".

o Reasons for Lay-Off

1) Decreased sale.
2) Scarcity of raw materials.
3) Technological advancements.
4) Production delay.
5) Excessive goods accumulation in godown.
6) Machinery breakdown.
o Factors Determining Lay-Off
1) Lay-off policy should be told to employees at the time of their employment in the
organisation so that they are aware about the terms and conditions of the lay-off.
2) If the employer is going to lay-off his employees for long duration of time, then
employees must be notified earlier.
3) During lay-off, employees must be told that the employer will make his best effort to
recall them.
4) Employers should help employees in their re-deployment.

IV. Dismissal or Discharge

1) Dismissal is a punishment, in which the service of the employee is terminated due to

serious misconduct.
2) This ultimate punishment is given by the employer to his employee to correct his
undisciplined behaviour.
3) Dismissal is a permanent separation and dismissed person is not able to get a job
somewhere as it carries a stigma.
4) Both dismissal and discharge results in termination of the employee's service. Due to
this reason, both the terms dismissal and discharge are used without any discrimination
by employees and employers and even sometimes by the Labour Courts.
5) However, there is a difference between dismissal and discharge and it should be
understood clearly.

o Reasons for Dismissal

1. Poor Performance: When an employee constantly fails to perform the given duties and
responsibilities or he fails to achieve the standards which are prescribed in the job, it can be
said that the performance of the employee is poor. Some of the reasons for the poor
performance are frequent absenteeism from the job, slowness, putting less effort to meet the
normal job requirements, or showing a negative attitude towards the organisation, superiors or
colleagues.

2. Indiscipline: When an employee wilfully violates the rules of the employer which may
include stealing, unethical behaviour and misbehaviour with colleagues, then the employee is
said to be involved in misconduct.

3. Lack of Qualification: When an employee is unable to do the assigned work even though
he/she is active and attentive, then it denotes that the employee is having lack of qualification.
Therefore, it is important to train and develop such employees.

4. Changed Job Requirements: Due to the changing nature of the job, it could be possible
that employees are not able to perform their jobs.
When an organisation reduces its work, then it often dismisses its employees. Although the
employees may be skilled and hardworking therefore, the firm should make an effort to transfer
and train those employees.

5. Insubordination: Insubordination means the indiscipline which sometimes forms the basis
for dismissal of employees; however it may be difficult to prove insubordination. Some
grounds for dismissal are stealing, unpunctuality, and poor work quality.

Irrespective of where and when they occur, insubordinate acts include:

i) Violating organisational policies, procedures, rules, and regulations.
ii) Disrespect to the boss' like disobedience of order or refusal to obey the order
particularly in front of others.
iii) Not following a proper channel of filing complaints and grievance redressal.
iv) Arguing with the boss or criticising the boss publicly."
v) Showing feelings of disrespect, using abusive comments and displaying these feelings
during the job. Difference between Dismissal and Discharge Dismissal

o Difference between Dismissal and Discharge

Basis of Dismissal Discharge

Difference
Meaning It is a kind of punishment which is It is related to the performance
given for any type of misconduct. of the employee. It is not
always considered as a
punishment.
Severity of Dismissal is said as more severe Discharge is said to be less
Punishment punishment as compared to discharge. severe punishment as
compared to dismissal.
Right of In this, the employer can deny his right In this, generally the employer
Employer to release the provident fund, bonus and has to pay for all the dues and
regarding gratuity which are paid to the employee benefits to the discharged
Benefits and other dues and benefits to cover the employee to cover the loss.
losses caused to the dismissed employee
due to his misconduct and violation of
policy.
Procedure Before dismissing an employee, the Employer is not bound to hold
employer undertakes the disciplinary any disciplinary proceedings;
proceedings in a proper way. he can discharge an employee
by simply giving him a notice,
as per the standing orders or
service contract.
Intimation In case of dismissal, no prior notice is In case of discharge, the
given to the employee. employee is served with a
reasonable notice in advance.
V. Retrenchment

1) Retrenchment can be defined as the termination of service due to surplus labour.

2) According to Industrial Disputes Act, "Retrenchment as the termination by the
employer of the service of a workman for any reason whatsoever, other than as a
punishment, but does not include voluntary retirement, retirement and termination on
the grounds of ill health".
3) As per the latest amendment, non-renewal of contract is not to be considered as
retrenchment. Thus, it can be concluded that every retrenchment is termination of
services, but all service terminations cannot be called retrenchment.
4) Retrenchment is different from dismissal. Dismissal takes place because of one's own
fault but on the other hand retrenchment is forced on both the employees and the
employer.
5) In retrenchment, the termination of services of many employees takes place but in
dismissal generally termination of service of only one or two employees takes place.

o Reasons for Retrenchment

1. Poor Performance: When an organisation, due to its poor performance, is going through a
phase of loss in terms of profits and it is not in a condition to sustain its position in the market,
then it needs to close down such business units which are in a continuous state of low
performance.

2. Threat to Survival: Due to some unexpected problems in the product market, the survival
of the firm is threatened. There may be a pressure on the management from the shareholders
and employees to improve the performance by all means even though if it requires cutting down
its operations.
3. Re-Deployment of Resources: When higher returns can be achieved by some alternate
employment opportunities, then there may be closing down of some existing business units or
segments so that their resources can be put to a better use for increasing the profits and
advancements in business.

4. Lack of Resources: To utilise big financial resources in order to create and maintain a stable
position in the market.

5. To Attain Improved Management Efficiency: In order to simplify the range of activities

of the enterprise it may be necessary to reduce some of the present operations to ensure working
efficiency at a higher level.

o Problems of Retrenchment
1) Due to retrenchment, unemployment increases, thereby forming the way for crimes in
the society through the activities like robbery, kidnapping, stealing, etc., increases.
2) The work output quality is impacted since the remaining employees are overloaded with
work and experienced persons are replaced with new and fresh talents.
 3) Retrenchment is not a good option to fight against corruption as it is done fairly thereby
removing the innocent people and leaving the corrupt ones in the job.
4) Retrenchment harms the self-respect of the workers as investment and gains are given
more importance than the workers of the firm.
5) Those persons who have the authority to retrench people, sometimes unfairly retrench
them due to their personal problems and disputes. This is very common in schools
where teachers on payroll are retrenched bby the head teachers due to their personal
issues.
6) Many times, retrenched employees get so much stressed that they indulge in the bad
habits of drug addictions and alcoholism. In this way, the productive people of the
nation turn into unproductive ones.
7) Retrenched people are not able to contribute to the society as they did, i.e., when they
were employed. Therefore, they are not given that much respect in the society and this
results in a drastic change in their social life.
8) Retrenchment results in unemployment, due to which the retrenched worker is not able
to fulfil his family's basic needs like bread, garments, etc. This leads to the emergence
of domestic problems such as divorce which disturbs the family and social life of the
worker.

VI. VRS/ Golden Handshake

1) VRS (Voluntary Retirement Scheme) can be defined as a method used to reduce the
present workforce of the company.
2) In this method, the employee is persuaded to voluntarily retire from the organisation.
3) It is also called as "Golden Handshake".
4) Generally, the employees who have attained the age of 40 are eligible for voluntary
retirement.
5) However, the eligibility criterion for the voluntary retirement scheme is different in
different organisations.
6) Except the Directors of the company, this scheme is applicable to all the employees
including workers and executives.

o Reasons for VRS

1. For Organisation: Under the following circumstances, an organisation may choose for a
voluntary retirement scheme:
i) Business recession,
ii) High market competition,
iii) Technological changes, process of production, new product line, innovation,
iv) Re-alignment of business,
v) Joint ventures with foreign collaborations,
vi) Mergers and acquisitions,
vii) Business re-engineering process, and
 viii) Product/technology obsolescence.

2. For Employees: The reasons for acceptance of VRS by employees are as follows:

i) Fear of Uncertain Future: A feeling of fear develops among the employees due to
which they are compelled to adopt the VRS. Although VRS is considered to be
voluntary, but 62% cases of VRS are non-voluntary. Either individually or cumulatively
these fears affect the employees, thereby forcing them to take VRS.
ii) Need for Money: Some people adopt for VRS when they are in need of money in order
to fulfil their requirements. Money can be required for the repayment of loan, marriage
of daughter, purchase of a house, etc.
iii) Job Dissatisfaction: If the employee is not satisfied with the job, he/she may go for
VRS. This job dissatisfaction may be due to clashes with the supervisor or the peer
group or because the job assigned to the employee is not according to his skills due to
which he does not find it interesting.
iv) Sickness, or Old Age: As the employees become older, their physical efficiency
decreases and therefore their productivity also decline. So, old age can be a reason for
VRS. Sickness is another reason why employees go for VRS because a sick employee
is unable to do the work as he suffers from fatigue, weakness and sooner gets tired after
every activity.
v) Allurement by Management: When the management of a company offers its
employee a lumpsum amount in lieu of VRS, the employee accepts VRS. This
handsome amount offered to the employee is known as "golden handshake".
vi) Dream of Own Business: Some workers do not find it pleasurable to work under others
and so they wish to settle their own business. Because of this desire the workers go for
VRS.
vii) Other Issues: Some other reasons for VRS are:
a. Attachment to Hometown: Some employees are too much attached to the place
where they are born and bought up. So, in order to settle back to their homeland the
employees go for VRS.
b. Family Pressure: Some workers, especially the female workers due to pressures of
the family, are forced to adopt VRS.
c. Better Job Offer: If the workers get another good job opportunity from any other
company, then they opt for VRS.

o Benefits of VRS
1) In case of retrenchment, there are legal formalities which need to be fulfilled before the
employee is retrenched. However, in VRS there are no such legal hindrances and VRS
can be put in use very easily.
2) In lieu of VRS, the financial benefits provided to the employee are very much attractive
as compared to that of retrenchment.
3) As VRS is voluntary, there is no need of any kind of pressure from the management.
This prevents the conflicts between employer and employee.
 4) If there is a surplus of labour in any department or division, then by implementing VRS
the number of labours can be reduced.
5) Since in VRS the number of employees declines, so the cost of those employees gets
saved, thereby the overall cost for an organisation also decreases.
6) In comparison to retrenchment where the employees are forcefully retrenched from an
organisation, VRS is the most sophisticated, better and most humane method to reduce
the number of employees.
7) VRS offers profitability to the employees who are adopting VRS. Therefore, VRS
prevents bitterness and dissatisfaction.

o Problems of VRS
1) Management might lose talented employees due to VRS because many skilled,
competent and productive employees may also apply for VRS in order to get separated
from the company.
2) If in a company a number of employees apply for VRS then a feeling of fear and
uncertainty develops among the existing employees regarding their job security.
3) The employee's separation from the organisation due to VRS may cost much more as
compared to the gains achieved from productivity.
4) Although VRS is a better method of separation of employees, still there might be protest
by the trade unions and other members of organisation against this scheme which can
hamper the working of the industry.
5) The name and fame of the organisation may also get affected due to the VRS operations.

VII. Rightsizing/Downsizing

1) When there is surplus of employees in an organisation, then the organisation plans to

eliminate some of the job positions which are no more required in the organisation.
2) This method of removing the job positions, thereby reducing the size of the organisation
is known as rightsizing/downsizing.
3) Due to the process of rightsizing/downsizing, the employees who are not required
anymore are removed from the organisation.
4) The main purpose behind rightsizing is to improve the efficiency of work.

o Reasons for Rightsizing

1. Employee Surplus: When the human resource planning is not appropriate or correct, there
may be a surplus of labour in an organisation.

2. Technological Upgradations: It is because of the technology that the ratio between the
number of men to the number of machines changes. In order to improve the productivity in an
organisation, it is necessary to adopt new and innovative technologies. If the organisation does
not downsize in order to increase the productivity then it may lag behind from its competitors
in the race of success.
3. Cost Saving: Cost saving is the main reason for implementing rightsizing because the
salary/wages of employees cost around 30-80 per cent of the whole cost of business, which
depends on the type of industry.

4. Outsourcing: When an organisation gets its some of the work done outside its organisation,
it is known as outsourcing. A company can outsource its few business activities due to which
the employees associated with these business activities become surplus.

VIII. Suspension of an Employee

1) The process of prohibiting employees from their work or from performing duties is
called suspension.
2) A suspended employee is prevented from the normal discharge of his her duties.
3) It is normally a type of punishment and given for a certain period of time.
4) An employee can be suspended on charges of misconduct, neglect etc. This is normally
done after an enquiry is conducted and the employee is found to be guilty.
5) The suspended employee is not allowed to fulfil his normal duties.
6) Suspension can also be an outcome in case of misconduct of an employee.
7) The misconduct needs to be queried by an enquiry committee.
8) The suspension period of an employee cannot be more than three months.
9) In the period of suspension, the employee is allowed a subsistence allowance of 50%
of his basic salary and allowances. This is as per a ruling of the Supreme Court.
10) The suspended employee is also allowed to claim to and fro charges from his house to
the place where the enquiry is being conducted.
11) When the final verdict is in favour of the charged employee, then he is entitled to receive
all his pending dues from the date of suspension. In case of serious charges, the
employee may be terminated.

o Dealing with Suspension

1. Employer: An employer has the following three options in the case of suspension of an
employee:

i) Consider Alternatives: The employer should always consider various other options so
that suspension is being avoided. For example, transferring employee to different
location, putting employee under supervision and allowing them to work from home or
providing different working hours.
ii) Let the Employee Respond: Before making a decision regarding suspension employee
should be allowed to express his point of view. Not giving this right to an employee can
be construed as unfair and it may consider as violation of the trust and faith in the
organisation by other employees.
iii) Document and Review: The employee should also document the entire process so that
it can be used for the reference in the future. This is accomplished by sending the
employee a suspension letter. This stops the employee from doing any work until the
 investigation is completed. All the data that is gathered for the suspension process
should also be gathered. This is necessary for Data security and the Sales privacy of the
employee.

2. Employee: On the other hand, the employee can do the following things:

i) Maintain professional dealings and relationship with the employer.

ii) Lay down the requirements very clearly before joining work again.
iii) Eschew any chance of misconduct.
iv) Say sorry where the need arises.
Q.3. Answer any one. (10 marks)

1. Examine the Training Process.

Ans – See Question No. 4

2. Discuss the Human Resource Planning in detail.

Ans –

• Human Resource Planning

1) "Human Resource Planning" (HRP) can be defined as a process of balancing the
people's supply, including the present and prospective employees with the potential job
openings in the organisation in a given period of time.
2) It is the system of the organisation to ensure the availability of right number of people,
right kind of people, at right time and right place to attain the organisational objectives.
3) HRP is also known as manpower planning, personnel planning or workforce planning.
It comes under the purview of organisational planning and is a future-oriented activity.
4) Inappropriate planning may result in the excess recruitment of the staff, rise in expenses
related to direct costs and training cost and other amenities for employees besides the
production cost.
5) Inappropriate recruitment also results in adverse impact upon the production, self-
esteem and the efficiency of the employees. All these factors highlight the importance
of HRP in an organisation.

• Nature of Human Resource Planning

1. Continuous Activity: It is an ongoing activity, as the need for assessing the supply and
demand of the manpower resources within the organisation never comes to an end.
2. Clearly Specified Objectives: HRP objectives may be guided by the strategic and
operational planning of the organisation. Basically, the needs of the human resources within
the organisation are based on the firm's objectives. HRP also aims at developing human
resources, sharpening the technical skills of resources, assisting them to plan their career map,
retaining them, etc.

3. Assessing the Staff Requirements: HRP focuses on pre-planning of the needs and estimates
regarding the human resources within the organisation. All the proceedings related to the
recruitment, selection and training procedures are planned in advance.

4. Maintaining Inventory of Existing Human Resources: It consists of the record of present

human resources. The manager must be aware about available manpower supply for fulfilling
the higher positions in the future.
5. Balancing Supply and Demand Equation: It is difficult to find the right candidates for the
vacant job positions instantly. The future perspective of the supply and demand of human
resources must be prior checked.
• Objective of Human Resource Planning
1. Assessing Manpower Requirements: HRP plays a very important role in assessing the
future requirements of human resources with accuracy. If a well-planned HRP does not exist,
then it would be hard for the organisation to have the right type of people at the right time.

2. Evaluation of Current Workforce: Human resource planning mainly evaluates the existing
workforce to know about its strengths and weaknesses.

3. Efficient Change Management: HRP of a firm helps to take necessary measures to meet
day-to-day environmental changes like changes pertaining to product, market conditions,
technological upgradations, policy changes by the government, etc.

4. Achieving Organisational Objectives: HRP specially focuses on the needs relating to the
growth, expansion, diversification or any other strategy for the growth of the organisation.

5. Furnishing the Accurate Details: HRP provides detailed information about the idle or
underutilised human resources. It also assists in decision-making of allied fields of
management related to promotions, etc.

6. Optimum Utilisation of Human Resources: The first and foremost important

responsibility of HRP is to ensure maximum utilisation of the existing and future human
resources within the organisation.

7. Analysing Manpower Gap: Human resource planning tries to identify the gap within the
existing resources and future requirements by imparting training and sharpening skills.

• Need of Human Resource Planning

1. Balancing Employment-Unemployment Situation: HRP tries to maintain a balance
between the educated unemployed skilled youth of the nation and the skill requirements in the
industry.
2. Technological Upgradations: There have been continuous upgradations in the marketing
methods, management techniques and systems of the production technologies in industries. It
has also demanded modifications in accordance with the job profiles. HRP is required to plan
the manpower needs accordingly, to avoid the problems regarding redundancy, re-training or
re-deployment.

3. Changes in Organisational Environment: In the dynamic and ever-changing business

environment, organisations are always subjected to the variations and breaks in their system of
working. Therefore, it is imperative for the organisations to rely on HRP to strategically plan
their manpower requirements.

4. Diverse Workforce: In present scenario of business environment, workforce consists of

people from different age, gender, social background and culture having altogether different
skills. An effective HRP is required here for proper planning of the manpower needs of the
organisations.
5. Skill Shortages: In this competitive era of business, the system of working in the
organisations is becoming more and more complicated on account of the special and rare skills
required within the firm for accomplishing the task. Therefore, HRP has an important task of
not only attracting the required potential but also ensuring to retain them in the organisation.
6. Government Interference: Various legislative measures such as provision regarding the
working conditions and working hours, restrictions on child and women employment, contract
labour, casual labour, etc. and government interference in the administration of the functioning
of the firm have necessitated more systemic HRP for the firms.

7. Judicial Regulations: Gone are the days when employees were treated as objects within the
organisation. The various legislative measures have strengthened the positions of the
employees in the organisation. Various labour laws have been implemented to ensure that the
employees do not face unjustified lay-off, retrenchment, etc. HRP is responsible for forecasting
the requirements after considering this fact.

8. Justified Recruitment: In an organisation, it is very natural to get recommendations for the

recruitment from various groups like trade unions, political groups, and personal sources. To
avoid this type of partial recruitment, HRP must be strictly implemented in the system.

9. Systematic Concept: With the growth of the concept of people management, there has been
a need to maintain the transparency in the system which can be fulfilled by maintaining the
systematic and transparent record by HRP.

10. Lead Time: As new employees are being trained for the new job responsibilities and
profile, sufficient time is required for the employees as well as for the management to assess
the worth of employee and to assign him the task accordingly. HRP provides lead time for all
these issues.

• Importance/Benefits of Human Resource Planning

1. Serves as Talent Pool: All organisations need individuals with required set of skills,
experience, and education. This requirement can be fulfilled by the appropriate human resource
planning as defining the number and type of individuals is necessary to fulfil the needs of the
organisation.

2. Allows Easy Expansion and Diversification: Organisation's upcoming plans concerning

diversification, modernisation, and growth can be successfully executed by human resource
planning. It ensures proper and efficient completion of task by arranging right quantity of
people with the right skills at the right time to tackle the challenging needs.

3. Helps in Budget Formulation: It allows checking and assessing the cost of various
processes and actions regarding human resources in the organisation. For example, salary or
other benefits are counter-checked and planning is made for the budget preparation of various
departments of the organisations.
4. Reduces Uncertainties and Change: For the proper working of an organisation, both the
components (human resource and non-human resource) should be effectively utilised. If it is
not done, there would be an anxiety in the organisation. If the organisation has sufficient non-
human resources like money, machines and raw materials, but lacks efficient human resources,
then the manufacturing or production process cannot be initiated. Such uncertainties and
changes can be reduced by proper human resource planning as it helps in proper selection and
placement of efficient people, at the required place, and time.

5. Controls Labour Imbalance: HRP facilitates to maintain proper balance of human

resources. Human resource should not be less than required nor should it be in excess. Too less
human resource causes under- utilisation of other organisational resources. While excess of
human resource causes under-utilisation of human resource. Human resource planning helps in
controlling this imbalance before it can become uncontrollable and expensive.

6. Helps in Training and Development of Employees: Due to consistent competition, there

is a regular requirement to train and develop employees to make them capable enough for the
organisation. HRP helps to identify the employees who need to be trained. Therefore, it aids in
fulfilling the organisation's future requirements rewarding by skilled staff.

• HRP Process
HRP was traditionally restricted to respond to only business needs.

However, with the growth in business, upgradation in technology and innovation in the
management system, HRP has become proactive and important in the current scenario of
business.

HRP is the method of forecasting human resource requirements and availability as well as
bridging the gap between their supply and demand.
1. Environmental Scanning

HRP begins with analysing the internal and external environment. This includes factors like
organisational culture, strategies, technology (internal), and competition, government policies,
and economic trends (external). The objective is to identify potential problems, threats, and
opportunities, helping HR understand the organisation’s strengths and weaknesses.

2. Organisational Objectives and Policies

Manpower planning must align with the overall goals and strategies of different departments.
It ensures that human resources are planned in accordance with organisational changes,
structure, and job design. Proper planning helps in determining the right number of people with
the right skills.

3. Demand Forecasting

This stage involves estimating the future manpower needs in terms of quantity and quality.
Forecasts are not always directly proportional to business growth and depend on internal plans
and external influences. Methods include:

1) Managerial Judgement – Experience-based estimates (top-down or bottom-up).

2) Ratio Analysis – Using historical ratios like employee-output or student-teacher ratio.
3) Trend Analysis – Examining past trends to predict future needs.
4) Scatter Plot – Graphical tool to show the relationship between two variables (e.g., sales
vs. workforce).
5) Computerised Forecasting – Using software to estimate HR needs.
6) Work-Study Techniques – Analyzing workload and efficiency to determine resource
needs.
7) Delphi Technique – Expert consensus through multiple rounds of questioning.
8) Econometric Models – Statistical modelling using economic indicators.
4. Supply Forecasting

After identifying future needs, the next step is to assess where and how manpower will be
available. This includes current employees (internal supply) and external candidates.
Techniques used include:

1) Staffing Tables or Manning Charts – To display current positions and vacancies.

2) Markov Analysis – Predicts internal movement of employees using transition
probabilities.
3) Skill Inventories – Lists current employees' qualifications, skills, and experience.
4) Replacement and Succession Planning – Identifying future leaders and key role
successors.
5) Cohort Analysis – Studies groups of employees over time for trends like turnover or
promotion.
5. Estimating Manpower Gaps

This involves comparing forecasted demand with the forecasted supply to find any surplus or
shortages. This gap analysis is essential to create a realistic and effective HR plan.

6. Matching Supply and Demand

Based on gap analysis, HR takes actions:

1) If demand equals supply: Operations continue as planned.

2) If supply exceeds demand: Steps may include restricting hiring, reducing working
hours, job sharing, offering early retirement, or implementing layoffs.
3) If demand exceeds supply: HR may engage in innovative recruitment, increase training
efforts, offer incentives, or adjust selection standards.

7. Action Planning

This is the execution phase, where HR implements specific programs like recruitment drives,
training, re-skilling, promotions, and reassignments. The aim is to ensure the right people are
available at the right time.
8. Evaluation and Control

The HRP process must be regularly monitored and evaluated to check its effectiveness. This
includes:

1) Assessing whether HR objectives are met

2) Reviewing and adjusting manpower plans
3) Identifying training needs
4) Addressing employee grievances
5) Taking corrective actions when necessary

• Factors Affecting Human Resource Planning

I. External Factors: External factors are those factors which externally influence the human
resource planning. They include:

1. Legislative Provisions: Various provisions relating to the labour laws, reservations in

recruitment, and policies initiated by the government, etc. affects HRP.
2. Level of Economic Development: Level of human resource development in the
country is determined by the level of economic development. This helps to determine
the future supply of human resources.
3. Business Environment: The environment in which the business operates comprises of
the external and internal factors which influence the business. These kinds of
environmental factors have an impact on the total volume of production mix and
accordingly the supply of human resources in the future is also influenced.
4. Technological Advancements: Technology can be defined as the phenomenon of
applying knowledge practically which may give rise to new inventions. The type of
human resources required is also influenced by the level of technology.
5. Global Influences: Factors which have worldwide impact on the aspects like the
supply and demand of manpower in various regions of the world also influence human
resource planning.

II. Internal Factors: These are the factors which influence the human resource planning
internally. These factors are summarised as follows:

1. Firm's Plans and Guidelines: The company's strategy for the growth, expansion or
diversification dictates the need for human resources in terms of quantity and quality
within the organisation.
2. Rules and Regulations for Human Resources: The specified rules and regulations for
the human resources within the organisation regarding the skills required, the amount
of compensation, provisions for the workforce, etc., affect HRP.
3. Job Analysis: It is a comprehensive study of a particular job with reference to the skills
required to accomplish a particular task. The comprehensive study of job helps to
determine the type of skills required in the persons to be recruited within the firm.
4. Perspective of Timeframe: HRP of the organisation varies from company to company
according to the environment in which it is operating. If the environment is relatively
stable, the company can go for long-term planning but if the environment in which the
company operates is highly dynamic, it is recommended for the company to opt short-
term planning.
5. Reliability and Credibility of Information: The effective planning is based on the
accurate data about related factors. In every organisation, HRP is based on the data
relating to the factors like capital budget, organisational structure, level of technology,
functional area objectives, job analysis, sources of recruitment, retirement plans, etc.
6. Policies regarding the Operational and Production System of Firm: HRP of a firm
is also based on the company's decision regarding the quantity of goods to be produced
or to be purchased from the market. It decides the number of persons required for the
production of the same within the system.
7. Trade Unions: Various measures taken by the trade unions to safeguard the employees'
interest will have an impact on the HRP. The decisions regarding working hours,
sources for recruitment, etc., have an impact on the HRP.
8. Phases of Organisational Lifecycle: Different phases of the organisational lifecycle
will have due impact on the HRP of the firm. In growth stage of the firm, additional
recruitment of employees will be required to cope up with growing demand whereas at
the same time in declining stage, employees will be retrenched to cut the costs. In both
the cases, human resource planning is very important.