Int roduction t o HRM, Concept of HRM Human resources management consists of a group of policies and procedures whose objective

is to m obilize and develop human resources in order to increase an organizations efficiency and effectiveness. The effective management of human resources is essential for all organizations that depend on personnel to produce goods and services. HRM is closely linked to: the mission, the values, the vision and the strategy of a business. It has progressively transformed itself from an administrative function to a catalyst for energy, a creator of business culture and dynamism. HRM is especially concerned with: Identifying the best candidates for the positions to be filled (Recruitment) Ensure that new em ployees are adequately informed about the policies of the organization (Orientation) The optional organization of the workload (Efficiency and Effectiveness) Dev eloping knowledge and skills of mgmt and staff (Training, Skill Developm ent and Career mgmt.) Encouraging employee identification and involvem ent with the business Assuring that management ov ersees the performance of each employee and offers feedback Im proving and/or maintaining a positive work environm ent (Conflict Resolution) Adequately rewarding em ployees for work accom plished (Salary and Benefits) Managing risk with the health and safety of em ployees in mind Assuring a balance between work and personal tim e

It is a multidisciplinary activity, utilizing knowledge and inputs drawn from psychology, economics, etc

Scope of HRM The Indian Institute of Personnel Management has specified the scope of HRM thus: Personnel aspect: This is concerned with manpower planning, recruitm ent, selection, placement, transfer prom otion, training and development lay off and retrenchm ent remuneration incentives productivity etc Welfare aspect: It deals with working conditions and am enities such as canteens, crches rest and lunch room housing transport m edical assistance education, health and safety recreation facilities etc Industrial relations aspects: This covers union management relations joint consultation collective bargaining grievances and disciplinary procedures settlement of disputes etc.

Functions of HRM Human resource or manpower planning Recruitm ent, selection and placem ent of personnel Training and developm ent of em ployees Appraisal of performance of employees Taking corrective steps such as transfer from one job to another Remuneration of employees Social security and welfare of employees Setting general and specific managem ent policy for organizational relationship Collective bargaining, contract negotiation and grievance handling Staffing the organization Aiding in the self-development of em ployees at all levels Dev eloping and maintaining m otivation for workers by providing incentives Rev iewing and auditing manpower management in the organization Potential appraisal, feedback, counselling Role Analysis for job occupants Job Rotation Quality Circle, Organization developm ent and Quality of Working Life

Nature of HRM It is pervasive in nature as it is present in all enterprises Its focus is on results rather than on rules It tries to help employees develop their potential fully It encourages employees to give their best to the organization It is all about people at work, both as individuals and groups It tries to put people on assigned jobs in order to produce good results Helps an organization m eet its goals by providing for com petent and wellm otivated em ployees Tries to build and maintain cordial relations between people at various levels in the organization

Objectives of HRM To help the organization reach its goals To ensure effective utilization and maximum developm ent of human resources To ensure respect for human beings

To identify and satisfy the needs of individuals To ensure reconciliation of individual goals with those of the organization To achieve and maintain high m orale am ong employees To provide the organization with welltrained and well-m otivated employ ees To increase to the fullest the em ployee's job satisfaction and self-actualization To develop and maintain a quality of work life To be ethically and socially responsive to the needs of society To develop overall personality of each em ployee in its multidimensional aspect To enhance employee's capabilities to perform the present job To equip the em ploy ees with precision and clarity in transaction of business To inculcate the sense of team spirit, team work and inter -team collaboration

Downsizing and rightsizing of the organizations Culture prevailing in the organization etc

Roles and Responsibilities of HR Manager HR Team Effectiveness for HR efficiency: Fram e a clear and easily implem entable HR Policies Nurture and develop a m otivated HR Team to m eet business requirement Dev elop the collective knowledge of the HR team to handle com plex and crisis situation arising due to dynamic and changing business environment Create a com plem enting skills based team such that various HR aspects can be addressed and there are varied com petencies and skills the team has to be handle the entire gamut of HR responsibilities ranging from HR design t0o HR delivery e. g. recruitm ent specialist, L&D experts, Business HR Plan and implem ent an effective HR Plan that is aligned to Busin ess Plan and overall organisation people agenda Expectations to attain HR

Processes of HRM Human resource planning (Recruitm ent, Selecting, Hiring, Training, Induction, Orientation, Evaluation, Prom otion and Lay offs) Em ployee remuneration and Benefits Administration Performance Managem ent Em ployee Relations

Deliver Business credibility

Evolution of HRM The early part of the century saw a concern for im proved efficiency through careful design of work. During the middle part of the century emphasis shifted to the employee's productivity. Recent decades have focused on increased concern for the quality of working life, total quality managem ent and worker's participation in managem ent. These three phases may be termed as welfare, developm ent and empowerment. In the 21 st century HRM will be influenced by following factors, which will work as various issues affecting its strategy: Size of the workforce Rising employ ees' expectations Drastic changes in the technology as well as Life-style changes Com position of workforce, new skills required Environmental challenges Lean and mean organizations Im pact of new econom ic policy, political ideology of the government

Execute manpower planning and budgeting to have a road-m ap for recruitment assignm ents Manpower hiring as per the recruitm ent plan agreed along with the Business heads/departm ent heads Keep ears to the ground and reach out to all em ployees through communication with em ployees at regular intervals to gather insights @ workplace and feed them back appropriately to the leadership team of the organisation Plan and execute suitable interventions to keep the em ployees m otivated Act as a business partner and provide dashboards/analytics to business heads/departm ent heads to help them have a pulse of their team Provide employee developm ent and counselling assistance to em ployees /team mem bers to enhance em ployee performance and productivity Take adequate m easures to retain good em ployees, ring fence high potential em ployees

HR Delivery Agenda to executive effective HR practices

Ensure Statutory Com pliant status at a ll times In case of a widespread organisation, HR visit calendar to all locations is made and followed Executing Em ployee Engagem ent initiatives to keep people together and make the workplace exciting, rewarding and engaging Drive an effective Learning and developm ent agenda that im pacts the em ployees and the businesses Evaluate and improvise the current HR Practices to keep with time and external benchmarks Update HR policies in line with the business and organisation requirement Keeping and updated Employee Handbook with all relevant details and information Design, update and share SOPs of all HR processes Conduct periodical employ ee surveys to collate insights @ workplace and in turn design em ployee interventions accordingly to address concern areas Support and counsel business managers to effectively manage team s to ensure higher em ployee productivity Have an updated repository of Job descriptions for all roles in the organisation along with m easurable performance indicators for each role Maintain employee records and files in order for ease of reference (both on -line and physical copies of the records) Communicate with em ploy ees and business heads for better alignm ent Be astute to handle dynamics at the workplace and help employees to ov ercome crisis situation

force is very much diversified in term s of the ethnicity, race, sexual orientation, disability and other cultural factors. The managerial challenge in the 21st century is mainly concerned with how to take the advantage of the diversified environm ent while fostering cooperation and cohesiveness am ong the dissimilar groups of employees. If the management is done effectively the diversified and dynamic environm ent can render successful outputs and offer the organization a powerful com petitive edge as it stimulates creativity, improves the skill of problem solving by offering broader perspectives and also infuses flexibility to the firm. The main purpose of the study of HRM in a dynamic environment is to unravel the mystery surrounding the external and the internal factors that com plicate the job of an HR manager in practice and reality. Factors may be many including the internal and the external environments. The advancem ents in technology in a rapid rate also plays a major role in the concern. Due to certain political influences and social factors in many cases the com panies may need to deal with certain situations of recessions and the local and foreign Gov ernment policies also play a vital role in the influencing in this context. The HRM needs to make certain things clear enough and thereby overcom e the obstacles com ing in the path by those factors. It also includes proper management of the skills of the employees in maintaining a stand still structure in all these adverse surroundings and turn them in favour of the organization as a whole. Technological Changes There are three ways in which technology could im prove human resource manag ement (HRM): It can streamline operations. It can improve relations with other departments through m ore timely and efficient service. It can play a transformational role by rem oving barriers to horizontal integration within and outside the firm.

HRM in a Dynamic Environment Well, jumping into the concept after quite a long period of tim e. The human resource developm ent is a vast topic to deal with. Thus it is quite obvious that the vast dim ensions include a much of many elements inside it. These elements are greatly influenced by the dynamic behaviour of the environment- both internal as well as external. In the 21st century actually the organizations cannot expect the success without the proper understanding and response of these behaviours and the responses to these constants, if not continuous trends and changes in who the organizations make to em ploy and what all these em ployees do require HR practices and system s that are well conceived and effectively implemented to ensure high performances and continuous success. The society is having a great influence on the latest managerial trends. Now -a-days labour

TQM in HR Total quality human resources managem ent (TQHRM) is an approach to human resources management that involves many of the concepts of quality management. The primary goal of TQHRM is em ployee em powerment. Several differences exist between the traditional human resources approach and TQHRM. The key points offered by Dr. Foster: Process Characteristics Consulting role Decentralization Release Dev elopm ental

Content Characteristics Pluralistic Holistic Sy stem -oriented Satisfaction m easures Person-based

Foster an attitude of openness in your organization Prom ote diversity in leadership positions Utilize diversity training Launch a custom izable em ployee satisfaction survey that provides com prehensive reporting

Workplace Diversity Workplace diversity refers to the variety of differences between people in an organization. That sounds simple, but diversity encom passes race, gender, ethnic group, age, personality, cognitive style, tenure, organizational function, education, background and m ore. Diversity not only inv olves how people perceive them selves, but how they perceive others. Those perceptions affect their interactions. For a wide assortm ent of em ployees to function effectively as an organization, human resource professionals need to deal effectively with issues such as communication, adaptability and change. Diversity will increase significantly in the com ing years. Successful organizations recognize the need for immediate action and are ready and willing to spend resources on managing diversity in the workplace now. Benefits of Workplace Diversity Increased adaptability Broader service range Variety of viewpoints More effective execution

Employ ee Empowerment Em powerm ent of em ployees in the work place provides them with opportunities to make their own decisions with regards to their tasks. Nowadays m ore and m ore bosses and managers are practicing the concept of em powerment am ong their subordinates to provide them with better opportunities. According to Thomas A. Potterfield, many organizational theorists and practitioners regard employee empowerm ent as one of the m ost im portant and popular managem ent concepts of our time. Com panies ranging from small to large and from low -technology manufacturing concerns to high-tech software firms have been initiating em powerm ent programs in attempts to enhance em ployee m otivation, increase efficiency, and gain com petitive advantages in the turbulent contemporary business environment. Learning Organization A learning organization is the term given to a com pany that facilitates the learning of its m embers and continuously transform s itself. Learning organizations develop as a result of the pressures facing m odern organizations and enables them to remain com petitive in the business environment. A learning organization has five main features Sy stem s thinking: conceptual framework that allows people to study businesses as bounded objects Personal mastery: commitm ent by an individual to the process of learning Mental m odels: assum ptions held by individuals and organizations Shared vision: creates a comm on identity that provides focus and energy for learning Team learning: accumulation of multiple individual learning sets constitutes team learning

Challenges of Diversity in the Workplace Communication: Perceptual, cultural and language barriers Resistance to change Im plem entation of diversity in the workplace policies Successful Managem ent of Diversity in the Workplace

Recommended steps that have been proven successful in world-class organizations are: Assessm ent of diversity in the workplace: Dev elopm ent of diversity in the workplace plan: Im plem entation of diversity in the workplace plan

Recommended diversity in the workplace solutions include: Ward off change resistance with inclusion

Methods and Techniques of Forecasting the Demand and Supply of Manpower Manpower forecasting is the first step or feature of the entire manpower planning activity. The HR manager foresees the demand and supply of different types of manpower resources in the firm. In sim ple words the basic idea is to see where or in which area there is a shortage or surplus of human requirement. Forecasting is the process of making judgm ents about events whose actual outcom es have not been seen. We could use a word like prediction which is sim ilar, but a m ore gen eral term. E.g. a retail showroom may need thirty m ore sales em ployees during the one-m onth sale period. Manpower Demand Forecasting: Demand forecasting is a process of evaluating the quality and quantity (num ber) of em ploy ees a firm or organization requires to meet its future needs. A forecast could be a long -term or a short-term plan depending on the activity levels for each function and departm ents. There are several internal and external factors to be considered in demand forecasting. Internal factors include budget constraints, production levels, new products and services. External factors include com petition from other firm s; it could be from the dom estic or international firm s, economic value, changes in technology etc.

It helps to evaluate the present staffing levels in different parts of the firm or organization. It helps to prevent a shortage of employees when and where they are needed the m ost. It helps to m atch the future requirem ent with the job specification.

Broadly speaking two key sources of supply of manpower exist. They are: Internal Supply: Em ployees m oving up the ladder by way of prom otions Em ployees are transferred from other departments or locations

External Supply: Same industry Different related industries Unrelated industries The sam e city Peripheral cities Metros Across the country Rural parts with good colleges Dying public sector units Com panies which are getting shut down

Demand Forecasting Techniques Expert Forecasts: Group forecasting method in which experts present their independently developed forecasts to the group. However, the experts do not m eet each other. The group keeps refining their forecasts until a group consensus is reached. This is called as the Delphi technique. Trend Analysis: This technique requires studying the past data of an organization. Based on the past forecast, utilization and requirem ent actually experienced in the business, the future forecast is made. Work Study Technique: It is a technique that can be used when it is possible to apply work measurem ents to know how long operations should take and the am ount of labour required. It is calculated in two ways. Work-Load Analysis: Evaluating the work load in a department or job role. This then enables deciding the no. of employees required for doing the job. This depends on the nature of the work load in a branch, department, or a division in a firm or organization.

Reasons to conduct demand forecasting: Determine the jobs necessary for offering services. Determine the staff required for future needs. Determine the correct staffing levels in different parts of the firm or organization. Determine the shortage of em ployees when and where they are needed the m ost.

Manpower Supply Forecasting Supply forecasting measures the num ber of em ployees available within or outside the firm or organization. It also has to keep absenteeism, shift changes, number of working hours, prom otions etc in mind. Reasons for making supply forecasting are: It helps to decide the number of employees and positions that are available for further need.

Work-Force Analysis: In workforce analysis a sufficient margin for absenteeism, labour turnover and idle time on the basis of past experience is made. This allows for com pleting the total job at hand undertaken by an organization despite the challenges of labour turnover or absenteeism. The organization needs to make reasonable prediction of labour turnover or absenteeism.

Job terminology: Description of technical terminology is highly necessary in order to facilitate the study of a job analysis. They are Task: A task is an action or related group of action designed to produce a definite outcom e or result. Position: A position is a group of sim ilar tasks and responsibilities assigned to one individual. Job: A job is a group of positions that are sim ilar as to kind and level of work. Occupation: An occupation is a group of jobs that are similar as to kind of work and are found throughout an industry. Job description: A job description is an organised, factual statement of the duties and responsibilities of a specific job. Job specification: A job specification is a statem ent of the minimum acceptable human qualities necessary to perform a job properly. Em ployee specification: Em ployee specification is a statement of minimum required em ployee qualifications. viz., physical, educational, work etc. which represent the possession of minimum acceptable human qualities by the prospective employee necessary to perform a job. Job classification: A job classification is a grouping of jobs on som e specified basis such as kind of work or pay.

Managerial Judgm ent Technique: This is a sim ple technique. In this the managers of different departments sit together, discuss and arrive at conclusions as to the number employees required for future operations based on their past experiences. This technique involves a top-down or bottom -up approach. In top-down approach the managers prepare departm ental forecasts. These are viewed by departm ent heads and a decision is taken. In bottom -up approach the managers submit their departm ental proposals to top managers who arrive at forecast.

Markov Analysis: This is a mathematical technique. It forecasts the availability of internal job candidates. In this analysis, various job classifications can be predicted based on past m ovements (transfers, prom otions, attrition, new joiners, resignations, and retirement). Statistical Judgm ent Technique: This technique concentrates on using the past to predict the future by identifying trends, patterns and business drives within the data to dev elop a forecast. This forecast is referred to as a statistical forecast because it uses mathematical formulas to identify the patterns and trends while testing the results for mathematical reasonableness and confidence. Job Analy sis Meaning and Definition A job analysis is a sy stematic exploration of the activities within a job. It is a basic technical procedure, one that is used to defin e the duties, responsibilities and accountabilities of a job. This analysis inv olves com piling a detailed description of tasks, determining the relationship of the job to technology and to other jobs and examining the knowledge, qualifications or em ployment standards accountabilities and other incumbent requirem ent.

Process of Job Analy sis Collection of Background Information: organisation charts, class specification s and existing job descriptions Selection of representative position to be analysed Collection of Job Analysis Data Dev eloping a Job Description Dev eloping a Job Specification. Dev eloping Employee Specification

Job Analysis Methods Observation Method: Using this m ethod, a job analyst watches employees directly or reviews film s of workers on the job. While the observation method provides firsthand information, workers in many cases do not function m ost efficiently when they are being watched. Thus distortions in the job analysis may occur. This m ethod also requires that the entire range of activities be observable; possible with som e jobs, but impossible for many e.g. m ost managerial jobs.

Individual Interview Method: Using this m ethod, job incumbents are selected and extensively interviewed. The results of these interviews are com bined into a single job analysis. This m ethod is effective for assessing what a job entails, but is very time consuming. Group Interview Method: This m ethod is similar to the individual interview m ethod except that a number of job incumbents are interviewed simultaneously. Accuracy is increased in assessing jobs, but group dynamics may hinder its effectiveness. Structured Questionnaire Method: Using this method, workers are sent structured questionnaire on which they check or rate item s they perform on their job from a long list of possible task items. This technique is excellent for gathering information about jobs. Technical Conference Method: This method utilizes supervisors with extensive knowledge of the job. Here, specific characteristics of a job are obtained from the experts. Diary Method: This m ethod requires job incumbents to record their daily activities. That is, workers are asked to maintain and keep daily records or list of activities they are doing on that day. This technique provides com prehensive job information and it is much useful when it is supplemented with subsequent interviews. Purposes of Job Analysis Job Descriptions: A job description is a written statem ent of what the job holder does, how it is done, and why it is done. A comm on format for a job description includes the job title, the duties to be perform ed, the distinguishing characteristics of the job, and the authority and responsibilities of the job holder. The content of Job Description Job title Organisational location of the job Supervision giv en and received Materials, tools, machinery and equipm ent worked with Designation of the immediate superior and subordinates Salary levels. Conditions of work Training and developm ental facilities. Prom otional chances and channels

incumbent must possess to perform the job successfully. Based on the information acquired through job analysis, the job specification identifies the knowledge, skills and abilities needed to do the job effectively. Individuals possessing the personal characteristics identified in the job specification should perform the job m ore effectively than individuals lacking these personal characteristics. The job specification, therefore, is an im portant tool in the selection process, for it keeps the selectors attention on the list of qualifications necessary for an incumbent to perform the job and assists in determining whether candidates are qualified. Job Evaluations: In addition to providing data for job descriptions and specifications, job analysis is also valuable in providing the information that makes com parison of jobs possible. If an organization is to have an equitable com pensation program, jobs that have similar demands in term s of skills, education and other personal characteristics should be placed in comm on com pensation groups. Job evaluation contributes toward that end by specifying the relative value of each job in the organisation. Job evaluation, therefore, is an important part of com pensation administration. Job Design Job design is defined as the process of deciding on the content of a job in terms of its duties and responsibilities; on the m ethods to be used in carrying out the job, in term s of techniques, system s and procedures and on the relationships that should exist between the job holder and his superiors, subordinates and colleagues. Two im portant goals of job design are (i) to m eet the organisational requirements such as higher productivity, operational efficiency, quality of product or service and (ii) to satisfy the needs of the indiv idual em ployees like interests, challenge, achievement or accom plishment etc. Finally the goal of the job design is to integrate the needs of the individual with the organisational requirements. Job Enlargement Job enlargem ent inv olves expanding the number of tasks or duties assigned to a given job. Job enlargem ent is naturally opposite to work sim plification. Adding m ore tasks or duties to a job does not m ean that new skills and abilities are needed to perform it. There is only horizontal expansion. Frederick Herzberg said that job enlargem ent is simply adding zero to zero, meaning that; one set of boring tasks (zero) is simply added to another set of boring tasks (zero). Job enlargement is said to

Job Specifications: The job specification states the minimum acceptable qualifications that the

contribute to em ployee m otivation, but the claim s is not validated in practice. Job Enrichment The m ost popularly adv ocated structural technique for increasing an em ployees m otivational potential is job enrichment. To enrich a job, managem ent allows the worker to assume some of the tasks executed by his or her supervisor. Enrichm ent requires that workers do increased planning and controlling of their work, usually with less supervision and m ore self-evaluation. From the view of increasing the internal m otivation from doing a job, it has been proposed that job enrichment offers great potential. However, job enrichment is successful only when it increases responsibility, increases the em ployees freedom and independence, organises tasks so as to allow workers to do a complete activity and provides feedback to allow individuals to correct their own performance. Furtherm ore, job enrichment efforts will only be successful if the individuals in the enriched job find that their needs are m et by the enrichment. If these individuals did not want increased responsibility, then increasing responsibility will not have the desired effect. Successful job enrichment, then, is contingent on worker input. Job Rotation Job rotation refers to the m ovem ent of an em ployee from one job to another. Jobs them selves are not actually changed, only the em ployees are rotated am ong various jobs. An employee who works on a routine/respective job m oves to and works on another job for som e hours/day s/m onths and backs up to the first job. This m easure relieves the em ployee from boredom and m onotony, im proves em ployees skills regarding various jobs and prepares the com petent em ployees to m eet the contingencies. Human Resource Planning Human resource or manpower planning is the process by which a management determines how an organization should m ove from its current manpower position to its desired manpower position. Through planning, a management strives to have the right number and the right kind of people at the right places, at the right time, to do things which result in both the organization and the individual receiving the maximum long -range benefit". The scope of HRP is futuristic in nature and usually runs parallel to the annual business planning exercise. It comm ences prior to the start of the com panys new financial year.

Steps in Human Resource Planning Forecasting manpower requirements Creating an inventory of present manpower resources and assessing the extent to which these resources are em ployed/ optimally Identifying manpower problems by projecting present resources into the future to determine their adequacy Planning the necessary programmes of requirement selection, training, developm ent, utilization, transfer, prom otion, m otivation and com pensation

Need for Human Resource Planning Organization needs com petent staff with the necessary qualifications, skills, knowledge, work experience and aptitude Em ployees exit and organization both naturally (superannuation) and unnaturally (resignations), there is an on going need for hiring replacem ent staff Meet the need for m ore employees due to organizational growth and expansion Organizations m ight need to replace the nature of the present workforce as a result of its changing needs Identify an organizations need to reduce its workforce

Process of Human Resource Planning 1. 2. 3. 4. 5. Deciding goals or objectives; Estimating future organisational structure and manpower requirements; Auditing Human resources both internally and externally Planning job requirem ents and job descriptions/person specifications; and Building a plan

Recruitment It is the process of generating a pool of capable people to apply for employment to an organization. Types of Recruitment Recruitm ent is of 2 types: Internal Recruitment - is a recruitment which takes place within the concern or organization. Internal sources of recruitm ent are readily available to an organization. Internal sources are primarily three Transfers, prom otions and Re-em ployment of exem ployees. Re-employment of ex -em ployees is one of the internal sources of recruitm ent in which em ployees can be invited and appointed to fill vacancies in the concern. There are situations when ex-em ployees provide unsolicited applications also. Internal recruitment may lead to increase in em ployees productivity as their m otivation level increases. It also saves time, m oney and efforts. But a drawback of internal recruitment is that it refrains the organization from new blood. Also, not all the manpower requirem ents can be met through internal recruitment. Hiring from outside has to be done. Internal sources are primarily 3 Transfers Prom otions (through Internal Job Postings) and Re-em ployment of ex-em ployees - Reem ployment of ex-em ployees is one of the internal sources of recruitment in which em ployees can be invited and appointed to fill vacancies in the concern. There are situations when ex-em ployees provide unsolicited applications also.

em ployees. Moreover, organization will face less of absenteeism and em ploy ee turnover problem s. By selecting right candidate for the required job, organization will also save tim e and m oney. Proper screening of candidates takes place during selection procedure. All the potential candidates who apply for the given job are tested. But selection must be differentiated from recruitment, though these are two phases of em ployment process. Recruitm ent is considered to be a positive process as it m otivates m ore of candidates to apply for the job. It creates a pool of applicants. It is just sourcing of data. While selection is a negative process as the inappropriate candidates are rejected here. Recruitment precedes selection in staffing process. Selection inv olves choosing the best candidate with best abilities, skills and knowledge for the required job. The Employee Selection Process takes place in following order 1. Preliminary Interviews: It is used to eliminate those candidates who do not meet the minimum eligibility criteria laid down by the organization. The skills, academic and fam ily background, com petencies and interests of the candidate are examined during preliminary interview. Application blanks: The candidates who clear the preliminary interview are required to fill application blank. It contains data record of the candidates such as details about age, qualifications, reason for leaving previous job, experience, etc. Written Tests: Various written tests conducted during selection procedure are aptitude test, intelligence test, reasoning test, personality test, etc. These tests are used to objectively assess the potential candidate. They should not be biased. Em ployment Interviews: It is a one to one interaction between the interviewer and the potential candidate. It is used to find whether the candidate is best suited for the required job or not. Medical exam ination: Medical tests are conducted to ensure physical fitness of the potential em ployee. Appointment Letter - A reference check is made about the candidate selected and then finally he is appointed by giving a formal appointm ent letter.

2.

3.

External Recruitm ent - External sources of recruitment have to be solicited from outside the organization. External sources are external to a concern. But it involves lot of time and m oney. The external sources of recruitm ent include Em ployment at factory gate, advertisements, em ployment exchanges, em ployment agencies, educational institutes, labour contractors, recomm endations etc. Selection Em ployee Selection is the process of putting right men on right job. It is a procedure of matching organizational requirem ents with the skills and qualifications of people. Effective selection can be done only when there is effective matching. By selecting best candidate for th e required job, the organization will get quality performance of

4.

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Induction (Orientation) & Placement Once the candidates are selected for the required job, they have to be fitted as per the qualifications.

Placement is said to be the process of fitting the selected person at the right job or place, i.e. fitting square pegs in square holes and round pegs in round holes. Once he is fitted into the job, he is given the activities he has to perform and also told about his duties. The freshly appointed candidates are then given orientation in order to familiarize and introduce the com pany to him. Generally the information given during the orientation programme includes: Em ployees layout Type of organizational structure Departmental goals Organizational layout General rules and regulations Standing Orders Grievance system or procedure

career. The career development approaches used to achieve these goals are job broadening or increasing job responsibilities, project work, network participation, and job rotation within one functional family or between businesses, functions or units. Internal m obility within the organization is based on the following principles: Talent has to be managed at the service of to the entire corporation, not to one specific unit or function Ev ery individual has a responsibility to take his/her career developm ent in his/her own hands The com pany offers guidance, opportunities and resources to maintain em ployability throughout a managers' career Organisations look for a balance between developing competencies internally and attracting com petencies from outside

In short, during Orientation em ployees are made aware about the mission and vision of the organization, the nature of operation of the organization, policies and programmes of the organization. The main aim of conducting Orientation is to build up confidence, m orale and trust of the employ ee in the new organization, so that he becom es a productive and an efficient employee of the organization and contributes to the organizational success. The nature of Orientation program varies with the organizational size, i.e., smaller the organization the m ore informal is the Orientation and larger the organization m ore formalized is the Orientation programme. Proper Placem ent of employees will lower the chances of em ploy ees absenteeism. The employees will be m ore satisfied and contended with their work. Int ernal Mobility Internal m obility the m ovement of employees from one position to another within a corporation is an efficient and cost-effective method of talent deployment. A successful internal m obility program begins with a com pany clarifying its purpose and the business goals it seeks t o accom plish with an internal m obility initiative. Next, the corporation translates the business goals driving internal m obility into specific business policies. These business policies will in turn determine the organization of the staffing department delivering the service, how and when the initiative will apply, and the rules and procedures followed. New challenges and learning opportunities are the best way of guaranteeing em ployability throughout a

Training & Development Training of em ploy ees takes place after orientation takes place. Training is the process of enhancing the skills, capabilities and knowledge of employees for doing a particular job. Training process m oulds the thinking of employees and leads to quality performance of em ployees. It is continuous and never ending in nature. Im portance of Training Training is crucial for organizational developm ent and success. It is fruitful to both employ ers and em ployees of an organization. An employee will becom e m ore efficient and productive if he is trained well. Training is given on four basic grounds: New candidates who join an organization are given training. This training familiarizes them with the organizational mission, vision, rules and regulations and the working conditions. The existing employees are trained to refresh and enhance their knowledge. If any updates and amendm ents take place in technology, training is given to cope up with those changes. For instance, purchasing new equipment, changes in technique of production, com puterisation. The employ ees are trained about use of new equipm ents and work methods. When prom otion and career growth becom es important. Training is given so

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that em ployees are prepared to share the responsibilities of the higher level job. The benefits of training can be summed up as: Im proves m orale of employees: Training helps the employee to get job security and job satisfaction. The m ore satisfied the em ployee is and the greater is his m orale, the m ore he will contribute to organizational success and the lesser will be em ployee absenteeism and turnover. Less supervision: A well trained em ployee will be well acquainted with the job and will need less of supervision. Thus, there will be less wastage of time and efforts. Fewer accidents: Errors are likely to occur if the employees lack knowledge and skills required for doing a particular job. The m ore trained an employ ee is, the less are the chances of committing accidents in job and the m ore proficient the em ployee becom es. Chances of prom otion: Em ployees acquire skills and efficiency during training. They becom e m ore eligible for prom otion. They becom e an asset for the organization. Increased productivity : Training im proves efficiency and productivity of em ployees. Well trained employees show both quantity and quality performance. There is less wastage of tim e, m oney and resources if em ployees are properly trained.

within a short time period. Off the job training is also called as vestibule training ,i.e., the employees are trained in a separate area( may be a hall, entrance, reception area, etc. known as a vestibule) where the actual working conditions are duplicated Career and Succession Planning Career planning is the process of setting individual career objectives and devising developm ental activities necessary to achieve them. It is, in the broadest sense, the personal process of planning ones future work. In this process, an individual analyses his or her interest, values, goals, and capabilities. From the management view point, career planning and development should remain an individual responsibility. The principal objectives of career planning are: To secure the right man at the right job and at the right time; To maintain a contended team of em ployees; To provide adequate career avenues to em ployees to higher levels of responsibilities; and To strengthen the retention programme of the organisation.

Ways/Methods of Training Training is generally im parted in two ways: On the job training: On the job training methods are those which are given to the em ployees within the everyday working of a concern. It is a sim ple and cost -effective training m ethod. The im proficient as well as semi- proficient em ployees can be well trained by using such training method. The em ployees are trained in actual working scenario. The m otto of such training is learning by doing. Instances of such on job training methods are job-rotation, coaching, tem porary prom otions, etc. Off the job training: Off the job training methods are those in which training is provided away from the actual working condition. It is generally used in case of new em ployees. Instances of off the job training m ethods are workshops, seminars, conferences, etc. Such method is costly and is effective if and only if large number of employees have to be trained

There are four distinct elem ents of a career planning programme. They include: 1. 2. 3. Individual assessm ents of abilities, interests, career needs, and goals; Organisational assessm ents of em ployee abilities and potential; Communication of information concerning career options and opportunities with the organisation; and Career counselling to set realistic goals and plan for their attainment.

4.

Com prehensive definition of Succession Planning is that it is the process of ensuring a suitable supply of successors for current and future senior or key jobs arising from business strategy, so that the careers of individuals can be planned and managed to optimise the organisations needs and the individuals aspirations. Succession planning includes these activities: Analysis of the demand for managers and professionals by com pany level, function and skill.

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Audit for existing executives and projection of likely future supply from internal and external sources. Planning of individual career paths based on objective estimates of future needs and drawing on reliable performance appraisals and assessm ents of potential. Career counselling undertaken in the context of a realistic understanding of the future needs of the firm, as well as those of the individuals. Accelerated prom otions, targeted against the future needs of the business. Performance-related training and developm ent to prepare individuals for future roles as well as current responsibilities. Planned strategic recruitment not only to fill short-term needs but also future needs. The actual activities by which openings are filled.

person. i.e. it is th e job that has to be evaluated and not the person Assessm ent: The assessm ent has to be carried out in an acceptable manner and by com petent people. Further, it is based on judgement and is not scientific but can however be used to make objective judgem ents if used correctly.

Compet ency based Training and Assessment With the ever evolving and diversifying business challenges, the approach to the m anagement of human resources has also undergone a paradigm shift. The com petitive advantage achieved through technology, new products and information is short lived and vastly evaporating. The only distinguishing feature from the com petition which remains, are the skills and contribution from the em ployees. The organizational leadership therefore plays an important part as they directly influence the performance and the people of the organization. A well-defined and uniform com petency framework is the first step towards an organized approach to the human resource management of the organization. There is a constant need to increase efficiency and create and deliver value in each transaction. Therefore it is imperative that a m ore scientific approach like com petencies be used to define and understand the knowledge, skills and attitude required to perform a job effectively. Evaluating an em ployees performance based on pre-defined com petencies and their behavioural indicators, in turn is called com petency based assessm ent. The preliminary condition for a com petency based assessm ent is a well-defined com petency framework of the organization. Ideally, the com petency framework needs to be in alignment with the long term organizational goals and its vision and mission. These com petencies then need to be interpreted in the context of the tasks performed by em ployees at different levels, so a com petency like fosters teamwork will be defined differently for a senior leader like COO and would further have to be contextualized for a junior manager. The competencies are like the Pole Star for the organization especially the senior leaders and act as a constant check for the em ployees to direct and redirect their efforts to yield specific results. Since, com petencies can be assessed and analy zed; it gives a fairly objective evaluation of an em ployees performance. The best part about the com petencies is that they can be learnt unlike personality traits which are characteristic to an individual. If the organization identifies criteria critical to its success

Job evaluation Job evaluation is a process of determining the relative worth of a job. It is a process which is helpful even for framing com pensation plans by the personnel manager. Job evaluation as a process is advantageous to a company in many ways: Reduction in inequalities in salary structure Specialization (define a job and thereby fix salaries for it) Helps in selection of em ployees Harm onious relationship between em ployees and manager Standardization (determining the salary differentials for different jobs becom e standardized) Relevance of new jobs (understand the relative value of new jobs)

Principles of Job Evaluation Definition: Jobs must be clearly defined such that they are identifiable and easily distinguishable. These jobs must then be part of the job description. Evaluation: A job evaluation scheme must be arrived upon and used as a standard and all jobs in the organisation must be evaluated as per that schem e only. Job Understanding: Job evaluators need to have deep insights into the job design process. They must have a methodical understanding of various tasks inv olved. Concern: Job evaluation must be concerned with the job and not with the

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in the form of core com petencies, they can be cascaded down to the whole organization. Having a com petency fram ework and assessm ents based on it provides a comprehensive picture of the skill map of the organization, the developm ent needs, and potential leaders and thus define the approach to effective talent managem ent. From the perspective of the em ploy ees, they get a better understanding of the potential progression of their careers which further augm ents their engagem ent with the organization. Within the com petency based assessment approach the organizations can find a structured m odel to integrate their management practices as well. A sy stematic approach like this can help define organizational priorities clearly and align the human resource strategies to create and build on key behaviours which are desired and would be rewarded. It also creates individual employees accountable and responsible for their performance and learning and developm ent while creating a culture of transparency. And m ost im portantly com petency based assessments go a step further to understand the individual and organizational fit to make correct hiring decisions, the starting point of the employees life-cycle in the organization. Performance management appraisal and potential

Purpose of Performance Management Driving results: The purpose of performance management is to drive im provement in business results through individual, group and enterprise goal alignm ent, measurem ent, performance coaching and performance information sharing. Building capabilities: Performance managem ent drives organisational and individual capability developm ent by clarifying role-specific goals and com petencies, creating an environm ent of constructive feedback, and u sing formal developm ental coaching or mentoring. Growing talent: Another important purpose of performance managem ent is to m otivate and retain high perform ers by providing career developm ent program s that include m otivation and reward strategies, challenging work assignments and other on-the-job learning initiatives that will lead to career advancem ent and job satisfaction. Basic Principles of Performance Management Effective organisations need effective performance management. Organisational effectiveness is not possible without performance managem ent. Performance management helps to achieve the following: To facilitate the integration of individual and organisational objectives and values and develop a performance-orientated culture. To identify and m eet individual developm ent needs and to identify those em ployees with a good growth potential. To identify poor performers. To provide a basis for valuing people. To im prove the quality of managem ent.

Performance Managem ent is a long term process that focuses on continuous performance improvement. Its goal is to create a climate of shared understanding about what is to be achieved, and then developing people to increase the chance that it will indeed be achieved. Aims of Performance Management To assist in the achievement of enhanced standards of work performance of an em ployee or class of em ployees. To assist em ployees to identify the knowledge and skills to perform their jobs efficiently. To ensure that the em ployees work towards the defined goals. To ensure that the em ployees receive regular feedback on performance. To assist the em ployees to achieve personal growth through acquiring relevant knowledge and skills and attitudes. To evaluate the com pany and its ability to set and reach goals. To identify and rem edy situations that are hindering com pany performance.

Managers ability to deliver has an im pact on performance management. Effective Performance management needs managers who not only have an open and honest managem ent style, but who also provide support and direction through: Having a thorough understanding of their institutional strategy and the big picture and being vary of any assumptions they may hold about their employees interest in such matters before engaging with them on such issues. Recognising that appraisal is not about supervision, but is m ore concerned with helping individuals set strategic goals for them selves that are consistent with those of the organisation.

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 Performance management is not a fixed event; it is a cyclic process centred on learning and developm ent. Performance management does not just happen, as is often assumed, at an annual event set up for the purpose. Formal appraisal is but a single aspect of the process. Performance management is about learning and developm ent, which is a continuous and ongoing activity. It is m ore effective if it is planned in advance, experienced, reviewed and evaluated on a regular basis. Feedback on progress and achievement is an im portant aspect of the learning cycle, and in this respect, employees are no different to students. We all need high-quality regular feedback if we are to develop. Indeed, conventional wisdom tells us that any feedback, even if negative, is better than none at all. Managers, then, need to be not only particularly skilled in this regard, but they must also seek every opportunity to provide feedback to the team mem bers. Performance managem ent is not a system. It is a natural process of managing people. Performance management is the way an organisation views its em ployees. This may not necessarily entail following best practices, but rather doing what is best for the organisation. Either way, the focus will, or should, invariably be on changing behaviour, not paperwork, and should focus on the process, rather than the sy stem. Performance managem ent works best and succeeds m ost when it is aligned with the culture, climate, aspirations and values of the organisation. It is perceived to be an artificial im plant grafted on to the existing sy stem. Role of Appraisal in Performance Management Performance Appraisal is the assessment, at regular intervals, of an em ploy ees performance at work. Appraisals are a part of performance managem ent. Performance management is a continuous process while appraisals are periodic activities. Appraisal is a static process, whereas performance managem ent is a dynamic process. If the management inv olves im provements, the m oment an organisation is assessed to determine where it stands, there is an appraisal taking place. Managing an organisation becom es difficult without som e form of appraisal. Appraisals are not reducing the performance of individuals and dyads or team s to a five-point scale or a num ber. It is the reduction of annual performance into a number and equating one number with another. Since appraisal scales are not calibrated and equated, the numbers generated from the appraisal process are not com parable across functions, levels, departments and organisations. Som e organisations use liberal scales, som e use conservative scales and some use no scales but m erely feelings.

Performance appraisal should lead to increased performance. Howev er, in m ost organisations, performance appraisals have lead to decreased performance. This is because of de-m otivation. When appraisals are linked to rewards and when fewer people are rewarded than those expecting them, those who are not rewarded get de-m otivated. If those who expect to be rewarded exceed the number of those who actually get rewards, the net outcom e of performance appraisal may be negative. If people continue to perform in spite of appraisals, and they do not have a positive attitude to appraisals, then the organisation is spending m ore psychological energy. Using appraisal sy stems should make the performance management process m ore effective and productive. Appraisal system s help managers manage their performance. Managers should view it as aids for performance management. Managers should not be overwhelm ed with appraisals and appraisal outcomes and should not ignore the m ost im portant aspects of performance management performance improvem ents and com petency building. This happens when the concerns get focused on appraisals rather than im provements or on ratings and rewards rather than performance enhancem ent and development. Managers need to learn to enjoy the performance managem ent process itself, as it occurs round the year and is not blocked by appraisals as they occur once in a while. Performance managem ent system s with an appraisal com ponent built into them should lead to im proved performance and m ore m otivated and com petent people. Compensation Administration Elements of compensation Base pay: Base pay is the fixed rate of com pensation that an em ployee receives for performing the standard duties and assignment of a job. Em ployers need to ensure that base-pay program s are designed to reveal market practices within their identified com petitor group. To achieve this, organisations must first identify their com petitive market. This can be achieved by considering different factors, including the nature of the industry, geographic location, total em ployment and annual revenue. Next, they need to conduct an assessm ent of market pay practices for similar jobs within the recognised com petitor group. This assessm ent should involve the duties, skills, and im pact levels of each job evaluated that is, each job of sim ilar size and scope.

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Then a pay structure for managing the com petitive base-pay levels for the jobs throughout the organisation should be developed. Pay structures typically consist of a series of pay ranges or bands that reveal com petitive rates of pay for specific jobs, as well as allowing room for salary growth. Jobs of sim ilar value from both the market point of view and an internal point of view are grouped together. Then a com petitive pay range is developed around the market rates for the particular jobs. Variable pay: Performance-based variable pay continues to achieve m omentum as a m ore successful way to identify and reward em ployee performance. Also known as pay -per-performance, variable pay is popular in todays corporate world. By including a percentage of variable pay in the com pensation plan, organisations ensure that two people with different efficiency levels do not get the sam e benefits. By doing this, the com pany rewards productivity and hard work and m otivates the under-performers to work hard. Once limited to senior managem ent levels, these incentive or bonus plans are being redesigned to reward the achievement of specific com pany or em ployee performance objectives. In a variable pay plan, the size of the award varies am ong em ployees and from one performance period to an other, based on levels of achievem ent m easured, as well as against pre established com pany and employee performance targets. Am ounts are usually calculated as a percentage of base pay depending on job category and position. Rewards are normally paid in cash on an annual, sem iannual or quarterly basis depending on the plan design. Plan designs range from salescomm ission types to individual incentive or bonus plans to team awards. The main idea of these program s is to reward innovation and hard work and to discourage mediocrity in performance. Skill and com petency -based pay: Skill-based pay offers employ ees extra com pensation when they have new skills specially recognised by the company as essential to achieve a competitive advantage. Skill-based pay can be particularly useful for em ployees who like their current jobs but are looking for new challenges. Competency -based pay is m ore widespread than skill-based pay because the criteria cover not only m easurable skills but also knowledge, performance behaviours and personal attributes. It helps out employees to grow in the com pany and helps them to close the knowledge gaps needed for creative m oves. Long-term incentive com pensation: Long -term incentive com pensation vehicles, such as stockoption plans and other deferred-com pensation plans, which are not usually used to reward performance, are achieving desirability am ong

em ployees. These long term incentive com pensation plans appreciate employees based on company performance ov er a long term that is typically three to five years. Stock-option plans are a comm on form of long-term com pensation at public organisations. In m ost private com panies, incentives that reflect stock plans are used for key em ploy ees. Long-term compensation plans can be valuable preservation tools for the success of an organisation. They help to focus on driving and im proving the key employees to achieve the financial performance of the com pany over a longer term. Elements of benefits Com pany benefits can include a wide range of offerings from standard m edical insurance to m ore m odern benefits like prepaid legal services, and applicants who are com paring job offers often narrow their choices down to those that offer the m ost generous benefits package. Applicants and new em ployees checking their choices of benefit plans often feel confused and ov erwhelmed as the terminology used can be difficult to recognise and understand. While the different plans are typically designed to deal with the health and welfare of the em ployee population, understanding them can be a difficult task. Further com plicating matters, som e com panies share the costs of these benefits with the em ployees, in an effort to help make up for the significant expenses connected with broad benefit plans. Some of the benefits are discu ssed below: Training: For m ost of the em ployees, training means m ore than m oney. For exam ple, according to one survey of HR executives conducted by the American Management Association, technical and em ployability training were rated considerably higher than pay -for-performance or bonuses. Com panies typically answer to this interest by sending workers to outside conferences and seminars, repaying employ ees for tuition, offering managerial training and supporting em ployees in degree programs. Health care: The benefits that get the m ost attention from em ployers today are health care benefits because of the high costs inv olved in getting good healthcare facilities and the increasing concern about staying healthy. In the past, health insurance plans included only medical, surgical and hospital expenses. However, today employers include prescribed drugs and dental, optical and mental healthcare benefits in the package they offer their workers. Typically, an employer offers em ployees some form of group health insura nce or set am ount to spend on

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healthcare or personal insurance plans each year. Em ployees may be offered insurance after working for a specified period of time, and the level of cov erage is usually linked to em ployment status, with part time employees receiving fewer benefits. Depending on the com panys plan, employees may have to select the healthcare plan, paying a small fee while the com pany pays the remaining am ount of the premium or the employ er may cover all insurance-related costs. In group benefits, employees can have access to different types of healthcare plans, including insurance plans, under which people pay for services at the tim e of availing them, and subm it a bill to the insurance com pany for reimbursem ent. Managed healthcare plans like prov iding services from health maintenance organisations (HMOs) and preferred provider organisations (PPOs), which offer care through a network of providers are also getting immensely popular. Pensions: Employees have ranked retirem ent or pension plans as second to medical coverage. However, many employers offer no pension cov erage to their em ployees. Approximately half of the private-sector workforce is not covered for pension by the em ployer. There are two main types of pension plans: defined benefit and defined contribution. In defined benefit plans, the benefits are calculated as a percent of the last few or the highest years of earnings multiplied by years of service. They are then paid in the form of life pensions. These plans are adjusted towards those who are expected to work for the same company throughout their career. Defined contribution plans generally apply to younger workers. This type of pension plan permits workers to save directly from som e selected assets of their own choice. Stock options: Stock options give em ployees a chance to buy stock in their com pany at a predetermined price during a limited time period. In todays strong economy, employers have found it increasingly essential to provide stock options to attract the m ost valued worker s. For example, m ore than 70 percent of technical workers now have stock options and 7 to 12 percent of U.S. com panies offer stock option plans to all employees, usually allowing from one hundred to two hundred option shares annually, or an am ount based on a percentage of salary. Generally there are two types of stock options:

Discounted stock options: This type of plan permits an employee to buy the companys stock at a price below the market value. Index options: Some companies issue stock options with employed prices joined to the Standard and Poors 500 Index or other peer group stock index. With this m ethod, if the stock price outperform s the index then the exercise price will be less than the fair market value. If the index outperform s the market, the exercise price will be m ore than the fair market value. Objectives of com pensation plans The Objectives of com pensation can be classified under four broad categories equity, efficiency, macro-economic stability and optimum allocation of labour. Equity: Equity is the first category, which may take sev eral form s. This concept inv olves incom e distribution through narrowing of inequalities, increasing the salary of the less paid employees, protecting real wages and the concept of equal pay for work of equal worth. Com pensation management struggles for internal and external equity. Efficiency: Efficiency is often closely related to equity, because the two concepts are not opposing. The objectives of efficiency are revealed in attem pts to link part of wages to productivity or profit, group or individual performance, purchase and application of skills and so on. Arrangem ents to get efficiency may also be seen as being fair. Macro-econom ic stability: Macro-econom ic stability can be achieved through high em ployment levels and low inflation. For exam ple, an unwarranted high minimum wage would have a bad im pact on levels of em ployment, though at what level this result would occur is a matter of debate. Efficient allocation of labour: The well-organised allocation of labour in the labour market means that em ployees will m ove to wherever they receive a net gain. Such m ovement can be from one location to another or from one job to another. The condition or availability of financial incentives causes such m ovement. For exam ple, workers may m ove from a low -wage area to a high wage area. Employees may gain new skills to benefit from the higher wages paid for skills. When an em ployer offers wages lesser than the market rates, the employee turnover increases and when they offer the wages above market rates, the employ er attracts job applicants. When em ployees m ove from small to large industries, an

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efficient allocation of labour due to structural changes takes place. Objectives of benefit plans Em ployers and em ployees value benefits differently[3]. They will hardly ever agree on the level of benefits that plans should provide. Em ployers try to find the em ployees needs and the cost to the organisation. Employees wish to increase the value of benefits received and m inimise other expenses. Em ployer objectives The em ploy er objectives for benefit plans are influenced by: Meeting the organisation and com pensation objectives. Actual salary and percentage of payroll. Administration complexity and cost. Tax and accounting issues. The part benefits play in the total rewards objectives of the organisation.

established according to the em ployers view of the im portance of the work perform ed. Before an organisation can calculate approximately the im portance of each job, it must first find out the job-related factors that will be used for setting com pensation levels -in short, com pensable factors. Finding out the relative internal value of jobs in a large organisation can be a difficult process. Jobevaluation m ethods are usually used to develop job hierarchy that reveals the relative value of jobs on the basis of skill, effort, responsibility, and working conditions. A num ber of job-evaluation approaches have been developed. Such approaches include: Whole job ranking. Classification. Point factors. Factor comparison. Slotting. Scored questionnaires.

Em ployee objectives Em ployee objectives for benefit plans inv olve incom e protection for: Cash flow: This refers to the cash outflow with respect to the personal expenses of employees. This normally occurs when there is an unexpected increase in expenses for example a sudden occurrence of m edical expenses. Incom e replacem ent: Providing replacing incom e if em ployee turns out to be disabled. Incom e for surviving dependants: Providing incom e for existing dependents in the event of death. Adequate retirement incom e: Providing sufficient incom e upon retirem ent. To design a benefits program, an organisation should define its program objectives. Furtherm ore, program objectives need to be a djusted with the organisations and HRs philosophy and strategy. Since com pany philosophies and strategies vary, no two com panies will share the sam e objectives for em ployee benefit plans. Characteristics of Com pensation Program s Internal equity: It is a measure of how an organisation values each of its jobs in relation to one another. Internal equity exists when an em ployer pay s wages corresponding with the relative internal value of each job. This is

External com petitiveness: It is a measure of an organisations pay structure com pared to that of its opponents. External equity exists when an employer pays a wage rate equal to the wages persisting in external labour markets. Evaluating external equity requires measuring these labour markets. There is, however, no single labour market for a specific job. Supply and demand differ considerably am ong markets, resulting in significant variation in wages across labour markets. The following factors add to these wage differences am ong markets: Geographic location. Industry sector. Union status. Size of the organisation. Product competition. Com pany prestige. Education and experience level of available work force. Licensing or certification requirements called for by the job

Som e com bination of these factors v erifies the labour market for a specific job. Em ploy ers should carefully define the appropriate market to ensure accurate external wage com parisons. Determining the market too narrowly can result in wages that are higher than necessary. If, for example, a company doing business in two locations defines its pay practice strictly in term s of a metropolitan labour market, it could set wages that are unnecessarily high for its rural areas. On the other hand, defining the market too broadly may cause an organisation to set wages too low to attract and maintain com petent employees. Affordability: It is a measure of how high priced a com pensation program is to a company. If pay

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structures are not formulated responsibly, an organisation could end up paying labour costs that exceed what it can afford to pay. Legal defensibility: Com pensation programs should stick to specific laws designed to provide fairness in how em ployees are paid. Role description is a critical step in the developm ent of a legally justifiable testing m echanism. Perform ing a role description study and using the resulting data to develop exam specifications assures that candidates are tested on critical incidents or the knowledge, skill, and abilities that are appropriate to the role for which they are being certified or licensed. Understandable or saleable: Com pensation program s should be well communicated between the employees and em ployers. Efficient to administer: With increased pressure to im prove productivity and reduce costs, it is essential that an organisations com pensation program be as simple and as easy as possible to maintain and manage. A balance needs to be struck between what appears to be the best program and what is well-organised, effective and easiest to manage. Safeguard organisational resources: The com pensation program should reward performance fairly without differing with the interests of com pany stakeholders. Awards should reflect both individual em ploy ee and com pany performance. Flexible: Pay program s are necessary tools to fight for labour in the marketplace. They should be flexible and capable of changing as needed. Meet the organisations unique needs: To som e degree, each company is single within its own industry or geographical area. The aim characteristics of the com pany need to be identified and addressed when designing com pensation program s. Incentives and Employ ee Benefit s An Employee Reward system consists of an organisations integrated policies, processes, and practices for rewarding its em ployees. This is done in accordance with their contribution, skill, com petence, and their market worth. It is developed within the framework of the organisations reward philosophy, strategies, and policies. It contains arrangements in the form of processes, practices, structures, and procedures. These arrangem ents will provide and maintain appropriate types and levels of pay benefits and other form s of reward.

The ov erall objective is to reward employees fairly, equitably, and consistently, in accordance with their value to the organisation. This further helps in the achievement of the organisations strategic goals. It is not just about pay and employee benefits. A reward sy stem consists of financial rewards like fixed, variable pay, and em ployee benefits which together com prise total remuneration. The system also incorporates non-financial rewards like recognition, praise, achievement, responsibility, and personal growth. The com bination of financial rewards, employ ee benefits, and non -financial com pensation comprises the total Em ployee reward sy stem. Needs for Employee Rewards In a world where organisations like to boast about running "lean and m ean," it may seem nearly im possible to com pensate employees, for doing good work without breaking the budget. According to a survey by staffing firm Accountem ps found that frequent recognition of accom plishments was the top non-m onetary com pensation nam ed by full and part-tim e office workers, with regular communication. This can make your employees m ore productive without shaving one m illimetre off your bottom line. Therefore, there is a need for em ployee rewards and its results are mentioned below: Retention: A good em ployee reward program is a positive impact on em ployee retention. When the em ployee is content with the reward program then, it will be easy for the organisation to retain the em ployee. Health and Safety: Solid employee reward program s also have m easurable positive effects both on safety and workplace health. This reduces overall health-care costs for both employ ee and em ployer. Motivation: A crucial outcom e of a good em ployee reward program is enhanced m otivation am ong personnel. This also includes helping the employees to make connections between professional goals and personal goals. Engagem ent: A solid employee reward program also increases employ ee engagem ent in the workplace, a factor that converts into im proved performance and better custom er experience. Return on Investm ent: Employee reward program s provide a concrete Return on Investm ent (ROI). Studies have shown that em ployee recognition and rewards of a non m onetary basis show a greater return on investment than do cash awards.

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 Bottom Line: Ultimately, from th e em ployers viewpoint, em ploy ee reward program s have a positive effect on the bottom line for reasons such as, the positive effect on health care costs, performance, and workplace engagement. According to many management consultants, human resource professionals, career coaches, book authors and bosses, from a range of industries; there are 15 best ways to reward em ployees without spending much of com pany funds. They are: 1. Have flexible working hours: If there is one com plim entary reward that rises abov e the rest, it is flexible work schedules. It is comm only suggested that flex tim e is a plus side that offers, the m ost gain with the least pain. For exam ple, give a little latitude in determining work schedules and to take time for family or personal issu es such as doctors appointment and banking errands. As long as the em ployee deserves, and does not abuse the privilege, this can go a long way to building trusting and mature relationships with key workers. 2. Send a handwritten note: Supervisors must ask top management people to write a personal note to em ployees, who deserve recognition. 3. Make work fun: Create som e events to provide fun to em ployee. 4. Help them connect: Introducing employees and staffs to key suppliers, custom ers or som eone in senior management can, help make an em ployees career. 5. Bring in the casualness: For exam ple, im plem enting a non formal day. It can make em ployees feel right at hom e with each other, which translates into increased productivity. It is great to work in an office where, employees are m ore concerned about doing quality work than, what they are wearing. 6. Celebrate em ployees family special days: Every birth and wedding deserves a celebration. Each em ployee must be made to leave office early on special days, and the food is on the house. No need to make up the tim e. Give m em orable gifts for em ployees spouse or family and apologies, for taking them away from their families on a Sunday. 7. Reward effort as well as success: Even if em ployees ideas som etimes fail, y ou must encourage the employees to keep producing new ideas. This stimulates innovation and positive behaviour, not winning. 8. Give them free days: Give a certain num ber of free days off to em ployees to use, as they see fit.

Em ployees can use these days as they like. They do not have to pretend to be sick. They can go to the beach, read a book, and play with their kids and so on. 9. Serve refreshments: During the hectic times of the year, serving drinks and refreshm ents to colleagues helps to build a comfortable environment. Small gestures will build great com panies. As y ou serve, y ou can encourage colleagues and hear about real consumer issues. 10. Celebrate employees birthday: Host a m onthly, hour-long birthday lunch for any em ployee, with a birthday that m onth. Employ ees are invited to ask him anything. They feel recognised, and he gains loyal employees who share their ideas. 11. Applaud their efforts literally: If an em ployee has done som ething really worthwhile, have your entire staffs to give them a standing ovation at the next meeting. 12. Have a Wall of Fam e: Set a public space within your firm for em ployees, with reference to their success. On this public space place photos of em ployees who have accom plished som ething truly special, along with th e details of what they did, to earn their place on the wall. 13. Create your own Club Med: Set aside a space or unused office in y our building, where employees can m editate, chill out or nap. 14. Invite their feedback and ideas: Great employees are not mercenaries. They do not just want to enjoy the work; they want to be passionate about it. If y ou want your em ployees to sense valued and inspire their passion on y our behalf, encourage them to make their own decisions. You can have sy stems in place to m onitor and control the im plem entation of ideas. However, you must be certain not to com prom ise the enthusiasm, creativity, and hard work that make them possible in the first place. 15. Rem ember the secret words: While telling y our staffs or employees, you appreciate them, and be obv ious. No one does it enough or is specific enough about what the employee did. So, when you share your feedback or appreciation, be specific about what you really liked, so they not only feel appreciated but can do it again. Types of Reward system There are a number of diverse types of reward program s aim ed at both individual and team performance. They are discussed below.

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 Variable pay: Variable pay or pay -for-performance is a reward system in which a portion of a persons pay is considered "at risk." Variable pay can be fixed to the performance of the com pany, the results of a business unit, an individuals accom plishments, or any com bination of these. It can take many form s like bonus programs, stock options, and one-time awards for significant accom plishments. Som e com panies and firms choose to pay their employees less than com petitors, but attem pt to m otivate and reward em ployees using a variable pay program instead. According to some experts, "The test of a good pay -for-performance plan is sim ple. It must m otivate managers to produce m ore earnings growth that far exceeds the extra cost of the program. Though em ployees must be made to stretch or to work on weekends, the goals must be within reach." Bonuses: Bonus program s have been used in Indian business, for some time. They usually reward individual achievements and are frequently used in sales organisations to encourage salespersons, to generate additional business or higher profits. They can also be used, however, to recognise group achievements. Without a doubt, increasing numbers of businesses have switched from individual bonus program s, to one that rewards contributions to corporate performance at group, departmental, or com pany -wide levels. According to many experts, small businesses interested in long-term benefits must probably consider another type of reward. Bonuses are generally short-term m otivators. By rewarding an em ployees achievements for the previous year, say critics, they encourage a short -term perspective rather than future-oriented accomplishments. In addition, these reward system s need to be carefully structured, to ensure they are rewarding achievements above, and beyond an individual or groups basic functions. Otherwise, they run the risk of being professed as entitlements or regular merit pay, rather than a reward for outstanding work. Proponents, however, argue that bonuses are a perfectly legitimate m eans of rewarding outstanding performance. They also argue that such com pensation can actually be a powerful tool to encourage future top-level efforts. Profit Sharing: Profit-sharing refers to the policy of creating a pool of m oney to be distributed to em ployees, by taking a stated percentage of a com panys profits. The am ount given to an em ployee is m ost of the time equal to a percentage of the employees salary, and is distributed once a business closes its books for the y ear. The benefits can be provided either in cash, or via contributions to em ployers 401(k) plans. It is a profit for a

com pany which offers this type of reward because, it can keep fixed costs low. The idea behind profit -sharing is to reward em ployees for their works and contributions, to a com panys achieved profit goal. It encourages em ployees to stay put because, m ost of the time it is structured to reward employ ees who stay with the com pany. Most profit-sharing system s require an em ployee to be v ested in the program ov er a number of years before receiving any m onies. Unfortunately, since it is rewarded to all employees, it tends to dilute individual contributions. In addition, while profit is vital, it is only one of many goals a com pany may have and is. According to Jack Stack profit sharing is "an accumulation of ev erything that happens in the business ov er a given period of time". Therefore, it is difficult for m ost em ployees to connect their actions to. Stack argued that "em ploy ees should be able to see the connection between their actions, decisions, and participation, and changes in a com panys goals." Like bonuses, profit sharing can in the long run, be viewed as an entitlement program if the connection between an employees actions and his or her reward becom es gloomy. Stock Options: Stock options have becom e an increasingly popular method in the territory of upper managem ent and large com panies. This rewarding started in recent years for middle management and other employ ees in both mature com panies, and start-ups. Employee stock-option program s or system s, give em ployees the right to buy a specified number of a com panys shares at a fixed price for a specified period of time (usually around ten years). They are generally authorised by an organisations board of directors, and approved by its shareholders. The number of options an organisation can award to employees is, usually equal to a certain percentage of the com panys shares outstanding. Like profit-sharing plans, stock options habitually reward em ploy ees for sticking around, serving as a long-term m otivator. Once an em ployee has been with an organisation for a certain period of tim e, usually around four years, he or she is fully vested in the program. If the employ ee leaves the organisation prior to being fully vested, those options are cancelled. After an employee becom es fully vested in the system, he or she can purcha se from the com pany an allotted number of shares at the strike price, or the fixed price originally agreed to. This purchase is known as "exercising" stock options. Once the stock is purchased, the em ployee can either retain it or sell it, on the open mark et with the difference in strike price and market price

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being, the employees gain in the value of the shares.

Wellness Issues Early efforts to create healthy workplaces focused on safety at the worksite and injury prevention for workers. More recently, program s are designed to assist em ployees to choose healthier behaviours like being m ore physically active or quitting sm oking. Campaigns to raise awareness, educational sessions to increase knowledge, opportunities to learn new skills, and changes to policies to make it easier for em ployees to make healthy choices are often included. This approach is taken because the workplace is a good way to reach people, since m ost adult Canadians spend a large part of their day at work. While safety and lifestyle programs are two aspects that contribute to the health of employees, workplace wellness is m ore effective when a third factor is brought into the equation- the environm ent at work. How the workplace affects health? Increasingly, it is recognized that the workplace itself has a powerful affect on peoples health. When people are satisfied with their job, they are m ore productive and tend to be healthier. When em ployees feel that the environm ent at work is negative, they feel stressed. Stress has a large im pact on employee m ental and physical health, and in turn, on productivity. Consultant Graham Lowe has identified five com ponents of workplace culture that directly affect em ployees' health and the health of the organization ov erall credibility, respect, fairness, pride, and camaraderie. The underlying idea is that com panies must genuinely care about the well-being of their em ployees. Com panies today who want to attract and keep good workers have leaders who understand the connection between employee satisfaction and em ployee health and believe that workplace wellness is a business strategy. Their managem ent practices include making reasonable demands on time and energy, involving employees in decision making, rewarding work well done, openly communicating, and providing support to balance work and home life. Em ployers know that workers are looking for jobs that pay well, have good benefits, are interesting, and include excellent health and safety program s. So in today 's com petitive hiring market, it's becom e m ore im portant than ever for com panies to enhance job satisfaction and ensure that workers enjoy being

Offering additional stock in this way presents risks for both the organisation and the employee. If the options strike price is much higher than the market price of the stock, the employees option is worthless. When an em ployee exercises an option, the organisation is required to issue a new share of stock that can be publicly traded. The organisations market capitalisation grows by the market price of the share, rather than the strike price that the em ployee purchases the stock for. The possibility of reduction of organisation earnings (impacting both the com pany and shareholders) arises when the organisation has a greater number of shares outstanding. To keep ahead of this likelihood, earnings must increase at a rate equal to the rate at which outstanding shares increase. Otherwise, the organisation must repurchase shares on the open market to reduce the number of outstanding shares. One benefit of offering a stock option to an organisation is that an organisation gets the ability to take a tax deduction for com pensation expense, when it provides shares to em ployees who are exercising their options. Another benefit to offering options is that wh ile organisations could be considered a portion of com pensation, current accounting m ethods do not require businesses to show options as an expense on their books. This tends to inflate the value of an organisation. Organisations should think carefully about this as a benefit. However, if accounting rules were to becom e m ore conventional, corporate earnings could be impacted as a result. Group based Reward System: As m ore small businesses use team structures to reach their objectives, many entrepreneurs look for ways to reward co-operation between departm ents and individuals. Bonuses, stock options, and profit sharing can all be used to reward team and group achievements. An entrepreneur can opt to reward individual or group contributions or a com bination of the two. Group-based reward system s are reviewed on a measurement of team performance, and with individual rewards received on the basis of this performance. While these sy stems encourage individual works towards comm on business goals, they also tend to reward underperforming em ployees along with average, and above average em ployees. A reward system, which recognises individual achievements in addition to team performance, can provide extra incentive for em ployees.

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on the job. Workplace wellness benefits both em ployers and employ ees. How does workplace wellness benefit the employer? A workplace wellness initiative can help a company to: Attract and keep em ployees; Reduce the costs of disability, drugs, and absenteeism ; Reduce the effects of a stressful workplace; Reduce health costs or keep them contained; and Im prove m orale by creating a happy, supportive environm ent.

com pensation, safe and healthy working conditions, immediate opportunity to use and develop human capacities, opportunity for continued growth and security, social integration in the work organisation, constitutionalisation in the work organisation, work and the total life space and the social relevance of work life. Quality of Working Life principles are the principle of security, the principle of equity, the principle of individuation and the principle of dem ocracy. Specific issues in Quality of working life are pay and stability of em ployment, occupational stress, organisational health programmes, alternative work schedules, recognition, congenial worker supervisor-relations, grievance procedure, adequacy of resources, seniority and merit in prom otions, em ployment on permanent basis. Human Resource Information Sy st em The Human Resource Information System (HRIS) is a software or online solution for the data entry, data tracking, and data information needs of the Human Resources, payroll, management, and accounting functions within a business. Normally packaged as a data base, hundreds of companies sell som e form of HRIS and every HRIS has different capabilities. Pick y our HRIS carefully based on the capabilities you need in y our com pany. Typically, the Human Resource Information System s (HRIS) provides ov erall: Managem ent of all employee information Reporting and analysis of em ployee information Com pany-related documents such as em ployee handbooks, em ergency evacuation procedures, and safety guidelines Benefits adm inistration including enrollm ent, status changes, and personal information updating Com plete integration with payroll and other com pany financial software and accounting system s Applicant tracking and resume management

How does workplace wellness benefit employees? Em ployees of com panies that have a workplace wellness program are likely to have: Increased awareness and knowledge of ways to improv e their health; A better (less stressful) workplace; Increased protection from injury; Im proved health and well-being; Higher m orale and greater job satisfaction; Increased productivity and effectiveness at work; Reduced personal health care costs; and A m ore relaxed/flexible approach to health issues.

Both em ployers and employees have a responsibility for creating a healthy workplace. Em ployees are expected to arrive at work in good health, and the em ployer is expected to provide an environm ent that allows employ ees to maintain good health, enjoy their work, and contribute to the com pany 's success. Workplace wellness is m ore than a 'lunch and learn' program. It's about developing a 'people first' approach to doing business. It's about taking care of em ployees, establishing a positive work environment, and paying attention to the factors that keep employees healthy and happy at work. A good workplace wellness program has an impact on em ployees' m ental, physical, em otional, social, and spiritual well-being. Quality of Work Life Quality of Working Life is a process of work organisations which enables its m embers at all levels to actively participate in shaping the organisation environment, m ethods and outcom es. Conceptual categories which together make up the quality of working life are adequate and fair

The HRIS that m ost effectively serves com panies tracks: Attendance and PTO use, Pay raises and history, Pay grades and positions held, Performance developm ent plans, Training received, Disciplinary action received,

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Personal em ployee information, and occasionally, Managem ent and key em ployee succession plans, High potential employee identification, and Applicant tracking, interviewing, and selection.

An effective HRIS provides information on just about anything the com pany needs to track and analyze about em ployees, former em ployees, and applicants. Your com pany will need to select a Human Resources Information Sy stem and customize it to m eet y our needs. With an appropriate HRIS, Human Resources staff enables employ ees to do their own benefits updates and address changes, thus freeing HR staff for m ore strategic functions. Additionally, data necessary for em ployee management, knowledge developm ent, career growth and development, and equal treatment is facilitated. Finally, managers can access the information they need to legally, ethically, and effectively support the success of their reporting employ ees. Human Resource Audit A Human Resources Audit is a com prehensive method (or m eans) to review current human resources policies, procedures, docum entation and sy stem s to identify needs for im provement and enhancem ent of the HR function as well as to ensure com pliance with ever -changing rules and regulations. An Audit involves systematically reviewing all aspects of human resources, usually in a checklist fashion. Sections of review include: Hiring and Orientation Benefits Com pensation Performance evaluation process Termination process and exit interviews Job descriptions Form review Personnel file review

Ensuring the effective utilization of the organizations human resources Rev iewing compliance concerns with a myriad of administrative regulations Instilling a sense of confidence in management and the human resources function Maintaining or enhancing the organizations and the departm ents reputation in the community Performing due diligence review for shareholders or potential investors/owners Establishing a baseline for future im provement for the function

Because of the multitude of laws affecting each stage of the em ployment process, it is extremely im portant for an em ploy er to regularly review their policies and practices to ensure regulatory com pliance in order to avoid potentially costly fines and/or lawsuits. While penalties such as these help define the risk of non-com pliance and signify the importance of conducting periodic HR Audits, an Audit can also ensure that policies and procedures are fair and consistent across the organization and strengthen em ployee satisfaction. By maintaining a satisfied and productive workforce, an employer lessens the expense associated with costly turnover of staff. Losing one employee is estimated to cost a company 50 150% of the lost employees salary in time and m oney spent to replace that em ploy ee. Human Resource Accounting Human resource Accounting is the process of identifying and reporting the Investm ents made in the Human Resources of an organisation that are presently not accounted for in the conventional accounting practices. In simple term s, it is an extension of the Accounting Principles of matching the costs and revenues and of organising data to communicate relevant information in financial term s. The quantification of the value of Human Resources helps the managem ent to cope up with the changes in its quantum and quality so that equilibrium can be achieved in between the required resources and the provided human resources. Im portance of Human Resource Accounting Human Resource Accounting helps the management in Employment and utilisation of Human Resour ces. It helps in deciding transfers, prom otion, training and retrenchment of human resources

The purpose of an HR Audit is to recognize strengths and identify any needs for improvem ent in the human resources function. A properly executed Audit will reveal problem areas and provide recommendations and suggestions for the remedy of these problem s. Som e of the reasons to conduct such a review include:

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It provides a basis for the planning of physical assets vis-a-vis human resources It helps in evaluating the expenditure incurred for imparting further education and training of em ployees in term s of the benefits derived by the firm. It helps to identify the causes of high labour turnover at various levels and taking preventive measures to contain it. It helps in locating the real cause for low return on investm ent, like im proper or under-utilisation of physical assets or human resources or both It helps in understanding and assessing the inner strength of an organisation and helps the managem ent to steer the com pany well through the m ost averse and unfavourable circum stances. It provides valuable information for persons interested in making long term investments in the firm. It helps the employees in im proving their performance and bargaining power. It makes each employee understand his contribution towards the betterm ent of the firm vis-a-vis the expenditure incurred by the firm on him

HRA as a tool of managem ent facilitates better and effective management of human Resources. As human resources are incapable of being owned, retained, and utilised, unlike the physical assets, there is a problem for the management to treat them as assets in the strict sense. There is a constant fear of opposition from the trade unions as placing a value on em ployees would make them claim rewards and com pensations based on such valuations. In spite of all its significance and necessity, the Tax Laws dont recognise human beings as assets. There is no universally accepted m ethod of the valuation of Human Resources.

Strat egic Human Resource Management Strategic Human Resource Management is the practice of aligning business strategy with that of HR practices to achieve the strategic goals of the organization. The aim of SHRM (Strategic Human Resource Management) is to ensure that HR strategy is not a means but an end in itself as far as business objectives are concerned. The idea behind SHRM is that com panies must fit their HR strategy within the fram ework of ov erall Business objectives and hence ensure that there is alignm ent between the HR practices and the strategic objectives of the organization. Ev olution of SHRM With the advent of new economy industries like IT and the mushroom ing of the service sector, organizations all over the world realized that human resources must be viewed as a source of com petitive advantage as opposed to treating it much the same way in access to technology or capital is concerned. What this m eans is that the practice of HRM is being viewed as som ething that prom otes the business objectives of the firm s and not merely another factor in the way the firm is managed. How does SHRM fit in with Strategy? With the advent of todays economy where services account for a major share of the GDP and the fact that the service sector is essentially people centric, it is imperative that the people first approach be em braced by the organizations for sustainable business strategy. The practice of SHRM demands a proactive and hands on approach by the management as well as the HR department with regards to the entire gamut of activities ranging from staffing and training and developm ent to mentoring and pay and performance management.

Objectives of Human Resource Accounting To furnish cost value information for making proper and effective managem ent decisions about acquiring, allocating developing and maintaining human resources in order to achieve cost effective organisational objectives. To m onitor effectively the use of human resources by the management. To have an analysis of the Human Asset, i.e. whether such assets are conserved, depleted or appreciated. To aid in the developm ent of managem ent principles and proper decision making for the future by classifying financial consequences of various practices.

Lim itations of Human Resource Accounting There is no proper clear cut and specific procedure or guidelines for finding costs and value of human resources of an organisation. The system s which are being adopted have certain drawbacks. The period of existence of Human Resource is uncertain and hence valuing them under uncertainty in future seem s to be unrealistic. The much needed empirical evidence is yet to be found to support the hypothesis that

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The Way SHRM works If we take real world examples, many organizations in recent times have dedicated people managers whose sole function is to look after the enabling and fulfilling needs of the resources. This is a marked change from treating people as just resources to treating people as assets. For instance, Infosy s states that people are its assets and the fam ous statem ent by Mr. Narayana Murthy, one of the founders of the com pany that the capital of Infosy s walks in every m orning and walks out every evening has to be taken in this context. Elaborating on this point, one finds that organizations tend to leverage upon the capabilities of the people employed there and ensuring that the human capital is nourished and nurtured as a source of com petitive advantage. This translates into a dedicated HR departm ent and people managers in every group dealing exclusively with em ployee issues as opposed to treating this as a line management function. Int ernational HRM IHRM can be defined as set of activities aimed managing organizational human resources at international level to achieve organizational objectives and achieve com petitive advantage over com petitors at national and international level. IHRM includes typical HRM functions such as recruitment, selection, training and developm ent, performance appraisal and dismissal done at international level and additional activities such as global skills managem ent, expatriate managem ent and so on. In sim ple terms, IHRM is concerned about managing human resources at Multinational Com panies (MNC) and it inv olves managing 03 types of employees namely, Hom e country em ployees- Employees belonging to hom e country of the firm where the corporate head quarter is situated. Host country employees- Employees belonging to the nation in which the subsidiary is situated. Third country employees- These are the em ployees who are not from hom e country/host country but are em ployed at subsidiary or corporate head quarters. As an exam ple a American MNC which has a subsidiary at India may employ a French person as the CEO to the subsidiary. The Frenchman employed is a third country em ployee.

Differences between dom estic HRM and International HRM (IHRM) are summarized below: Dom estic HRM is done at national level and IHRM is done at international level. Dom estic HRM is concerned with managing employees belonging to one nation and IHRM is concerned with managing em ployees belonging to many nations (Hom e country, host country and third country employees) Dom estic HRM is concerned with managing limited number of HRM activities at national level and IHRM has concerned with managing additional activities such as expatriate management. Dom estic HRM is less com plicated due to less influence from the external environment. IHRM is v ery com plicated as it is affected heavily by external factors such as cultural distan ce and institutional factors.

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