BHARATHIAR UNIVERSITY

MBA (HR)

COURSE 2.3

HUMAN RESOURCE
DEVELOPMENT AND
PLANNING
(Notes For Examination)

Prepared By
Dr Abbas T. P
drtpabbas@gmail.com

1|Page 2.3 – Human Resource Development and Planning

 2.3. HUMAN RESOURCE DEVELOPMENT AND PLANNING
UNIT I
Q1. HRD
Human Resource Development (HRD) is the part of Human Resource
Management (HRM) that specifically deals with training and development
of the employees in the organization.
HRD can be defined as a set of systematic and planned activities designed
by an organization to provide its members with the opportunities to learn
necessary skills and abilities to meet current and future job demands.
Many employees come into an organization with only a basic level of skills
and experience and must receive training in order to do their jobs effectively.
Others may already have the necessary skills to do the job, but don't have
knowledge related to that particular organization.
HR development is designed to give employees the information they need to
adapt to that organization's culture and to do their jobs effectively.
Objectives of HRD: The objectives of HRD are:
 To develop capabilities of all individuals in an organization in relation
to their present role future roles.
 To develop better inter-personal and employer-employee relationships
in an organization.
 To develop team spirit.
 To develop coordination among different units of an organization.
 To develop organizational health by continuous renewal of individual
capabilities
Scope of HRD: HRD, being a systematic process for bringing the desired
changes in the behaviour of employees, involves the following areas:
1. Recruitment and selection of employees.
2. Performance appraisal of the employees.
3. Performance counselling and performance interviews of employees.
4. Career planning and development programmes for the employees.
5. Development of employees through succession planning.
6. Workers’ participation and formation of quality circles.
7. Employee learning through group dynamics and empowerment.
8. Learning through job rotation and job enrichment.

2.3 – Human Resource Development and Planning 2|Page

9. Learning through social and religious interactions and programmes.
10. Development of employees through managerial and behavioural skills.
Need for HRD: The need for HRD are:
1. To create a climate free from monotony and to improve the working life
2. To facilitate effective communication
3. To enable the members to attain self-actualization through
systematically developing their potentials,
4. Tapping the present and future creative abilities of the people to utilize
for organisational development,
5. Facilitating growth of employees and making them aware about their
strengths and weaknesses,
6. Helping organisations to utilize human resources to their maximum
potentials,
7. Availing opportunities for further development by the employees
themselves.
Significance of HRD: The significance of HRD are:
1. HRD Develops Competent HR: HRD develops the skills and
knowledge of individual, hence, it helps to provide competent and
efficient HR through different training and development programs.
2. HRD Creates Opportunity for Career Development: HRD helps to
grasp the career development opportunities through development of
human skills and knowledge.
3. Employee Commitment: Trained and efficient employees are
committed towards their jobs which is possible through HRD.
4. Job Satisfaction: When people in the organization are well oriented
and developed, they show higher degree of commitment in actual work
place. This inspires them for better performance, which ultimately leads
to job satisfaction.
5. Change Management: HRD facilitates planning, and management of
change in an organization. It develops organizational health, culture
and environment which lead to change management.
6. Opportunities for Training and Development: Trainings and
development programs opportunity for employee's development by
matching training needs with organizational requirement.
7. Performance Improvement: HRD develops necessary skills and

3|Page 2.3 – Human Resource Development and Planning

 abilities required to perform organizational activities. As a result of
which, employees can contribute for better performance in an
organization.
HRD Functions: HRD functions include the following:
1. Employee training and development,
2. Career planning and development,
3. Succession planning,
4. Performance appraisal,
5. Employee’s participation in management,
6. Quality circles,
7. Organization change and organization development.
Outcomes of HRD: Outcomes of HRD at the organisational level are:
1. Training increases competence of the employees with development of
knowledge, new skills and attitude.
2. Employees become aware of the skills required for job performance.
3. Employees become more committed to their jobs. It increases
objectivity.
4. Team spirit goes up.
5. Development of trust and respect for each other among employees.
6. Collaboration and team work produces synergy effect.
7. They accept change readily.
8. Increase in capabilities to solve problems.
9. Important and useful data in respect of employees are generated, which
helps in human resource planning.
10. Employees participate in decision making.
11. HRD improves human resource aspects like skill, knowledge, creative
abilities and talents and moulding of other aspects like values, beliefs,
aptitude and attitude according to the changing needs of groups, and
organisation.

2.3 – Human Resource Development and Planning 4|Page

Q.2. HRD SYSTEM
Human Resource Development (HRD) is the part of Human Resource
Management (HRM) that specifically deals with training and development
of the employees in the organization.
HRD functions in an organization, like Employee training and development,
Career planning, Succession planning, Performance appraisal, etc., are
carried out through its systems and sub systems.
HRD has five major systems and each of the systems have sub systems:
1) Career System,
2) Work Planning System
3) Development System
4) Self-Renewal System and
5) Culture Systems
1. Career system: Career System ensures attraction and retention of
human resources through the following sub-systems.
a) Manpower planning sub-system: It performs the task of getting
the right number and type of personnel to do the required tasks for
the fulfilment of the goals and objectives of the organization.
b) Recruitment sub-system: It performs the task of finding and
attracting the potential resources for filling up the vacant positions
in an organization.
c) Career planning sub-system: It helps the employees to manage
their learning and development.
d) Succession planning sub-system: It performs the task of
identifying and developing new leaders who can replace old leaders
when they leave, retire or die.
e) Retention sub-system: It performs the best effort to maintain a
working environment which supports current staff in remaining
with the company.
2. Work Planning System: This system ensures that the attracted and
retained human resources are utilized in the best possible way to obtain
organizational objectives through the following sub-systems.
a) Role analysis sub-system: It performs a systematic approach to
determine the relative value of roles within an organisation by
measuring the demands and responsibilities of the role.
b) Role efficacy sub-system: Role efficacy subsystem measures the
potential effectiveness of a role.

5|Page 2.3 – Human Resource Development and Planning

 c) Performance plan sub-system: It performs a systematic and
structured approach to successfully achieve the desired goals of
individuals or team.
d) Performance feedback and guidance sub-system: It exchanges
information between employee and manager concerning the
performance expected and the performance exhibited for
constructive feedback.
e) Performance appraisal sub-system: It evaluates and documents
the job performance of an employee.
f) Promotion sub-system: It deals with the advancement of an
employee within a company position or job tasks.
g) Job rotation sub-system: It implements the management
approach where employees are shifted between two or more jobs at
regular intervals of time in order to expose them to all verticals of
an organization.
h) Reward sub-system: It is concerned with the formulation and
implementation of strategies and policies that aim to reward people
fairly, equitably and consistently in accordance with their value to
the organization.
3. Development System: Following are some of the developmental sub-
systems of HRD that make sure that human resources in the
organization are continuously developed.
a) Induction sub-system: It organizes induction programmes for
bringing staff into an organisation.
b) Training sub-system: It attempts to improve current or future
employee performance by increasing an employee's ability to
perform through learning.
c) Job enrichment sub-system: It designs and implements plan to
motivate self-driven employees by assigning them additional
responsibility normally reserved for higher level employees.
d) Self-learning sub-system: It enables employees to enhance their
competences and abilities that have value in labor market.
e) Potential appraisal sub-system: It identifies and evaluates the
potential of the employees to assume higher positions and
responsibilities in the organizational hierarchy.
f) Succession Development sub-system: It identifies and develops
new leaders who can replace old leaders when they leave, retire or

2.3 – Human Resource Development and Planning 6|Page

 die.
g) Counselling sub-system: It understand and helps people who have
technical, personal and emotional or adjustment problems with the
objective of reducing it so that performance is maintained at
adequate level.
h) Mentoring sub-system: It is basically an employee training
system under which a senior or more experienced person is assigned
to act as a guide to a trainee.
4. Self-Renewal System: This system renew and rejuvenate the
organization itself through the following sub systems.
a) Survey sub-system: It undertake sociological investigation that
uses question based or statistical surveys to collect information
about how people think and act.
b) Action research sub-system: It initiates research either to solve
an immediate problem or a reflective process of progressive problem
solving.
c) Organizational Development interventions Subsystem: It
plans and implements various organizational development
interventions.
d) Organizational Retreats Subsystem: It plans and implements
the organizational withdrawals from various market sectors.
5. Culture System: The sub systems of this system helps to build
organizational culture through planned and systematic practices that
facilitate business.
a) Vision, Mission and Goal Sub-system: It sets the vision, mission
and goals of the organization
b) Values Sub-system: It defines and sets the organizational, work
ethical, personal, social and other values in an organization
c) Communication Sub-system: It defines and implements all forms
of official and non-official communications in an organization.
d) Get-togethers and Celebrations Sub-system: It coordinates all
kinds of employee get-togethers and celebrations.
e) Task forces Sub-system: It manages the task of setting up of
various job-oriented task forces in an organization.
f) Small Groups Sub-system: It manages group formation and other
group related activities in an organization.

7|Page 2.3 – Human Resource Development and Planning

Q.3. ROLE ANALYSIS
Role analysis (also known as Job Evaluation) is a systematic approach used
to determine the relative value (or size) of roles within an organisation by
measuring the demands and responsibilities of the role (but not the
performance of the individual undertaking the role).
Role Analysis is an orderly and systematic technique of determining the
relative worth of the various jobs within the organisation so as to develop
an equitable wage and salary structure.
Objectives of Role Analysis:
a) To determine equitable wage differentials between different jobs in the
organisation.
b) To eliminate wage inequities.
c) To develop a consistent wage policy.
d) To establish a rational basis for incentive and bonus schemes.
e) To provide a frame work for periodic review and revision of wage rates.
f) To provide a basis for wage negotiation with Trade Unions.
g) To minimize wage discrimination on the basis of age, sex, region etc.
h) To enable management to gauge and control the pay roll costs.
Process of Role Analysis:
Role Analysis develops a plan for comparing jobs in terms of those things
the organization considers important determinants of job worth. This
process involves the following steps:
1. Job Analysis. Through job analysis, information on job content is
obtained, together with worker requirements for successful performance
of the job.
2. Compensable Factors. The next step is deciding the compensable
factors that place one job at a higher level in the job hierarchy than
another. Choosing compensable factors is the heart of Role Analysis.
3. Developing the Method. The next step is to select a method of
appraising the job according to the factors chosen.
4. Job Structure. The next step is to compare jobs to develop a job
structure or job hierarchy.
5. Wage Structure. The final step is pricing the job structure to arrive at
a wage structure

2.3 – Human Resource Development and Planning 8|Page

Methods of Role Analysis
Role Analysis methods can be classified as:
1. Non-Quantitative Methods:
Here a job is compared as a whole with other jobs. There are 2 non-
quantitative approaches for Role Analysis:
(a) Ranking or Job Comparison:
Ranking of job is normally done by an “expert committee” formed by the
organisation. Three techniques can be used for ranking jobs.
(i) Job Description: In this technique, a written description of jobs noting
the differences between them in terms of duties, responsibilities, skill
requirements etc, is prepared. Each job is then assigned a rank depending
upon its relative significance. Several raters may independently rank each
job. The average of these ratings is calculated to determine the final
rankings.
(ii) Paired Comparison: In this technique each job is paired with every other
job in the series. The more difficult job in each pair is identified. Rank is
then assigned on the basis of the number of times a job is rated more
difficult.
(iii) Ranking along a Number Line: In this technique, ranks obtained
through job descriptions and paired comparisons are spread along a number
line. Each job is then placed along the line on the basis of its closeness to the
highest ranked job.
Advantages of Ranking Method are:
1. Simple and easy to understand.
2. Faster and inexpensive.
Disadvantages:
1. Subjective and influenced by personal bias.
2. Specific job requirements are not taken into account.
3. Ranking does not give indications of actual differences between jobs in
terms of difficulties or responsibilities.
(b) Grading Method:
In grading method, different “grades” of jobs are predetermined based on
certain criteria such as skill, knowledge, responsibility etc. The steps
involved in this method are as follows:

9|Page 2.3 – Human Resource Development and Planning

(i) Prefix the grade.
(ii) Prepare job description.
(iii) Identify key jobs in each grade
(iv) Allocate all jobs in each grade based on criteria.
Advantages of grading method:
(i) This method is easy to understand and simple to operate.
(ii) It is more accurate and systematic than the ranking method.
(iii) It is economical and therefore suitable for small concerns.
Disadvantages of grading method:
(i) It is very difficult to write accurate and precise description of job grades.
(ii) Some job may involve tasks which overlap more than one grade.
(iii) Personal judgment is involved in deciding job classes and assigning jobs
to specific classes.
2. Quantitative Methods:
In quantitative methods key factors of the job are selected and measured.
There are 2 quantitative approaches for Role Analysis:
(a) Point Rating: In this most widely used method of Role Analysis, jobs
are divided into component factors. Points are assigned to each factor
depending on the degree of its importance in a particular job. The total
points for a job indicate its relative worth.
Advantages of point rating:
(i) It is the most comprehensive and accurate method of Role Analysis.
(ii) Minimizes bias and human judgment.
(iii) Systematic wage differentials according to content of the job can be
determined.
Disadvantages of point rating:
(i) It is expensive and time consuming.
(ii) It is complicated and an average worker cannot understand it easily.
(b) Factor Comparison:
Under this method, a few key jobs are selected and compared in terms of
common factors. The procedure involved is as follows

2.3 – Human Resource Development and Planning 10 | P a g e

UNIT II (HRD MODULES)
Q.4. RECRUITMENT & SELECTION
ERCRUITMENT
Recruitment is the first step in the process of filling a vacancy. Recruitment
is the process of identifying, screening, shortlisting and hiring potential
resource for filling up the vacant positions in an organization.
Sources of Recruitment
1. Internal Sources of Recruitment: Internal sources of recruitment refer
to hiring employees within the organization internally. Internal sources of
recruitment are the best and the easiest way of selecting resources as
performance of their work is already known to the organization.
Various internal sources of recruitments are:
a) Promotions: Promotion is the process of shifting an employee from a
lower position to a higher position with more responsibilities,
remuneration, facilities, and status. Many organizations fill the higher
vacant positions with the process of promotions, internally.
b) Transfers: Transfer refers to the process of interchanging from one job
to another without any change in the rank and responsibilities. It can
also be the shifting of employees from one department to another
department or one location to another location, depending upon the
requirement of the position.
c) Recruiting Former Employees: Here the ex-employees are called back
depending upon the requirement of the position. This process is cost
effective and saves plenty of time. As former employees are very well
versed with the roles and responsibilities of the job, the organization
needs to spend less on their training and development.
d) Internal Advertisements: Internal Advertisements is a process of
advertising jobs within the organization. This job posting is an open
invitation to all the employees inside the organization.
e) Employee Referrals: Employee referrals is an effective way of sourcing
the right candidates at a low cost. It is the process of hiring new
resources through the references of employees, who are currently
working with the organization.
f) Previous Applicants: Here, the hiring team checks the profiles of
previous applicants from the organizational recruitment database.
These resources can be easily approached and the response will be
positive in most of the cases.

11 | P a g e 2.3 – Human Resource Development and Planning

2. External Sources of Recruitment
External sources of recruitment refer to hiring employees outside the
organization externally.
Various external sources of recruitment are:
a) Direct Recruitment: Direct recruitment refers to the external source
of recruitment where the recruitment of qualified candidates is done by
placing a notice of vacancy on the notice board in the organization.
b) Employment Exchanges: This external recruitment is helpful in
hiring for unskilled, semi-skilled, and skilled workers.
c) Employment Agencies: These agencies hold a database of qualified
candidates and organizations can use their services at a cost.
d) Advertisements: Here, the job vacancy is announced through various
print and electronic media with a specific job description and
specifications of the requirements.
e) Professional Associations: Professional associations that act as a
bridge between the organizations and the job-seekers can help an
organization in hiring professional, technical, and managerial
personnel.
f) Campus Recruitment: Campus recruitment is an external source of
recruitment, where the educational institutions such as colleges and
universities offers opportunities for hiring students.
g) Word of Mouth Advertising: Word of mouth is an intangible way of
sourcing the candidates for filling up the vacant positions.
h) Deputation: It is the process of sending an employee to another
organization for a short duration of two or three years.
i) Raiding: In this method, the rival firms by offering better terms and
conditions, try to attract qualified employees to join them
Recruitment Process: The recruitment process consists of the following:
1. Recruitment Planning: It involves drafting a comprehensive job
specification for the vacant positions outlining their responsibilities,
skills, experience and qualifications needed, grade and level of pay, etc.,
of the jobs to be filled.
2. Strategy development: The next step involved is to devise a suitable
strategy for recruiting the candidates in the organization, including the
type of recruitment method, the geographical area to be considered for
the search, source of recruitment, etc.

2.3 – Human Resource Development and Planning 12 | P a g e

3. Searching: Searching involves deciding internal or external sources.
Sometimes both internal and external may be decided.
4. Screening: Screening is done on the basis of qualification, knowledge,
skills, abilities, interest and experience mentioned in job specification.
5. Evaluation and control: Evaluation and control in recruitment is
needed as considerable cost is involved in the process.
SELECTION PROCESS
Selection starts where recruitment ends. Selection refers to the process of
offering jobs to one or more applicants from the applications received
through recruitment.
Selection process: Following are the steps involved in a standard selection
process:
1. Preliminary Interview: The purpose of preliminary interview is to
eliminate unsuitable or unqualified candidates from the selection
process.
2. Application Blank: This is a method for getting information from a
prospective candidate. This serves as a personal record of the candidate.
3. Selection Tests: In order to select a right person for the job, individual
differences in abilities and skills are to be adequately and accurately
measured for comparison through psychological testing and testing of
specific abilities and skills.
4. Selection Interview: Interview is a face-to-face interaction between
interviewer and the interviewee. There are four types of selection
interviews:
a. Preliminary Interview: This process would be initiated to screen the
applicants to decide whether a further detailed interview will be
required.
b. Patterned Interview: In this type of interview, the pattern of the
interview is decided in advance. What kind of information is to be
sought, how the interview is to be conducted and how much time is
to be allotted, all these are worked in advance
c. Depth Interview: Under this method, the interviewer tries to
portray the interviewee in depth and detail.
d. Stress Interview: The objective of stress interview is to make
deliberate attempts to create stressful conditions for the interviewee
to observe how the applicant behaves under stressful conditions.

13 | P a g e 2.3 – Human Resource Development and Planning

5. Reference checks: The reference checks are used to verify information
or to obtain additional information through reference which are given
by the job aspirants.
6. Physical Examination: The main purpose of conducting physical or
medical examination is to have proper matching of job requirement with
the physical ability of the candidate.
7. Final selection: Final selection follows the above procedures outlined.
Selected candidates would be sent with appointment orders. Additional
names than required vacancies may be kept in the waiting list.

2.3 – Human Resource Development and Planning 14 | P a g e

Q.5. PERFORMANCE APPRAISAL
People differ in their abilities and their aptitudes. There is always some
difference between the quality and quantity of the same work being done by
two different people. Therefore, performance appraisal is necessary to
understand each employee’s abilities, competencies and relative worth for
the organization.
After the candidates are recruited, selected, placed and trained they are
given certain standards to maintain and targets to achieve over a
predetermined period of time. Performance appraisal evaluates the
employee’s performance over a period of time against these standards and
targets
Objectives of Performance Appraisal: Below are the main objectives of
performance appraisal
(1) Pay Rise: It plays a role in making decision about salary increase.
(2) Promotions: It plays a role in making decision about promotion.
(3) Feedback System: It provides feedback to employees about their
performance.
(4) Training and development program: The information collected
from performance appraisal can be used for devising training and
development programmes.
(5) Improves Supervision: Since performance appraisal happens
periodically, supervisors observe their subordinates closely and
continuously.
(6) Career Planning: Performance appraisal facilitates career planning
for the employees.
(7) Healthy and Productive work environment: Since the
achievements and hard work of the employees are identified and
awarded, there is a sense of satisfaction amongst the workers and are
motivated to achieve higher standards and quality.
(8) Improves communication: Being a continuous process, performance
appraisal improves communication between the supervisor and the
subordinate.
Performance Appraisal Process: Performance appraisal can be
undertaken either on informal basis or on formal and systematic basis.
Following is the steps in the systematic performance appraisal
1. Defining Objectives: Whether the appraisal is reward providing
appraisal, such as salary revision or promotion or it is an appraisal for

15 | P a g e 2.3 – Human Resource Development and Planning

 training and development.
2. Defining Appraisal Norms: Appraisal is done in the context of certain
standards. These may be in the form of various traits of the appraisee
or their expected work performance results.
3. Designing Appraisal Programme: In the design for appraisal
programme, types of personnel to act as appraisers, appraisal
methodology and types of appraisal are all to be decided.
4. Implementation: In implementing appraisal programme, the
appraisal is conducted by the appraisers.
5. Appraisal Feedback: The appraisal feedback with plus and minus
points should be listed out and communicated to the appraisees.
6. Post – Appraisal Action: Rewards, promotions, training, etc., follow
in the post-appraisal action
Methods of Performance Appraisal
There are several methods of performance appraisal that can be broadly
classified into
1. Traditional methods of performance appraisal
a) Ranking Method: In ranking, a person is ranked against others on the
basis of certain traits or characteristics. This is very simple method
when the number of persons to be ranked is small.
b) Paired comparison: In this method, each person is compared with
other persons taking only one at a time. The appraiser puts a tick mark
against the person whom he considers the better of the two, and the final
ranking is determined by the number of times that person is judged
better than others.
c) Grading: This is a method where certain categories of abilities of
performance are defined well in advance. Persons are put in a particular
category depending on their traits and characteristics. The categories
may be outstanding, good, average, poor, very poor or may be in terms
of letter like A,B,C,D etc., with A indicating the best and D indicating
the worst.
d) Forced Distribution Method: As there is a tendency to rank many of
the employees high, the basic assumption in this method is that the
employee’s performance conforms to a normal statistical distribution.
For example, 10 percent of the employees may be rated as excellent, 20
per cent as above average, 40 per cent as average, 20 per cent below
average and 10 per cent as poor.

2.3 – Human Resource Development and Planning 16 | P a g e

e) Forced – Choice Method: This system is adopted to avoid subjectivity
and the tendency of the rater to give consistently high or low ratings to
the employees. The rater will be given a group of statements out of which
he will have to choose the one that best describes the characteristics of
the employee being evaluated. The choices may consist of both negative
and positive statements.
f) Check List Method: Under this method HR department prepares a
series of questions. Each question has alternative answers ‘Yes’ or ‘No’.
The appraiser concerned has to tick appropriate answers relevant to the
appraisals.
g) Critical Incidence Method: This method involves three steps. A test
of noteworthy on the job behaviour (good or bad) is prepared. A group of
experts then assigns scale values depending on the degree of desirability
for the job. Finally, a check list of incidents which define good and bad
employees is prepared. The appraiser is given this checklist for rating.
h) Graphic Scale Method: In this method, a printed appraisal form is
used for each appraisee. The form contains various employee
characteristics and his job performance information. The degree of
quality may be measured on three point or five point scale. On five point
scale, ‘excellent, very good, average, poor or very poor’ may be used for
measurements.
2. Modern methods of performance appraisal
a) Appraisal by Results or Objectives: Appraisal by results draws its
root from management by objective.
b) BARS: Behaviorally anchored rating scales (BARS) approach measures
observable, critical behaviors that are related to specific job dimensions.
c) Assessment Centre Method: This method is to test candidates in a
social situation by a number of assessors, using a variety of criteria. The
assessors or evaluators are drawn from experienced executives, working
at different levels of management.
d) 360 Degree Appraisal: In 3600 appraisal, appraisal of an employee is
done by his superior, his peers, his subordinates clients and outsiders
with whom he interacts in the course of his job performance. In this
appraisal, besides appraising the performance of the assessee, his other
attributes such as talents, behaviour, values, and technical
considerations are also subjected to appraisal.

17 | P a g e 2.3 – Human Resource Development and Planning

UNIT III
Q.6. POTENTIAL APPRAISAL
Potential appraisal is a powerful tool of employee development and is an
important part of the appraisal process.
Potential Appraisal is the process of tracking unrevealed talent, skills and
abilities in a person which even he/she is unaware of.
It is a future oriented appraisal, whose main objective is to identify and
evaluate the potential of the employees to rise up in the organisational
structure.
Organization incorporate potential appraisal in their appraisal processes for
identifying and developing suitable employee base for succession planning.
The purposes of a potential appraisal are:
 To inform employees of their future prospects;
 To enable the organisation to draft a management succession
programme;
 To update training and recruitment activities;
 To instruct employees about the work to be done to enhance their
career opportunities.
Potential Appraisal Tools
Potential appraisal uses numerous tools to examine a person´s potential.
Some of these tools are:
1. Tests: Tests are the simplest and most commonly used standardized
procedures for potential evaluation. They are considered to be observer-
neutral and objective.
Tests can be distinguished into
a) Intelligence tests: Intelligence tests measure intellectual abilities like
mathematical analogies. Intelligence tests belong to the tests with a
high validity.
b) Performance tests: Performance tests are used to determine special
abilities such as the ability to concentrate and responsiveness. These
types of tests are used for the potential evaluation for jobs with high,
specific requirements.
c) Personality tests: Measuring emotional, motivational and
interpersonal characteristics is the purpose of personality tests. The
results of this test are compared to those of a reference-population.

2.3 – Human Resource Development and Planning 18 | P a g e

2. Interviews: In potential appraisal interviews are largely distributed and
are highly accepted by all persons who are involved. The validity of
interviews varies substantially in dependence of the used method.
Interviews can be divided into biographical and multimodal interviews.
a) Biographical Interview: By using this kind of biographical interviews
the self-interpretation of one owns biography is essential. The
interviewed person should evaluate its own strengths and
weaknesses. By that the behavioural pattern of the interviewed
should be determined.
b) Multimodal Interview: A multimodal interview is a semi-structured
type of interview which combines a series of standardized and
unconcealed interview sections.
3. Assessment Centre: Assessment-Centres are highly-structured
procedures which are characterized by independent exercises. By using this
tool, a realistic simulation of important professional tasks is given.
Assessment-Centres are usually group-processes with high validity and
acceptance of the involved people.
4. Single-Assessment and Hearing: Single-Assessments are structured
procedures which combine various instruments and last several hours. It is
mainly used to select junior-specialist or experts. After passing the single-
assessment the candidate speak to a committee of future superiors,
colleagues and the board of directors.
5. Self-Assessment: By using the self-assessment type a candidate can try
to examine his own knowledge, potential and tendencies. The self-
assessment method is based on an IT-supported questionnaire and is mostly
used in case of applications.
6. 360° Feedback: The 360° Feedback is a feedback method in which
colleagues, superiors, customers and suppliers and other employees
participate. The comparison of the own valuation and the valuation of others
is essential. Due to this procedure deviations between the own valuation
and the valuation of the others can arise and been used for improvements.
Therefore 360° Feedback method is supposed to be repeated after a certain
period of time.
7. Management Audit: A Management Audit is an evaluation process
which estimates the leadership qualities and management skills of the
existing manpower. External consultants examine employee’s skills and
potential with different tests. After that an interview is used to present the
employees experience, competencies and leadership-qualities. The result of
management audits is communicated by a recommendation.

19 | P a g e 2.3 – Human Resource Development and Planning

Potential Appraisal System Requirements & Steps
The following are some of the requirements and steps to be followed when
introducing a potential appraisal system:
1. Role Description: A good potential appraisal system would be based on
clarity of roles and functions associated with the different roles in an
organisation. This requires extensive job descriptions that spell out various
functions involved in performing the job to be made available for each job.
2. Qualities Required: Besides job descriptions, it is necessary to have a
detailed list of qualities required to perform each of these functions. These
qualities may be broadly divided into four categories:
 Technical knowledge and skills,
 Managerial capabilities and qualities,
 Behavioural capabilities, and
 Conceptual capabilities.
3. Indicators of Qualities: A good potential appraisal system besides
listing down the functions and qualities would also have various
mechanisms for judging these qualities in a given individual. Some of the
mechanisms for judging these qualities are:
 Rating by others,
 Psychological tests,
 Simulation games and exercises,
 Performance appraisal records.
4. Organising the System: Having ensured all the above 3 requirements,
the organisation is now in a sound position to establish and operate the
potential appraisal system. Such establishment requires clarity in
organisational policies and systematisation of its efforts.
5. Feedback: If the organisation believes in the development of human
resources it should attempt to generate a climate of openness for helping the
employees to understand their strengths and weaknesses and to create
opportunities for development. A good potential appraisal system should
provide an opportunity for every employee to know the results of
assessment. He should be helped to understand the qualities actually
required for performing the role for which he thinks he has the potential,
the mechanisms used by the organisation to appraise his potential, and the
results of such an appraisal.
A good potential appraisal system provides opportunities continuously for
the employee to know his strengths and weaknesses. These are done
through periodic counselling and guidance sessions by either the personnel
department or the managers concerned.

2.3 – Human Resource Development and Planning 20 | P a g e

Q.7. CAREER PLANNING & DEVELOPMENT
Human Capital (HC) forms the basis of Human Resource Development
(HRD) and Human Resource Management (HRM). Career planning and
development is an important aspect of HRM and HRD.
The topic of career planning and development consists of the terms the
career planning, career development, and career management.
When we speak of career planning, we mean the steps an individual goes
through to direct his or her own career in ways that will be personally
satisfying.
The process of career development is an ongoing effort of both individuals
and organizations to expand career opportunities and realize career goals.
As such, career development includes both individual career planning and
organizational career management.
Career management refers to the organization’s efforts to manage the flow
of individuals through positions over time in ways that will best meet both
organizational and individual goals.
Career Planning
A career is a sequence of positions held by a person during the course of a
lifetime.
Career planning is the process through which individuals identify and
implement steps to attain their career goals.
Career Planning Process: There are five basic steps in the career
planning process:
Self-Assessment: In the self-assessment phase the individual begins by
examining his or her own personal interests, skills, values, and abilities
Opportunity Exploration: The second phase of career planning involves
investigating a range of career opportunities to determine which skills,
interests, and abilities are required. Basically, this is an information-
gathering step, and many sources may be used, including friends, family
members, and business associates as well as written sources
Goal Setting: Goal Setting is the process of using what has been learned
through self-assessment and the investigation of career opportunities to
decide which job/occupational opportunities fit both personal interests and
skills/abilities. The goals set should be specific and measurable as well as
reasonably attainable within a specified time frame.
Action Planning: The action plan outlines all steps needed to reach a
specific career goal - formal training, internships, job search strategy

21 | P a g e 2.3 – Human Resource Development and Planning

development, network building, further career exploration, etc.
Evaluation: Evaluation reviews progress toward one’s career goals.
Evaluation keeps planning on track and can also help identify strengths and
weaknesses in a career plan, realism of goals, and accuracy/currency of self-
assessment.
Career Development
Career Development is the process of planning the series of possible jobs
which an individual may hold in the organization over time and developing
strategies designed to provide necessary job skills as the opportunity arises.
Objectives of Career Development: The purposes and objectives of career
development programme are:
1. To attract and retain effective persons in an organization.
2. To utilize human resources optimally.
3. To improve morale and motivation level of employees.
4. To reduce employee turnover.
5. To practice a balanced ‘promotion from within’ policy.
6. To make employees adaptable to changes.
7. To increase employees’ loyalty and commitment to the organizations.
8. To maintain harmonious industrial relations.
9. To inculcate equitable employment practices providing equal career
progression opportunities to women and minorities.
Stages of career development process: career development stages may
be grouped under following four categories:
Exploratory Stage: This stage starts when a new employee joins the
organization. An employee with his qualification and knowledge when joins
an organization finds him in an apparent mismatch condition. It takes quite
some time for him after thorough training to become adaptable with the
organization and more particularly with his job assignment. Therefore, it is
essential for the organization to sustain the behavioural as well as
operational deficiencies to help him to develop in the course of time. The
best solution at this stage is to allow the new entrant to perform some
specific job and to confer freedom in functioning. This will help the new
entrant to gradually develop to the requirements of the organization. Some
companies even allow the new entrant to undergo a compulsory job rotation
for reasonable time period. The purpose of such job rotation is to allow the
employee to select his preferred job from a wide range of available jobs in
the organization.

2.3 – Human Resource Development and Planning 22 | P a g e

Maintenance Stage: This is a mid-career stage for employees, who strive
hard to retain their established name and fame. Therefore, at this stage
employees need to put their continuous efforts for self-development. For an
organization, career development process at this stage, therefore, calls for
renewing and updating the skills of employees particularly in the context of
changing environment to help employees to overcome their mid-career
crisis. This stage is crucial and unless the organization adopts suitable
career development programme, it may face high employee turnover, who
are in their mid-age group.
Stage of Decline: Employees at this stage being prepared for retirement,
get scared from possible threat of reduced role of responsibilities in the
organization. Such complexity is behaviourally associated with old age of
the employees which, unless set right through suitable career development
programme, may even render such employees inefficient or misfit for the
organization. Career Development process at this stage, therefore, should
aim at helping the employees to get mentally prepared for retirement
rituals, particularly to prepare them to accept a reduced role and
responsibilities, so that, they can find them accommodative with family and
society in later part of their life.

Advantages of Career Planning & Development

Benefits to employee: The employee has advance knowledge of career
opportunities within the company. He knows where he stands, where he
wants to go, who is ahead of him, how to scale the corporate ladder. This
helps him set his career goals more realistically and take appropriate steps
to realize them.
Benefits to organization: Organizations can base their decisions more
systematically.
 Fast tracks for stars could be arranged, training to slow movers can
be provided,
 Replacements can be planned in advance,
 Hard-working, talented people can be retained through offering
attractive career options and compensation plans;
 Job assignments can be made based on merit, etc.

23 | P a g e 2.3 – Human Resource Development and Planning

UNIT IV
Q.8. TRAINING AND DEVELOPMENT
Training and Development is an integral part of the human resource
development activity. It ensures continuous skill development of employees
working in an organisation.
Importance of Training: Training offers innumerable benefits to both
employees and employers
Benefits to Employers:
1. Faster learning of new skills by employees.
2. Increased productivity by increasing the skill of the employees.
3. Training can help the standardization of operating procedures.
4. Trained employees need lesser supervision.
5. Trained personnel will be able to make better and economical use of
the materials and the equipment and reduce wastage.
6. The morale of employees is increased as training programme can
mould employees’ attitudes towards organizational activities
7. Management can identify the talents, who can be groomed as
managers for assigning responsibility in the organizations.
Benefits to Employees:
1. Creates a feeling of confidence in the minds of employees.
2. Develops skills, which serves as a valuable personal asset of a worker.
3. Employees can develop for Career advancement.
4. A highly trained employee can earn higher salary in the job market.
5. Develops adaptability among workers.
6. Trained workers handle the machines safely and thus they are less
prone to accidents
Methods of Training
There is a wide range of training methods and techniques that are suitable
for different categories of people in the organization.
On-the-job training (OJT)
On-the-job training (OJT) is considered to be the most effective method of
training the operative personnel because it is planned, organized, and

2.3 – Human Resource Development and Planning 24 | P a g e

conducted at the employee's worksite. The worker is given training by his
immediate supervisor and is based on the principle of ‘learning by doing’.
Following are important on-the-job training methods:
1. Job Instruction Training (JIT): The JIT is a four-step instructional
process where a trainer, supervisor or co-worker acts as the coach.
1. Preparation: The trainee receives an overview of the job.
2. Presentation: The trainer demonstrates the job.
3. Performance Try Out: The employee is permitted to copy the
trainer’s way.
4. Follow-Up: The employee does the job independently without
supervision
2.Coaching: Coaching is a kind of informal, unplanned daily training and
feedback given to employees by immediate supervisors. In coaching, the
supervisor
 explains things and answers questions;
 throws light on why things are done the way they are;
 offers a model for trainees to copy;
 conducts lot of decision making meetings with trainees;
3.Mentoring: Mentoring is a relationship in which a senior manager in an
organization assumes the responsibility for grooming a junior person.
Technical, interpersonal and political skills are generally conveyed in such
a relationship from the more experienced person.
4.Job Rotation: This kind of training involves the movement of trainee
from one job to another. This helps him to have a general understanding of
how the organization functions.
5.Committee Assignments: In this method, trainees are assigned to
important committees and are asked to solve an actual organizational
problem.
Off-The-Job Training
In off-the-job training, the trainee is separated from the job situation and
his attention is focused upon learning the material related to his future job
performance. The workers are free of tension of work while they are
learning. There are several off-the-job methods of training and development
as described below:
1.Vestibule training: Vestibule training is used to designate training in a
cabin (or a classroom) for semi-skilled jobs. In this method, actual work

25 | P a g e 2.3 – Human Resource Development and Planning

conditions are simulated in a class room. Material, files and equipment that
are used in actual job performance are also used in the training.
2.Lecture method: The lecture is a traditional method of instruction. The
instructor organizes the material and gives it to a group of trainees in the
form of a talk. An advantage of lecture method is that it is direct and can be
used for a large group of trainees.
3.Role playing: In Role Playing, the participants play the role of certain
characters, such as the production manager, mechanical engineer,
maintenance engineers, quality control inspectors and the like.
4.Conference approach: In this method, the trainer delivers a lecture and
involves the trainee in a discussion so that his doubts about the job get
clarified.
5.Demonstration: In this method, an experienced trainer demonstrates by
performing the working activity, at pre-determined speeds, telling the
trainee how to do the task, showing the trainee the movements involved and
coaching the trainee while he practices.
6.Case Study: The case method is a non-directed method of study whereby
trainees are provided with practical case reports to analyze. By analyzing
the problems presented in the case report and developing possible solutions,
trainees can be encouraged to think independently.
7.In-basket Exercises: These are more elaborate simulation exercises in
which a complex organization is created in the form of an office
environment. The trainees work in an office setting with their in-basket full
of interdepartmental memos, letters, reports and other data on their desks,
as one receives in an office. The normal phone calls, emails and face to face
meetings also keep on happening to give a real office-like environment.
8.Critical Incident Method: Under this method each employee developed
in a group process. Incidents are prepared on the basis of actual situations
which happened in different organizations. Each Employee in the training
group is asked to study the incident and to make short term decisions in the
role of a person who has to cope with the incident in the actual situation.
9.T-Group Training: The T-Group provides participants, 10 to 15 persons,
with an opportunity to learn about themselves, their impact on others and
how to function more effectively in group and interpersonal situations.
Usually there is no leader, no planned agenda and stated goal. The trainees
can be given any assignment like case study, role play, etc., that leads the
group interaction. The participants would be encouraged to be thoughtful
and understanding towards the feeling of others

2.3 – Human Resource Development and Planning 26 | P a g e

Q.9. STRESS MANAGEMENT
Stress refers to a psychological and physiological state that result when
certain features of an individual’s environment challenge that person,
creating an actual or perceived imbalance between demand and capability
to adjust that results in a non-specific response
The Causes of Stress: The factors contributing to stress are called
stressors. The stressors are found within the environment, the individual,
and the interaction between the two. Stressors are divided into two classes:
 Internal Stressors – Those that lie within the individual, and
 External Stressors – Those that are part of the external environment.
1. Internal Stressors: There are 4 internal sources of stress.
a) Inner Conflicts: Non-specific fears, anxiety and guilt feelings
maintain the body in a state of readiness for emergency action.
b) Perceptual Influences: Perception is influenced by a number of
internal factors. Perceptual distortions can cause several forms of
stress.
c) Thresholds of Stress: People who have high thresholds for stress
have high levels of resistance to it.
d) Motivational Level: People who are ambitious and highly motivated
to achieve are more likely to experience stress than are those who
are content with their career status.
2. Environmental Stressors: Environmental and internal conditions that
lie beyond an individual's control are called environmental stressors.
Environmental stressors can be organized into the following categories:
a) Task Demands: Changes and lack of control are two of the most
stressful demands people face at work.
b) Role Demands: Role demands relate to pressures placed on a person.
The role demand can create inter-role, intra-role or person-role
conflicts. Another major cause of role stress is role ambiguity. Role
ambiguity is created when role expectations are not clearly
understood and the employee is not sure what he or she is to do.
c) Inter-personal Demands: These are pressures created by other
employees. This includes:
i. The Abrasive Person: May be an able and talented employee, but
one who creates emotional waves that others at work must
accommodate.

27 | P a g e 2.3 – Human Resource Development and Planning

 ii. Sexual Harassment: Sexual harassment directed at women in
the workplace can create a stressful working environment for
the person being harassed, as well as for others.
iii. Leadership Styles: Leadership styles like authoritarian or
participative can create stress for different personality types.
For example, those comfortable with participative leadership
may feel restrained by a directive style.
d) Physical Demands: Non-work demands create stress for people.
Workers subject to family demands related to marriage, child
rearing and parental care may create role conflicts.
Identification of Stress at Various Levels
1. Individual level: In general, individual distress usually takes one of the
three basic forms:
a. Physiological symptoms in the form of a number of medical illnesses
like heart disease and strokes, backaches, peptic ulcers, and
headaches.
b. Psychological symptoms in the form of depression, burnout, and
psychogenic disorders and
c. Behavioural symptoms in the form of violence, substance abuse of
various kinds, and accidents.
2. Organizational level: Mismanaged stress at an organizational level can
cause a variety of indirect costs for the organization, such as low morale,
dissatisfaction, breakdowns in communication and disruption of working
relationships.
Managing Stress
Stress is an inevitable feature of work and measures must be taken both at
organizations and at individual levels to ease the stress
1. Individual Level: An employee can take personal responsibility for
reducing the stress level. The methods for reducing individual stress
include:
a) Time Management: A practical way to manage stress is to better
control your use of time. Many people manage their time poorly.
The well-organized employee, can often accomplish twice as much
as the person who is poorly organized.
b) Non-Competitive Physical Exercise: Employees can seek to improve
their physical health by non-competitive physical exercise such as
aerobics, walking, jogging, swimming and riding a bicycle.

2.3 – Human Resource Development and Planning 28 | P a g e

 c) Relaxation and Biofeedback: Individuals can teach themselves to
reduce tension through relaxation techniques such as meditation,
hypnosis, and biofeedback.
d) Development of Social Support Systems: Having friends, family or
work colleagues to talk to provide an outlet when stress levels
become excessive.
e) Adjustment of Perceptions: Effective stress management may
require conscious adjustment of your thinking because perceptions
of a stressor play a role in the way the stressor is experienced
f) Learned Optimism: Learned optimism enhances physical health
and achievement and averts susceptibility to depression.
g) Leisure Time Activities: Leisure time activities provide employees
an opportunity for rest and recovery.
h) Diet: Good dietary practises contribute to a person's overall health,
making the person less vulnerable to distress
i) Opening Up: The process of opening up and confessing appears to
counter the harmful effects of stress.
2. Organizational Level: Organizations must recognize that they can
improve performance by reducing the amount of work-related stress
employees’ experience. Ways to do this includes:
a) Job Redesigning: Redesigning jobs to give employees more
responsibility, more meaningful work, more autonomy, and
increased feedback can reduce stress.
b) Goal Setting: Goal-setting activities designed to increase task
motivation can reduce the degree of role conflict and role ambiguity.
c) Organizational Communication: Increasing formal organizational
communication with employees reduces uncertainty by lessening
role ambiguity and role conflict.
d) Employee Wellness Programmes: Organizations may sponsor
wellness programmes, which are designed to promote employee
health and well-being.
e) Social Support System at the Work Place: Team building, is one way
to develop supportive social relationship in the work place.
f) Organizational Culture: The organization's culture can help
employees manage stress.

29 | P a g e 2.3 – Human Resource Development and Planning

UNIT V
Q.10. HR ACCOUNTING & AUDITING
Human Resource Accounting
Human Resource Accounting (HRA) is a new branch of accounting. It is an
attempt to identify and report investments made in the human resources of
an organization that are not presently accounted for under conventional
accounting practice.
The American Association of Accountants (AAA) defines HRA as the process
of identifying and measuring data about human resources and
communicating this information to interested parties.
Benefits of Human Resource Accounting
The main benefits of Human Resource Accounting are:-
1. HR Accounting helps the company ascertain how much investment it
has made on its employees and how much return it can expect from
this investment
2. The Ratio of Human Capital to Non-Human Capital computed as per
the HR Accounting Concept indicates the degree of labour intensity of
an organization.
3. HR Accounting provides a basis for planning of physical assets of the
type Human Resources
4. HR Accounting provides valuable information to investors
Methods of Human Resource Accounting
The approaches to HRA may be broadly grouped under two categories:
1) Monetary measures and
2) Non-monetary measures
1. Monetary Models
(a) Capitalization of Historical Costs: In this method, all costs of
recruitment, training and other costs involved in developing an
employee are capitalized. The amount so capitalized is written off
over the period an employee serves the organization.
(b) Replacement Costs: Replacement cost is the cost of replacing an
existing employee. The underlying costs include the cost of
recruitment, training and development, the opportunity cost during
the intervening period till the new recruit attains the efficiency level
of the old employee, etc.

2.3 – Human Resource Development and Planning 30 | P a g e

 (c) Economic value method: In this method human resources are
valued on the basis of the contribution they are likely to make to the
organization during their continuance in the organization. The
payments to be made in the form of pay, allowances, benefits, etc.,
are estimated and discounted appropriately to arrive at the present
economic value of the individual.
(d) Asset multiplier method: In this method, the employees working
in an organization are classified into four categories: top
management, middle management, supervisory management, and
operative staff. The salary bill of each category is multiplied with a
suitable multiplier to calculate the total value of each.
2. Non-monetary Measures
(a) Expected realizable value method: In this method, the elements
of expected realizable value such as productivity, transferability and
promotability are measured through personnel research, appraisal
techniques and other objective methods.
(b) Discounted net present value of future earnings: Causal
variables such as leadership style and behaviour affect intermediate
variables such as morale, motivation, commitment to goals, etc.,
which in turn, affect output variables such as production, sales, net
profit, etc.
HR Audit
HR Audit is a comprehensive evaluation of existing HRD strategies,
systems, styles, skills and culture and their appropriateness to achieve the
short term and long term goals of the organization.
HR Audit performs the systematic verification of job analysis and design,
recruitment and selection, orientation and placement, training and
development, performance appraisal and job evaluation, employee and
executive remuneration, motivation and morale, participative management,
communication, welfare and social security, safety and health, industrial
relations, trade unionism, and disputes and their resolution.
HR Audit is very useful for the organization to achieve the organizational
goals and is also a vital tool which helps in assessing the efficiency of HR
functions in the organization.
HR Audits help the organization in following ways:-
(1) It helps to find out the proper contribution of the HR department
towards the organization.
(2) Development of the professional image of the HR department of the

31 | P a g e 2.3 – Human Resource Development and Planning

 organization.
(3) Reduces the HR cost.
(4) Motivates HR personnel.
(5) Find out the problems pertaining to HR functions and solve them
smoothly.
(6) Helps in developing sound performance appraisal systems.
HR Audit Process
An HR audit process review that the policies and procedure implemented by
the company are in compliance with Government law. HR audit also
evaluates the effectiveness of personnel management.
Certain steps are included in it which are as follows:
(1) Identify Indicators: The first step in HR audit is to identify the
indicators. Here particular issues regarding the skills, styles, systems,
strategies and structures of the organization are discussed. Necessary data
is also collected for the audit purpose; the various indices, statistical ratios
and gross numbers are identified as per the requirement.
(2) Examine the Variations: Under this step, scrutiny of all available
information pertaining to personnel will be taken in to account. Similar
previous corresponding period is taken into account, the performance is
judged on the basis of the indicators decided and any variation between the
results in the two time frames is examined.
(3) Comparing and examining variations: After examining the
deviations, a comparison is made. These deviations are compared between
different departments and between similar units in the other industries.
These deviations will help the organization to correct the process of auditing
if the need arises.
(4) Drawing trend lines: After the measurement and comparison with the
other departments, the organization is able to derive a trend that exists and
would analyze and depict it in the form of trend lines, frequency
distributions and statistical correlations.
(5) Preparing a detailed Report: The last step involves the finalization
of report. This final report contains the detailed information about the audit
of the organization. This report is submitted to the top management and to
the managers at suitable levels for information. Necessary action is taken
thereafter.

2.3 – Human Resource Development and Planning 32 | P a g e

HR Challenges
Over a period of time, Human Resource Management has evolved as a
strategic function to improve working environment, plan out human
resources needs and strike a balance between the organization and
employers in order to increase organizational productivity and meet
organizational goals. In today’s highly competitive world HRM has
gradually become one of the most important functions of an organization.
It is really a huge challenge to understand the psychology of workforce,
retain the best talents of the industry, motivate them to perform better and
handle diversity while maintaining unity. Globalization has resulted in
many positive developments but it has left many concerns for HR managers.
In today’s tough world and tight job market, coordinating a multicultural or
diverse workforce is a real challenge for HR department. Human resource
managers find it difficult to strike a balance between employer and
employees keeping in mind the recent trends in the market.
To remain in business, human resource managers need to efficiently address
following human resource challenges:
#1 Compliance with Laws and Regulation
Keeping up with changing employment laws is a struggle for business
owners. Many choose to ignore employment laws, believing they don’t apply
to their business. But doing so could mean audits, lawsuits, and possibly
even the demise of the company.
#2 Change Management
As a business grows, its strategies, structure, and internal processes grow
with it. Some employees have a hard time coping with these changes. A lot
of companies experience decreased productivity and morale during periods
of change.
#3 Leadership Development
A recent study showed more than a third of companies are doing an average
job, at implementing leadership development programs. Thirty-six percent
of companies surveyed admitted that their leadership development
practices are below average.
#4 Workforce Training and Development
Investing in the training and development of lower-level employees is
another common HR problem. Some businesses have trouble finding the
resources to do so. Employees on the front lines are some of your hardest
workers, and may not have the time to take a training course.

33 | P a g e 2.3 – Human Resource Development and Planning

#5 Adapting to Innovation
Technology is constantly changing. Businesses must be quick to adapt, or
risk being left in the dust by their competitors. The challenge for small
business owners is getting employees to embrace innovation and learn new
technology.
#6 Compensation
Many companies are struggling with how best to structure employee
compensation. Small businesses have to compete not only with businesses
of a similar size, but also with corporations with big payroll budgets.
#7 Understanding Benefits Packages
Since good benefits packages can be a deciding factor for potential hires,
understanding them is key.
#8 Recruiting Talented Employees
Attracting talent is a huge investment of time and money. It’s difficult for
entrepreneurs to balance between keeping a business running, and hiring
the right people at the right time. In addition, it’s impossible to know
whether a candidate will actually be a good fit until they’ve worked for you
for a period of time.
#9 Retaining Talented Employees
Competition for talented employees is fierce. Startups and small companies
don’t have big budgets for retirement plans, expensive insurance plans, and
other costly items that their larger competitors do—at least, not yet.
Employee turnover is expensive and can negatively impact business growth.
#10 Workplace Diversity
Multiple generations. Ethnic and cultural differences. These are just a few
of the many factors that make workplace diversity a continual challenge for
small businesses. The risk of lawsuits for failing to protect employees from
harassment is real.
11. Emotional and Physical Stability of Employees:
Providing with wages and salaries to employees is not sufficient in today’s
world. The human resource manager should maintain proper emotional
balance of employees. They should try to understand the attitude,
requirements and feelings of employees, and motivate them whenever and
wherever required.
12. Balance Between Management and Employees:
The human resource manager has a responsibility to balance the interest of

2.3 – Human Resource Development and Planning 34 | P a g e

management and employees. Profits, commitment, cooperation, loyalty, and
sincerely are the factors expected by management, whereas better salaries
and wages, safety and security, healthy working conditions, career
development, and participative working are the factors expected by
employees from management.
13. Performance Appraisal:
This activity should not be considered a routine process by the human
resource manager. If employees are not getting proper feedback from them,
it may affect their future work. A scientific appraisal technique according to
changing needs should be applied and the quality of it should be checked
from time to time.
14. Dealing with Trade Union:
Union members are to be handled skillfully as they are usually the people
who oppose the company policies and procedures. Demands of the union and
interests of the management should be matched properly.
15. Leadership Development
With growing options for top performing candidates, employers find it
difficult to build the future pillars of the organization. The rising employee
turnover rate is giving recruiters really a tough time with implementing
practices to enhance employee engagement and make them stay for long in
the organization

35 | P a g e 2.3 – Human Resource Development and Planning