MBA Semester 1

MB0043 – Human Resource Management

Assignment Set - 1

Q.1 Training refers to the process of imparting speci fic skills. “Training need analysis” is required for
effective training program. Explain in detail, all the three factors of Thayer and McGhee model of
identify training needs.
Answer: Thayer and McGhee model is based on the following three factors:

1. Organization analysis
2. Task analysis
3. Individual analysis

Organization Analysis
Total Organization Analysis is a systematic effort to understand exactly where training effort needs to
be emphasized in an organization. It involves a detailed analysis o f the organization structure,
objectives, human resources and future business plans, and an understanding of its culture.
The first step in organization analysis is establishing a clear understanding of both short -run and long-
run business and people goals . Long-term objectives are the broad directions in which the
organizations would move over a long duration. These long -term objectives are then broken down
into specific strategies and short -term goals for each of the units/departments. In an organization,
the cumulative effect of all these would ultimately lead to the long -term goal. Short -term goals are
constantly in need of adaptation to the changing environment, both external and internal.

For an organization analysis, there are three essential require ments: (1) an adequate number of
employees available to ensure fulfillment of the business operation; (2) that employee performance
is up to the required standard; and (3) that the working environment in their units/departments is
conducive to fulfillment of tasks.
In order to ensure the first two requirements a human resource inventory needs to be made. Data
regarding positions, qualifications, vacancies, replacements and training time required for
replacements have to be worked out. Job standards must als o be worked out.
Various efficiency and productivity indexes, or ratios such a productivity ratios, cost per unit etc, can
be worked out to determine not only efficiency but also adequacy, in terms of under -manning or
over-manning, of the workforce.
An important dimension of organizational need -based analysis, is the diagnosis of the state of the
organization "climate" or “culture”. While rules, procedures, systems and methods all contribute to
the making of the environment, much of it is also determined by the attitude that the "people" have
in the organization-for instance, the attitude that top management has towards its subordinate staff
and the attitudes that members have towards work, Managers and company procedures. These
attitudes are learnt, they re sult from the person’s experience both within and outside the
organization, and training inputs could be used to effect changes of attitude and consequently of
the organizational climate.
In analyzing the organization climate, both direct and indirect meth ods could be used. Direct
methods are observation, use of questionnaires, and interviews. Reliance or indirect methods would
not give a clear understanding of the attitudes and predispositions of employees. In fact, factors
such as low absenteeism and low turnover are not by themselves indicators of positive or negative
attitudes, and high or low morale. It would be better to make a careful analysis and study each
indicator in a particular situation in conjunction with more direct methods like attitude surv eys.
Analysis and interpretation of the data may give clear clues not only to attitudinal training needs but
possibly also to kill training needs.

Task Analysis
This activity entails a detailed examination of each job, its components, its various operati ons and
the conditions under which it has to be performed. The focus here is on the "task" itself and the
training required to perform it, rather than on the individual. Analysis of the job and its various
components will indicate the skills and training r equired to perform the job at the required standard.

Standard of Performance : Every job has an expected standard of performance (SOP). Unless such
standards are attained, not only will inter -related jobs suffer, but organizational viability will be

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affected, and so will the expectations that have been set for that particular job itself. If the
standards set for the performance of a job are known, then it is possible to know whether the job is
being performed at the desired level of output or not. Knowledge of the "task" will help in
understanding what skills, knowledge and attitudes an employee should have.

Methods: If an employee is asked to perform a job, the exact components of the job and the
standard of performance must be known. Task analysis entails not merely a simple listing of the
various job components, but also of the various sub -tasks. Conventional methods of job analysis are
usually suitable for task analysis. They are:
1. Literature review regarding the job.
2. Job performance.
3. Job observation,
4. Data Collection regarding job interviews.
For blue-collar employees, more precise industrial -engineering techniques, like time and motion
studies, could be used, and for white -collar employees, work sampling observation, interviews, and
job performance data analysis could be employed. The focus in task analysis approach to
identifying training needs is with the clear objective of enhancing the performance standard of a
given task. This information is then utilised to establish the training programm e for the employee. It
helps identify the skill required, either in terms of education or training, to perform the job,
knowledge, and finally attitudinal pre -dispositions such as the attitudes, towards safety, or
interpersonal competence that will ensure that the job is performed optimally.

Individual Analysis
Individual analysis is the third component in identifying training needs. The focus of individual analysis
is on the individual employee, his abilities, and the inputs required for job performance, or individual
growth and development in terms of career planning.
The common source for this needs analysis usually forms parts of the performance assessment
process. Clues to training needs can also come from an analysis of an individual’s or a group’s
typical behavior. The primary sources of such information are:
(1) Observation at place or work, examination of job schedules, quantum of spoilage, wastage, and
clues about interpersonal relations of the employees; (2) interviews with superiors and employee s; (3)
comparative studies of good vs. poor employees, to identify differences, skills and training gaps; (4)
personnel records; (5) production reports; and (6) review of literature regarding the job and
machines used. Job -knowledge tests, work sampling an d diagnostic psychological tests also provide
information about employees.

Q.2 India is considered as the leading „emerging economy. India’s organizational success is rooted
in its culture; bring out Indian culture and historical perspective to HRM. Writ e a brief note on Human
relations movement in India.
Answer: Kautilya provides an account of the techniques of human resources management as 4th
century B.C. in the "Artha -Shastra". As per the book, there existed logical procedures and principles
in organizing labour namely the Shreni or guild system and in the principles of the co -operative
sector. The wages were in terms of quantity and quality of work turned out and punishment for
unnecessarily delaying the work or spoiling it. The writing of Kautilya p rovides an excellent discussion
on staffing and personnel management, including the detailing of what today are called job
descriptions, qualifications for jobs, methods of selection, employee and supervisor development,
formally established incentive meth ods (Sarasa- saama- daana- bheda- danda- catura, the Carrot
and Stick approach) and even the science of performance evaluation. The guild system was
pioneered and closely followed by the establishment of the co -operative sector of craftsmen and
traders organizing themselves to promote their professional interests. Numerous professional societies
were similarly formed each establishing systematic procedures and policies to nurture their own
interests.
Significantly, these practices also respected the princi ples of the division of labour, which can easily
be traced to the caste system that even today is a inseparable part of the Indian cultural system.
The society got divided into

· Individuals engaging themselves in activities such as teaching, sacrifice o r state management

were designated as Brahmins

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· While those specialising in fighting were termed as Kshatriyas.

· Individuals engaged in the areas of trade, business and agriculture were called Vaishyas

· Those devoting themselves in manual work were known as Shudras.

Herein hereditary facilitated the transfer of skills and training from one generation to another. Quickly
even specialised skills became hereditary suchas goldsmiths, weavers, potters, blacksmiths,
carpenters, hunters, charioteers, snak e charmers, architects, sculptors, armourers identified as
separate communities by themselves. Between the employer and employees justice and equity laid
a sound foundation for successful enterprise.
During the medieval period, India experienced aggression s for around 700 years, during the Mughal
rule. While trade and commerce flourished majority of the artisans and the craftsmen remained poor
and lived simple lives compounded by the large and joint family system that prevailed. Low wages
oppressive political conditions and poor physique characterised the workplace. Nothing significantly
changed during the British rule. Oppression and poor working conditions prevailed in all industries
and intensified in the tea estates that were the key focus of the British for obvious reasons that tea
was a key export product.
This prevailed till the enactment of the Factory Act of 1881. This coincided with the waves of
industrialization and urban growth that India witnessed. The Act brought about the first set of formal
guidelines and rules that the industries had to comply with. Workers employed in the factories were
allowed a week off-day and provisions were made for supervision, quality and hours of work. Sadly
the act also established the minimum age of children for emp loyment to be seven years and the
maximum working hours for them to not exceed seven hours a day and only in the day -shift.
This set the stage for the organization of employees to ensure fair work and pay and in 1890, the first
labour organization Bombay Mill Hands Association was established. In 1905, the printers’ Union at
Calcutta and in 1907, the Postal Union at Bombay were established. The Madras Labour Union was
organized thereafter in 1918. The Central Labour Board was established in 1922 to bring t ogether the
different unions in the Bombay city and the All India Trade Union Congress was organized. The formal
implementation of the Indian Trade Unions Act took place in 1926, one more landmark in the history
of industrial relations in the country. Ther e was a large scale expansion of the trade union movement
after the Second World War – especially after the independence. The union -government
interactions significantly stepped up to accommodate for the removal of the war -time restrictions on
strikes, formation of three more central labour organizations and the competition among them and
the use of adjudication rather than collective bargaining techniques to resolve issues. In 1960, 45
percent of the total industrial workforce was claimed to be unionised. Today, the total membership is
estimated to be around 4.3 million i.e., 28 percent of total workforce.
The post-independence period also marked the formation of the Personnel Department in different
public and private sectors. Under the Factories Act, 1948 , employers had to employ a Welfare
Officer in a factory employing 500 or more workers. Similarly the Mines Act, 1952, empowers the
Government to specify employment of welfare officer/officers. While welfare constituted a large
part of the responsibilities of the Personnel department, there were other tasks and responsibilities
that were assigned as well.
The responsibilities included other varied functions including the employment of suitable people,
workplace safety and driving awareness, training and wa ge and salary administration. The Personnel
department however operated in a somewhat isolated manner and executed tasks as assigned by
the head of the organization / core business teams. The interactions with the other heads of
departments were limited an d only on a need-based rationale.
In the past two decades the workforce in India has evolved rapidly to emerge as a nation of
intelligent, skilled and highly aware and mature professional, who stand shoulder -to-shoulder with
the professional from the world over. The workplace is an equitable one, which believes in the values
of respect for the individual and aspiration to be the best in the world. The role of the Human
Resources function can no longer be ignored or sidelined. It is viewed as a strategic par tner and has
found a place at the top management table. The Head of Human Resources function is selected
with as much care and attention as the CEO and is consulted in all business decisions, irrespective of
its direct/ indirect implications to human resou rces. Being a HR professional is a conscious decision
that a individual takes early in his / her life and pursues it with dedication and commitment.

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Q.3 A company is being set up by a group of 3 professionals. The business objective is to sell mobile
phones of a Chinese company, which has come up with an inexpensive range of handset ranging
from Rs.1200 to Rs.7000. They need to submit a human resource plan to their investors. Explain the
process of Human Resource Planning system for this company, which cov ers all important steps
needed for HRP.
Answer: The steps in the HRP process are a systematic set of activities carried out in a chronological
manner. Each step needs to be evaluated and debated with all possible information gathered from
the external as well as internal environment.

A. Purpose of Human Resource Planning: Human Resource Planning fulfils individual as well as
organizational goals. What it essentially amounts to is “striking a balance” between the future
human resources needs and the future enterprise needs. And this is done with the clear
objective of maximizing the future return on investment in human resources. And this objective
may be laid down for a short -term (i.e. for one year).
B. Estimating/Forecasting th e future Manpower Requirements : the first step in the process is to arrive
at the desired organizational structure at a given point in time. Mapping this structure with the
existing structure helps in identifying the gap in resources requirement. The numbe r and type of
employees needed have to be determined. In addition to the structure there are a number of
external factors that affect this determination. They include business forecasts, competitor
strategy, expansion plans, product/skills mix changes, pro fit/revenue growth projections, in
addition to management philosophy and government policies. This step also includes an analysis
of the external labour/talent environment, its demographics, demand/supply of the required
talent, and cost considerations.
Forecasting provides the basic premises on which manpower planning is done. Forecasting is
necessary for various reasons, such as:

a) The challenges of the general economic business cycles have an influence on the short -range
and long-run plans of all organi zations. These are inflation, wages, prices, costs and raw material
supplies.
b) An expansion / growth initiative might need the business to use additional machinery and
personnel, and a re -allocation of facilities, all of which call for adequate advance pla nning of
human resources.
c) Changes in management philosophies and top management leadership styles.
d) The use of new technology (such as the introduction of automatic controls, or the
mechanization of materials handling functions) requiring a change in th e skills of workers, as well
as a change in the number of employees needed.
e) Very often, changes in the quantity or quality of products or services require a change in the
organization structure. Plans have to be made for this purpose as well.
C. Auditing Human Resources: Once the future human resource needs are estimated, the next step
is to determine the present supply of manpower resources. This is done through what is called
"Skills Inventory". A skills inventory contains data about each employee’s skill s, abilities, work
preferences and other items of information which indicate his worth to the company. Skills
inventory is also referred to as competency dictionaries. This information is usually retained as

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 part of the performance management system with t he HR department. This step in the HRP
system helps identify the existing profile of the manpower and its efficiency. It helps highlight
where the organization is vs. where it ought to be. The step concludes with identifying clear gaps
in the skills / manpower mix required to meet the upcoming business objectives.
D. Job Analysis: After having decided how many persons would be needed, it is necessary to
prepare a job analysis. The recorded details of training, skills, qualification, abilities, experience
and responsibilities, etc. as needed for a job are studied. Job analysis includes the preparation of
job descriptions and job specifications.
E. Developing a Human Resource Plan: This step refers to the development and implementation of
the human resource p lan, which consists in finding out the sources of labour supply with a view
to making an effective use of these sources. Some important considerations at this point are:

• Specific roles/disciplines being hired for, of them which roles are pivotal for the b usiness
• Competencies and capabilities needed
• Manager vs. employee hiring
• Hire internally vs. External sourcing
• Planning for new skills through training existing staff vs. hiring new teams
• In case of surpluses, planning for redeployment / reduction in w orkforce as required
• Succession planning for key positions in the company

Q.4 Organizations hire candidate through various sources. Discuss all the possible sources of
recruitment.
Answer: The sources of employees can be classified into two types, i nternal and external. Filling a job
opening from within the firm has the advantages of stimulating preparation for possible transfer /
promotion, serves as a key motivator for internal employees who are aspiring for a move, increasing
the general level of morale, and provides more information about job candidates through analysis
of work histories within the organization. A job posting has a number of advantages. From the
viewpoint of the employee, it provides flexibility and greater control over career pro gress. For the
employer, it should result in better matches of employee and job. However, not all jobs are posted
by an organization internally. In opening a job for internal aspirants an organization make a
conscious decision and then moves forward. It is also possible that organizations might post all job
opening internally as well as externally and the internal candidates compete for the job along with
other external candidate. Whatever is the case, the objective remains to find the ‘best person’ for
the job.
In most instances, the jobs are posted on the employee intranet portals/ notice boards, though
some carry listings in the company newspapers. The posting period could be anywhere between 2 -3
weeks, with the final decision for hiring being completed w ithin 4-6 weeks. Internal applications are
usually open to all employees with a few restrictions such as tenure within the company and poor
performance issues if any. The present manager must keep in the loop and usually his or her
approval might be requir ed to proceed with the application for the job opening. Some
organizations require immediate notification, while others inform only if the employee qualifies as a
prime candidate for the listed opening. The human resources team acts as a hub in screening
applications that are unrealistic, preventing an excessive number of bids by a single employee, and
counselling employees who are constantly unsuccessful in their attempt to change jobs.
External recruitment is when the organization clearly prefers to hire from outside the organization for
the job. Organizations most definitely go for external hiring for lower level jobs, when they are
expanding, during phases of rapid growth and for positions whose skills/ experience specifications
cannot be met by existing human resources.

Common outside sources available:

1. Advertising: In both the print as well as the web media. Among the best methods when the
organization needs to reach a large audience and usually at least 5 -6 or more job openings.
First, advertisement s can be placed in the appropriate media to be read by particular media
groups. Secondly, more information about the company, the job, and the job specification can
be included in the advertisement to permit some self -screening. Advertisement invites a fai r
amount of poor candidate profiles and therefore a fair amount of time and effort of the firm’s
recruitment team is spent in screening. Often organization that can afford the cost, outsource
this to a placement agency those take care of the first few step s in the screening process.

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2. Professional Placement organizations or recruiting firms or executive head -hunters: maintain
complete information about employable candidates, who usually are already employed
elsewhere. These consulting firms therefore mainta in a active database of skilled and
experienced resources. They work closely with organizations through contractual agreements to
source appropriate candidates for the firm’s requirements. They recommend persons of high
calibre for almost any job in inform ation technology, managerial, marketing and production
engineers’ posts. They have slowly and steadily emerged as extremely popular and fairly
effective means for find good resources. These firms are looked upon as ‘head hunters’, ‘raiders’
and ‘pirates’ by organizations which lose human resources through their efforts. However, these
same organizations may employ "executive search firms" to help them find talent.

3. Job Portals and Job Sites: Job portals are hosted by a recruitment agency with a large
database of skilled and experienced candidates. An organization looking for a particular skill set
can register on the portal for a monthly/quarterly /annual fee and browse for the desired
candidate profile and obtain a potential list of candidates who fit the profile. That these
candidates would be interested in a new job and would keen to move from the existing role/
organization is another matter all together. A significant amount of time and effort of the
recruitment team goes in reaching out to these candi dates and validating that the information
on the resume is accurate and the person matches the requirement and that the candidate is
indeed looking to change the job. This is also a common sourcing method in organizations.

4. Employment Agencies: Additional screening can be affected through the utilization of

employment agencies, both public and private. Today, in contrast to their former un -popular
reputation, the public employment agencies in several States effective, particularly in the fields
of unskilled, semi-skilled and skilled operative jobs. In the technical and professional areas,
however, the private recruiters are doing most of the work.

5. Employee Referrals: Fast emerging as the latest most effective method is the referral route to
staffing. Friends and relatives of present employees are also a good source from which
employees may be drawn. In the current times when the talent market is most challenged, large
employers frequently offer their employees bonus or prizes for any referrals that are hi red. This is
usually linked to the referred employee’s stay with the company for a specific length of time.
In these time of talent crunch that the organizations are facing they are constantly coming up
with innovative ways to hire good talent. Some compa nies maintain details of former employees
whose performance record was good to woo them back when there are new job openings for
which they are qualified.

6. Schools, Colleges and Professional Institutions: Popularly called Campus Recruitment,

organizations engage with education institutions that educate students for ready -to-work jobs,
like engineers and management graduates by offering opportunities for recruiting their students.
These institutions operate (usually annual) placement services / events where complete bio -data
and other particulars of the students are made available along with interviewing opportunities.
The companies that hire such resources maintain contact with Placement Bureaus of these
institutions and enlist with them to showcase the orga nization and carry out the selection process
for those who fit the organizations’ requirement and are interested. The prospective employers
can review credentials and interview candidates for management trainees or probationers.
Whether the education sough t involves a higher secondary certificate, specific vocational
training, or a college background with a bachelor’s, masters’ or doctoral degree, educational
institutions provide an excellent source of potential employees for entry -level positions in
organizations. These general and technical/ professional institutions provide blue -collar
applicants, white-collar and managerial human resources.

7. Casual applicants: Unsolicited applications, both at the gate and through the Career site on the
web page and even on post mail, constitute a much -used source of human resources. But are
fast losing their value and are no longer counted as a valid method. Similarly unsolicited
applications for positions in which large numbers of candidates are not available from other
sources, the companies may gain keeping files of applications received from candidates who
make direct enquiries about possible vacancies on their own, or may send unconsolidated

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 applications. The information may be indexed and filed for future use when t here are openings
in these jobs.

8. Indoctrination seminars for colleges professors to plants and banquets are arranged so that the
participant professors may be favorably impressed. They may later speak well of a company and
help it in getting the requir ed human resources. are arranged to discuss the problem of companies
and employees. Professors are invited to take part in these seminars. Visits

9. Contractual Staffing : To adjust to short -term fluctuations in human resources needs, it is

commonplace in organizations to contract employees of another employer by the hour or day.
While this practice has been particularly well established in the office administration field today
almost any job can be sub contracted through a third party vendor with whom the firm enters into a
contract. This way the firm not only obtains well -trained and selected human resources while its
liability as a permanent employer of the resources is absolved.

10. Voluntary organizations: such as private clubs, social organizations m ight also provide employees
– handicaps, widowed or married women, old persons, retired hands, etc., in response to
advertisements.

Q.5 Write short notes on:

MBO
360 Degree
Answer: MBO -Management by objectives is one of the most popular individua l evaluation methods
in use today is Management by Objectives (MBO). In this system, the Manager and employee to be
evaluated jointly set objectives/targets in advance for the employee to try to achieve during a
specified period. And usually the objectives framed are of quantitative nature. MBO is a very
common industry practice. At the beginning of the year clear objectives are laid down for
achievement during the course of the year. These objectives are popularly called by the following
names:

1. KRA-key result areas

2. KPA -key performance areas
3. Targets
4. Commitments

MBO is one of the most effective methods for performance review primarily because it is identified at
the beginning of the review period and is regularly reviewed for achievements and m odified on-
going again in consensus between the employee and the manager.
At the end of the review year, the MBO’s are reviewed for completion with the SMART framework.
In case of a new employee or someone moving jobs/assignments between teams; after about 6-8
weeks of being in the job this process is undertaken and the objectives are set.
The evaluation too is a joint review of the degree of achievement of the objectives. This approach
combines the manager and self -evaluation systems.

Critical incident technique: In this technique, HR specialists and operating managers prepare lists of
statements of very effective and very ineffective behaviour for an employee. These are the critical
incidents. The HR specialists combine these statements into categories, w hich vary with the job.
Once the categories are developed the statements of effective and ineffective behaviour are
provided to the managers. The manager maintains a log for each employee right through the
evaluation period. The manager "records” examples of critical (outstandingly good or bad)
behaviors in each of the categories, This log is used to evaluate the employee at the end of the
period. The manager can be specific in making positive and negative comments, and it avoids
“recency” bias. The critica l incident technique is normally to be used by superiors than in peer or
subordinate evaluations.

Checklists and weighted checklists : Another type of individual evaluation method is the checklist. In
its simplest form, the checklist is a set of objectives or descriptive statements. If the manager believes
that the employee possesses the trait listed, the manager checks the items; if not it is left blank. A
rating score from the checklist equals the number of checks.

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A recent variation is the weighted check list. Managers or HR specialists familiar with the jobs to be
evaluated prepare a large list of descriptive statements about effective and ineffective behaviour
on jobs, similar to the critical incident process. Judges who have observed behaviour on the jo b sort
the statements into the ones describing behaviour that is scaled from excellent to poor (usually on a
7-11 scale). When there is reasonable agreement on an item (for example, when the standard
deviation is small), it is included in the weighted chec klist. The weight is the average score of the
Raters to the checklist’s use.
The Managers or other Raters receive the checklists without the scores, and they check the items
that apply, as with an un -weighted checklist. The employee’s evaluation is the sum of the scores
(weights) on the items checked. Checklists and weighted checklists can be used by evaluators who
are superiors, peers, or subordinates, or by a combination.

Behaviorally anchored rating scales : the most prevalent technique, which is a varia tion of the
critical incident approach, is the behaviorally anchored rating scale (BARS). This technique is also
called the behavioral expectation scale (BES).
Managers give descriptions of actually good and bad performance, and HR specialists/consultants
group these into categories (five to ten is typical). The items are once again evaluated by managers
(often other than those who submitted the items). A procedure similar to that for weighted checklists
is used to verify the evaluations (outstandingly good , for example) with the smallest standard
deviation, hopefully around 1.5 on a 7 -point scale. These items are then used to construct the BARS.
The final output is a set of statements for each item from among which the manager chooses the
most appropriate one for the employee based on his/her performance

360 Degree: Typically, performance appraisal has been limited to a feedback process between
employees and Managers. However, with the increased focus on teamwork, employee
development, and customer service, the emphasis has shifted to employee feedback f rom the full
circle of sources depicted in the diagram below. This multiple -input approach to performance
feedback is sometimes called "360 -degree assessment" to connote that full circle.

There are no prohibitions in law or regulation against using a variety of rating sources, in addition to
the employee’s Manager, for assessing performance. Research has shown assessment approaches
with multiple rating sources provide more accurate, reliable, and credible information. For this
reason, HR Management s upports the use of multiple rating sources as an effective method of
assessing performance for formal appraisal and other evaluative and developmental purposes.
The circle, or perhaps more accurately the sphere, of feedback sources consists of Managers, pe ers,
subordinates, customers, and one’s self. It is not necessary, or always appropriates, to include all of
the feedback sources in a particular appraisal program. The organizational culture and mission must
be considered, and the purpose of feedback will differ with each source. For example, subordinate
assessments of a Manager’s performance can provide valuable developmental guidance, peer
feedback can be the heart of excellence in teamwork, and customer service feedback focuses on
the quality of the tea m’s or agency’s results. The objectives of performance appraisal and the
particular aspects of performance that are to be assessed must be established before determining
which sources are appropriate.
We shall discuss the contributions of each source of ra tings and feedback. In addition, precautions
are listed to consider when designing a performance management program that includes 360 -
degree assessment.

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Superiors: Evaluations by superiors are the most traditional source of employee feedback. This form
of evaluation includes both the ratings of individuals by Managers on elements in an employee’s
performance plan and the evaluation of programs and teams by senior managers.

Self Assessment: This form of performance information is actually quite common b ut usually used
only as an informal part of the Manager -employee appraisal feedback session. Managers frequently
open the discussion with: "How do you feel you have performed?" In a somewhat more formal
approach, Managers ask employees to identify the key accomplishments they feel best represent
their performance in critical and non -critical performance elements. In a 360 -degree approach, if
self-ratings are going to be included, structured forms and formal procedures are recommended .

Peers: With downsizing and reduced hierarchies in organizations, as well as the increasing use of
teams and group accountability, peers are often the most relevant evaluators of their colleagues’
performance. Peers have a unique perspective on a co -worker’s job performance and employees
are generally very receptive to the concept of rating each other. Peer ratings can be used when
the employee’s expertise is known or the performance and results can be observed. There are both
significant contributions and serious pitfalls that must be carefully considered before including this
type of feedback in a multifaceted appraisal program.

Subordinates: An upward-appraisal process or feedback survey (sometimes referred to as SAM for a

"Subordinates Appraising Managers") is among the most significant and yet controversial features of
a "full circle" performance evaluation program. Both managers being appraised and their own
superiors agree that subordinates have a unique, often essential, perspective. The subordinate
ratings provide particularly valuable data on performance elements concerning managerial and
Managerial behaviors. However, there is usually great reluctance, even fear, concerning
implementation of this rating dimension. On balance, the contributions can outweigh the concerns if
the precautions noted below are addressed.

Customers: Setting Customer Service Standards , requires agencies to survey internal and external
customers, publish customer service standards, and measure agency performance against these
standards. Internal customers are defined as users of products or services supplied by another
employee or group within the agency or organization. External customers are outside the
organization and include, but are not limited to, the general public.

Q.6 Hawthorne study ha s played a critical role in human resource development: Elucidate the
Hawthorne study and explain its contribution to human relations movement.

Answer: Hawthorne study emphasis on Group Dynamics, a group can work effectively only if its
members remain co mmitted to certain desired norms, which Cartwright has termed principles of
group dynamics.

These principles are:

i) If a group is to be used effectively as a medium of change, those who are to be changed
and those who are to wield an influence for change must have a strong sense of belonging
to the same group, i.e., the barriers between the leaders and the led should be broken
down.
ii) The more attractive a group is to its members, the greater the influence it would exercise on
its members. If attitudes, va lues or behavior, are relevant as a basis of attraction to the
group, the group will wield a tremendous influence over them.
iii) The higher the prestige of a group member in the eyes of other members, the greater the
influence he will exercise on them.
iv) Successful efforts to change individuals or sub -parts of a group would result in making them
conform to the norms of the group.
v) Strong pressure for changes in a group can be established by creating a shared perception
by members for the need for change, thu s making the source of pressure for change lie
within the group itself.
vi) Information relating to the need for change, plans for change, and the consequence of
change must be shared by all the members of a group.

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vii) Changes in one part of a group produce a strain in other related parts which can be
reduced only by eliminating the change or by bringing about readjustments in the related
parts.

Groups represent an important dynamic in the study and application of organizational behavior.
Research indicates the following four ways to enhance team effectiveness; (1) Team building –
organizations need to understand that teams need time and training so they can develop into
productive and cohesive units. There is a learning curve that every team must go through . A sense of
ownership and partnership and empowerment is what finally makes the group effective. Quality
team building programs have proved very effective method to enhance team effectiveness. Here
again organizations need to be careful that the program i s customised to the team’s specific
requirement, the corporate culture and values and forces the group members to stretch outside
their comfort zone. (2) Collaboration – leveraging the capability of each individual in the group to
effectively channels it t owards the group’s goals, is something that organizations do to enhance
group effectiveness. (3) Group Leadership – the critical role of the leader in selecting the right talent
and then using the right tactic to motivate them to reach the group goal is im portant. Team leaders
need to engage in many different kinds of behaviors in order to foster team effectiveness. Positive
leaders nurture positive teams has been proven by research. (4) Cultural/Global Issues – the
emerging workplace and its global teams p ose different challenges for group effectiveness.
Guidelines to such teams should include tips on adapting to each culture and respecting local laws.
The study of teams and performance remains an important area of research and is still the most
effective way to achieving organizational results.

MBA Semester 1
MB0043 – Human Resource Management
Assignment Set - 2

Q.1 It is assumed that high morale leads to high productivity. Explain what morale is and how it is
related to productivity?
Answer: Morale has been variously defined by different authors. Pr ofessor Ralph C. Davis says, "Good
organizational morale is a condition in which individuals and groups voluntarily make a reasonable
subordination of their personal objectives for their organization". According to Dale Yoder and Paul
D. Standohar, "Morale means evident commitment, that is, demonstrated spirit, enthusiasm, and
confidence in the organization’s policies, programmes, and accomplishments. Morale is revealed by
what individuals and groups say and do to show an interest in, understanding of, and personal
identification with work -team survival and success.” Edwin B. Filippo has described morale as “a
mental condition or attitude of individuals and groups which determines their willingness to co -
operate. Good morale is evidenced by employee enthusia sm, voluntary conformance with
regulations and orders, and a willingness to co -operate with others in the accomplishment of an
organization’s objectives. Poor morale is evinced by surliness, insubordination, a feeling of
discouragement and dislike of the j ob, company and associates."
According to Haimann, "It is a state of mind and emotions affecting the attitude and willingness to
work, which in turn, affect individual and organizational objectives." Joseph D. Mooney describes
morale as "the sum total of s everal psychological qualities which include courage, fortitude,
resolution, and above all, confidence."

Morale and Productivity

It is assumed that high morale and high productivity/ high quality and creative work all go hand in
hand. Since morale manife sts itself in the attitudes of employees, it is important to know about the
results of high and low morale. One of the most unpredictable effects of the level of morale is its
impact on employee productivity. The productivity of a group is a composite of m any factors, at
least one of which is the general state of mind or the commitment of the group. Formerly it was
thought that high morale resulted in high productivity. Research is repeatedly proving that this
correlation is not as simple. Various studies h ave revealed that the group having the highest morale
need not always be the highest in productivity. As morale is made up of so many factors, so is
productivity, the result of a series of complex factors. When a group is convinced that high

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productivity will result in its getting the things it wants most, it is reasonable to believe that
productivity will be high. It is likewise reasonable to believe that if the group’s satisfactions in the work
situation are high and high productivity will enable it to ge t the things it wants most, the productivity
may be high.
Though high morale may not be the single cause of the high productivity, a high -producing group
nearly always has a reasonably high morale, in terms of the company as a whole. Morale
development is almost certain to accompany successful operations where the individuals can relate
their respective endeavors and objectives to the success of the enterprise as a whole. "A morale -
building organization tends to utilize fully the skill, initiative, judgeme nt, and training of its members,
and through such utilization succeeds in building up these and other qualities in everyone, so that
the abilities of all constantly expand, and the organization thus is able to succeed and grow."

Q.2 “Coxen” is a medium si ze, plastic manufacturing company. In this Company, workers have
developed grievances against management. For past 2 years, in spite of making profit, company is
not paying bonus to workers. It is expected that, if the grievances are not dealt with, it mig ht lead to
severe consequences. Imagine this situation and explain the grievance handling procedure, list
each steps of the procedure. Suggest few measures to avoid grievances.
Answer: The Grievance Handling Procedure are as given below:
a) A grievance should be dealt within the limits of the first line manager.
b) The appellate authority should be made clear to the employee so that if he cannot get
satisfaction from his immediate manager, he should know the next step.
c) The grievance should be dealt with spe edily.
d) In establishing a grievance procedure, if the grievance is against an instruction given by a
superior in the interest of order and discipline, the instructions must be carried out first and then
only employee can register his protest.

There should be no recourse to official machinery of conciliation unless the procedure has been
carried out without reaching any solution.

Grievance Machinery
Grievance machinery is usually thought of in connection with a company that deals with a labour
union. Though the union must be given some credit for stimulating the installation of such
procedures, all companies, whether unionized or not, should have established and known methods
of processing grievances.
To establish new grievance machinery, workers in each department and each shift shall select, from
among themselves and for a period of not less than one year at a time, departmental
representatives, and forward the list of persons so selected to the management. Where the unions in
the undertaking are in a po sition to submit an agreed list of names, recourse to election may not be
necessary. Nor will this be necessary when a Works Committee is functioning satisfactorily, for the
Works Committee’s member of a particular constituency shall act as the departmenta l
representative.

Grievance Handling
The details of the grievance procedure vary from industry to industry and from trade union to trade
union because of the variations in the size of organizations, trade union strength, the management
philosophy, the company traditions, industrial practices and in the cost factor. An important aspect
of the grievance machinery is the reassurance given to an individual employee by the mere fact
that there is a mechanism available to him which will consider his grievance in a dispassionate and
detailed manner, and that his point of view will be heard and given due consideration. An
employee’s conception of his problem(s) may be quite biased. Venting his grievance and being
heard gives him a feeling of being cared for. He g ets it "off his chest", so to say, and it does a lot of
good for his morale as revealed by the famous Hawthorne Studies.

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Initial step
The greatest opportunity for the settlement of a complaint or grievance lies in the initial step of the
procedure. If t here is no formal procedure and the firm announces an open -door policy, then it is
possible that the manager may get bypassed by the worker who would take his grievance directly
to the higher levels of management. But such bypassing not merely undermines t he manager’s
authority, who loses face, but also creates an atmosphere of win -or-loose in which both the worker
and manager will try to prove the other wrong.

Intermediate step
As the figure indicates, the next step on the management side of the procedur e is to submit the
dispute to middle management. Involving the manager’s, middle and senior -line managers in the
grievance process helps in two ways. Initially, the social barriers between the various categories are,
to some extent, broken by personal cont act and mutual understanding. Secondly, the problem -
solving approach integrates the various levels in the organization into a team to jointly overcome
the problem which concerns not only the worker but the manager as well. However, it is important to
ensure that the line management assumes prime responsibility for the settlement of a grievance. In
many organizations, the Personnel Department is injected into the procedure as a decision -making
power. On the union side, intermediate levels are represented by higher personnel in the union
hierarchy. In most of the organizations, the business agent, a full -time negotiations specialist of the
union, takes over the intermediate and sometimes the final step. The presence of a business agent
may explain why manageme nt is often outmanoeuvred by the union. Business agents are specialists
in union-management negotiations, and it is also their full -time job. The line manager often considers
grievance processing a minor, incidental, and distasteful duty. This lack of spec ialization and interest
on the part of line management has led to the situation in which the staff personnel department is
given authority to make decisions about grievances.

Final Company-union step

Usually, the final step to be undertaken by the compan y and union is a discussion of the grievance
between representatives of top management and top union officials. For management, it may be
the President in important grievances, a Vice -president, or a high -level Industrial Relations Executive
but, for the union, it may be the President of the local union, the Union Executive Committee, or a
representative of the International Union. It is difficult to secure an integration of interests at this high
level.

Q.3 Write a brief note on Succession planning.

Answer: Succession planning involves having senior executives periodically review their top
executives and those in the next -lower level to determine several backups for each senior or key
position in the firm. It takes years of grooming to develop effective senior managers and this is a
talent challenge that all organizations face today. Traditionally succession planning was restricted to
senior-level management positions and this was either an informal or formal process.
Over the years succession planning h as established itself as a key HR activity in most organizations
with formal processes that ensure it is reviewed regularly and scientifically. In smaller organizations it
is yet an informal succession planning process where the individual manager identifi es and grooms
his or her own successor.

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Succession planning involves an examination of strategic (long -range) plans and HR forecasts for all
identified key positions in an organizations. It includes positions that are critical for the business and
for its continuity and not just the senior level positions. It includes a review of the data on all potential
candidates who might be able to move to these positions either right -away or in the near future. The
objective is to identify employees with potential an d increase managerial depth as well as
promoting from within the company. This is usually an exercise undertaken one a year and usually
runs parallel to the performance appraisal process. This exercise is carried out by the senior
management team of the un it/subsidiary and facilitated by the HR team. Usually, committees of top
managers’ work together to identify high potential candidates within their team and then out -line
developmental activities for them. They may also include a formal assessment of the p erformance
and potential of candidates and written individual development plans for candidates.
All member’s voice opinions about the potential candidates that are proposed and disagreements
are openly debated, before the final document is signed off. The succession planning process
includes determining and clarifying the requirements of the managerial position and development
plans for how these potential candidates can be groomed to occupy these positions in the
eventuality they fall vacant. These develop ment plans then translate into the individual’s
development plan and HR along with the immediate manager work with the individual to execute
the same.
A succession planning exercise concludes with an organization chart of all key positions with listing of
possible potential candidates and the readiness rating for each potential candidate. For example a
position that can immediately be filled is rated higher than a position which does not have a ready -
now candidate. Other components include performance appra isal of these employees, and
individual development plans and management development programs. Additionally, the factors
rated as most important in selecting specific internal/external potential candidates for grooming
includes: past job performance, past positions or prior employment, perceived credibility, area of
expertise and career paths and values and attitudes.

Benefits: There are many benefits of having a formal Succession Planning System:
1. Provides a clear context to strategic business planning as the key positions for the business’s
success are what are being planned for.
2. Provides a more systematic basis to judge the risk of making particular succession and
developmental moves.
3. Bring focus to systematized succession a plan that scientific ally identifies potential candidates to
ensure business continuity.
4. Enables the identification of high potential and future leaders, whereby the thereafter the
manager/HR can engage with them for leadership development initiatives.
5. Reduces randomness of managerial movements.
6. Helps anticipate problems before they get started – and thereby avoid dysfunctional situations.
7. Provides scientific approach for arriving at succession decisions as part of the overall human
resource planning exercise – connecting formats (data, timing) with process (judgement, discussions,
analyses)
8. Helps plan for internal promotion opportunity
9. Provides early warning if succession does not exist for a position allowing for lateral hiring from the
market.
Regardless of what type of succession planning program is used (formal or informal); most successful
programs obtain the support of top management

Q.4 Think of a situation in which an employee is to be dismissed from the organization, what will be
the fair steps of dismissal followed by the organization?
Answer: Dismissal and Discharge of an Employee:
According to Article 311 of the Indian Constitution, which states that “no person shall be dismissed or
removed from service until he has been given a reasonable oppor tunity to show cause as to why
the proposed action should not be taken against him?"
The Model Standing Orders, similarly states that, "before an employee is dismissed, he should be
given an opportunity to explain the circumstances against him."

The following steps are followed for dismissal of an employee:

a) Charge Sheet is Framed and Issued:

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The first step in the procedure is to have in -place a written complaint against the employee in
question, and which contains details of the offence with which he is charged, policy breach and the
allegation of misconduct made against him, and indicating the time limit within which a reply to the
charge sheet should be submitted to the due authorities. The employee is called to put forth his case
why a disciplinary act ion should not be taken against him.
The contents and implications of the complaint/charge sheet may be explained to him in his own
language and in the presence of some reputable witness, before a copy of it is handed over to him.
If he refuses to accept i t, it should be sent to his residential address "registered post with
acknowledgement due". If the employee refuses to take delivery of the registered letter, or when it
has been returned undelivered, it should be published in a local paper to ensure its w ide publicity.
b) Explanation Receipt:
The employee provides his explanation within the scheduled time allotted. He can also ask for an
extension of time for its submission, all in good faith.
c) Issue of Notice of Enquiry:
Upon receipt of the explanation from the employee it is reviewed. If found unsatisfactory, a notice of
enquiry, mentioning the time, date and place, has to be given to him in which the name of the
person or officer conducting the enquiry would also be mentioned. The employee is required to be
present at the appointed time and place, together with his witness, if he has any.
d) Conducting the Enquiry:
On the appointed day and at the appointed place and time, the enquiry is held by the Enquiry
Officer in the presence of the employee. The co ntents of the charge sheet and an explanation of
the procedure to be followed at the enquiry are communicated to the worker. If he pleads his
innocence, the enquiry proceeds; but if he pleads guilty, unconditionally and in writing, the enquiry
is dropped.
e) Sharing Findings:
Once the enquiry is over, the Enquiry Officer has to give his findings, which should invariably contain
the procedure which was followed, the employee’s statements, all of the documents produced and
examined, the charges made and the e xplanations given and the evidence produced. The officer
should then record his own findings on each of the charges and the grounds on which he has come
to a particular conclusion. He should specifically mention which charges have been proved and
which have not been proved. He then submits his findings to the authorities empowered to take the
disciplinary action against the employee. He, however, is not required to make any
recommendations.

a) On receiving the report, the executive authorized to take a decisi on thereon passes an order of
action
b) Communication of the decision

A copy of the orders is then handed over to the employee.

In terminating the employment of a employee the following conditions must necessarily be
complied with for misconduct.

a) The misconduct of the employee is of such a nature as to indicate that his discharge or dismissal
would be an appropriate punishment and that this kind of punishment has been provided in the
companies policies or per statute.
b) A fair and open enquiry must be held by the employer into the misconduct which an employee
has been charged with.
c) The enquiry should be held in such a manner as to ensure that it would be fair and proper and in
conformity with the principles of natural justice. The employee must be given an adequate
opportunity to defend himself and to present witness in support of his contention or case.
d) The person holding the enquiry should not be someone who’s known to be biased has
personal/vested interest or was in anyway associated with the misconduct.
e) The order must be sensitively communicated to the employee against who it has been passed .

Q.5 Describe the process of wage fixation and the machinery available for it.
Answer: A lot of the wage fixation dispensation in modern times is based on the the oretical
framework provided by the Equity theory. The Equity theory states that satisfaction with pay is always
with reference to relevant others. The following equation provides the details of the consideration
that influence the sense of satisfaction tha t an employee experiences w.r.t. salary:

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The employee very naturally and often unconsciously identifies ‘relevant’ others who are similar to
himself/herself professionally / w.r.t. the job characteristics / the skill -set etc. The employee then
begins to constantly compare and evaluate to retain a state of equilibrium. When the left -hand side
of the equation is equal to the right hand side there is no dissonance and the employee is happy
and satisfied in what he’s getting paid.
When the employee perceives a dissonance in the way he is paid vs. what the relevant other is paid
there is discomfort and dissatisfaction at work. If the left side of the equation is lower than the right
hand side of the equation it is a case of the employee under -reward and he/she can opt to engage
in the following course of action:

• Individual could ask for a raise

• Individual could reduce contribution (work less hard)
• Individual could try to get the Other to reduce contribution
• Quit or
• Choose another relevant / comparison other
If the left hand side of the equation is higher than the right hand side it is a case of over -reward and
the employee normally reacts in the following ways:

· Individual could increase contributions (work harder or longer, cultivate additional skills)
· Individual could attempt to get the other a raise
· Individual could attempt to get other to increase his/her contribution
· Quit the job as he/she is soon singled out by the others
· Choose another relevant/comparison other

Therefore in designing pay s ystems organizations need to pay attention to all three dimensions of
equity; internal Equity:- A pay differential between different jobs, within the organization either too
large or too small. external Equity: comparison of similar jobs in different organ izations and individual
Equity: comparison among individuals in the same job with the same organization. How do
organizations achieve this delicate balance among so many variables?

Internal Equity is best established by ensuring that each and every job in ternally is appropriately
compared and benchmark. Carrying out job evaluation exercises and reviewing it from time to time
takes care of this challenge. Additionally providing employee transparency in the way jobs are
ranked and aligned to levels within a common hierarchy is critical. We will spend time in the next
chapter understanding this in a detailed manner.

External Equity is established by organizations participating in salary surveys where the organization’s
own salary levels are benchmarked with comparative companies in the same industry to ascertain
how they pay vs. the market. This is usually done by engaging with a third party consultant
specializing in carrying out salary/compensation surveys. The steps in a compensation survey activity
would normally be

· Identify and assign a consultant to carry out the salary survey

· Identify the jobs / roles that the company wants to benchmark – a company might not want all
jobs to be benchmarked as it is expensive, only those jobs that are critical to the business might be
identified for benchmarking against the market.
· Identify the companies in the industry that it wishes to benchmark against – peer / competitor
companies with whom the company competes in the market and with whom the fight for talen t is
on are common examples, however companies that pay way above or below the normal market
trends might be eliminated to ensure that more stable data is used for comparison.
· Share all information related to the identified jobs such as job description, job specification, person
specification, level in the organization, salary and benefits and other perquisites provided
· Consultant provides the report. Review the report to ascertain where the company stands w.r.t. its
competitors.
· Take corrective act ion as required/ as per compensation philosophy and ability to pay

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As this is a expensive and time consuming process organizations normally do a survey once in 2 -3
years, however larger MNC’s might want to do one every year. Companies can also purchase of f-
the shelf industry specific compensation survey reports that are published by these consultants and
do their own benchmarking with the help of the internal HR teams.
Another important pay level decision is the way the organization wishes to benchmark its pay level
on a overall basis. An organization can decide to lead the market and pay its employees closer to
the top end of the benchmarked salary ranges, else it can lag the market and intentionally peg itself
at the lower end of the salary ranges from th e survey results. An organization can decide to ‘ match’
the market and pay salaries at the market average. Therefore, in keeping with their pay philosophy
a company can decide to pay at the 75th percentile of the market. Therefore it would benchmark
itself against the 75th percentile on the survey results obtained from a custom survey or a off -the-
shelf one.
Individual equity is established through having clearly laid down compensation policies and
guidelines. The focus here is on transparency where the emp loyee is satisfied because he knows that
he as well as comparison others are paid similarly and as per the declared compensation guidelines.
Few elements that ensure a fair policy exists:
• Establishing Pay Ranges commensurate with the levels in a organizati on
• Provide for Broad -banding clubbing levels into few bands that will make promotions
meaningful and relevant
• Ensuring that there are no employees above or below a range, exceptions break the rule
and results in lack of credibility
• Ensure that the criteria for ascertaining individual pay is clearly linked to merit, skill or seniority,
avoid ambiguity for bias that might breed favoritism or nepotism
• Some medium as also most large family -run organizations provide for employee participation
/ negotiation of pay terms. Usually this provision is for key and top performing employees. It is
important for a organization to be clear on whether this is allowable or not. If not clarified this
can become a big de -motivator for other employees and a source of inequit y.
• Ensure that compensation system is compliant with the countries statute, like minimum
wages, provident fund, gratuity, paid leave, tax considerations and standard deductions
Compensation design of policy and guidelines is managed by a dedicated Compen sation and
Benefits team which is a part of the Human Resources Team. Compensation administration i.e.
payroll processing is however more of a Finance department activity. Often organizations also
outsource this activity. Companies like Accenture, Hewitt, ADP are common payroll processing
consultants.

Q.6 Write short notes on:

Charismatic Leadership
Participative Leadership
Delegative Leadership
Transformational Leadership
Answer: Charismatic Leadership
Charismatic Leadership points out that charisma is a personal trait. Often it is confused and
interpreted as th e highest form of transformational leadership, but increasing research supports a
different thought. Charismatic or ‘heroic’ leaders easily build allegiance in followers but do not
necessarily change the organization.

(1) Inspirational motivation: the degree to which the leader articulates a vision that is appealing and
inspiring to followers. Leaders with inspirational motivation challenge followers with high standards,
communicate optimism about future goals, and provide meaning for the task at hand.
(2) Intellectual stimulation: The degree, to which the leader challenges assumptions, takes risks and
solicits followers’ ideas. Leaders with this trait stimulate and encourage creativity in their followers.
(3) Individualized consideration or Individuali zed attention: The degree to which the leader attends
to each follower’s needs, acts as a mentor or coach to the follower, and listens to the follower’s
concerns and needs. This also encompasses the need to respect and celebrate the individual
contribution that each follower can make to the team (It is the diversity of the team that gives it its
true strength).

Transformational leadership and charismatic leadership theories have a lot in common and
complement each other in important ways. Another research however suggests that charismatic

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leaders create dependent followers, whereas transformational leaders support follower
empowerment, which reduces leader dependency.

Participative Leadership
Participative Leadership; Lewin’s study found that participative (democratic) leadership is generally
the most effective leadership style. Democratic leaders offer guidance to group members, but they
also participate in the grou p and allow input from other group members. While it is possible that this
style productivity is lower than that in the authoritarian group, but the contributions were of a much
higher quality. This could also be more time taking. Participative leaders enc ourage group members
to participate, but retain the final say over the decision -making process. Group members feel
engaged in the process and are more motivated and creative.

Delegative Leadership
Delegative Leadership Model : Developed by Paul Hersey and Ken Blanchard the Delegative
Leadership Model suggests that effective of leaders can assess a situation and change style with the
(1) readiness of followers – ability/willingness of employees to execute a specific task, (2) Ability – the
extent to which the employees have the necessary skill and knowledge to perform the task without
the leaders guidance, and
(3) Willingness refers to the follower’s motivation and commitment to perform the assigned task. The
situational leadership model identifies 4 leadership styles of ‘telling, selling, participating and
delegating, each of which is appropriate under different circumstances of the situation.

Transformational Leadership
Transformational Leadership: The term transformational leadership was first coined by J.V. Downton
in 1973. James MacGregor Burns (1978) first introduced the concepts of transformational and
transactional leadership in his tr eatment of political leadership, but this term is now used in
organizational psychology as well. According to Burns, the difference between transformational and
transactional leadership is what leaders and followers offer one another. This is a leadership
perspective that explains how leaders change teams or organizations by creating, communicating
and modeling a vision for the organization or work unit, and inspiring employees to strive for that
vision. This is best understood then compared with the transa ctional leadership, which is defined as
leadership that helps organization achieve their current objectives more efficiently such as linking
job performance to valued rewards and ensuring that employees have the resources needed to get
the job done. Transformational leaders are change agents who energize and direct employees to a
new set of corporate values and behaviors. These leaders steer the organization onto a better
course of action. It si best suited in organizations that need significant alignment w ith the external
environment. Key elements of transformational leadership include (1) Creating a Strategic Vision –
reflect a future for the company or work unit that is accepted and valued by organizational
members, creating a higher purpose/super -ordinate goal that energizes and unifies employees, (2)
Communicating the Vision – elevating the importance of visionary goals to employees, by bring it to
life through symbol, metaphors, stories and other vehicles that go beyond plain language and
where the leader ‘walks the talk’ and model the visionary behavior that is expected from the
employees, and (3) Building Commitment to the Vision – such leaders create in employees’ a ‘can
do’ attitude by including them in the vision process. Their persistence and consi stency reflects an
image of honesty, trust and integrity.

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