Unit 4

UTILIZING

HUMAN RESOURCE

Motivation
Thus,

motivation is an inner state that energizes,

direct and sustains behavior towards goal
achievement. It is an important management tools
to harmonize and achieve gods of individuals and
organization. It is drive and effort to satisfy a need.
It makes employees to exert greatest effort nerd. It
makes employees to exert greatest effort.

Following are the definition given by various authors.

According to T.R Michell, Motivation is the process that

account for an individual intensity direction and persistence
of effort toward attaining a goal.

According to Robbins Deanzo, Motivation is an individual

willingness to event effort to achieve the organization goal,
conditioned by this effort ability to satisfy individual need.

According to Fred Luthans, Motivation is a process that

starts with a physiological, deficiency or need that activates
behavior or a drive that is end at a goal or incentive.

Motivation
Concept

of motivation:

The motivation is derived from the latin

mover which means to move. Literally
motivation means inducement to act or move
for
better
performance
toward
goal
achievement. It is an inner force that induces a
person to act in a certain way. Motivation is the
result of the interaction between the individual,
job and the situation. It encourage and
stimulate individual to follow a desired course
of action. It is willingness to exert high level of
effort to satisfy individual goals.

Type of Motivation:
Motivation

can be of 2 types.
Extrinsic Motivation
Intrinsic motivation
Extrinsic

Motivation :

It is externally induced and arised because of the

social and family influences. Extrinsic motivation is
money related. It can be incentives, fringe benefits,
money, services, etc. Money is the reward for work,
so, it serves as a carrot for motivation. I can be
compensation plan of an organization that includes
salary, wages and performance based incentives.
This motivation is also known as positive incentives.
Since it reduces tension employees that result from
the lack of money and reward for better performance

Type of Motivation:
Intrinsic

motivation :

It is job methods reword. It is making the job

challenging and meaningful by providing more
responsibilities. It results from important job
enrichment (vertical expansion). These rewards
are self generated by individual. It adds value to
the job and motivates employees by providing
more responsibilities sense if challenging and
achievement. It result from interesting work
responsibility, autonomy in job, opportunities,
recognition, feedback on performance and
involvement. This motivation is also known as
ve incentive since it is based on fear and
punishment for poor performance.

Importance of
Motivation:

1.Productivity

improvement
2.Understand employees
behavior
3.Quality improvement
4.Employee retention
5.Creativity promotion
6.Employee factor

# Motivations theory
ERG

theory ( Alderfer;s)
Achievement theory
Vrooms Expectancy
Theory

ERG theory
Alderfer;s)
(
Aldefer identify ERG theory in 1972 AD. His theory
drew upon from Maslow;s theory, but suggested that
individuals where motivated to more forward and
backward through the levels in terms of motivations.
He reduce Maslow;s level from 5 to the following 3. It
can be shown by the help of following diagram.

Need for existence :

Need for existence is related to Maslow;s first two needs,
thus it combine the physiological and safety need into 1
level. It provides basic materials needs for existence
requirements.
Need for relatedness :
It addressed the social needs and desire for maintaining
interpersonal relationships.
Need for growth :
It combines steam and self actualize needs of Maslow. It
is read for desire of personal development.
Thus, ERG theory focuses on satisfying needs. In
contrast, this theory defines that if a person
continuously fails to satisfy his/her higher order need,
he/she might return to satisfy lower order need.

Achievement theory :
David

I Mc Clelland in 1985 AD profound the

achievement theory, The idea here is that needs
are acquired throughout life i.e. needs are no
innate but are learned or developed as a result of
ones;s life experience. This theory focuses on the
following 3 types of needs.

Need

for achievement (nAch) :

It emphasizes the desire for success to
accomplish difficult task, solve difficult problem
for mastering task, and do things more efficiently
for attaining goals and success. It is to do better
than other.

Achievement theory :

Need

for application (nAff) :

It focuses on desire for relationship and associations

with other. This is a desire to be liked and accepted by
others.
Need for power ( n Pow) :

It relates to the desire for responsibly for control for

an authority over others. This is desire to make other
behave in a specific way. This is desire to control people.
The above needs are acquired and developed by the result
of life experience over time. This theory is very useful
because each needs can be linked with a set of work,
preference. He encourages managers to learn how to
identify the presence of nAch, nAff, nPow in them and in
others to create work environment. Thus, this theory
highlights the importance of matching the individuals and
job.

# Vrooms Expectancy
Victor
Vroom in 1964 AD profounded vrooms
Theory:
expectancy
theory, this theory explain motivation in

terms of the expectation that people have about their

ability to perform effectively on the job and to obtained
the best reward for heir effective performance.
Expectancy theory explains motivation in term of the
following 3 relationship;
Effort performance relationship : (E-P)
Performance reward relationship (P-O) :
Reward personal goal relationship :

Thus,
Vrooms
expectancy
theory
emphasizes
the
relationship between efforts performance and valance for
motivation. This theory also provides clear guidelines but
increasing motivation by altering he persons (E-P)
expectancies, (P-O) expectancies and valance outcome. This
theory can be donated by the following formula.

Motivation = expectancies valance

Equity theory :

J. stacy adms profounded equity theory.

This theory focused on people that who want
to be treated equally in comparison to other
who behave in similar ways. Employee make
comparison of their job inputs and outputs
relative to other and that inequalities
influences the degree of effort that employee
exert. This theory focused on desired to be
treated with what they persist as equality and
to
avoid
equality.
Individuals
compare
themselves with a comparison person who is in
comparable
organization
situation.
The
comparison person can be

Equity
theory
:
Self inside :

It is the process of comparing themselves with the

other position within the current organization.

Self outside :

It is a process of comparing themselves with the

similar position outside the current organization.

Other inside :

It is a process of comparing themselves with

another person inside the current organization.

Other outside :

It is a process of comparing themselves with

another person outside the current organization.

Equity
theory :
Thus, this theory focuses on the comparison of ones

performance with others and the individuals are motivated by

the desire to be equally treated in their work relationship.
Equity occurs when,

Persons outcomes

Persons inputs

others outcomes
=

others inputs

It describes that the above formula match, than the

person is more motivated and perform better. Whereas, when
the above ratio is not approximately equal, than inequity
occurs Thus, the person will be motivated to take actions to
reduce inequity. The above ratio is based on perceptions of
inputs and outputs, where the input is the contribution of
individual toward the organization by their better
performance. Whereas, outcomes are the reward that as
organization received for their better performance Job
outcomes consist of pay, benefits, recognition, promotion,
status and personal development.

Motivation
and
Best performance is the result of the effective
motivation.
Motivation induce person to behave in a certain
Performance:
way and ultimate improve the performance. Performance is
the function of ability and motivation. It implies doing a job
effectively and efficiently with a minute degree of
willingness to perform effectively would depend upon the
degree of motivation of the individual. Since, motivation is
defined as the process within the individual that also for
direction and effort to increase a desire level of
performance.

Employees usually feel demotivated when there is

disturbance in their work place and organization in unable
to fulfill their goods. T he disturbance may be turnover,
absenteeism and accidents so to improve the performance,
the employees should be motivated according to
organization needs and by fulfilling the employees personal
goals which will ultimately results in better performance.

Motivation
and
To improve the performance organization can motivate their
employs
by providing rewards and participating them on
Performance:
organizational function. Reward is material and physiological pay
off for performing the task in the work place. Whereas
participation is formal employment involvement in decision
making, providing them workplace, demarcating, empowerment
and employee ownership

There is direct and +ve linked between motivation and

performance because increased motivation results in more effort
and performance. It can be shown by the help of following
diagram.

Motivation
and
Thus, job performance is a function of employee ability
and
motivation which can be shown by the help of
Performance:
following equation.

Job performance = ability Motivation

The equation indicates the importance of ability to do

a job as well as motivating the human resources. It also
clarifies that motivation implement to use ability which
results in better performance. Thus, if an employee wants
to achieve high level of performance he must possess a
high level of motivation and ability to do the job.

To summarize, the relationship between motivation

and performance can be sometimes chicken and egg
situation. Since, they influenced each other and are
influenced by each other and derived from its +ve
effect.

Frustration:

It is a common emotional response to opposition. Related to

anger and disappointment, it arises from the perceived
resistance to fulfillment of individual will. The greater the
obstruction and greater the will, the more the frustration likely to
be, Thus, frustration is the feeling caused by a sense of privation
(lack of sth.), deprivation (blocking or interfering) or conflict in
relation to the goal directed activities.

Most of the peoples behavior is goal directed. If people do

not achieve what they want to achieve and if they did not
behave as they like then it results to frustration. Frustration
causes problems in both individual and organ-life. Every people
pass away from frustration in their life.

According to Fred Luthen, Frustration occurs when a

motivated drive is blocked before a person reaches a desired
goal.

The frustration involves the following factors which can be

shown from the following diagram.

Frustration:

Causes of Frustration:

Need :

Need is the basic requirement of any human being related

to their personal goal.

Motivated drive :
It is the factor that motivates employees to fulfill their need
and achieve goal.

Barriers :
It is a disturbance or block on the process of achieving goals
which leads to frustration; barrier may be overt i.e. outward
or physical and convert i.e. inward or mental.

Defense mechanism :

Frustration leads to behave people in several ways

which are called defense mechanism. I cause because of the
non fulfillment of needs to protect own self concept.
Frustration can lead to any of the following defense
mechanism by an individual.

Causes of Frustration:

Aggression :

It is physically or symbolically attacking the barrier. Aggression

individual strike out a all those around him. I may hurt anyone. I
may take the form of kicking, knocking, stepping foot, breaking etc

Withdraw :
It is backing away, giving u or becoming disinterested. They
withdraw from the scene that causes frustration such as asking for a
transfer or quieting the job. Individual feel apathetic (feeling lack of
interest or enthusiasm) it may also result in depression or suicide.

Fixation :
It is continually trying o achieve the goal. They seniors for both his
problems and others problems and repeatedly behave in same
manner. They dont want to give up.

Compromise :
When their goals not fulfilled, they substitute the old goal by new
one and move toward the new direction. They left out the current
job and seek fulfillment outside the job.

Factor related to Job

Pay :
Satisfaction:
It is an important determinate of job satisfaction. Ay is wham

They are

an employee getting their performance. It may be in the form if

salaries and wages which fulfills employee needs. As money is
an important factor for the satisfaction in the job. Fair pay serves
as symbol of achievement and a source of recognition.

Nature of job:

Challenging, creative, interesting and innovative job

influence the employees mood. They can implement their skill
and ability. Jobs that give autonomy o interest provide the
greater job satisfaction.

Promotion:

It leads to more job satisfaction since it involves higher pay,

challenging work assignment, responsibilities and autonomy.
Employee considers promotion as their biggest achievement and
in their career and feel satisfied.

Factor
Supervision : related to Job
It is also supervision basis for job satisfaction because the
Satisfaction:
employees who work under the supervision of their seniors feel
more supportive. If superior show interest on their work and help
them hen employees are satisfied. More over if the superior
participant he other level of staff member in decision making and
organizational function hen hey feel more satisfied.

Working condition :

Good working condition also leads o job satisfaction. It

involves adequate light, ventilation, comfortable temp, cleanness
on the work place and adequate tools and adequate. They provide
physical comfort.

Work group :

The good and supportive relationship between the

organizational colleagues leads o job satisfaction. Work good
fulfills he need for social interaction of the members. So, it serves
as social support, comfort advice and assistance o individual.

Performance Appraisal:

In simple word, performance means doing a job effectively

and efficiently with a min degree of employee created
disruptions. It is defined in term of effectiveness, efficiency
and personal data such as measure of accident, turnover,
absence etc. It is a result of efforts plus abilities. Ones he
employee has been selected oriented, socializing trained and
it has been at hiring and planning.

Following are the some of the definition about

performance appraisal given by various authors

According to Dole S. Beach, performance appraisal is

the systematic evaluation of the individual with respect to his
performance on the job and his potential for development

According to Wagne F. Cascio, performance appraisal is

the systematic description of the job relevant strength and
weakness of an individual or groups.

 Performance appraisal has been consider as a most

Usages
/ Purposes of
significant tools for an organization because in
Performance
Appraisals:
performance appraisal
data related to performance

assessment of employees are recorder, store and used

for several purpose the following are the uses of
performance appraisal:

Performance improvement

Reward management

Training and developing decision

Promotion, transfer, separation decision

Validation of selection test

Supervisory understanding

Career planning and succession planning

Policy formulation

Method of Performance Appraisal

Graphic Rating Scale:

This is the simplest and most popular technique for

appraising employees performance. This system
consist of several numerical stage each representing a
job related criteria such as quality and quantity of work,
honestly, dependability, job knowledge, attitude,
attendance, appearances initiatives and co-operation.
Each scale ranges from excellent to poor. The rater
checks the appropriate performance score. This pt. may
be used to increase salary, promotion, transfer etc. the
e.g. of graph rating scale is shown below.

Method of Performance Appraisal

Alternative ranking:

This method is concerned with ranking employees from best to

worse on the basic of qualities or overall performance. In the method
the supervisor or rater ranks the performance of his subordinates in
the order of their merit starting from the best to worse. In other words,
employees are tested in order of merit and placed in a simple
grouping.

Paired comparison method:

Under this method the evaluator compares each employees with

every other employees on a one-on-one basis in terms overall
performance. The no. of times each individual is compared with other
in different trait is tabulated and tailed. These no yields the rank order
of the entire group e.g. there are 5 employees named A, B, C, D and E.
the performance of A is 1st compared with the performance of B and a
decision is made about whose performance is better. Then, the
performance of A is compared with remaining C, D and E. the same
procedure is repeated for other employees. The no. of comparison
may be calculated by the following formula.

Paired-comparison = n (N-1)
2

Where,

N= no. of employees to be compared

Method of Performance Appraisal

Essay method:

In this method, the rater or evaluate describes the

performance, trades and behavior of the employees in
an essay from. Generally, supervisor does this job and
he has no explain in his own words about the strength
and
weaknesses
of
the
employees,
technical
effectiveness, promotion potentiality and deviation need
of each employees. The strength of the essay method
depends on the writing skills and analytical ability of the
rater, thats why the employee receives weak rating in
compression with other simply because his supervisor is
a poor writer.

Method of Performance Appraisal

Critical incident method :

This approach focuses on critical behaviors of an

employee that make all the differences between effective
and in effective of a job in a critical situation. It is a
written description. In this process the major performance
factors are important for each job. E.g. sales, supervision,
technical skills are 1st of all identified by the experts.
Then, the supervisor is given a note book containing their
performance category. The supervisor directly observes
and records such incidents. The main advantage of this
procedure is to provide feedback to the employees which
are useful for devtal. Purpose. But, the main
disadvantage is that it may give the employee the
impression that everything they do will be recorded which
may harass them. E.g. if a bank employee has to provide
deposit service to customer within 5 minutes but if it
takes 15 minutes then it is the case of critical incident.

Method of Performance Appraisal

Forced distribution :
In this method predetermined %age of employees are placed
in performance categories e.g. 15% high performer, 30%
average performer and 50% low performer. Generally,
schools, colleges and universities follow this method. E.g. 1 st
division, 2nd division, 3rd division and fail Similarly, in grading
system its denoted by A,B,C and D. In this system the rater
consider certain feature and mask them according to a scale.
The selective features may be analytical ability, cocooperativeness, dependability, self expression, judgment,
leadership etc. After developing the features the performance
of each employee is ranked as A = outstanding, B = very
good, C = good, D = fair, E = poor and F=hopes, now, the
actual performance of employee is compared with these
grades and he is allowed the grade which best describes his
performance. In this mater employees are placed group or
ranked into particular classification by the evaluator such as
top ten, 1st, 2nd, 3rd division, grade like A, B, C, D,E

Method of Performance Appraisal

Check list method:

Under this mater a check list of statement on the trades of the
employee and their job is prepared into columns i.e. yes or no.
the supervisor tick the yes and no column according to
performance on he given statement and forward the list to the
HR department. Here, the actual assessment of the employees
takes places. In other word, the supervisor only does the
reporting while actual evolution is done by the HR department.
Check list method is shown by the following model.

Types of Reward Management:

They are

Intrinsic and extrinsic reward

Financial and nonfinancial reward

Compensation Management

Compensation refers to all forms of financial reward received

by employees as a part of an emplacement relationship. An
employee receives compensation in return from his/her
contribution to the organization. Compensation occupies an
important place in the life of employee since it maintains
standers of life. employees put in their effort in exchange for
some kinds of compensation, compensation motivate
employees to perform better compensation management
consist of designing a cost and effective pay structure that
will attract retain and motivate the competent employees
compensation dissatisfaction can lead to absentism,
turnover, job dissatisfaction, low performance, strike and
grievances. Most of the problem arises in an organization due
to compensation.

Compensation management is concerned with

designing and implementing total compensation
package. Compensation package consist of pay plans
+ varieties of benefits. The payment. of condensation
should be fair and equitable.

Compensation Management

Compensation consists of following two types:

Direct compensation :
It consider of;

Pay i.e. salary and wages, base pay and merit pay

Incentives i.e. commission, bonuses, profit sharing etc.

Indirect compensation:

It consists of;

Benefits i.e. pay for time not worked, protection

programs and executive benefits.

Services i.e. physical facilities, children education,

health facility, loans, companys ca etc.

Determinants of Compensation

External factors:

Internal factors:

External

factors:

While determining compensation external factors should

be considers since compensation plan cant be
determined in selection, the major external factors that
influence compensation are

Legal consideration:

Labour market rates:

Equity consideration :

Cost of living:

Union pressure:

Determinants of Compensation

External factors:

Internal factors:

Internal

factors:

While determining compensation internal factors should

be considers since compensation plan cant be
determined in selection, the major internal factors that
influence compensation are

Objectives of compensation

Compensation policies:

Job evaluation:

Employee productivity:

Methods of Establishing
Job analysis:
Compensation:
It is a process of collecting information about jobs
and workers through survey, observation and discussion
among worker and supervisors. Job analysis determines the
task that makes up the jobs and competencies that are
required on an individual to accomplish job successfully. The
outcomes of job analysis are:
Job description:

It is a profile of the job. I explain job requirements in terms

of duties, responsibilities authority, working condt etc.

Job specification:

It is a profile of the employee performing the job. It

describes worker requirements and specifies experience,
training, education, skills, ability etc of an employee.
Job performance standers:

They specify quality and quantity of performance for each

job. They serve as performance target for employee effort.
They also serve as criteria for evaluating job performance.

Methods of Establishing
Job evaluation:
Compensation:

It is the process of analyzing and assessing the

various jobs systematically to assure them their relative
worth in an organization. It puts the job in a hierarchical
order to their relative worth and ay them accordingly. The
relative worth of a job may be determined by comparing it
with others within the organization. The basic compensable
factor consider for job evaluation are duties and
responsibilities of the job, skills required for the job, effort
needs for the job and working condt of the job. Fob
evaluation helps to established internal equity between
various jobs. Job evaluation can be done under the
following 4 method:

Job ranking method:

Mostly this method is applied by the small organization

under this method jobs are ranked in order of heir
importance from the simplest to the hardest. Each job is
compared with other o determine the overall rank.

Methods of Establishing
Job evaluation:
Compensation:

Job grading method:

It categories jobs into grade Job grade is calculated

under the basis of responsibilities, skills and difficulties
grade is a group of different job requiring similar skills,
effort and responsibility.

Factor comparison method:

The jobs are evaluated under the compensable

components such as responsibilities, skills, mental and
physical efforts working condt each factor is compared with
the same factor for other key job. the comparison in one at
a time.

Point method:

Under this method the jobs are evaluated on a factorby-factor basic, but it usages points instead of pay rates.
Different factor are selected for different jobs.

Methods of Establishing
Compensation:
Compensation surveys:

They are used to set compensation or pay in

the organization. It is a survey of compensation paid by
employers in an organization according to labor mark
rates. The data obtained from such survey as the bench
mark for comparing compensation level. Compensation
data can be collected from numerous sources like;

Published survey such as Labor Departments, Burea of

statistics employer Association Publish Survey relating
to wage and salary.

Consultancy and agencies.

Advertisement and applicants

Informal communication

Methods of Establishing
Compensation:
Pricing jobs:

In this method, the job evaluation worth is

matched with labor market worth. This steps involves
grouping of different pay ranges within each grades has
a defined max and min pricing jobs involve establishing
an opportunities pay level for each job and grouping he
different pay level into pay grades.

# Incentives

Concept:

F W Taylor introduced the system of incentives for the

first time 1800s. Incentives are pay for performance which is in
monitory forms. Employees usually get salary and wages but
beside that employees are also paid some incentives depending
performance which various from individual to individual and from
time to time. It is also some kind of rewards that are paid for
performing better. Incentives are linked to increase the
productivity of the employee toward the organization.

Incentives encourage employees to achieve specific

organization goals and also helps o achieve personal goals of an
employer. Incentives are provided to motive employee to
perform better, incentives helps to attract the capable employee
and retain them for long period of time. Incentives save the cost
of an organization. Incentives will also increase the earning the
employee if they perform better. Some examples of incentives
are bonus, profit sharing and employee share ownership.

# Forms of Incentives:

Incentives plan are

Individual incentives plan.

Piece work plan:

Piece works motivate employees to perform better. It is

types of additional financial compensation, this incentives
plan is used for production worker. The compensation is
based on the no. of unites produced. It can be of 2 types.

Strength piece work:

The worker is paid fix wage for each unites produced.

It is calculated by no. of unites produced and retail unite.
There is a direct relationship between output and earnings.

Differential work piece:

The worker is paid different wage for their work i.e. 1

up to standard and another when the employee beat the
standard

# Forms of Incentives:

Commission plan:

This incentives plan is used for sales personal. It is based on

sales performance in terms of value. Sales pursue are paid on
commission basis either st. commission or salary % age of sales
value, e.g. 6% for selling all the products. Whereas salary +
commission is the combo of constant salary with the commission
e.g. Rs 10000/month as a base salary+ 3 % of all sales.

Bonus plan:

Bonus is an incentives pmt. Thats given o an employee

beyond ones normal base salary. It is given for doing a standard
hour works than the time they are given. It is mostly used for
managerial and professional employees. Its one time lump sum
pmt. Employees who can work an hour work in 40 min obtain
bonus. Its based on cost saving, bonus plan can be so bonus, end
of year bonus and production bonus. It is cash reward that given
to an individual for extra ordinary performance. Sot bonus is
given on the spot. End of year bonus is provided to an individual
at the end of the year and to those who attain objectives under
performance contract whereas, production bonus is based on
time or cost saving associated with higher productivity.

# Forms of Incentives:

Group incentives plan:

It is given to two or more than 2 employers for their

combine performance. Reward is linked to the combined
performance of a group of employs. Group incentives
plans are provided when individual output is not
sufficient and when the task has to be performed inter
dependently. Group incentives plan can be piece work
plan, commission plan and production plan.

Organizational incentives plan:

It is provided to all the employees of an

organization. It is aims to direct the effort all employees
toward achieving overall organizatnal effectiveness. All
employees are rewarded on the basis of the success of
the organization. This types of incentives produced
reward for all employees based on organizational cost
reduction or profit sharing. He widely used
organizational incentives plan are;