HUMAN RESOURCE MANAGEMENT

SYLLABUS HUMAN RESOURCE MANAGEMENT (16-17)

Code RMB202
. Course Credit: 36 Hrs

UNIT I: (6 Hours) Essentials of HRM: Nature of HRM, Scope, functions and importance of HRM, HRM
vs.HRD, SHRM: Introduction, characteristics and scope of SHRM, SHRM vs. Conventional HRM, Barriers to
strategic HRM, Linking HR strategy with business strategy, HRM linkage with TQM & productivity.

UNIT II: (8 Hours) Human Resource Planning and Employee Hiring : Nature of job Analysis, job design,
Human Resource Planning, Demand forecasting for manpower planning, HR supply forecasting, factors
influencing HRP, Employee hiring- Nature of Recruitment, Sources of recruitment, Employee selection,
process of employee selection, recent trends in recruitment.

UNIT III: (8 Hours) Employee Training & Development: Nature and importance of Training, methods and
types of training, career planning, promotion, transfer, demotion and separation, Performance Appraisal:
Meaning and types of appraisal, Job Evaluation: Meaning and methods of job evaluation.

UNIT IV: (8 Hours) Compensation Management and Employee Relations: Introduction to compensation
management, Components of employee and executive compensation, Factors affecting employee
compensation, Employee incentive schemes, and recent trends in compensations management. Meaning and
nature of employee relation and industrial relations.

UNIT V: (6 Hours) Employee Safety/ Health and International Human Resource Management: Basics of ethics
and fair treatment at work, measures and policies for employee safety at work, basic principles governing
International Human Resource Management and the role of culture.
UNIT 1- Essentials of HRM
 Concept of human resource
 A sum of Total knowledge, skills, creative abilities,
talents and aptitudes, values, attitudes, approaches and
beliefs of an organization’s workforce.
 HRM refers to acquisition, retention, motivation and
maintenance of Human Resources in an organization.
 HRM is the planning, organising, directing &
controlling of the procurement, development,
compensation integration, maintenance and separation
of human resources to the end that individual,
organizational and social objectives are accomplished.
 What is HRM?
•HRM is concerned with the people’s dimension in the organization
•Facilitating the competencies and retention of skilled force
• Developing management systems that promote commitment
• Developing practices that foster team work
• Making employees feel valued and rewarded.
Features of HRM or characteristics
1.HRM involves management functions like planning, organizing, directing
and controlling
2.It involves procurement, development, maintenance of human resource
3.It helps to achieve individual, organizational and social objectives
4.HRM is a mighty disciplinary subject. It includes the study
of management psychology communication, economics and sociology.
5.It involves team spirit and team work
Edwin Flippo defies HRM as“planning, organizing, directing, controlling
of procurement,development, compensation, integration , maintenance
and separation of human resources to the end that individual,
organizational and social objectives are achieved.”

According to the Invancevich and Glueck, “HRM is concerned with the

most effective use of people to achieve organizational and individual
goals. It is the way of managing people at work, so that they give their
best to the organization”.

According to Dessler (2008) the policies and practices involved in

carrying out the “people” or human resource aspects of a management
position, including recruiting, screening, training, rewarding, and
appraising comprises of HRM.
Objectives of HRM
 Objectives of HRM
1) Societal Objectives: seek to ensure that the organization becomes socially responsible
to the needs and challenges of the society while minimizing the negative impact of such
demands upon the organization. The failure of the organizations to use their resources for
the society’s benefit in ethical ways may lead to restriction.
2) Organizational Objectives: it recognizes the role of HRM in bringing about
organizational effectiveness. It makes sure that HRM is not a standalone department, but
rather a means to assist the organization with its primary objectives. The HR department
exists to serve the rest of the organization.
3) Functional Objectives: is to maintain the department’s contribution at a level
appropriate to the organization’s needs. Human resources are to be adjusted to suit the
organization’s demands. The department’s value should not become too expensive at the
cost of the organization it serves.
4) Personnel Objectives: it is to assist employees in achieving their personal goals, at
least as far as these goals enhance the individual’s contribution to the organization.
Personal objectives of employees must be met if they are to be maintained, retained and
motivated. Otherwise employee performance and satisfaction may decline giving rise to
employee turnover.
 Human Resource Management: Objectives
• To help the organization reach its goals.
• To ensure effective utilization and maximum development of human resources.
• To ensure respect for human beings. To identify and satisfy the needs of
individuals.
• To ensure reconciliation of individual goals with those of the organization.
• To achieve and maintain high morale among employees.
• To provide the organization with well-trained and well-motivated employees.
• To increase to the fullest the employee's job satisfaction and self-actualization.
• To develop and maintain a quality of work life.
• To be ethically and socially responsive to the needs of society.
• To develop overall personality of each employee in its multidimensional aspect.
• To enhance employee's capabilities to perform the present job.
• To equip the employees with precision and clarity in transaction of business.
• To inculcate the sense of team spirit, team work and inter-team collaboration.
 Nature of HRM
HRM is a management function that helps manager’s to recruit, select, train and develop
members for an organization. HRM is concerned with people’s dimension in
organizations.

The following constitute the core of HRM

1. HRM Involves the Application of Management Functions and Principles. The functions
and principles are applied to acquiring, developing, maintaining and providing
remuneration to employees in organization.
2. Decision Relating to Employees must be Integrated. Decisions on different aspects of
employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high
quality products supplied at reasonable costs.
4. HRM Functions are not Confined to Business Establishments Only but applicable to
non business organizations such as education, health care, recreation and like.
HRM refers to a set of programmes, functions and activities designed and carried out
in order to maximize both employee as well as organizational effectiveness.
 Difference between HRM and personnel Management
personnel management HRM
 Focus:- on organizations
interest like profit
maximizations
 Philosophy:- managing
personnel
 Pervasiveness:- concern of only
personnel manager
 Motivation:- concerned with
selection, recruitment, and
appraisal
 Team work:- orderly way of
administration of personnel
policies
 Techniques:-pressure tactics,
cohesive measures, threats of
pressure
 On development of individuals
in accordance to their needs,
aspirations.
 Humanization of management
 Common concern for all
managers from top to bottom
 Concentrates on motivation,
morale boosting, and job
satisfaction
 Is more interested in people
working in team building and
team works
 Work through cooperation and
team management, mutual
understanding and motivation
 Functions of HR

MANAGERIAL OPERATIVE
FUNCTIONS FUNCTIONS
Planning Staffing
Development
Organizing
Compensation
Directing
Motivation
Controlling Maintenance
Integration
Emerging Issues
MANAGERIAL FUNCTIONS OF HRM

Planning: Determination in advance of a personal program that will

contribute to goals established for the enterprise

Organising : This is required to carry out the plans. Designing the

structure of relationships among jobs , personnel and physical factors.

Directing : Before the action is started “direction “ is necessary; this

may be in the form of “motivation “ “ actuation “ or “ command “.This
is to get people to work willingly and effectively

Controlling: Observation of action and its comparison with plans and

correction of any deviation that may occur at any time.
OPERATIVE FUNCTIONS OF HRM
Procurement: Obtaining proper kind and number of personnel
necessary to accomplish organizational goals

Development: Increasing the skill through training that is necessary for

proper job performance

Compensation: Adequate and equitable remuneration of personnel

for their contribution to organization objectives.

Integration : It is concerned with a reasonable reconciliation of

individual , societal and organizational interests .

Maintenance: Maintenance is concerned with the continuation of this

state , this is heavily effected by communication with employees.

Separation : Separations and return of that person to society. Could be

retirement , lay off , out-placements and discharge
Scope of HRM
 Very Vast
 Covers all major
activities in the
working life of a
worker -from
time an individual
enters into an
organization until
he or she leaves
comes under the
purview of HRM
Scope of HRM
The scope of HRM refers to all the activities that come under the banner of HRM.
These activities are as follows
1.Human resources planning :-Human resource planning or HRP refers to a
process by which the company identifies the number of jobs vacant, whether the
company has excess staff or shortage of staff and to deal with this excess or
shortage.
2.Job analysis design :-Another important area of HRM is job analysis. Job analysis
gives a detailed explanation about each and every job in the company. Based on
this job analysis the company prepares advertisements.
3.Recruitment and selection :-Based on information collected from job analysis
the company prepares advertisements and publishes them in the news papers.
This is recruitment. A number of applications are received after the advertisement
is published, interviews are conducted and the right employee is selected thus
recruitment and selection are yet another important area of HRM.
4.Orientation and induction :-Once the employees have been selected an
induction or orientation program is conducted. This is another important area
of HRM. The employees are informed about the background of the company,
explain about the organizational culture and values and work ethics and introduce
to the other employees.
5.Training and development :-Every employee goes under training program
which helps him to put up a better performance on the job. Training program is
also conducted for existing staff that have a lot of experience. This is called
refresher training. Training and development is one area were the company
spends a huge amount.
6.Performance appraisal :-Once the employee has put in around 1 year of
service, performance appraisal is conducted that is the HR department checks
the performance of the employee. Based on these appraisal future promotions,
incentives, increments in salary are decided.
7.Compensation planning and remuneration :-There are various rules regarding
compensation and other benefits. It is the job of the HR department to look into
remuneration and compensation planning.
8.Motivation, welfare, health and safety :-Motivation becomes important to
sustain the number of employees in the company. It is the job of the HR
department to look into the different methods of motivation. Apart from this
certain health and safety regulations have to be followed for the benefits of the
employees. This is also handled by the HR department.
9.Industrial relations :-Another important area of HRM is maintaining co-ordinal
relations with the union members. This will help the organization to prevent
strikes lockouts and ensure smooth working in the company
Significance/importance/need of HRM
HRM becomes significant for business organization due to the following reasons.
1.Objective :-HRM helps a company to achieve its objective from time to time by
creating a positive attitude among workers. Reducing wastage and making
maximum use of resources etc.
2.Facilitates professional growth :-Due to proper HR policies employees are
trained well and this makes them ready for future promotions. Their talent can be
utilized not only in the company in which they are currently working but also in
other companies which the employees may join in the future.
3.Better relations between union and management :-Healthy HRM practices can
help the organization to maintain co-ordinal relationship with the unions. Union
members start realizing that the company is also interested in the workers and will
not go against them therefore chances of going on strike are greatly reduced
4. Helps an individual to work in a team/group :-Effective HR practices teach
individuals team work and adjustment. The individuals are now very comfortable
while working in team thus team work improves.
5.Identifies person for the future :-Since employees are constantly trained, they
are ready to meet the job requirements. The company is also able to
identify potential employees who can be promoted in the future for the top level
jobs. Thus one of the advantages of HRM is preparing people for the future
6. Allocating the jobs to the right person :-If proper recruitment and
selection methods are followed, the company will be able to select the
right people for the right job. When this happens the number of people
leaving the job will reduce as the will be satisfied with their job leading
to decrease in labour turnover.
7. Improves the economy :-Effective HR practices lead to higher profits
and better performance by companies due to this the company
achieves a chance to enter into new business and start new ventured
thus industrial development increases and the economy improves.
HRD Definition
Human resource development is an integral part of Human resource
function of an organization that deals with development of the human
resource through trainings and experiential learning. HRD develops the
key competencies of a person through performance analysis, identifying
the gap and providing training to fill the gaps.
T Venkktesewara Rao has defined HRD in the organizational context as a
continuous planned process by which employees are helped to.
(a) Acquire or sharpen capabilities required to perform various function
associated with present or expected future roles.
(b) Develop their general capabilities as individuals and discover and
exploit their own inner potentials for their own and organizational
development purposes.
(c) Develop an organizational culture in which superior-subordinate
relationship, team work and collaboration among sub units are strong
and contribute to the professional well being and motivation of
employees.
HRD Involves Following Activities;
Training & Development: Training typically focuses on providing employees
with specific skills or helping them to correct deficiencies in their
performance. In contrast, development is an effort to provide employees
with the abilities that the organization will need in the future.
Organizational Development: It is an organization wide application of
behavioral science knowledge – to the planned development and
reinforcement of a firm’s strategies, structures, and processes for improving
its effectiveness.
Career Development: A formal approach taken by an organization to help
people acquire the skills and experiences needed to perform current and
future jobs is termed as career development. Company’s policies especially
policies regarding promotion, counseling the employees, opportunities to
excel in future help employees to develop their career. It consists of skills,
education and experiences as well as behavioural modification and
refinement techniques that allow individuals to work better and add value.
Strategy is the approach selected to achieve defined goals in the future. According to
Chandler (1962) it is: ‘The determination of the long-term goals and objectives of an
enterprise, and the adoption of courses of action and the allocation of resources
necessary for carrying out those goals.’

Strategy has three fundamental characteristics.

First, it is forward looking. It is about deciding where you want to go and how you
mean to get there. It is concerned with both ends and means. In this sense a strategy
is a declaration of intent: ‘This is what we want to do and this is how we intend to do
it.’ Strategies define longer-term goals but they also cover how those goals will be
attained. They guide purposeful action to deliver the required result.
The second characteristic of strategy is that the organizational capability of a firm
(its capacity to function effectively) depends on its resource capability (the quality and
quantity of its resources and their potential to deliver results).
The third characteristic of strategy is strategic fit – the need when developing HR
strategies to achieve congruence between them and the organization’s business
strategies within the context of its external and internal environment. The focus is
upon the organization and the world around it. To maximize competitive advantage a
firm must match its capabilities and resources to the opportunities available in its
environment. The concept of fi t or integration is also a major feature of strategic
HRM.
 Strategic Human Resource Management
 Strategic Human Resource Management
 The linking of HRM with strategic goals and
objectives in order to improve business
performance and develop organizational cultures
that foster innovation and flexibility.
 Formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors the company needs
to achieve its strategic aims.
As defined by Pearce and Robinson (1988): ‘Strategic management is the set of
decisions and actions resulting in the formulation and implementation of
strategies designed to achieve the objectives of an organization.’
According to Kanter (1984) its purpose is to: ‘elicit the present actions for the
future’ and become ‘an action vehicle – integrating and institutionalizing
mechanisms for change’.
Schuler (1992) stated that: Strategic human resource management is largely
about integration and adaptation. Its concern is to ensure that:
1) human resources (HR) management is fully integrated with the strategy and
strategic needs of the firm;
2) HR policies cohere both across policy areas and across hierarchies; and
3) HR practices are adjusted, accepted and used by line managers and
employees as part of their everyday work.
Strategic HRM is an approach that defines how the organization’s goals will be
achieved through people by means of HR strategies and integrated HR policies and
practices.
Strategic HRM can be regarded as a mind set underpinned by certain concepts
rather than a set of techniques. It provides the foundation for strategic reviews in
which analyses of the organizational context and existing HR practices lead to
choices on strategic plans for the development of overall or specific HR strategies
 Steps in developing SHRM

1. Analysing the business strategy

2. Identify both opportunities and problems, Environmental analysis
3. Analyse your current and future demand for HR
4. Analyse the HR you have available
5. Gap Analysis
6. Develop a strategic plan
7. Implementation
8. Evaluation
Linking HR Strategy with Business Strategy
Organisations generally follow a continuous, three step strategic planning
process:

Annual
Performance
Strategic Plan Performance Plan
Reports
High level agency Operational level
Status report on
goals, strategies, and strategies, measures,
achievement of agency
neeed resources and timeframes to
goals
support strategic goals

Cont….

GPRA Strategic Planning Process - Simplified

 Resource-based strategic HRM
Resource-based strategic HRM can produce what Boxall and Purcell (2003)
referred to as human resource advantage. The aim is to develop strategic
capability. This means strategic fit between resources and opportunities,
obtaining added value from the effective deployment of resources, and
developing people who can think and plan strategically in the sense that they
understand the key strategic issues and ensure that what they do supports the
achievement of the business’s strategic goals.
Wright et al (2001) noted that there are three important components of HRM
that constitute a resource for the firm and are influenced by HR practices or the
HR system:
1. The human capital pool comprised of the stock of employee knowledge,
skills, motivation and behaviours.
2. The flow of human capital through the firm – the movement of people and of
knowledge.
3. The dynamic processes through which organizations change and/or renew
themselves.
They suggested that HR practices are the primary levers through which the firm
can change the pool of human capital as well as attempt to change the
employee behaviours that lead to organizational success.
strategic HRM is about both HR strategies and the strategic management
role of HR professionals. There is always choice about those strategies and the
strategic role of HR.
The significant features of strategic HRM
• Creating sustained competitive advantage depends on the unique
resources and capabilities that a firm brings to competition in its
environment
• Competitive advantage is achieved by ensuring that the firm has higher
quality people than its competitors
The competitive advantage based on the effective management of people is
hard to imitate
• The challenge is to achieve organizational capability, ensuring that
businesses are able to find, assimilate, reward and retain the talented
individuals they need
• It is unwise to pursue so-called ‘best practice’ (the ‘universalistic’
perspective of without being certain that what happens elsewhere
would work in the context of the organization.
• ‘Best fit’ (the ‘contingency’ perspective of is preferable to ‘best practice’ as
long as the organization avoids falling into the trap of ‘contingent
determinism’ by allowing the context to determine the strategy
The search for best fit is limited by the impossibility of modelling all the
contingent
variables, the difficulty of showing their interconnection, and the way in
which changes in one variable have an impact on others (Purcell, 1999).
• Best fit can be pursued in a number of ways, namely by fitting the HR
strategy to its position in its lifecycle of start-up, growth, maturity or
decline or the competitive strategy of innovation, quality or cost
Leadership or to the organization’s ‘strategic configuration’ , eg the
typology of organizations as prospectors, defenders and analysers defined
by Miles and Snow (1978).
• Improved performance can be achieved by ‘bundling’, ie the
development and implementation of several HR practices together so that
they are inter-related and therefore complement and reinforce each other
Barriers of SHRM
Barriers to successful SHRM implementation are complex. The main reason is a lack of
growth strategy or failure to implement one. Other major barriers are summarized as
follows:

1. Inducing the vision and mission of the change effort.

2. High resistance due to lack of cooperation from the bottom line.
3. Interdepartmental conflict.
4. The commitment of the entire senior management team.
5. Plans that integrate internal resource with external requirements.
6. Limited time, money and the resources.
7. The status quo approach of employees.
8. Fear of incompetency of senior level managers to take up strategic steps.
9. Diverse work-force with competitive skill sets.
10. Fear towards victimisation in the wake of failures.
11. Improper strategic assignments and leadership conflict over authority.
12. Ramifications for power relations.
13. Vulnerability to legislative changes.
14. Resistance that comes through the legitimate labour institutions.
15. Presence of an active labour union.
16. Rapid structural changes.
17. Economic and market pressures influenced the adoption of strategic HRM.
18. More diverse, outward looking approach.
David Bowen and Edward Lawler have described the relationship between TQM and Human Resource
Management as follows:
•The importance of the HR side of quality equation provides HR department with golden opportunity.
Quality can be the “business issue” that truly brings senior managers and HR executives together to
move from just HRM to strategic HRM. A major role in the quality improvement effort puts HR in a
position to contribute directly and visibly to the bottom-line, to add value to the company’s products and
services in the same way that other functions, such as sales, accounting, and production, add value.
•Before the human resource function can make full contribution to TQM efforts, high quality must be
assured within the function itself. Benchmarking provides a useful means of both evaluating the quality
of human resource programs, activities and impact as well as a means of identifying areas in which
resource should be concentrated.
•One of the important impacts of TQM, from strategic HRM perspective, is that it places great emphasis
on training. TQM maintains that error and mistakes, which detract from the quality of companies’
products and services, are predictable result of untrained workers, and therefore training must be
provided. Consistent with the emphasis on measurement, in some companies that use TQM, training is
evaluated with the use of control groups and experimental designs.
•In contrast to training, TQM is sharply at odds with conventional human resource practices in the area
of performance evaluation. According to Deming, traditional performance evaluation systems are
flawed because they are directed toward the individual instead of a team. Such systems are also focus
on assigning blames for past mistakes instead of pointing out the direction for the future and may even
detract from teamwork.
Despite these differences, most of the concepts of TQM are very much applicable in HRM and if used
in a systematic and well-planned manner can result in good product and service quality and
organizational growth.
 UNIT II
Human Resource Planning and
Employee Hiring
A job is defined as a collection of duties and responsibilities which are given
together to an individual employee. Job analysis is the process of studying and
collecting information relating to operations and responsibilities of a specific
job.

What is Job Analysis?

job analysis is an essential and pervasive human resource technique and the

starting point for other human resource activities.

Nature of job analysis

Job Tasks

Job Analysis Job Duties

Job Responsibilities
 Job Analysis is a systematic exploration,
study and recording the responsibilities,
duties, skills, accountabilities, work
environment and ability requirements of a
specific job. It also involves determining the
relative importance of the duties,
responsibilities and physical and emotional
skills for a given job. All these factors identify
what a job demands and what an employee
must possess to perform a job productively.
Job Description

 Job title

 Job summary

 Job activities

 Working conditions

 Social environment
Job Specification

 Essential attributes: skills, knowledge and abilities

(SKAs) a person must possess.

 Desirable attributes: qualifications a person ought to

possess.

 Contra-indicators: attributes that will become a

handicap to successful job performance.

JA = JD + JS
Process of Job Analysis
1. Determine the Use of the Job Analysis Information: Start by
identifying the use to which the information will be put, since this will
determine the type of data you collect and the technique you use to collect
them.
2. Collection of Background Information: According to Terry, “The
make-up of a job, its relation to other jobs, and its requirements for
competent performance are essential information needed for a job
evaluation. This information can be had by reviewing available
background information such as organization charts (which show how the
job in question relates to other jobs and where they fit into the overall
organization); class specifications (which describe the general
requirements of the class of job to which the job under analysis belongs);
and the existing job descriptions which provide a starting point from which
to build the revised job description”.
3. Selection of Jobs for Analysis: To do job analysis is a costly and time
consuming process. It is hence, necessary to select a representative sample
of jobs for purposes of analysis. Priorities of various jobs can also be
determined. A job may be selected because it has undergone undocumented
changes in job content. The request for analysis of a job may originate with
the employee, supervisor, or a manager.
4. Collection of Job Analysis Data
5. Processing the Information: Once job analysis information has been
collected, the next step is to place it in a form that will make it useful to those
charged with the various personnel functions. Several issues arise with respect
to this. First, how much detail is needed? Second, can the job analysis
information be expressed in quantitative terms? These must be considered
properly.
6. Preparing Job Descriptions and Job Classifications: Job information
which has been collected must be processed to prepare the job description form.
It is a statement showing full details of the activities of the job. Separate job
description forms may be used for various activities in the job and may be
compiled later on. The job analysis is made with the help of these description
forms. These forms may be used as reference for the future.
7. Developing Job Specifications: Job specifications are also prepared on the
basis of information collected. It is a statement of minimum acceptable qualities
of the person to be placed on the job. It specifies the standard by which the
qualities of the person are measured. Job analyst prepares such statement taking
into consideration the skills required in performing the job properly. Such
statement is used in selecting a person matching with the job
 Methods of Collecting Job Analysis Data
1. Participant Diary/Logs
2. Interview
3. Critical Incidents
4. Technical Conference Method
5. Job Performance
6. Functional Job Analysis
7. Observation Method.
8. Questionnaires
 TECHNIQUES OF JA

1.Functional job analysis

2.Management position description questionnaire method

3. The Hay Plan

4. Method Analysis
 JOB DESIGN
Job design, which is an outgrowth of job analysis, is a way of organising
tasks, duties and responsibilities into a productive unit of the work.
“It is concerned with changing, modifying and enriching jobs in order to
capture the talents of employees while improving organisation
performance.”
Job design follows job analysis i.e. it is the next step after job analysis. It
aims at outlining and organising tasks, duties and responsibilities into a
single unit of work for the achievement of certain objectives. It also
outlines the methods and relationships that are essential for the success of
a certain job. In simpler terms it refers to the what, how much, how many
and the order of the tasks for a job/s.
There are various steps involved in job design that follow a
logical sequence, those that were mentioned earlier on. The
sequence is as follows:
•What tasks are required to be done or what tasks is part of the job?
•How are the tasks performed?
•What amount are tasks are required to be done?
What is the sequence of performing these tasks
 Elements of Job Design
1. Task Analysis
What tasks will be done?
•How each task will be done?
•How the tasks fit together to form a job

2. Worker Analysis
•Determines Capabilities the worker must possess
•Determines the Responsibilities the worker will have

3. Environmental Analysis
•Location
•Lighting
•Temperature
•Noise
•Ventilation
In Job design specifically the following areas are fine tuned:
•Checking the work overload.
•Checking upon the work under load.
•Ensuring tasks are not repetitive in nature.
•Ensuring that employees don not remain isolated.
•Defining working hours clearly.
•Defining the work processes clearly.
 Benefits of Job Design
The following are the benefits of a good job design:
Employee Input: A good job design enables a good job feedback.
Employees have the option to vary tasks as per their personal and social
needs, habits and circumstances in the workplace.
Employee Training: Training is an integral part of job design. Contrary to
the philosophy of “leave them alone’ job design lays due emphasis on
training people so that are well aware of what their job demands and how it
is to be done.
Work / Rest Schedules: Job design offers good work and rest schedule by
clearly defining the number of hours an individual has to spend in his/her
job.

Adjustments: A good job designs allows for adjustments for physically

demanding jobs by minimizing the energy spent doing the job and by
aligning the manpower requirements for the same.
Job design is a continuous and ever evolving process that is aimed at
helping employees make adjustments with the changes in the workplace.
The end goal is reducing dissatisfaction, enhancing motivation and
employee engagement at the workplace.
Various factors that affect a job design can classified under three heads.
They are:
Organizational Factors: :-Organizational factors to refer to factors inside
the organization which affect job design they are
•Task characteristics :-Task characteristics refer to features of the job that is
depending on the type of job and the duties involved in it the organization
will decide, how the job design must be done. In case the company is not in
a position to appoint many people; a single job may have many duties and
vice versa.
•The process or flow of work in the organization :-There is a certain order in
which jobs are performed in the company. In case the company wishes it
could combine similar job and give it to one person this can be done if all
the jobs come one after the other in a sequence.
•Ergonomics :-Ergonomics refers to matching the job with physical ability
and characteristics of the individual and in providing an office environment
which will help the person to complete the jobs faster and in a comfortable
manner.
•Work practices :-Every organization has different work practices. Although
the job may be the same the method of doing the job differs from company
to company. This is called work practice and it affects job design
Environmental Factors: Environmental factors which affect job design are as follows
a) Employee availability and ability :-Certain countries face the problem of lack of skilled
labour. They are not able to get employees with specific education levels for jobs and
have to depend on other countries due to this job design gets affected.
b)Social and cultural expectations :-The social and cultural conditions of every country is
different so when an MNC appoints an Indian it has to take into account like festivals,
auspicious time, inauspicious time, etc. to suit the Indian conditions. This applies to
every country and therefore job design will change accordingly.

Behavioural Factors : Job design is affected by behavioral factors also. These factors
are
a)Feedback :-Job design is normally prepared on the basis of job analysis and job
analysis requires employee feedback based on this employee feedback all other
activities take place. Many employees are however not interested in providing a true
feedback because of fear and insecurity. This in turn affects job deign.
b)Autonomy :-Every worker desires a certain level of freedom to his job effectively. This
is called autonomy. Thus when we prepare a job design we must see to it that certain
amount of autonomy is provided to the worker so that he carries his job effectively.
c)Variety :-When the same job is repeated again and again it leads to burden and
monotony. This leads to lack of interest and carelessness on the job. Therefore, while
preparing job design certain amount of variety must be provided to keep the person
interested in the job.
 Methods of job design
There are various methods in which job design can be carried out. These
methods help to analysis the job, to design the contents of the and to
decide how the job must be carried out .these methods are as follows :-

I. Job rotation

II. Job enlargement

III. Job enrichment

I. Job Rotation :- Job rotation involves shifting a person from one job to
another, so that he is able to understand and learn what each job involves.
The company tracks his performance on every job and decides whether he
can perform the job in an ideal manner. Based on this he is finally given a
particular posting.
Job rotation is done to decide the final posting for the employee e.g. Mr. A
is assigned to the marketing department whole he learns all the jobs to be
performed for marketing at his level in the organization .after this he is
shifted to the sales department and to the finance department and so on.
He is finally placed in the department in which he shows the best
performance Job rotation gives an idea about the jobs to be performed at
every level. Once a person is able to understand this he is in a
better understanding of the working of organization
II. Job enlargement :- Job enlargement is another method of job design when
any organization wishes to adopt proper job design it can opt for job
enlargement. Job enlargement involves combining various activities at the
same level in the organization and adding them to the existing job. It
increases the scope of the job. It is also called the horizontal expansion of
job activities.
III. Job enrichment :- Job enrichment is a term given by Fedric herzberg.
According to him a few motivators are added to a job to make it more
rewarding, challenging and interesting. According to herzberg the
motivating factors enrich the job and improve performance.
n other words we can say that job enrichment is a method of adding
some motivating factors to an existing job to make it more interesting.

The motivating factors can be

a)Giving more freedom.
b)Encouraging participation.
c)Giving employees the freedom to select the method of working.
d)Allowing employees to select the place at which they would like to
work.
e)Allowing workers to select the tools that they require on the job.
f)Allowing workers to decide the layout of plant or office.
 Human resource planning :-
Human resource planning can be defined as the process of identifying the
number of people required by an organization in terms of quantity and quality. All
human resource management activities start with human resource planning. So
we can say that human resource planning is the principle/primary activity of
human resource management. From human resource planning the organization
identifies how many people it has currently and how many people will be required
in future. Based on this information major human resource decisions are taken.

As defined by Bulla and Scott (1994), human resource planning is ‘the process for
ensuring that the human resource requirements of an organization are identified
and plans are made for satisfying those requirements’.

Reilly (2003) defined workforce planning as: ‘A process in which an organization

attempts to estimate the demand for labour and evaluate the size, nature and
sources of supply which will be required to meet the demand.’
Definition HRP
Human Resource Planning According to Vetter, “HRP is the process by
which management determines how the organization should move from its
current man power position to desired manpower position. Through
planning, management strives to have the right time, doing things which
result in both the organization and individual receiving maximum long run
benefits”.
According to Gordon Mc Beath, “HRP is concerned with two things:
Planning of manpower requirements and Planning of Manpower supplies”.

Objectives of Human Resource Planning

1. To ensure optimum utilization of human resources currently available in
the organization.
2. To assess or forecast the future skill requirement of the organization.
3. To provide control measures to ensure that necessary resources are
available as and when required.
4. A series of specified reasons are there that attaches importance to
manpower planning and forecasting exercises
The objectives of human resource planning may be summarized as
below:

•Forecasting Human Resources Requirements: HRP is essential to

determine the future needs of HR in an organization. In the absence of this
plan it is very difficult to provide the right kind of people at the right time.
• Effective Management of Change: Proper planning is required to cope
with changes in the different aspects which affect the organization. These
changes need continuation of allocation/ reallocation and effective
utilization of HR in organization.
•Realizing the Organizational Goals: In order to meet the expansion and
other organizational activities the organizational HR planning is essential.
•Promoting Employees: HRP gives the feedback in the form of employee
data which can be used in decision-making in promotional opportunities to
be made available for the organization.
•Effective Utilization of HR: The data base will provide the useful
information in identifying surplus and deficiency in human resources. The
objective of HRP is to maintain and improve the organizational capacity to
reach its goals by developing appropriate strategies that will result in the
maximum contribution of HR.
 Need/ Purpose of HRP
Major reasons for the emphasis on HRP at the Macro level:
1) Employment-Unemployment Situation
2) Technological Change
3) Demographic Change
4) Skill Shortage
5) Governmental Influences
6) Legislative Control
7) Impact of the Pressure Group
8) Systems Approach
9) Lead Time
 Factors Affecting HRP
HRP is influenced by several factors. The most important of the factors
that affect HRP are
(1) type and strategy of organization
(2) organizational growth cycles and planning
(3) environmental uncertainties
(4) time horizons
(5) type and quality of forecasting information
(6) nature of jobs being filled and
(7) off loading the work.
The importance of HRP can be explained as follows.

1.Anticipating future requirement :-Thru this process of HRP, the company is

able to find out how many people will be required in future. Based on this
requirement the company could take further actions. This method also helps
the company to identify the number of jobs which will become vacant in the
near future.

2.Recruitment and selection process :-The recruitment and selection process

is a very costly affair for a company. Many companies spend lakhs of rupees on
this process. Therefore recruitment and selection must be carried out only if it
is extremely necessary. HRP process helps to identify whether recruitment and
selection are necessary or not.
3.Placement of personnel :-Since the HRP process is conducted for the
entire organization, we can identify the requirements for each and every
department. Based on the requirement, we can identify existing employees
and place them on those jobs which are vacant.
4.Performance appraisal :-HRP make performance appraisal more
meaningful. Since feedback is provided in performance appraisal and
employee is informed about his future chances in same company, the
employee is motivated to work better. Information for all this is collected
from HRP process.
5.Promotion opportunity :-HRP identifies vacancies in the entire
organization including all the branches of all the company. Therefore when
the company implements promotion policy it can undertake its activities in
a very smooth manner
 Factors affecting HRP in the organization.

Human resource planning can be defined as the process of identifying the

number of people required by an organization in terms of quantity and quality.
All human resource management activities start with human resource
planning. So we can say that human resource planning is the principle/primary
activity of human resource management. There are various factors that affect
HRP which are as follows:

1.Employment :-HRP is affected by the employment situation in the country

i.e. in countries where there is greater unemployment; there may be more
pressure on the company, from government to appoint more people. Similarly
some company may force shortage of skilled labour and they may have to
appoint people from other countries.
2.Technical changes in the society :-Technology changes at a very
fast speed and new people having the required knowledge are
required for the company. In some cases, company may retain
existing employees and teach them the new technology and in some
cases, the company have to remove existing people and appoint
new.
3.Organizational changes :-Changes take place within the
organization from time to time i.e. the company diversify into new
products or close down business in some areas etc. in such cases the
HRP process i.e. appointing or removing people will change
according to situation.
4.Demographic changes :-Demographic changes refer to things
referring to age, population, composition of work force etc. A
number of people retire every year. A new batch of graduates with
specialization turns out every year. This can change the appointment
or the removal in the company.
5.Shortage of skill due to labour turnover :-Industries having high labour
turnover rate, the HRP will change constantly i.e. many new appointments
will take place. This also affects the way HRP is implemented.
6.Multicultural workforce :-Workers from different countries travel to
other countries in search of job. When a company plans it’s HRP it needs
to take into account this factor also.
7.Pressure groups :-Company has to keep in mind certain pleasure.
Groups like human rights activist, woman activist, media etc. as they are
very capable for creating problems for the company, when issues
concerning these groups arise, appointment or retrenchment becomes
difficult
Although HRP is a very advantageous method it has some limitations/
Barriers which can be explained as follows

1.The future is uncertain :-The future in any country is uncertain i.e.

there are political, cultural, technological changes taking place every
day. This effects the employment situation. Accordingly the company
may have to appoint or remove people. Therefore HRP can only be a
guiding factor. We cannot rely too much on it and do every action
according to it.
2.Conservative attitude of top management :-Much top management
adopts a conservative attitude and is not ready to make changes. The
process of HRP involves either appointing. Therefore it becomes very
difficult to implement HRP in organization because top management
does not support the decisions of other department.
3. Problem of surplus staff :-HRP gives a clear out solution for
excess staff i.e. Termination, layoff, VRS,. However when certain
employees are removed from company it mostly affects the
psyche of the existing employee, and they start feeling insecure,
stressed out and do not believe in the company.
This is a limitation of HRP i.e. it does not provide alternative
solution like re-training so that employee need not be removed
from the company.
4.Time consuming activity :-HRP collects information from all
departments, regarding demand and supply of personnel. This
information is collected in detail and each and every job is
considered. Therefore the activity takes up a lot of time.
5.Expensive process :-The solution provided by process of HRP
incurs expense .E.g. VRS, overtime, etc. company has to spend a
lot of money in carrying out the activity. Hence we can say the
process is expensive.
HR Planning Process

69
Process of HRP/MP//steps in HRP/MP Human resource planning can
be defined as the process of identifying the number of people
required by an organization in terms of quantity and quality. All
human resource management activities start with human resource
planning. So we can say that human resource planning is the
principle/primary activity of human resource management.
Personnel requirement forecast :-This is the very first step in HRP
process. Here the HRP department finds out department wise
requirements of people for the company. The requirement consists of
number of people required as well as qualification they must posses.
2.Personnel supply forecast :-In this step, HR department finds out
how many people are actually available in the departments of the
company. The supply involves/includes number of people along with
their qualification.
3. Comparison:-Based on the information collected in the 1st and 2nd
step, the HR department makes a comparison and finds out the
difference. Two possibilities arise from this comparison
No difference :-It is possible that personnel requirement = personnel supplied. In this
case there is no difference. Hence no change is required.
b. Yes, there is a difference :-There may be difference between supply and requirement.
The difference may be
i.Personnel surplus
ii.Personnel shortage
4.Personnel surplus :-When the supply of personnel is more than the requirement, we
have personnel surplus. We require 100 people, but have 125 people. That is we have a
surplus of 25 people. Since extra employees increase expenditure of company the
company must try to remove excess staff by methods of
i. Lay off
ii. Termination
iii.VRS/CRS
5.Personnel shortage :-When supply is less than the requirement, we have personnel
shortage. We require 100 people; we have only 75 i.e. we are short of 25 people. In
such case the HR department can adopt methods like Overtime, Recruitment, Sub-
contracting to obtain new employee
There are number of techniques of estimating/forecasting human

resources demand:

(a) Managerial Judgment

(b) Work Study Technique

(c) Ratio-trend Analysis

(d) Econometric Models

(e) Delphi Model

(f) Other Techniques

HR SUPPLY FORECASTING
Supply Forecasting: Supply forecasting means to make an estimation of supply of human
resources taking into consideration the analysis of current human resources inventory and
future availability.
Existing Inventory: The first step in supply forecasting is to take a stock of existing HR
inventory as follows.
a) Head Count
(b) Job Family Inventory
(c) Age Inventory:
(d) Inventory of skill, experience, values and capabilities:
(e) Inventory of Qualifications and Training:
(f) Inventory of Salary grades
(g) Sex wise Inventory
(i) Inventory of Past Performance and Future Potentialities
 Recruitment – Introduction
 Applies to the process of attracting potential
employees to the organization or company
 Continues with the selection and cases with
placement of the candidates
 Manpower planning to make it possible to
acquire the number & type of people necessary
to ensure the continued operation of the
organization
Recruitment - Definition

 William F Glueck –
 Recruitment acts set of activities and
organization uses to attract job candidates
possessing appropriate characteristics to help
the organization reach its objectives.

 Byars & Rue –

 Recruitment Involves seeking & attracting a
pool of people from which qualified
candidates for job vacancies can be chosen
Recruitment is defined as a process to discover the sources of
manpower to meet the requirements of the staffing schedule and to
employ effective measures for attracting that manpower in adequate
to facilitate effective selection of an efficient workforce. The process
of searching for prospective employees and stimulating them to
apply for jobs in the organization.
-Edwin B. Flippo
Objectives of recruitment

Recruitment fulfills the following objectives

1.It reviews the list of objectives of the company and tries to achieve
them by promoting the company in the minds of public.
2.It forecasts how many people will be required in the company.
3.It enables the company to advertise itself and attract
talented people.
4.It provides different opportunities to procure human resource
Factors governing recruitment:

All organizations whether large or small do engage in recruiting activity,

though not to the same extent. This differs with:

1. The size of the organization.

2. The employment conditions in the community where the organization

is located.

3. The effects of past recruiting efforts.

4. Working conditions, salary and benefit packages offered by the

organization. This may influence turn over and necessitate future
recruiting.

5. The rate of growth of organization.

6. Cultural, economic and legal factors.

Factors governing recruitment may be broadly divided
as:

1) Internal factors.
2) External factors.

Internal factors:

1. Recruitment policy.

2. Human resource planning.

3. Size of the firm.

4. Cost.

5. Growth and expansion

External factors:

1. Supply and demand.

2. Unemployment rate.

3. Labour market.

4. Political, social.

5. Image
Process of Recruitment
According to Famularo, personnel recruitment process involves five elements, viz., a
recruitment policy, a recruitment organisation, a forecast of manpower, the development of
sources of recruitment, and different techniques used for utilising these sources, and a method of
assessing the recruitment programme. The explanation of these is described below:
Stages in the Recruitment Process
1. Recruitment Policy: It specifies the objectives of recruitment and provides a framework for
the implementation of the recruitment programme. It also involves the employer’s commitment to
some principles as to find and employ the best qualified persons for each job, to retain the most
promising of the organisation.
2. Identify and Determine the requirements- Recruitment process begins with requisition for
recruitment from any department of the company.
3. Sources of Recruitment: Various sources of recruitment may be classified as internal and
external. These have their own merits and demerits
4. Identifying prospective employees with required characteristics
5. Methods of Recruitment: Recruitment techniques are the means to make contact with
potential candidates, to provide them necessary information and to encourage them to apply for
jobs.
6. Evaluation of Recruitment Programme: The recruitment process must be evaluated
periodically. The criteria for evaluation may consist of cost per applicant, the hiring ratio,
performance appraisal, tenure of stay, etc. After evaluation, necessary improvements should be
made in the recruitment programme.
Methods of recruitment/sources
Recruitment is a process of searching for prospective employees and
stimulating them to apply for jobs Companies can adopt different methods of
recruitment for selecting people in the company. These methods are
1.Internal sources
2.External sources
Internal sources of recruitment :-
Internal sources of recruitment refer to obtaining people for job from inside the
company. There are different methods of internal recruitment
1.Promotion :-
Companies can give promotion to existing employees. This method of recruitment
saves a lot of time, money and efforts because the company does not have to train
the existing employee. Since the employee has already worked with the company.
He is familiar with the working culture and working style. It is a method of
encouraging efficient workers.
2.Departmental exam :-
This method is used by government departments to select employees for higher
level posts. The advertisement is put up on the notice board of the department.
People who are interested musts end their application to the HR department and
appear for the exam. Successful candidates are given the higher level job. The
method ensures proper selection and impartiality
Transfer :-Many companies adopt transfer as a method of recruitment. The idea is to
select talented personnel from other branches of the company and transfer them to
branches where there is shortage of people.
4.Retirement :- Many companies call back personnel who have already retired from the
organization. This is a temporary measure. The method is beneficial because it gives a
sense of pride to the retired when he is called back and helps the organization to
reduce recruitment selection and training cost.
5.Internal advertisement :-In this method vacancies in a particular branch are
advertised in the notice board. People who are interested are asked to apply for the
job. The method helps in obtaining people who are ready to shift to another branch of
the same company and it is also helpful in motivating and retaining people.
6.Employee recommendation :- In this method employees are asked to recommend
people for jobs. Since the employee is aware of the working conditions inside the
company he will suggest people who can adjust to the situation. The company is
benefited because it will obtain.
Advantages of internal recruitment
1.Internal methods are time saving.
2.No separate induction program is required.
3.The method increases loyalty and reduces labour turnover.
4.This method is less expensive.

Disadvantages of internal recruitment

1.There is no opportunity to get new talent in this method.
2.The method involves selecting people from those available in the
company so there is limited scope for selection.
3.There are chances of biased and partiality.
4.Chances of employee discontent are very high.
External methods/sources of recruitment
External sources of recruitment refer to methods of recruitment to obtain people
from outside the company. These methods are

1.Management consultant :- Management consultant helps the company by

providing them with managerial personnel, when the company is on the look out for
entry level management trainees and middle level managers. They generally
approach management consultants.
2.Employment agencies :-Companies may give a contract to employment
agencies that search, interview and obtain the required number of people. The
method can be used to obtain lower level and middle level staff.
3.Campus recruitment :- When companies are in search of fresh graduates or
new talent they opt for campus recruitment. Companies approach colleges,
management, technical institutes, make a presentation about the company and the
job and invite applications. Interested candidates who have applied are made to go
through a series of selection test and interview before final selection.
4.News paper advertisement :-This is one of the oldest and most popular
methods of recruitment. Advertisements for the job are given in leading
news papers; the details of the job and salary are also mentioned. Candidates are
given a contact address where their applications must be sent and are asked to
send their applications within a specified time limit. The method has maximum
reach and most preferred among all other methods of recruitment.
Internet advertisement :-With increasing importance to internet, companies and
candidates have started using the internet as medium of advertisement and
search for jobs. There are various job sites likenaukri.com and monster.com etc.
candidates can also post their profiles on these sites. This method is growing in
popularity.
6.Walk in interview :-Another method of recruitment which is gaining importance is
the walk in interview method. An advertisement about the location and time of walk
in interview is given in the news paper. Candidates require to directly appearing for
the interview and have to bring a copy of their C.V. with them. This method is
very popular among B.P.O and call centers
Advantages of external recruitment
1.There is influx of new talent in the method.
2.The method encourages more and more competition.
3.There is lesser chance of partiality through this method.
4.If options like campus recruitment have been exercised we get a
chance to employ fresh graduates, thus increasing employment.

Disadvantages of external recruitment

1.The method is costly because it involves recruitment cost, selection,
training cost.
2.The method is time consuming.
3.The method reduces loyalty to the company.
 Importance of Recruitment

1. Provides organization with a pool of

qualified candidates
2. The more qualified the pool the better the
success rate in selection
3. Can help the organization meet affirmative
action goals
4. Can increase organizational effectiveness
RECRUITMENT PROCESS

The process comprises five interrelated stages they are planning,

strategy development,
searching,
screening and
evaluation and control.
The ideal recruitment program is the one that attracts a relativity
large number of qualified applicants who will survive the screening
process and accept positions in the organizations when offered
 SELECTION
Selection can be defined as process of choosing the right person
for the right job.
 To select means to choose.
 Selection is the process of picking individuals who have relevant
qualifications to fill jobs in an organisation.
 The basic purpose is to choose the individual who can most
successfully perform the job, from the pool of qualified
candidates.
Application blank/form :-Application blank is the application form to be filled by
the candidate when he applies for a job in the company.
The application blank collects information consisting of 4 parts-
1)Personal details
2) Educational details
3) Work experience
4)Family background
The Process
The Process
Selection is usually a series of hurdles or steps. Each one must be

successfully cleared before the applicant proceeds to the next.

HRM as a Central Subsystem in an Enterprise

Hiring Decision Step 8

Reference Checks Step 7

Medical Examination Step 6

Selections Interview Step 5

Selections Tests Step 4

Application Blank Step 3

Screening Interview Step 2

Reception Step 1
HOW SELECTION IS DIFFERENT FROM RECRUITMENT

1. Difference in Objective: The basic objective of recruitment is to attract

maximum number of candidates so that more options are available. The basic
objective of selection is to choose best out of the available candidates.
2. Difference is Process: Recruitment adopts the process of creating application
pool as large as possible and therefore. It is known as positive process. Selection
adopts the process through which more and more candidates are rejected and fewer
candidates are selected or sometimes even not a single candidate is selected.
Therefore, it is known as negative process or rejection process.
3. Technical Differences: Recruitment techniques are not very intensive, and not
require high skills. As against this, in selection process, highly specialised techniques
are required. Therefore, in the selection process, only personnel with specific skills
like expertise in using selection tests, conducting interviews, etc., are involved.
4. Difference in Outcomes: The outcome of recruitment is application pool which
becomes input for selection process. The outcome of selection process is in the form
of finalising candidates who will be offered jobs.
Barriers to effective selection:
The main objective of selection is to hire people having competence and commitment.
This objective is often defeated because of certain barriers. The impediments which
check effectiveness of selection are perception, fairness, validity, reliability, and
pressure.

PERCEPTION: Our inability to understand others accurately is probably the most

fundamental barrier to selecting right candidate. Selection demands an individual or a
group to assess and compare the respective competencies of others, with the aim of
choosing the right persons for the jobs. But our views are highly personalized. We all
perceive the world differently. Our limited perceptual ability is obviously a stumbling
block to the objective and rational selection of people.

FAIRNESS: Fairness in selection requires that no individual should be discriminated

against on the basis of religion, region, race or gender. But the low number of women
and other less privileged sections of society in the middle and senior management
positions and open discrimination on the basis of age in job advertisements and in the
selection process would suggest that all the efforts to minimize inequity have not been
very effective.
VALIDITY: Validity, as explained earlier, is a test that helps predict job
performance of an incumbent. A test that has been validated can differentiate
between the employees who can perform well and those who will not. However,
a validated test does not predict job success accurately. It can only increase
possibility of success.

RELIABILITY: A reliable method is one which will produce consistent results

when repeated in similar situations. Like a validated test, a reliable test may fall
to predict job performance with precision.

PRESSURE: Pressure is brought on the selectors by politicians, bureaucrats,

relatives, friends, and peers to select particular candidate. Candidates selected
because of compulsions are obviously not the right ones. Appointments to
public sector undertakings generally take place under such pressure.
Quality Hiring as a Source of Competitive Advantage
 Hiring, it is worth remembering, is not a one-week string of transactions.
I post a job ad, you reply. We talk and if I like you, I hire you.

 Hiring can damage the reputation of a company permanently, if it is not

taken up seriously.

 Quality hiring demands investment in time and money.

 every company should approach the prospective job seekers with two
things in mind.

• Attract: You project a carefully crafted, authentic image as an

employer.

• Acquire: In this phase the employer tries to buy quality.

Recent trends in recruitment process are:
1. Internship/ summer training
2. Competitions
3. Directly apply
4. Approach people
5. Other methods – Some of the effective other methods of finding out
right candidate are:
a. Guest lecture
b. Visiting faculty
c. Workshop/ seminars
d. Live projects
e. Exams
UNIT III
Training
Training refers to the process of imparting specific skills and is an
attempt to improve current or future employee performance by
increasing an employee’s ability to perform through learning, usually by
changing the employee’s attitude or increasing his or her skills and
knowledge.
TRAINING AND DEVELOPMENT OBJECTIVES
Individual Objectives – help employees in achieving their personal goals,
which in turn, enhances the individual contribution to an organization.
Organizational Objectives – assist the organization with its primary
objective by bringing individual effectiveness.
Functional Objectives – maintain the department’s contribution at a level
suitable to the organization’s needs.
Societal Objectives – ensure that an organization is ethically and socially
responsible to the needs and challenges of the society.
The purpose of training and development can be explained as
follows.
1.Improving quality of work force :-Training and development help
companies to improve the quality of work done by their employees.
Training programs concentrate on specific areas. There by improving the
quality of work in that area.
2.Enhance employee growth :-Every employee who takes development
program becomes better at his job. Training provides perfection and
required practice, therefore employee’s area able to develop them
professionally.
3.Prevents obsolescence :-Through training and development the
employee is up to date with new technology and the fear of being thrown
out of the job is reduced.
4. Assisting new comer :-Training and development programs greatly help
new employees to get accustomed to new methods of working, new
technology, the work culture of the company etc.
5.Bridging the gap between planning and implementation :-Plans made by
companies expect people to achieve certain targets within certain time limit
with certain quality for this employee performance has to be accurate and
perfect. Training helps in achieving accuracy and perfection.
Need for Employee Training
Training is given on four basic grounds:
1. New candidates who join an organization are given training. This training
familiarizes them with the organizational mission, vision, rules and regulations and the
working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to cope
up with those changes.
4. When promotion and career growth becomes important. Training is given so that
employees are prepared to share the responsibilities of the higher level job.
Training needs can be assessed by analyzing three major human resource areas: the
organization as a whole, the job characteristics and the needs of the individuals.
Importance of Training
Training is crucial for organizational development and success. It is fruitful to both
employers and employees of an organization. An employee will become more efficient
and productive if he is trained well. The benefits of training can be summed up as:
1. Improves Morale of Employees- Training helps the employee to get job security
and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more
he will
contribute to organizational success and the lesser will be employee absenteeism and
turnover.
2. Less Supervision- A well trained employee will be well acquainted with the job and
will need less of supervision. Thus, there will be less wastage of time and efforts.
3. Fewer Accidents- Errors are likely to occur if the employees lack knowledge and
skills required for doing a particular job. The more trained an employee is, the less are
the chances of committing accidents in job and the more proficient the employee
becomes.
4. Chances of Promotion- Employees acquire skills and efficiency during training.
They become more eligible for promotion. They become an asset for the organization.
5. Increased Productivity- Training improves efficiency and productivity of
employees. Well trained employees show both quantity and quality performance. There
is less wastage of time, money and resources if employees are properly trained.
Training Process
1.Determining training needs of employee :-In the very 1st step of training procedure, the HR
department, identifies the number of people required training, specific area in which they need
training, the age group of employee, the level in organization etc. in some cases the employee
may be totally new to the organization. Here the general introduction training is required.
Some employees may have problems in specific areas; here the training must be specific. This
entire information is collected by HR department.
TNA( Training need analysis)
Organisational analysis: examination of the internal and external environments of the
organisation, its human resources and the strategic objectives of the organisation to identify
areas within the organisation where training emphasis should be laid
Person analysis: it identifies who in the organisation, will need training and for what purpose
Task analysis: It dissects a job into its different components and draws conclusion about KSA(
knowledge, skill abilities) and behaviour needed to perform the job successfully in the present
and also in the future.
2.Selecting target group :-Based on information collected in step 1 the HR department
divides employee into groups based on the following .
i. The area of training
ii. Level in the organization
iii. The intensity of training etc.
Iv Age group
3.Preparing trainers :-Once the employees have been divided into groups, the
HR department arranges for trainers. Trainers can be in house trainers or specialized trainers
from outside. The trainers are given details by HR department, like number of people in
group, their age, their level in organization, the result desired at the end of training, the area
of training, the number of days of training, the training budget, facilities available etc
4.Preparing training packages :-Based on the information provided by trainers, he
prepares entire training schedule i.e. number of days, number of sessions each day, topics to
be handled each day, depth of which the subject should be covered, the methodology for
each session, the test to be given foe each session, handout/printed material to be given in
each session.
5.Presentation :-On the first day of training program the trainer introduces himself and
specifies the need and objective of the program and then actually stars the program. The
performance of each employee is tracked by the trained and necessary feedback is provided.
6.Performance :-At the end of training program the participants reports back to their office
or branches. They prepare report on the entire training program and what they have learned.
They the start using whatever they have learned during their training. Their progress and
performance is constantly tracked and suitable incentives are given if the participant is able
to use whatever he has learned in training.
7.Follow up :-Based on the em0ployee performance, after training, the HR department is
able to identify what is exactly wrong with training program and suitable correction is made
Types of Employee Training
Some commentator use a similar term for workplace learning to improve performance:
“training and development”. One can generally categorize such training as on-the-job or
off-the-job:
On-the-job training takes place in a normal working situation, using the actual tools,
equipment, documents or materials that trainees will use when fully trained. On-the-job
training has a general reputation as most effective for vocational work.
On the Job Training is characterized by following points
It is done on ad-hoc manner with no formal procedure, or content
At the start of training, or during the training, no specific goals or objectives are
developed
Trainers usually have no formal qualification or training experience for training
Training is not carefully planned or prepared
The trainer are selected on the basis of technical expertise or area knowledge
Off-the-job training takes place away from normal work situations — implying that
the employee does not count as a directly productive worker while such training takes
place. Off-the-job training has the advantage that it allows people to get away from work
and concentrate more thoroughly on the training itself. This type of training has proven
more effective in inculcating concepts and ideas.
On the job training method :-In this method workers who
have to be trained are taken to the job location, divided into
groups and one superior is allotted to every group. This
superior or supervisor first demonstrates how the equipment
must be handled, and then the worker is asked to repeat
whatever he has observed in the presence of the supervisor.
This method makes it easy for the employee to learn the
details about specific equipment. Once the worker studies the
first equipment thoroughly the superior moves on to the next
equipment and soon.
1. Apprenticeship training
2.Simulation training.
3. Job rotation
4. Planned progression
5. Under study
6. Coaching and counselling
7. Junior board
8. in- basket
Advantages of On-the-Job Training:
1.It is directly in the context of job
2.It is often informal
3.It is most effective because it is learning by experience
4.It is least expensive
5.Trainees are highly motivated
6.It is free from artificial classroom situations
Disadvantages of On-the-Job Training:
1.Trainer may not be experienced enough to train or he may not be so
inclined.
2.It is not systematically organized
3.Poorly conducted programs may create safety hazards.
Off the job training refers to method of training given outside the
company. The different methods adopted are
1.Classroom method
2.Vestibule
3. Business games
4.Committee
5.Conference
6.Readings
7.T-Group Training
Career
The tern 'career denotes all the jobs that are held during one's working
life. It is viewed as a sequence of positions held by an individual during
the course of his lifetime. Edwin B. Flippo defined a career as a sequence
of separate but related work activities that provide continuity, order and
meaning in a person's life.
Definitions of Career Planning
Career planning is an ongoing process through which an individual sets
career goals and identifies the means to achieve them. The process by
which individuals plan their life’s work is referred to as career planning.
"Career planning is a process of systematically matching career goals
and individual capabilities with opportunities for their
fulfilment."(Schermerhorn: 2002)
Career Anchors
Career anchors denote the basic drives that create the urge to take up a certain type of a
career. These drives are as follows:
Managerial Competence: Person having this drive seek managerial positions that
provide opportunities for higher responsibility, decision making, control and influence
over others.
Technical Competence: People having this anchor seek to make career choices based
on the technical or functional content of the work. It provide continuous learning and
updating one's expertise in a technical or specialised area such as quality control,
engineering, accounting, advertising, public relations etc.
Security: If one's career anchor is security than he is willing to do what is required to
maintain job security (through compliance with organisational prescriptions), a decent
income and a stable future.
Creativity: This drive provides entrepreneurial and innovative opportunities to the
people. People are driven by an overwhelming desire to do something new that is
totally of their own making.
Autonomy: These people seek a career that provides freedom of action and
independence.
 Nature of Career Planning
The following are the salient features of career planning:
•A Process: Career planning is a process of developing human resources rather than an event.
•Upward movement: It involve upward movement in the organisational hierarchy, or special
assignments, project work which require abilities to handle recurring problems, human relations
issued and so on.
•Mutuality of Interest: The individual's interest is served as his needs and aspirations are met to a
great extent and the organisation's interest is served as each of its human resources is provided an
opportunity to develop and contribute to the organisational goals and objectives to the optimum of
its ability and confidence.
Dynamic: Career planning is dynamic in nature due to an ever changing environment

Objectives of Career Planning

Career Planning seeks to meet the following objectives:
1. To provide and maintain appropriate manpower resources in the organisation by
offering careers, not jobs.
2. To provide environment for the effectiveness, efficiency and growth of its employees
and motivating them to contribute effectively towards achieving the objectives of the
organisation.
3. To map out careers of various categories of employees suitable to their ability, and their
willingness to be 'trained and developed for higher positions.
4. To have a stable workforce by reducing absenteeism and employee turnover.
5. To cater to the immediate and future human resources need of the organisation on a
timely basis.
6. To increase the utilisation of managerial reserves within organisation
 Steps in Career Planning Process
Step 1: Self-Assessment
Step 2: Goal Setting
Step 3: Academic/Career Options
Step 4: Plan of Action
Step 5: Catch Hold of Opportunities

Different phases in the career of an employee:

Most working people go through career stages and it has been found that
individual’s needs and expectations change as the individual moves
through these stages.
1. Exploration Stage
2. Establishment Stage
3. Mid-Career Stage
4. Late Career
5. Decline
 Promotions
According to Pigours and Myers, ‘Promotion is advancement of an employee to
a better job – better in terms of greater responsibility, more prestige or status,
greater skill and especially increased rate of pay or salary”.
Arun Monappa and Mirza S Saiyadain defined promotion as “the upward
reassignment of an individual in an organization’s hierarchy, accompanied by
increased responsibilities, enhanced status and usually with increased income
though not always so”.

Conditions of promotions are:

1. Reassignment of higher level job to an employee than what he is presently
performing
2. The employee will naturally be delegated with greater responsibility and
authority than what he has had earlier. Promotion normally accompanied
higher pay. It means in some cases, the employee perform higher level job
and receive the salary related to the lower level job.
3. Promotion may be temporary or permanent depending upon the
organizational needs and employee performance.
1. Horizontal promotion: When an employee is shifted in the same
category, it is called ‘horizontal promotion’. A junior clerk promoted to
senior clerk is such an example. It is important to note that such
promotion may take place when an employee shifts within the same
department, from one department to other or from one plant to another
plant.
2. Vertical Promotion: This is the kind of promotion when an employee
is promoted from a lower category to higher category involving increase
in salary, status, authority and responsibility. Generally, promotion means
‘vertical promotion’.
3. Dry Promotion: When promotion is made without increase in salary,
it is called ‘dry promotion’. For example, a lower level manager is
promoted to senior level manager without increase in salary or pay. Such
promotion is made either there is resource/fund crunch in the
organisation or some employees hanker more for status or authority
 Purposes:
1. To recognize an employee’s skill and knowledge and utilize it to improve the
organisational effectiveness.
2. To reward and motivate employees to higher productivity.
3. To develop competitive spirit and inculcate the zeal in the employees to
acquire skill, Knowledge etc.
4. To promote employees satisfaction and boost their morale.
5. To build loyalty among the employees toward organisation.
6. To promote good human relations.
7. To increase sense of belongingness.
8. To retain skilled and talented people.
9. To attract trained, competent and hard working people.
10. To impress the other employees that opportunities are available to them too
if they also perform well.
 Promotion can be made on various bases.
Following are the major ones:
1.Seniority i.e., length of service
2. Seniority-cum-Merit Promotion
3. Time Bound

TRANSFER
According to Dale Yoder “A transfer involves the shifting of an
employee from one job to another without special reference
to change in responsibilities or compensation”. Usually
transfer takes place between jobs paying approximately the
same salaries. A slight change in responsibilities, duties and
pay increase may also take place occasionally.
Transfer should be distinguished from promotion. “A transfer
involves a change of job without any significant increase in
responsibility or income and a promotion involves a change
in which a significant increase in responsibility or income
occurs”. (J. Lundy)
Types of Transfer:
The Following are The Various Types of Transfers:
(A)Production Transfers
(B) Replacement Transfers
(C) Versatility Transfers
(D) Shift Transfers
(E) Remedial Transfers
(F) Miscellaneous Transfers
Demotion
Demotion is “reverse” of promotion. Demotion is the lowering of a rank,
reduction in salary, status and responsibilities. It may be defined as the
assignment of an individual to a job of lower rank and pay usually involving
lower level of authority and responsibility.

Demotions may be necessary under the following situations:

(a)When the company curtails some of its activities, officers occupying certain
posts are demoted.
(b)Errors in the promotions already given are corrected through demotions.
(c) It may be necessary to use demotion as a tool of disciplinary action against
erring employees.
 Causes of demotion:
Demotion may be caused because of the following factors:
(a) In the process of re-organisation, some departments may be combined
resulting in the elimination of some jobs. Here, employees may be required to
accept lower positions. Such demotions are not considered black spots against
the employees who are demoted.
(b) Demotions may be used as a disciplinary measure against the employees
who commit serious blunders at their job. Sometimes, objectionable behaviour
of employees with their supervisors and top management may result in
demotion of them.
(c) When an employee realises that he cannot handle the additional
responsibilities thrust upon him consequent upon his promotion, he will be
demoted. That is to say, when an individual fails to meet the job requirements
and standards, he would be automatically demoted to the position which he was
holding earlier.
(d) Sometimes, ill-health, changes in technology, difference in methods and
practices, etc., tend to make experienced heads unproductive resulting in re-
definition of their duties and responsibilities. The redefinition may result in
demotion.
Separation
According to Yoder, separation is a negative recruitment. It may be in the
form of Retirement ,resignation, Death, lay off, Retrenchment, dismissal etc
Reasons for Separation
1. Voluntary Separation
2. Professional reasons
3. Personal reasons
4. Involuntary Separation
5. Health problems .
6. Behavioural problems
7. Organizational problems
Various forms of employee separation
1. Retirement: Retirement is the major cause of separation of employees from the
organisation. It can be defined as the termination of service of an employee on reaching
the age of superannuation.
Retirement may be of two types:
(i) Compulsory Retirement
(ii) Voluntary Retirement: When organisations give option to its employees to retire
even before superannuation, it is called ‘voluntary retirement’. This scheme is termed
as, ‘voluntary retirement scheme (VRS)’. Of late, in their efforts to downsize the
employees, organisations by providing certain incentives, are trying to encourage their
employees to opt for voluntary retirement. Employees in return of voluntary retirement
are given lump sum payment. This type of retirement is also called ‘Golden Hand
Shake’.
A business firm may opt for a voluntary retirement scheme under the following
circumstances:-
•Due to recession in the business.
•Due to intense competition, the establishment becomes unviable unless downsizing is
resorted to.
•Due to joint-ventures with foreign collaborations.
•Due to takeovers and mergers.
•Due to obsolescence of Product/Technology.
The companies can frame different schemes of voluntary retirement for different classes of
their employees. However, these schemes have to conform to the guidelines prescribed in
rule 2BA of the Income-tax Rules. The guidelines for the purposes of section 10( 10C ) of
the Income-tax Act have been laid down in the rule 2BA of the Income-tax Rules. The
guidelines provide that the scheme of voluntary retirement framed by a company should be
in accordance with the following requirements, namely :
1.It applies to an employee of the company who has completed ten years of service or
completed 40 years of age
2.It applies to all employees (by whatever name called), including workers and executives of
the company excepting Directors of the company
3.The scheme of voluntary retirement has been drawn to result in overall reduction in the
existing strength of the employees of the company
4.The vacancy caused by voluntary retirement is not to be filled up, nor the retiring
employee is to be employed in another company or concern belonging to the same
management
5.The amount receivable on account of voluntary retirement of the employees, does not
exceed the amount equivalent to one and one-half month’s salary for each completed year of
service or monthly emoluments at the time of retirement multiplied by the balance months of
service left before the date of his retirement on superannuation. In any case, the amount
should not exceed rupees five lakhs in case of each employee, and
6.The employee has not availed in the past the benefit of any other voluntary retirement
scheme.
Conditions to be fulfilled in case of VRS
1.Though the eligibility criteria for VRS varies from company to company, but usually,
employees who have attained 50 years of age or completed 20 years of service are
eligible for voluntary retirement.
2.The scheme applies to all employees including workers and executives, except the
directors of a company.
3.The vacancy caused by voluntary retirement is not to be filled up.
4.The retiring employee shall not be employed in another company or concern
belonging to the same management.
5.The amount receivable on account of voluntary retirement of the employee does not
exceed the amount equivalent to three months' salary for each completed year of
service, or salary at the time of retirement multiplied by the balance months of service
left before the date of retirement on superannuation of the employee.
WHY VRS?
There are several reasons for organizations to introduce VRS. The most common
among them are to:
• improve efficiency
• respond to decline in sales and increase in cost
• reduce overhead costs
• protect long-term interests of the organization
• achieve technological advancement that reduces the requirement for manpower
• restructure the organization.
2. Resignation
3. Death
4. Layoff: Layoff implies denial of employment to the employees for reasons beyond
the control of employer. Breakdown of machinery, seasonal fluctuations in demand,
shortage of power, raw materials, etc. are the examples of reasons leading to layoff.
According to Section 2 (KKK) of the Industrial Disputes Act, 1947, lay off is defined as
“the failure, refusal or inability of an employer, on account of shortage of coal, power or
raw materials or accumulation of stocks or breakdown of machinery or by any other
reason, to give employment to a workman whose name appears on the muster rolls of
his industrial establishment and who has not been retrenched”.
It is important to note that the employee-employer relationship does not come to an end
but is suspended for some time Layoff may be temporary. In seasonal Industries like
mines, sugar, etc., lay off occurs routinely. Layoff also may occur for an indefinite time.
When layoff becomes a permanent one, it is called ‘retrenchment’.
According to the Section 25 of the Industrial Disputes Act, 1947, a laid off worker is
entitled to compensation equal to 50 per cent of the basic wages and dearness allowance
that would have been payable to him had he not been laid off.
However, the worker needs to satisfy the following conditions to be entitled to the
compensation:
(i) Should not be casual worker
(ii) His name should appear in the muster roll of the establishment.
(iii) Have completed not less than one year of continuous service.
5. Retrenchment: Retrenchment means permanent termination of an employee’s
services for economic reasons. Retrenchment occurs on account of surplus staff, poor
demand for products, general economic slowdown, etc. It’s worth noticing that
termination of services on account of retirement, winding up of a business, illness or on
disciplinary grounds does not constitute retrenchment.
The Industrial Disputes Act, 1947 makes it obligatory for organisations employing 100 or
more employees to give three months’ notice to the employee to be retrenched and also
seek prior approval of the Government.
In other organisations, employee must be served one month’s prior notice in writing
indicating the reasons for retrenchment. He/she should be paid compensation equal to 15
days’ wages for every completed year of service.
6. Dismissal: Dismissal is termination of service of an employee as a punitive measure.
This may occur either on account of unsatisfactory performance or misconduct.
Persistent failure on the part of employee to perform up to the expectations or specified
standard is considered as unsatisfactory performance. Wilful violation of rules and
regulation by the employee is treated as misconduct. Dismissal is a drastic step seriously
impairing the earnings and image of the employee.
Therefore, dismissal as a measure should be resorted to with great care and caution. It
must be justified and duly supported by the just and sufficient cause. Before an employee
is dismissed, he must be served advance notice to explain his position. The reasons for
dismissal must be clearly made known to the employee.
Performance Appraisal
Performance appraisal is a systematic and objective way of evaluating the
relative worth or ability of an employee in performing his job.
According to Flippo, “performance appraisal is the systematic, periodic and an
impartial rating of an employee’s excellence in the matters pertaining to his
present job and his potential for a better job.”
Need of PA
(1) To give information about the performance of employees on the job and
give ranks on the basis of which decisions regarding salary fixation, demotion,
promotion, transfer and confirmation are taken.
(2) To provide information about amount of achievement and behavior of
subordinate in their job. This kind of information helps to evaluate the
performance of the subordinate, by correcting loopholes in performances and to
set new standards of work, if required.
(3) To provide information about an employee’s job-relevant strengths and &
weaknesses.
(4) To provide information so as to identify shortage in employee regarding
ability, awareness and find out training and developmental needs.
(5) To avoid grievances and in disciplinary activities in the organization.
Importance of PA
It is important because of several reason s such as:
1. Personal Attention.
2. Feedback
3. Career Path
4. Employee Accountability
5. Communicate Divisional and Company Goals
Objectives of PA
1. Salary Increase
2. Promotion
3. Training and Development
4. Feedback
5. Pressure on Employees
Methods of PA
Performance appraisal methods are categorized in two ways traditional
and modern methods. Each organization adopts a different method of
performance appraisal according to the need of organization
Traditional method of performance appraisal has been used by companies
for very long time. A common feature of these methods is they are all
relatively simple and involve appraisal by one senior

1.Check list method :- In this method the senior, the boss is given a list of
questions about the junior. These questions are followed by check boxes.
The superior has to put a tick mark in any one of the boxes. This method is
an extremely simple method and does not involve a lot of time. The same
set of questioners can be given for every employee so that there is
uniformity in selecting employee.
Confidential report :- This method is very popular in government
departments to appraise IAS officers and other high level officials. In this
method the senior or the boss writes a report about the junior giving him
details about the performance about the employee. The +ve and – ve traits,
responsibilities handled on the job and recommendations for future
incentives or promotions. The report is kept highly confidential and access
to the report is limited.
3.Critical incident method :- In this method critical or important incidents
which have taken place on this job are noted down along with
employee’s behavior and reaction in all these situations. Both +ve and –ve
incidents are mentioned. This is followed by an analysis of the person, his
abilities and talent, recommendations for the future incentives and
promotions.
4.Ranking method :-In this method ranks are given to employees based on
their performance. There are different methods of ranking employees.
Simple ranking method
Alternate ranking method
Paired comparison method
i. Simple ranking method :- Simple ranking method refers to ranks in serial
order from the best employee eg. If we have to rank 10 best employees
we start with the first best employee and give him the first rank this is
followed by the 2nd best and so on until all 10 have been given ranks.
ii. Alternate ranking :- In this method the serial alternates between the best
and the worst employee. The best employee is given rank 1and then we
move to the worst employee and give him rank 10 again to 2nd best
employee and give him rank 2 and so on.
 iii.Paired comparison :- In this method each and every person is the group,
department or team is compared with every other person in the
team/group/department. The comparison is made on certain criteria and finally
ranks are given. This method is superior because it compares each and every person
on certain qualities and provides a ranking on that basis.
5.Graphic rating scale :- Graphic rating scale refers to using specific factors to
appraise people. The entire appraisal is presented in the form of a chart. The chart
contains certain columns which indicate qualities which are being appraised and
other columns which specify the rank to be given.

The senior has to put a tick mark for a particular quality along with the ranking. Such charts are
prepared for every employee. According to the department in which they work. Sometimes the
qualities which are judged may change depending upon the department
6. Narrated essay :- In this method the senior or the boss is supposed to
write a narrative essay describing the qualities of his junior. He may describe
the employees strength and weakness, analytical abilities etc. the narrative
essay ends with a recommendation for future promotion or for future
incentives.

Modern methods of appraisal are being increasingly used by companies.

Now days one of the striving feature that appraisal involves is, the opinion
of many people about the employee and in some cases psychological test
are used to analyze the ability of employee. These methods are as follows:

1.Role analysis :- In this method of appraisal the person who is being

apprised is called the focal point and the members of his group who are
appraising him are called role set members. These role set members identify
key result areas (KRA 2 marks)(areas where you want improvement are
called KRA) which have to be achieved by the employee. The KRA and their
improvement will determine the amount of incentives and benefits which
the employee will receive in future. The appraisal depends upon what role
set members have to say about the employee.
2. Assessment centers :- Assessment centers (AC) are places where the
employee’s are assessed on certain qualities talents and skills which
they possess. This method is used for selection as well as for appraisal. The
people who attend assessment centers are given management games,
psychological test, puzzles, questioners about different management related
situations etc. based on their performance in these test an games appraisal is
done.
3.Management by objective :- This method was given by Peter Drucker in
1974. It was intended to be a method of group decision making. It can be use
for performance appraisal also. In this method all members of the of
the department starting from the lowest level employee to the highest level
employee together discus, fix target goals to be achieved, plan for achieving
these goals and work together to achieve them. The seniors in the
department get an opportunity to observe their junior- group efforts,
communication skills, knowledge levels, interest levels etc. based on this
appraisal is done.
4.Behavioral anchored rating scale :- In this method the appraisal is done
to test the attitude of the employee towards his job. Normally people
with +ve approach or attitude view and perform their job differently as
compared to people with a –ve approach.
5.Psychological testing :- In this method clinically approved psychological
test are conducted to identify and appraise the employee. A feedback is
given to the employee and areas of improvement are identified.
6.Human resource audit/accounting :- In this method the expenditure on
the employee is compared with the income received due to the efforts of
the employee. A comparison is made to find out the utility of the
employee to the organization. The appraisal informs the employee about
his contribution to the company and what is expected in future.
7. 360* appraisal :- In this method of appraisal and all round approach is
adopted. Feedback about the employee is taken from the employee
himself, his superiors, his juniors, his colleagues, customers he deals with,
financial institutions and other people he deals with etc. Based on all
these observations an appraisal is made and feedback is given. This is one
of the most popular methods
 The Performance Appraisal Process
1.Setting performance standards :-In this very first step in performance
appraisal the HR department decides the standards of performance i.e.
they decide what exactly is expected from the employee for each and
every job. Sometimes certain marking scheme may be adopted eg. A
score90/100 = excellent performance, a score os 80/100 = good. And
soon.
2.Communication standard set to the employee :-Standards of
performance appraisal decided in 1st step are now conveyed to the
employee so that the employee will know what is expected from him
and will be able to improve his performance.

3.Measuring performance :-The performance of the employee is now

measured by the HR department, different methods can be used to
measure performance i.e. traditional and modern method. The method
used depends upon the company’s convenience
 What is to be appraised?
The content to be appraised is determined on the basis of job analysis.
Usually it comprises of:
 Behaviours, including observable physical actions, movements
 Objectives which measure job related results
 Traits which are measured in terms of personal characteristics

Who will appraise?

 Supervisors
 Peers
 Subordinates
 Users of services
 consultants
 Self appraisal

When to appraise?
 Conducted informally
 Carried out systematically at regular intervals, sticking to a definite plan
  Measure actual performance

Use reliable and dependable performance measures

These must be easy to use and report on critical behaviours that
determine performance
These would generally include: personal observation, statistical reports,
oral reports and written reports
These may be objective or subjective
Objective measures are generally quantitative, and include quality of
production, degree of training needed, accidents in a given period,
absenteeism, length of service etc. Such measures are used for
evaluating lower level jobs
Subjective measures are based on opinions of those doing evaluation
and are not verifiable by others; generally used for evaluating middle
level positions.
4.Comparing performance with standard :-The performance of the
employee is now judged against the standard. To understand the score
achieved by him. Accordingly we come to know which category of
performance the employee falls into i.e. excellent, very good, good,
satisfactory etc.
5.Discussing result :-The results obtained by the employee after
performance appraisal are informed or conveyed to him by the HR
department. A feedback is given to the employee asking him to change
certain aspects of his performance and improve them.
6.Collective action :-The employee is given a chance or opportunity to
improve himself in the areas specified by the HR department. The
HR department constantly receives or keeps a check on the
employee’s performance and notes down improvements in performance.
7.Implementation and review :-The performance appraisal policy is to be
implemented on a regular basis. A review must be done from time to time
to check whether any change in policy is required. Necessary changes are
made from time to time
 Limitations of performance appraisal
1.Halo effect :- In this case the superior appraises the person on
certain positive qualities only. The negative traits are not considered. Such
an appraisal will no give a true picture about the employee. And in some
cases employees who do not deserve promotions may get it.
2. Horn effect :- In this case only the negative qualities of the employee are
considered and based on this appraisal is done. This again will not help the
organization because such appraisal may not present a true picture about
the employee.
3.Central tendency :- In this case the superior gives an appraisal by giving
central values. This prevents a really talented employee from
getting promotions he deserves and some employees who do not deserve
any thing may get promotion.
4.Leniency and strictness :-Some bosses are lenient in grading their
employees while some are very strict. Employee who really deserves
promotions may loose the opportunity due to strict bosses while those
who may not deserve may get benefits due to lenient boss.
5.Spill over effect :-In this case the employee is judged +vely or –vely by
the boss depending upon the past performance. Therefore although the
employee may have improved performance, he may still not get
the benefit.
6.Fear of loosing subordinates and spoiling relations :-Many bosses do not
wish to spoil their relations with their subordinates. Therefore when they
appraise the employee they may end up giving higher grades which are not
required. This is an injustice to really deserving employees.
7.Goodwill and techniques to be used :-Sometimes a very strict appraisal
may affect the goodwill between senior and junior. Similarly when different
departments in the same company use different methods of appraisal it
becomes very difficult to compare employees.
8.Paper work and personal biased :-Appraisal involves a lot of paper work.
Due to this the work load of HR department increases. Personal bias and
prejudice result in bosses favouring certain people and not favouring
others.
 Advantages/needs/importance/use/purpose of performance appraisal
1.Feedback to the employee :-Performance appraisal is beneficial because it
provides feedback to the employee about his performance. It identifies the areas
for improvement so that employee can improve itself.
2.Training and development :-Due to performance appraisal it is easy to
understand what type of training is required for each employee to improve
himself accordingly training programs can be arranged.
3.Helps to decide promotion :-Performance appraisal provides a report about the
employee. Based on this report future promotions are decided, incentives, salary
increase is decided.
4.Validation of selection process :-Through performance appraisal the HR
department can identify whether any changes are required in the selection process
of the company normally a sound selection process results in better performance
and positive appraisal.
5.Deciding transfers and lay off of the worker :-Employee with specific talent can
be transferred to places where their talents are utilized properly; similarly decisions
regarding termination of employees depend upon performance appraisal reports.
6.Human resource planning and career development:-Companies can plan for
future vacancies at higher levels based on performance appraisal reports. Similarly
career planning can be done for the employee on the performance appraisal report
Job Evaluation
The purpose of job evaluation is to find the relative worth of a job
and determine what a fair wage for such a job should be. Job
evaluation, it should be noted, begins with job analysis (a systematic
way of gathering information about a job) and ends at that point
where the worth of a job is ascertained for achieving pay equity
between jobs. Job evaluation is different from performance appraisal
too. Performance appraisal is the systematic description of an
employee's job related strengths and weaknesses.
Features of job evaluation

 It tries to assess jobs

 The standards of job evaluation are relative, not absolute
 It gets the basic information through job analysis
 It is generally carried out by groups, not individuals
 Some amount of subjectivity is always present in job evaluation
 It does not fix pay scales but offers a sound basis for determining a rational
wage structure
The Process Of Job Evaluation

The process of job evaluation involves the following steps

 Gaining acceptance from employees and trade unions
 Creating a job evaluation committee
 Finding the jobs to be evaluated
 Analyzing and preparing job descriptions
 Selecting the method of job evaluation
 Classifying jobs
 Installing the programme
 Reviewing the process periodically
Essentials For The Success of A
Job Evaluation Programme
Guidelines for conducting the job
evaluation programme
 Rate the job and not the person on the job
 Collect all the relevant facts accurately
 List the distinguishing features of a job and its relationship with other jobs
 Study the jobs independently and objectively and then discuss views openly and
thoroughly
 Cover all groups and grades of employees
 Make it easy to understand
 Gain acceptance and support from employees, unions etc.
Job Evaluation Methods

A. Ranking method: The job ranking method arranges jobs in

numerical order on the basis of the importance of the job's duties
and responsibilities to the organization. This method, though easy
to understand, is highly subjective in nature.
B. Classification method: The job classification method slots jobs
into preestablished grades. Higher-rated grades demand more
responsibilities, tougher working conditions and varied job duties.
This method is easy to understand and takes care of all relevant
factors affecting the performance of a job. However, it is not easy
to write all inclusive descriptions of a grade. Further, the method
oversimplifies sharp differences between different jobs and
different grades.
C. Factor comparison method: In this method, jobs are ranked
according to a series of factors such as mental effort, physical
effort, skill needed, responsibility, supervisory responsibility,
working conditions, etc. pay will be assigned in this method by
comparing the weights of the factors required for each job.
 An example of factor comparison
method

Suppose the job of a painter is found to be similar to electrician in skill (15),

fitter in mental effort (10), welder in physical effort (12), cleaner in
responsibility (6) and labourer in working conditions (4) then the wage for
the job would be 47.
Job Evaluation Methods

D. Point method: The point system of job evaluation uses a point

scheme based on the compensable job factors of skill, effort,
responsibility and working conditions. The more compensable
factors a job possesses, the more points are assigned to it. Jobs
with higher accumulated points are considered more valuable to
the organization.
 Select key jobs
 Identify the factors to all identified jobs such as skill, effort,
responsibility etc.
 Divide each major factor into a number of sub factors. Each
sub factor is defined and expressed in order of importance.
 Find the maximum number of points assigned to each job
 Once the worth of a job in terms of total points is known, the
points are converted into money values, keeping the wage
rates in mind.
Point values to factors along a scale

Point values for Degrees Total

Factor 1 2 3 4 5
Skill 10 20 30 40 50 150
Physical effort 8 16 24 32 40 120
Mental effort 5 10 15 20 25 75
Responsibility 7 14 21 28 35 105
Working conditions 6 12 18 24 30 90
Maximum total points of all factors depending on their importance to job = 540
(Bank Officer)
 Conversion of job grade points into
money value
Point range Daily Wage rate (Rs) Job grades of key bank officials

500-600 300-400 1 Officer

600-700 400-500 2 Accountant

700-800 500-600 3 Manager I Scale

800-900 600-700 4 Manager II Scale

900-1000 700-800 5 Manager III Scale

 A Comparative Picture of Major Job
Evaluation Methods
Major job evaluation methods
Method What facet of How is job Type of Major Major
job is evaluated? evaluated? method advantages(s) disadvantage(s)

Ranking Whole job Jobs are subjectively Non-quantitative Relatively quick Entirely subjective
(compensable ordered according and in expensive
factors are to relative worth
implicit)

Classification Whole job Compare job to Non-quantitative Readily available Cumbersome

descriptions of job and inexpensive system
grades

Factor Compensable Compare job to key Quantitative Easy to use Hard to construct;
comparison factors of job jobs on scales of inaccurate over time
compensable factors

Point method Compensable Compare job to Quantitative Accurate and May be costly
factors of job standardised stable overtime
descriptions of
degrees of universal
compensable factors
and subfactors
 UNIT IV
Syllabus: Compensation Management and Employee Relations:
Introduction to compensation management, Components of
employee and executive compensation, Factors affecting
employee compensation, Employee incentive schemes, and recent
trends in compensations management. Meaning and nature of
employee relation and industrial relations.
 Compensation
Compensation is the remuneration received by an employee in return for his/her
contribution to the organization. Compensation management is an organized practice
that involves balancing the work-employee relation by providing monetary and non-
monetary benefits to employees.
Compensation management is an integral part of human resource management which
helps in motivating the employees and improving organizational effectiveness.
Company’s nature and size. etc. Pay structure consists of certain grades. Scale and
range of pay in each scale. Each scale has a minimum and a maximum limit.

Pay structure in India generally consists of the following components:

1- Basic wage/salary
2-Dearness allowance (D.A.) and other allowances.
3- Bonus and other incentives.
4- Fringe benefits or perquisites
Basic Wage

The basic wage provides the foundation of pay pocket. It is a price for services
rendered. It varies according to mental and physical requirements of the job as
measured through job evaluation. In India, basic wage has been influences by
statutory minimum wage, wage settlements, and awards of wage board’s
tribunals pay commissions, etc. It is based on following:

i) Minimum wage: Wage sufficient to sustain and preserve the efficiency of the
worker and offer basic amenities of life

ii) A fair wage is something more than the minimum wages. Fair wage is a
mean between the living wage and the minimum wage. While the lower limit
of the fair wage must be the minimum wage, the upper limit is the capacity of
the industry to pay fair wage compares reasonably with the average payment
of similar task in other trades or occupations requiring the same amount of
ability.
iii) Living Wage: Wage level that allows the earner to afford adequate shelter,
food and the other necessities of life. The living wage should be substantial
enough to ensure that no more than 30% of it needs to be spent on housing.
The goal of the living wage is to allow employees to earn enough income for
a satisfactory standard of living.
Dearness allowance and other allowance : This allowance is given to
protect the real wages of workers during inflation .Under section 3 of the
minimum wages act is as cost of living allowance. Dearness allowance has
now become an integral part of the wage system in India.

Bonus: Bonus is a share of the workers in the prosperity of enterprises.

Bonus may also be regarded as an incentive to higher productivity. According
to the bonus commission (1961), bonus is sharing by worker in the prosperity
of the concern in which they are employed. In the case of low paid workers
such sharing in the prosperity argument earnings and help to bridge the gap
between the actual wages and need based wage. It has little direct incentive
effect because it is usually paid to all workers at the same rate irrespective of
their individual efficiency and long after the close of the financial years.
Fringe Benefits: It refers to various extra benefits provided to the employees , in
addition to the compensation paid in the form of wage or salary. These can be defined
as any wage cost not directly connected with the employee’s effort, performance,
service eg. Medical insurance, paid leaves, rest periods, pensions, security schemes

Features of Fringe Benefits

1.These are supplementary to regular wages or salary.
2.These are paid to all employees based on their membership in the organization.
3.These are indirect compensation because these are not directly related employees
performance.
4.F.B. involve a labour cost for the employer and not meant directly to improve
efficiency.
5.These raise the living standard of the employees
6.Fringe benefits refers to items for which a direct monetary value to the employee
can be ascertained eg. Provided fund, Pension etc, on the other hand services refers
to the items like medical facilities, recreation etc.
7.These benefits are may be statutory or voluntary.
 Objectives in compensation management
Acquire qualified personnel: Compensation needs to be high enough to
attract applicants. Pay levels must respond to the supply and demand of
workers in the labor market since employers compete for workers.
Premium wages are sometimes needed to attract applicants already
working for others.

Retain current employees: Employees may quit when compensation

levels are not competitive, resulting in higher turnover.

Ensure equity: Compensation management strives for internal and

external equity. Internal equity requires that pay be related to the relative
worth of a job so that similar jobs get similar pay. External equity means
paying workers what comparable workers are paid by other firms in the
labor market.

Reward desired behavior: Pay should reinforce desired behaviors and

act as an incentive for those behaviors to occur in the future. Effective
compensation plans reward performance, loyalty, experience,
responsibility, and other behaviors.
Control costs: A rational compensation system helps the organization
obtain and retain workers at a reasonable cost. Without effective
compensation management, workers could be overpaid or underpaid.

Comply with legal regulations: A sound wage and salary system

considers the legal challenges imposed by the government and ensures
the employer's compliance.

Facilitate understanding: The compensation management system

should be easily understood by human resource specialists, operating
managers, and employees.

Further administrative efficiency: Wage and salary programs should

be designed to be managed efficiently, making optimal use of the HRIS,
although this objective should be a secondary consideration compared
with other objectives.
 Wage
International Labour Organisation (ILO) defines wages as the amount
received by an employee for the services of hourly, daily, weekly and
fortnightly employees.
The term wages is also defined by The Payment of Wages Act, 1936 and
The Minimum Wages Act, 1948.

Salary
Salaries are the remuneration paid to the personnel employed on a
monthly or yearly basis.
The distinction between wages and salaries need not be observed in
actual usage. Both may mean remuneration paid to an employee for
services rendered.

166
 Difference between Wage & Salary

Wage earners are paid on the basis Salary earners are paid consolidated
of time or units produced. amount which includes fixed and
variable components.
Wage earners get paid more for Salaries are often calculated as
working more than 40 hours per packages.
week.
Wage earners often have to give up Salary earners usually receive paid
pay for time off. time when they are not working
Wages do not contain any type of Salaries can contain all kinds of
benefits benefits and perks.
Wage earners get overtime Salary workers are rarely offered
overtime pay.
Significance of compensation plan in determining employee
motivation
A compensation plan must include a fair salary and benefits at least up to
industry standard. Money is the most motivating factor although not sole
but In fact, most are motivated by money; at least for their basic needs.
Employee motivation through compensation can come in the form of raises,
performance bonuses, commissions, profit sharing, or any number of "extra
benefits" like, automobiles, vacations, or other tangible items purchased and
used as rewards. Organisations use different compensation strategies to
motivate their employees. Most often individuals are provided with base pay
to engage with the company and ensure their continued participation. In
many cases, base salary alone will only spur an employee to work at the level
required for them to keep their job. If employers want staff members to
perform at a superior level, they likely have to offer employees the
opportunity to earn incentive (i.e.—additional) pay.
Incentive plans are one such way to motivate employees to expend more
effort, but they are usually not very flexible. Most incentive plans involve a
pay-for-performance arrangement in which employees are rewarded for the
achievement of specific objectives.
168
These types of compensation strategies tend to be of medium-range duration,
and include performance criteria that feature broad operational or financial
metrics. Pay employees the salary portion of their compensation monthly or
bi-monthly. Pay employees the incentive portion of their compensation as
soon after they meet their goals as feasible. Thus, quarterly incentive
payments are usually more motivating than annual payments and monthly
incentive payments are often best. Compensation plan helps to attract and
retain top employees-and keep them motivated if you pay them as much or
more than your competitors. Every few years, one should determine what
competitors are paying and adjust your compensation plan accordingly.
One can do this informally by asking employees with other companies that you
interview about their compensation plan, or more objectively by hiring an
outside consulting firm to benchmark your plan against others and advise you
on how to adjust it. Another way to motivate your employee is to Use merit
increases to reward top performers. Award the largest salary increases to your
stars, much more modest increases to satisfactory performers, and no
increases to employees whose performance falls below expectations.
Compensation plan plays very significant role in retaining and motivating your
employees so it should be made very smartly.
 Factors Influencing Employee Remuneration:
A number of factors influence the remuneration payable to employees.
They can be categorized into i) external & ii) internal factors.
External Factors
Factors external to an organization are labour market, cost of living,
labour unions, government legislations, the society, & the economy.
Labour Market:
Demand for & supply of labour influence wage & salary fixation. A low
wage may be fixed when the supply of labour exceeds the demand for it.
A higher wage will have to be paid when the demand exceeds supply, as
in the case of skilled labour. Going rate of pay is another labour-related
factor influencing employee remuneration. Going rates are those that
are paid by different units of an industry in a locality & by comparable
units of the same industry located elsewhere. Productivity of labour also
influences wage fixation. Productivity can arise due to increased effort of
the worker, or as a result of the factors beyond the control of worker
such as improved technology, sophisticated machines &equipment,
better management
Cost of Living: Next in importance to labour market is the cost of living. A rise in cost
of living is sought to be compensated by payment of dearness allowances, basic pay to
remain undisturbed.
Labour Unions: The presence or absence of labour organizations often determines the
quantum of wages paid to employees. Employers in non-unionized factories enjoy the
freedom to fix wages & salaries as they please. An individual non-unionized company
may be willing to pay more to its employees if only to discourage them from forming
one.
Labour Laws: We have a plethora of labour laws at the central as well at the state
levels. Some of the central laws which have a bearing on employee remuneration are
the Payment of Wages Act, 1936; the Minimum Wages act,1948; the Payment of
Bonus Act, 1965; Equal Remuneration Act, 1976; & the Payment of Gratuity Act, 1972.
The Payment of Wages Act was passed to regulate payment of wages to certain classes
of persons employed in the industry. The Minimum Wages Act enables the central &
state government to fix minimum rates of wages payable to employees in sweated
industries. The Equal Remuneration Act provides for payment of equal remuneration
to men & women workers for same or similar work
Society: Remuneration paid to employees is reflected in the prices fixed by an
organization for its goods & services. For this reason, the consuming public is
interested in remuneration decisions.
The Economy: The last external factor that has its impact on wage &salary
fixation is the state of economy. While it is possible for some organizations to
thrive in recession, there is no question that economy affects remuneration
decisions. For example, a depressed economy will probably increase the labour
supply. This, in turn should serve to lower the going wage rate.
The Internal Environment
Among the internal factors which have an impact on pay structure are the
company’s strategies, job evaluation, performance appraisal, & the worker
himself or herself.
Business Strategy: The overall strategy which a company pursues determines
the remuneration to its employees. Where the strategy of the enterprise is to
achieve rapid growth, remuneration should be higher than what competitors
pay. Where the strategy is to maintain & protect current earnings, because
of the declining fortunes of the company, remuneration level needs to be
average or even below average.
Job Evaluation & Performance Appraisal: Job evaluation helps
establish satisfactory wage differentials among jobs. Performance
appraisal helps award pay increases to employees who show
improved performance.
The Employee: Several employee-related factors interact to
determine his or her remuneration. These include performance,
seniority, experience & potential. Performance is always rewarded
with pay increase. Rewarding performance motivated the
employees to do better.
Experience makes an employee gain valuable insights & should
therefore be rewarded.
Potential is useless if it is never realized. Yet, organizations do pay
some individuals on their individuals
Ability to pay: The financial strength of the organisation is one of the
highly critical factors that determine compensation administration
EXECUTIVE COMPENSATION
The financial payments and non monetary benefits provided to high
level management in exchange for their work on behalf of an
organization. The types of employees that are typically paid with
executive compensation packages include corporate presidents,
chief executive officers, chief financial officers, vice presidents,
managing directors and other senior executives.
As a rule of thumb, the base salary constitutes 30% of total
compensation, the annual incentive another 20%, the benefits about
10% and long-term incentives or the wealth creation portion of the
compensation about 40%. Indeed, before the financial crisis, there
was a lot of board attention to improving the relationship between
pay and performance
Executive Compensation has four distinct characteristics:

•Pay Package Design: Executive pay arrangements typically

consist of six distinct compensation components: salary, annual
incentives, long-term incentives, benefits, perquisites and
severance/change-in-control agreements.
•Equity Compensation: The majority of compensation of most
executive pay packages comes in the form of company stock.
•Performance-Contingent Pay: Executive pay packages are
designed so that the bulk of an executive's compensation is
contingent on a company achieving pre-established criteria of
specific financial results and/or strategic objectives.
•Vesting Schedules: Even after financial or strategic criteria for an
award is met, full ownership of the equity award are often
conditioned on the executive's compliance with certain covenants.
Elements / Components of Executive compensation
Executive Salaries/ Base Salary: Salaries of executives vary by type of job, size of organization,
region of the country, and industry. On average, salaries make up about 40-60% of the typical top
executive's annual compensation total. At times publicly traded company to hike or reduce the
salary of executive based on performance, approval may be needed from directors and
shareholders .
Executive Bonus Plans: Because executive performance may be difficult to determine, bonus
compensation must reflect some kind of performance measure if it is to be meaningful..
Performance Incentives-Long Term Vs. Short Term Performance-based incentives attempt to
tie executive compensation to the long-term growth and success of the organization. However,
whether the emphasis is really on the long term or merely represents a series of short-term
rewards is controversial. Short-term rewards based on quarterly or annual performance may not
result in the kind of long-run-oriented decisions necessary for the company to continue to do
well. Stock options have increased in use as a component of executive compensation during the
past 10 years, and employers may use a variety of very specialized and technical approaches to
them However, the overall trend is toward using stock options as performance-based long-term
incentives.
Benefits For Executives As with benefits for non-executive employees, executive benefits may
take several forms, including traditional retirement, health insurance, vacations, and others.
However, executive benefits may include some items that other employees do not receive..
Executive Perquisites: In addition to the regular benefits received by all employees, executives
often receive benefits called perquisites. Perquisites (perks) are special executive benefits—
usually noncash items.
 Incentives
Wage incentives are extra financial motivation. They are designed to
stimulate human effort by rewarding the person, over and above the
time rated remuneration for improvements in the present or
targeted results.
Characteristics of a wage Incentive plan
The characteristics of sound incentive wage plan are stated below:

1. Approval of Management, Workers and Trade Union: All the interested

parties must accept, support and co-operate in the incentive plan. In the
absence of employee support, the programme of incentive will fail.
2. Work Standard: The standard upon which wage incentive is based
should be fixed through careful work measurement devices, e.g., time and
motion studies, work sampling.
3. Guaranteed Base Wage: Normally the base rate is determined by job
evaluation. The employee should be dropped due to the circumstances
beyond his control and there must be security of income.
4. No Unwarranted Rate Cutting: The work standard or quota, in time or
money per unit, must be guaranteed by management against unilateral
and unwarranted rate cutting.
5. Easy Calculation of Earnings: Complexity is one of the basic drawbacks
of many incentive plans. Management should try to simplify it as for as
possible.
6. Grievance procedure: An incentive plan of wage payment should have
effective grievance procedure to deal with complaints and dissatisfaction
ventilated by employees
 Advantages of Incentive Plans
Wage incentive scheme are considered beneficial to both employers and employees in
the following ways:
1. Before introducing an incentive plan, scientific work study is carried out. It helps to
make improvements in work flow, work methods and man machine relationship.
2. Wage incentive plans provide an opportunity for hardworking and ambitious
workers to earn more.
3. Employees are encouraged to become innovative. They think and involve more
efficient ways of doing work. Moreover, they bring to the notice of management
wasteful practices and problems that retard productivity.
4. Incentive plans help to improve discipline and industrial relations. These plans are
useful in minimizing absenteeism, accidents, and go slow. This is because workers
have an interest in increasing productivity.
5. The costs of supervision are reduced as workers themselves are motivated to work
hard and improve performance so as to earn monetary rewards.
6. A sprit of mutual cooperation and team work is crated among workers. As their
activities are interdependent, any obstruction on the part of a worker can affect
output and rewards.
7. Wage incentives are a sound technique of improving productivity. Workers are
likely to work at their best when they are offered monetary rewards for good
performance.
 TYPES OF INCENTIVE Systems
There are various types of incentive systems. Following are the main systems
through which organisations provide incentives to their employees:
System I: Team gain sharing /profit-sharing
In the case of team profit-sharing and gain sharing systems, team incentives
are tied to organizational outcomes (e.g., organizational profit, organizational
productivity, customer satisfaction. and so on). Specifically, in team profit-
sharing systems, the organizational outcome evaluated is financial in nature;
that is, teams are rewarded when the organization makes a certain amount of
profit . In these systems, cash rewards are generally shared equally among all
of the various teams in an organization.
System II: Team goal-based incentive systems
In this type of system, the organization (often in conjunction with the team)
formulates "goals" or "targets" for each team that are believed to reflect
effective performance outcomes (e.g., predetermined production objectives,
customer service goals, etc.). Such goals may be
Very short or long-term objectives. When the team's performance meets the
target in question, its members earn a predetermined monetary or
nonmonetary reward.
System III: Team discretionary bonus systems
These team incentive systems, like goal-based incentive systems, evaluate
team outcomes (i.e., customer satisfaction) when determining whether a
specific team should be provided with incentives. Unlike goal-based systems,
however, the team is not provided with a predetermined performance
standard which will guarantee the of a specific predetermined reward. Instead,
when the organization feels a team has done an outstanding job, the team is
provided with a monetary or nonmonetary reward
Systems IV and V: Team and team member skill incentive systems
Under this system, teams are rewarded when they demonstrate the
acquisition of certain kills. For example, when supervisory staff and team
members agree that the team has developed cooperation skills, monetary
bonuses are provided to team members . Team member skill incentive systems
are similar to their team skill incentive counterpart. However, the team
member's skills and competencies, and not the team's, are the focus of
evaluation. That is, team members are rewarded for acquiring team-related
skills, as indicated by evaluations provided by other team members. Some
examples of such skills are adaptability (i.e., learning the tasks of other team
members), oral communication, growth, problem- solving, commitment,
initiation of ideas, and leadership
 Advantages and limitations of incentives.
There are generally various types of incentives prevailing in an organization.
•Organizational
•Individual
•Group/Team
Each one has got advantages and limitations which are as follows:

Merits of Organizational Incentives

1. Organizational incentive enhances organizational effectiveness.

2. Organizational incentive helps to enhance team work.

3. Organizational incentive encourages employee participation at work.

4. Organizational incentive adds a new dimension in organizational productivity

and job satisfaction.

5. Organizational incentive ensures employee relations among the employees

as well as between the employees and management.
Limitations Of Organizational Incentives
1. Since the incentive depends on organizational performance, employees may
not be motivated at individual level.
2. It will be complex to determine the amount of incentive among different
levels of employees
3.Organizational incentive plan does not provide instant incentive to
employees.
4.Organizational incentive does not depend on individual performance

Merits Of Individual Incentives:

1. Employees are individually motivated for higher level of performance in the
organization.
2. Organizational ability will increase due to individual's satisfaction at work.
3. Individual incentives will result in greater job satisfaction and organizational
productivity.
4. Individual incentive reduces organizational expenses.
5. Individual incentives can be easily administered and applied.
Limitations Of Individual Incentives
1. Since the individual incentive is provided with an additional output,
employees tend to increase their output as far as possible and they give less
importance to the quality.
2. Goal conflict occurs between individual goals and organizational goals.
3. The quality of work life is reduced.
4. The living standard of employees will be uncertain.
5. Individual incentive does not promote team work,
6. Bonuses are nor directly linked with employee’s performance.
 Definition of IR
According to the ILO, industrial relations comprise relationships between the state on the
one hand and the employers’ and employees, organisations on the other hand and the
relationship among the occupational organisations themselves.
So, Industrial Relation is concerned with the relationship between management and workers
and the role of the regulatory mechanism in resolving any industrial dispute.
Nature of IR
IR is concerned with the relationship between management and workers and the role of
regulating mechanism in resolving any industrial dispute.
1) IR covers the following areas: -
Collective bargaining - Role of management, unions and government
Machinery for resolution of industrial disputes.
Labour legislation
IR training
Grievance and disciplinary policy
2) IR is characteristics by both conflict and co-operation. This is the basis of adverse
relationship. So the focus of IR is on the study of the attitudes, relationship practices and
procedures developed by the contending parties to resolve or at least minimize conflicts.
3) IR is concerned by laws, rules and regulations aggrieved conditions, policy framework,
government transactions, co-operation between management and labour.
 Approaches to IR
There are two general approaches to IR
•Traditional approaches ( Psychological, Sociological & Human Relation)
•Modern approaches ( Unitary, Pluralistic, Marxist)
Traditional approaches to Industrial Relations
1.Psychological approach: This approach says that the problems of IR have their origin in the
perceptions of the management, unions and the workers. The conflicts between labour and
management occur because every group negatively perceives the behaviour of the other i.e. even
the honest intention of the other party so looked at with suspicion.
2. Sociological approach: This approach views Industry as a social world. The management
goals, workers’ attitudes, perception of change in industry, are all, in turn, decided by broad social
factors like the culture of the institutions, customs, structural changes, status-symbols, rationality,
acceptance or resistance to change, tolerance etc. Industry is, thus inseparable from the society in
which it functions.
3. Human relations approach: This approach views human side of Industrial relations which
says that when employers treat Human beings as objects, encroach on their expectations, conflicts
and tensions arise. In fact major problems in industrial relations arise out of a tension which is
created because of the employer’s pressures and workers’ reactions, protests and resistance to
these pressures through protective mechanisms in the form of workers’ organization, associations
and trade unions. Tension then gradually extends to the whole industry and sometimes affects the
entire economy of the country.
Modern Approaches
Unitary Perspective: In Unitarism, the organization is perceived as an integrated and harmonious system, viewed as one happy family. A core
assumption of unitary approach is that management and staff, and all members of the organization share the same objectives, interests and
purposes; thus working together, hand-in-hand, towards the shared mutual goals. Furthermore, unitarism has a paternalistic approach where it
demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict is perceived as disruptive.
Pluralistic-Perspective: In pluralism the organization is perceived as being made up of powerful and divergent sub-groups - management and
trade unions. This approach sees conflicts of interest and disagreements between managers and workers over the distribution of profits as normal
and inescapable. Conflict is dealt by collective bargaining and is viewed not necessarily as a bad thing and if managed could in fact be channelled
towards evolution and positive change.
Marxist/ Radical Perspective: The basic assumption of this approach is that industrial relations under capitalism are an everlasting and
unavoidable source of conflict According to this approach, industrial conflicts are the central reality of industrial relations, but open conflicts are
uncommon. The Marxist approach views industrial disputes as a class struggle and industrial relations as a politicized concept and an element of
the class struggle. As per the Marxist approach, the understanding of industrial relations requires an understanding of the capitalized society, the
social relations of production and the mechanism of capital accumulation. The Marxist approach views the power relationship between the two
classes, namely, the employer (capital) and the employee (labour), as the crux of the industrial relations. Both classes struggle hard to consolidate
their respective positions so that they can have a greater leverage over the other in the process of bargaining. The proponents of this approach
perceive that the employers can survive longer without labour than the employees can without work. As far as theory is concerned, the
compensation payable to the employees is an outcome of the power struggle.
Trusteeship/ Gandhian Approach: This approach was proposed by Mahatma Gandhi. The concept of trusteeship implies stewardship without
ownership. Such stewardship is not for private profit, but for the greatest good of all. Gandhi ji believed that people should keep the minimum
wealth for themselves to be able to lead a life and give up the rest to be held in trust for the greatest good of all. He insisted on recognizing each
individual worker as a human being. He believed in non-violent communism, going so far as to say that “if communism comes without any
violence, it would be welcome.” Gandhiji laid down certain conditions for a successful strike. These are: (a) the cause of the strike must be just
and there should be no strike without a grievance; (b) there should be no violence; and (c) non-strikers or “blacklegs” should never be molested.
He was not against strikes but pleaded that they should be the last weapon in the armoury of industrial workers and hence should not be resorted
to unless all peaceful and constitutional methods of negotiations, conciliation and arbitration are exhausted
The System Approach: The system approach was developed by J. P. Dunlop of Harvard University in 1958. According to this approach,
individuals are part of an ongoing but independent social system. The behaviour, actions and role of the individuals are shaped by the cultures of
the society. The basis of this theory is that group cohesiveness is provided by the common ideology shaped by the societal factors.
According to Dunlop, the industrial relations system comprises certain actors, certain contexts, and an ideology, which binds them together and a
body of rules created to govern the actors at the workplace and work community. The actors in the system are the managers, the workers and
their representatives, and the government agencies.
Significance of good industrial relations
Industrial relations usually imply good and positive relations
between the employees and employers. The good IR help run an
industry effectively and successfully, i.e., the desideratum of the
day. The importance of IR can be imbued with multiplicity of
justifications.
To mention, good IR help:
1. Foster Industrial Peace:
2. Promote Industrial Democracy
3. Benefit to Workers:
4. Benefit to Management
5. Improve Productivity
 UNIT 5
Syllabus: Employee Safety/ Health and International Human Resource Management: Basics of
ethics and fair treatment at work, measures and policies for employee safety at work, basic
principles governing International Human Resource Management and the role of culture.
Ethics
Ethics is a system of rules and principles of appropriate conduct in any
given culture, society or organization that guides people in their decision
making and responsibilities. In simpler terms, it's a system of rules that
tells us what behavior is 'good' and what behavior is 'bad.' For example,
it is usually considered unethical to lie. Ethics or moral philosophy is a
branch of philosophy that involves systematizing, defending, and
recommending concepts of right and wrong conduct. It deals with values
relating to human
conduct, with respect to the rghtness andwrongness of certain actions an
d to the goodness and badness of themotives and ends of such actions
 Ethical Issues in HR
1.Compensation
There are ethical issues pertaining to the salaries, executive perquisites and the annual
incentive plans etc. The HR manager is often under pressure to raise the band of base
salaries. There is increased pressure upon the HR function to pay out more incentives
to the top management and the justification for the same is put as the need to retain the
latter. Further ethical issues crop in HR when long term compensation and incentive
plans are designed in consultation with the CEO or an external consultant. While
deciding upon the payout there is pressure on favouring the interests of the top
management in comparison to that of other employees and stakeholders.
2. Race, gender and Disability
In many organisations till recently the employees were differentiated on the basis of
their race, gender, origin and their disability. Not anymore ever since the evolution of
laws and a regulatory framework that has standardised employee behaviours towards
each other. In good organisations the only differentiating factor is performance
3. Employment Issues
Human resource practitioners face bigger dilemmas in employee hiring. One dilemma
stems from the pressure of hiring someone who has been recommended by a friend,
someone from your family or a top executive.
4. Privacy Issues
Any person working with any organisation is an individual and has a personal
side to his existence which he demands should be respected and not intruded. The
employee wants the organisation to protect his/her personal life. This personal life
may encompass things like his religious, political and social beliefs etc. However,
certain situations may arise that mandate snooping behaviours on the part of the
employer.
5. Sexual Harassment
Improper sexual conduct in the workplace--which includes lewd and suggestive
comments, touching and fondling, persistent attention, and requests for sexual
favours--has long been a problem for women, and occasionally for men. All too
often, such sexual harassment has been regarded as employers as a personal
matter beyond their control However, increased attentions to the problem and
recent developments in laws have made employers aware of their responsibilities-
-and women, of their rights.
Although sexual harassment is usually committed by one employee against
another, employers bear both legal and ethical obligation to prevent harassment
and to act decisively when it occurs. Harassment is more likely to occur when
management has not prescribed clear policies and procedures with regard to
conduct of a sexual nature.
Importance of Ethics in HR
Importance of ethics in human resources is crucial for any business
owner, whether in a local startup or a multinational powerhouse.
Legal Considerations
Breaches of ethics in human resources can lead companies into a world of legal trouble,
in both the civil and criminal arenas. Breaches of ethics in the HR department are more
likely to be reported by victims to the Better Business Bureau, the Equal Employment
Opportunity Commission or other regulatory agencies than those committed in other
areas, such as product development or accounting. Companies with comprehensive
ethics programs in place can avoid costly trouble regarding discrimination and hostile-
work-environment issues, resulting in lower costs for litigation and out-of-court
settlements.
Company Reputation
Discrimination issues, sexual harassment and unfair employment policies can land
companies on the front page of consumer- or business-focused publications, damaging
a company's reputation among consumers, potential strategic partners and potential
future employees. Gaining a reputation as an ethical employer can help to attract the top
talent in your industry from a wider area, as employees seek to find the most beneficial
employment relationships they can. The opposite holds true, as well; if job applicants
see your company as an unethical employer, the most skilled, experienced, creative and
productive applicants are likely to put their resumes in elsewhere.
Employee Loyalty
Treating employees ethically can garner long-term employee trust and loyalty,
which conveys a range of distinct benefits to employers. Loyal employees gain
more experience working with their employers, allowing them to master
production processes and more fully understand the inner workings of the firm.
This can increase employees' productivity and efficiency over time in addition to
keeping recruiting and training costs under control. Sellers of consumer goods
can gain marketing advantages from loyal employees, as well. Loyal employees
often act as champions for a company's products, purchasing goods from their
employer and spreading positive word-of-mouth advertising to friends, family and
acquaintances over the years.
Promoting Ethics
A solid reputation as an ethical employer does not happen on its own. Savvy,
ethics-conscious business owners put comprehensive ethics programs in place
to display a firm commitment to ethics in every area of business, including
human resources. Put HR ethics policies in place regarding discrimination,
sexual harassment and the treatment of employees, and put each of your
managers and supervisors through ethics training programs to make sure they
are fully aware of your expectations. Most importantly, lead by example in your
organization to create a culture of mutual respect and dignity, where ethical
decision-making is valued and rewarded.
 FAIR TREATMENT
Implementing following things will enhance fair treatment:
•Avoid showing favouritism toward one employee over another one.
Doing so can cause the unfavoured employee to resent you. What
applies to one employee should apply to all. Do not discriminate
based on race, age, religion, disability, sexual orientation, gender or
any other quality.
•Promote an employee solely based on how qualified he is to
perform the job, not because of a personal relationship. Otherwise,
his promotion will appear unfair to other employees who are more
qualified to perform the job.
•Post all job openings for all employees to see, instead of verbally
telling an employee about an opening. By posting all job openings,
employees have an equal opportunity to apply for open positions.
•Listen to your employee. By listening to your employee, you send
the message that her/his opinion and feedback is important. If you
do all of the talking but never take the time to listen, it's unfair.
•Provide each employee with an employee handbook or rulebook to
ensure he knows the rules. Disciplining an employee who is
unaware of the rules is unfair. Along that same line, if one
employee is disciplined for breaking the rules, all employees
should be disciplined for breaking the rules.
•Recognize and reward each employee for her accomplishments,
regardless of where she is on the staff hierarchical structure.
•Avoid “lording it” over your employees. Instead, treat your
employees as equals. Remember that if it were not for the
employees, you would not have a job. They need you. You need
them. You're a team. It is OK to make a distinction if you are in
management. However, your title should not make you superior.
 Employee Safety at workplace
Employers have legal responsibilities to ensure a safe and healthy
workplace. As an employee you have rights and you have
responsibilities for your own wellbeing and that of your workers.
In accordance with the Factories Act 1948, an occupier of an
establishment has to ensure the health, safety and welfare of all
the workers while they are at work in the factory.
It is obligatory for an employer/occupier to ensure the provision
and maintenance of plant and systems of work that are safe and
without health risks. Arrangements should be made to rectify
risks involved in use, handling, storage and transport of articles
and substances.
The Factories (Amendment) Bill, 2014 was introduced in Lok Sabha on
August 7, 2014. It proposes to amend the Factories Act, 1948. The Act
aims to ensure adequate safety measures and promote the health and
welfare of the workers employed in factories.
The Bill introduces provisions for:
(i) Supply of protective equipment and clothing to workers exposed to
hazards, and
(ii) Rules regarding hazardous processes.
It modifies the provisions regarding:
(i) Precautions against dangerous fumes and gases
(ii) Explosive or inflammable dust or gas
(iii) Dangerous operations
Directive Principles
The Constitution of India provide detailed provisions for the rights of the citizens and also lays
down the Directive Principles of State Policy which set an aim to which the activities of the state
are to be guided. On the basis of these Directive Principles as well as international instruments,
Government is committed to regulate all economic activities for management of safety and health
risks at workplaces and to provide measures so as to ensure safe and healthy working conditions
for every working man and woman in the nation. Government recognizes that safety and health
of workers has a positive impact on productivity and economic and social development.
Prevention is an integral part of economic activities as high safety and health standard at work is
as important as good business performance for new as well as existing industries.
These Directive Principles provide
(a) For securing the health and strength of employees, men and women;
b) That the tender age of children are not abused;
c) That citizens are not forced by economic necessity to enter avocations unsuited to their age
or strength;
d) Just and humane conditions of work and maternity relief are provided; and
e) That the Government shall take steps, by suitable legislation or in any other way, to secure
the participation of employee in the management of undertakings, establishments or other
organisations engaged in any industry.
National Policy on Safety, Health & Environment at Workplace
The National Policy was declared on 20th February 2009. The Policy is not limited to large and
organized sector, but extends even to MSME and unorganized sectors.
The Policy Provides for
•General guidance to all the stakeholders to discharge their responsibilities in an appropriate
manner.
•Helps to create a positive safety and health culture.
•Enables development of research activities, skill development of employees, employers,
enforcement authorities, and society at large.
•Participation and cooperation of employers and employees promoting employee participation for
effective management.
Objectives of Policy
The policy seeks to bring the national objectives into focus as a step towards improvement in
safety, health and environment at workplace. The objectives are to achieve:
a) Continuous reduction in the incidence of work related injuries, fatalities, diseases, disasters
and loss of national assets.
b) Improved coverage of work related injuries, fatalities and diseases and provide for a more
comprehensive data base for facilitating better performance and monitoring.
c) Continuous enhancement of community awareness regarding safety, health and
environment at workplace related areas.
d) Continually increasing community expectation of workplace health and safety standards.
Provisions Regarding Safety (as per Factories act 1948)
•Fencing of Machinery
•Work on or near Machinery in motion
•Employment of Young Persons on Dangerous Machines
•Striking Gear and Devices for cutting off power
•Self Acting Machines
•Casing of New Machinery
•Prohibition of Employment of Women & Children near Cotton openers
•Hoists, lifts, Lifting Machines and others
•Revolving Machinery
•Pressure Plant
•Floors, Stairs & Means or Access
•Pits, Sumps, Opening in Floors and others
•Excessive Weights
•Protection of Eyes\precautions against Dangerous Fumes, Gases & others
•Precautions Regarding use of portable electric light
•Explosive or Inflammable Dust, Gas
•Precautions in case of fire
•Specifications of Defective Parts or Tests of Stability
•Safety of Buildings and machines
•Safety officers
Provisions Regarding Welfare of Workers (as per Factories act 1948)
•Washing Facilities
•Facilities for Storing & Drying clothing
•Facilities for Sitting
•First Aid facilities
•Canteens, Shelters, Rest Rooms & Lunch Rooms
•Creches
•Welfare Officers
Types of Welfare Facilities

Measures undertaken by Employers in India

 Education
 Housing
 Transportation
 Recreation
 Other facilities
 Canteens, rest rooms, lunch rooms
 Washing facilities, medical aid, leave travel concessions
 Consumer cooperative societies
Statutory Provisions

A. The Factories Act

B. The Plantation Labour Act
C. The Mines Act
D. The Motor Transport Workers Act
E. The Contract Labour Act
 International HRM
IHRM can be defined as set of activities aimed managing organizational human
resources at international level to achieve organizational objectives and achieve
competitive advantage over competitors at national and international level. IHRM
includes typical HRM functions such as recruitment, selection, training and
development, performance appraisal and dismissal done at international level and
additional activities such as global skills management, expatriate management and so
on.
International HRM is concerned with identifying and understanding how the MNC’s
manage their geographically dispersed worked force in order to leverage their HR
resources for obtaining local as well as global competitive advantage.

In simple terms, IHRM is concerned about managing human resources at Multinational

Companies (MNC) and it involves managing 3 types of employees namely,
•Home country employees (PCN) - Employees belonging to home country of the firm
where the corporate head quarter is situated.
•Host country employees (HCN) - Employees belonging to the nation in which the
subsidiary is situated.
•Third country employees (TCN) - These are the employees who are not from home
country/host country but are employed at subsidiary or corporate head quarters.
According to P.V. Morgan: IHRM is the interplay among 3 dimensions:
•HR Activities
•Types of employees
•Types of Countries
 Role of International HRM
International human resource management is the basis of success of any global
multinational organization. International HRM enhances employee’s effectiveness
to achieve goals of the organization and meet the needs; to develop employees to
assume more diverse tasks, assignments, face challenging situations and better
understand the cultural variations across the nations.
IHRM department deals with heterogeneous functions and has to give additional
focus on various aspects, such as:
1. More involvement in the employee’s personal life.
2. Deal with different groups of employees i.e. PCN, HCN and TCN for which HR
policies
and practices may differ. International HR managers have to understand cultural
differentiation in multicultural environment.
3. Manage external influences, i.e host government authorities, business and other
interest pressure and labour groups, etc.
4. Lay different emphasis on management training to deal diverse workforce, their
orientation and to meet international environment and
5. Provide guidance on taxation and compensation aspects.
Benefits of HR Audit
1.Identification of contributions of HR department
2.Improvement of professional image of HR department
3.Encouragement of greater responsibility and professionalism among
HR members
4.Clarification of HR duties and responsibilities
5.Stimulation of uniformity of HR policies and practices
6.Finding critical personnel problems
7.Ensuring timely compliance with legal requirements
8.Reduction of HR costs through more effective personnel procedures
9.Creation of increased acceptance of changes in HR department
10.A thorough review of HR information systems
 Scope and Types of HR Audit
HR Audit must cover the activities of the department and extend beyond
because the people problems are not confined to HR department alone. Based
on this HR audit can be spread across following four different categories.
•Human Resource Function Audit
• Managerial Compliance Audit
• Human Resource Climate Audit Employee Turnover Absenteeism Accidents
Attitude Surveys
• HR - Corporate Strategy Audit

Approaches to HR Audit

1.Comparative Approach (Benchmarking with another company)

2.Outside Authority Approach (Outside consultants’ standards)
3.Statistical Approach (Statistical measures and tools)
4.Compliance Approach (Legal and company policies)
5.Management By Objectives Approach (Goals & Objectives based)
 CT 1 Dated 30-Aug-2013

Total marks : 10
Attempt all Questions. All Questions carry 2 marks each

1. Define HRM (Human Resource Management)

2. What does HRM deals with?

3. What is the significance of HRM?

4. What is the difference between human resource management and personnel
management?
5. What is the impact of globalization on HRM?
 CT 2 Dated 8-Sep-2013
Total marks : 20
Attempt all Questions. All Questions carry 2 marks each

Q1. Difference between Job specification and Job description.

Q2. Why is Recruitment a negative process and Selection a positive process?

Q3. List down factors governing Recruitment.

Q4. What are benefits of Job design?

Q5. Write a short note on Gap Analysis.

Q6. Write a note on VRS.

Q7. What are advantages of external sources of recruitment?

Q8. Define Performance Appraisal.

Q9. Define 360 degree performance appraisal.

Q10. Write a note on On the job Training methods.

Difference between HRM and personnel Management HRM & Personnel management.
Ans. Human resource management is the new version of personnel management. But there are various points of
differentiation which are as under:
•Personnel management is a traditional approach of managing people in the organization.
Human resource management is a modern approach of managing people and their strengths in the organization.
•Personnel management focuses on personnel administration, employee welfare and labour relation.
Human resource management focuses on acquisition, development, motivation and maintenance of human
resources in the organization.
• Personnel management assumes people as a input for achieving desired output.
Human resource management assumes people as an important and valuable resource for achieving desired
output.
• Under personnel management, personnel function is undertaken for employee's satisfaction. Under human
resource management, administrative function is undertaken for goal achievement.
• Under personnel management, job design is done on the basis of division of labour.
Under human resource management, job design function is done on the basis of group work/team work.
•Under personnel management, employees are provided with less training and development
opportunities.
Under human resource management, employees are provided with more training and development opportunities.
•In personnel management, decisions are made by the top management as per the rules and regulation of the
organization.
In human resource management, decisions are made collectively after considering employee's participation,
authority, decentralization, competitive environment etc.
•Personnel management focuses on increased production and satisfied employees.
Human resource management focuses on effectiveness, culture, productivity and employee's participation.
•Personnel management is concerned with personnel manager.
Human resource management is concerned with all level of managers from top to bottom.
• Personnel management is a routine function.
Human resource management is a strategic function.
 Distinction between HRM & SHRM
1. HRM involves the process of employing people, developing their
skills/capacities, and utilizing their services. Strategic HRM can be termed
as a branch of HRM.

2. While traditional HRM focuses mainly on employee relations, Strategic

HRM focuses on partnerships with internal and external customers.

3. When HRM has only short-term goals, Strategic HRM is for long-term
goals.

4. When HRM has staff specialists, Strategic HRM has line managers.

5. When considering job design, there is a tight division of labour and

independence specialization in HRM. On the other hand, job division in
Strategic HRM is flexible.
1 minute bar timer

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