HUMAN RESOURCE MANAGEMENT

HUMAN RESOURCE MANAGEMENT- CONCEPT

 It is concerned with people dimension in the organization.
 The purpose of HRM is to maximize the productivity of an organization by optimizing the effectiveness
of its employees
 Its development trend can be stated as-:

Human
Welfare Personnel
resource
management management
management
“ Human Resource Management is a process consisting of the acquisition, development, motivation, &
maintenance of human resource” – Robbins

HRM Practices in Nepal

 Nepal lacks sufficient basic infrastructure to develop manpower
 Nepal literacy rate is below 60%
 Some 400 thousand raw hands enter in the labor market every year
 About 4 million Nepalese originated citizens are estimated to be working outside Nepal (excluding india)
 Government regulation, competitive pressure, unionization of employees have put a strong influence on
HRM function carried out by organization
 More foreign & multinational companies setting up in Nepal & bringing along with global HR practices
especially after 1990.
 DO YOU KNOW??

 57% of organizations view employee retention as a problem, and 22% of new hires leave their jobs
within 45 days of being hired. Reasons include poor performance and temperament issues
 The costs of employee turnover range from 30% to 150% of the employee’s salary
 In the US, there are 3 million unfilled jobs and 11.8 million unemployed workers.
 The average time spent by recruiters looking at a resume is just 5 to 7 seconds
 In 2000, 22% of resumes were submitted via email or posted on the web. In 2014, over 90% of resumes
were posted online or sent via email. But, only 35% of applicants are actually qualified for the jobs to
which they apply.
 427,000 resumes are posted each week on Monster, 89% of recruiters have hired someone through
LinkedIn and 8,000,000 applicants found their job on Twitter.
 93% of recruiters are likely to look at a candidate’s social media profile – so you might not want to post
those images from the last party you attended!
 While the average length of an interview is 40 minutes, 33% of 2000 surveyed bosses indicated they
know within the first 90 seconds if they will hire that candidate.
 HR managers believe that TUESDAY is the most productive day of the week. – source-Business News daily
 Research tells that over 70% of learning on the jon occurs informally.
 70% of College Students surveyed who would lie on a resume to get a job they wanted (Source: Statistic
Brain)
JOB ANALYSIS
TO REMEMBER
- Determining job requirements (what, how, why employee does)

JOB DECCRIPTION
- Summary statement of the job

JOB SPECIFICATION
- Personal qualification required in terms of : skills, education, experience

JOB EVELUATION
- Orderly & systematic process of determining the wages for the job in relation to other job

JOB ENLARGEMENT
- Involves combining two or more complete jobs in one & adds to an existing job

JOB ENRICHMENT
- Not only adding more tasks to a job but giving the employee more control over these tasks.

REPLACEMENT PLANNING
- Developed to show the names of current occupants of position in the organization & the names of likely
replacements.

SUCCESSION PLANNING
- It is the process of anticipating future staff needs & preparing plans for meeting these manpower needs
internally.
UNIT -1 RECRUITMENT & SELECTION
 RECRUITMENT - CONCEPT

 Recruitment involves searching for candidates from as many reliable sources as

possible.
 Recruitment is the process of locating and encouraging potential applicants to apply
for existing or anticipated job openings.
“ Recruitment is the discovering of potential candidates for actual or anticipated
organizational vacancies” - Robbins

SELECTION - CONCEPT

 Selection is essentially a process of choosing right applicant best suited for the organization’s
requirement.
 It is also the process of rejecting the unsuitable applicants & finally arriving at the most suitable one.

“ selection is the process of choosing from those available individuals who are most likely to perform
successfully in a job.” – Byars & Rue
DIFFERENCE BETWEEN RECRUITMENT & SELECTION
 Recruitment planning is to plan what kind & number of people needs to hire in the near future.

 Strategy development stage critically considers:

- from where we are going to hire?
- which department needs to hire new hands?
- how many people we need to hire? etc..

 In searching stage, HR managers consider both internal & external sources & methods of recruitment.

 In screening stage, they go through the pool of probable candidates

 In last stage, managers try to evaluate effectiveness of recruitment process

SOURCES/METHODS OF RECRUITMENT
 SOURCES/METHODS OF INTERNAL RECRUITMENT

1. Promotion

2. Transfers

3. Former employees (Rehire & Recalls)

4. Previous Applicants

5. Job postings

6) Employee Referral Programs

 SOURCES/METHODS OF EXTERNAL RECRUITMENT
1) Educational Institute

2) Employment Agencies

3) Radio/Television Advertisements

4) Newspaper Advertisement

5) E-recruiting/computerized recruiting
 TYPES OF ADS
1) Want Ads

2) Blind Ads

why blind Ads ?

- in some case company wants to terminate the employee
but wants to
find a replacement first.
- companies may not want their competitors or even
employees know
that they are hiring
- to test existing employee intention
 RECRUITMENT OF PROTECTED CLASSES

 It means recruitment of disabled people, minority class or under privileged groups & the people
differ in terms of race, color, national origin, sex, religion etc..
 To provide equal employment opportunity, every country has developed certain acts/ rules.
 Protected class are recruited under two basis-:
- Mandatory (compulsory Acts to be followed)
- voluntary (Some companies go beyond the Acts & offer more opportunities to protected classes)
 ELECTRONIC RECRUITMENT

CONCEPT-: Also known as online recruitment. Any recruitment process than an organization conducts via
web-based tools is known as electronic recruitment

PROCESS

Online job posting Receiving of

Responses & status
on website or application over Online test
Management
portals internet
PURPOSE
- To make the process more efficient & effective as well as less expensive & to reach large pool of potential
candidate
 SELECTION PROCESS
Reception of Application

Preliminary Interview

Application Blank
Physically unfit, unfavorable general impression

Selection Test

Main Employment
Interview
Unfavorable second impression
Unfavorable personal data

Background Investigation
Unfavorable test score

Unfavorable history

Final Selection Interview

-Ve Decision

Medical Examination
Unfit

R E J E C T I O N Induction or Orientation
 TYPES OF SELECTION TESTS

APTITUDE TEST
ACHIEVEMENT
ABILITY TEST
TEST
INTELLIGENCE
TEST

INTEREST TEST
PERSONALIT
SELECTION Y TEST
TEST ATTITUDE TEST

PROJECTIVE TEST

SITUATION
TEST

HONESTY
TEST
 TYPES OF SELECTION TESTS
1. ABILITY TEST
- They assist in determining how well an individual can perform task related to the job.

a) Aptitude Test
- To determine potential learning capacity of a candidate

b) Achievement Test

- They measure past achievement & performance

c) Intelligence Test
- They measure general ability for intellectual performance.
2. PERSONALITY TEST TYPES OF SELECTION TESTS

b) Attitudes Test
- they measure tendencies
to act favorable or un
favorable towards objects,
people or events.

c) Projective Tests
- it consists of picture or incomplete items.
Candidate is asked t to narrate what he see in
picture or to complete

a) Interest Test
- They measure likes
& dislikes related to
hobbies, group activities
& career choices
 TYPES OF EMPLOYMENT INTERVIEW
1. Informal Interview 5) Depth & stress interview
- Take place anywhere - the subject will be put to
- Not planned in advance exhaustive analysis

2. Formal interview
- Conducted in more 6) panel or board interview
Formal environment - several individuals may
- Planned in advance interview one applicants

3. Structured Interview
- Highly structured & 7) The group interview
More formalized - new technique in west
less popular in Nepal
- its some thing like GD
4. Non-directive interview
- Question that can produce
Yes or no answer are avoided
- Broad general question are
asked
 GUIDELINES FOR EFFECTIVE INTERVIEW

FOR
INTERVIEWER FOR CANDIDATE
 Prepare yourself carefully. Learn everything
about job, interviewers.
 Uncover the interviewer’s need. Let him
describe his needs.
 Relate yourself to interviewer’s needs. Tell
him how you can be useful
 Think before speaking. Pause – think –
speak
 Appearance are important. Dress well
 Make a good first impression. First few
minutes are important.
 Nonverbal behavior is important. Keep eye
contact.
 EMPLOYEE INDUCTION
 Induction is a technique by which a employee is
formalized into the changed environment.
 It is a kind of welcoming process.

The basic objectives are-:

 introduce the person to the people with whom he works
 Make him aware about general company policies
 Answer any question & clear any doubts about the job
 Provide on-the-job instruction.
 RECRUITMENT & SELECTION PRACTICE IN NEPAL

 Nepalese organizations use a mix of internal & external

sources of recruitment
 Government organization uses “gorkhapatra” as recruitment
tool.
 Corporate houses, NGO, INGO’s uses both internal (job
posting, employee referrals) & external (newspaper, job fair)
for recruitment.
 Friends & relatives are the main source of recruitment for
unorganized private sector.
 Gorkhapatra & Kantipur are mostly used newspaper for
recruitment.
 Government organization have their own format &
procedure for selection. First, lok sewa exam, interview &
selection
 Written exam & interview are the major tools for selection in
organized private sector.
 the selection of candidate in the unorganized private sector
is based on the subjective judgment of the owner. Personal
relationship counts most.
 The role of political interference is important in the selection
of candidate for public sector & even in government sector
jobs
 Political influence is high in government sector for promotion
& transfers.
 Nepotisms is high in every type of organization.
TRAINING AND DEVELOPMENT
DIMENSIONS TRAINING
Concept Training is a learning experience
in that it seeks a relatively
permanent change in an
individual that will improve hos
or her ability to perform on the
job.
Who? Non-managerial personnel
What? Technical & Mechanical
Operation
Why? Specific job related purpose
When? Short-term purpose
Cost factor Mostly less expensive
Outcomes/ret It comes immediately after
urns completing the training
DEVELOPMENT
Management development is more
future oriented, it attempt to
improve managerial performance by
imparting knowledge, changing
attitudes or increasing skills
Managerial personnel
Theoretical, Conceptual ideas
General knowledge
Long-term purpose
Mostly very expensive
It comes lately
DESIGNING TRAINING PROGRAMS
1) Setting training objectives
 All training programs are designed on the basis of objectives to be attained
after completing the training.
 In the first phase, the line managers have to send a request from to the HR
managers stating the need for training and its expected outcomes.

2) Managing Training budget

 Training demands time, money and dedication.
 Some of the cost are direct and other are indirect.
 The cost element in training, the determines the budget of training are
material cost, resource person cost, cost of venue & menu etc.

3) Designing training content and method

 To solve the problems faced by both employees and employers a specific type
of content material has to be designed.
 It can be done by organizations expert or resource person can be outsourced.
 Based on needs appropriate content & method have to be designed.
 OBJECTIVES TRAINING

1) Update capabilities
 Training aims to update employee knowledge & skills to keep up with new technologies, job redesign &
change.
 Continuous training promotes innovation.

2) Develop healthy attitudes

 Training aims to develop healthy attitudes in employees towards the job and the organization.
 This facilitates better cooperation, commitment and loyalty of employees.
 Sound relationship between the employee and the job is established.

3) Socialization
 Training aims to socialize employees towards organization culture and job environment.
 This facilitates employee retention in the organization, employee confidence increases.

4) Develop future potential

 Training aims to prepare employee for future assignments.
 It helps career development of employees through promotion opportunities.
 It develops potential for future growth of employees.

5) Productivity improvement
 Training aims to improve productivity.
 It increases efficiency and effectiveness of employees
 Cost of production goes down, labor turnover decreases, employee motivation & morale increase.
BENEFITS TRAINING
1) Competency development
 Training improves knowledge, skills and attitudes of employees for doing current jobs.
 It develops competency of employees, it removes skills deficiencies of employees.

2) Productivity improvement
 Training improves efficiency. It reduces the chances of operational errors. Waste and scrap are
reduced.

3) Better communication
 Training fosters open communication among employees, free expression of feeling is
promotes.
 Organizational climate improves through improved communication.

4) Change Management
• Training facilitates planning & management of change. It overcomes resistance to change.
• Organizational reengineering is facilitated, new technology is adopted.

5) Improved labor relations

 Training facilitates improved labor relations, management of grievances & conflicts is
facilitated., quality of work life improves

6) Career development
 Training facilitates career development of employees. It can be matched with career
development needs of employees

7) Reduced supervisory burden

 Training reduces supervision burden in the organization. Trained employees become capable
of assuming greater responsibilities.
 TRAINING NEEDS ASSESSMENT
Training is not cure for all organizational problems.
P = f (A x M x OD)
P = Performance
A= Ability
M= Motivation
OD= Opportunity to do
When ability of the employee is low then only training is necessary. Otherwise not.

Desired performance – Actual performance = Training Needs.

Performance deficiency

Lack of Skills or knowledge Due to other reason

Yes Yes

Need for Training Need for

(concern for HR Manager) Motivation/Opportunity
(concern for psychologists)
METHODS OF EMPLOYEE TRAINING

METHODS OF TRAINING

Lecture

Apprenticeshi O
O p Conference
F
N
F
Case study
T
T
H
Internship H
Role Play
E
E
J
J
Audio Visual
O
O
B Job Rotation
B Demonstratio
n
 ON THE JOB TRAINING METHODS
1) Apprenticeship
• The field in which apprenticeship training is offered are a machinist,
carpenters, jewelers, electricians etc.
• In craft, trades & technical areas , this methods is the oldest & most widely
used method.
Merits
 Skilled work force is maintained
 Workman ship is good
Demerits
 It takes long time.
 It is expensive.

2) Internship
• This method is used for skilled & technical staff.
• It helps the trainee to know & experience “real world situation”.
• Students/participants vocational, technical & professional courses generally
go through internship training.

Merits
 Facilitates transfer of learning
 It offers both practical experience & theoretical knowledge
Demerits
 Training do not cover really a full job
 Participants may not be really serious to learn & take responsibility
 ON THE JOB TRAINING METHODS

3) Job rotation
• It involves moving employees from one job to another to
enlarge their experience.
• It is just horizontal movement.

Merits
 It prepared background required for future managerial
positions
 Exposure to many jobs
Demerits
 Trainee may learn bad habits then good habits
 Very short stay in job
 OFF THE JOB TRAINING METHODS
1) Lecture
• The main objectives of this method is that it can be used for large group.
• It can be organized rigorously so that ideas & principles relate properly on
the others.
Merits
 It can be used for large groups.
 Least expensive
Demerits
 Learners are passive.
 In large group interaction is very less

2) The Conference Method

• Here mutual problems are discussed & participants pool their ideas &
experience in attempting to arrive at better methods of dealing with these
problems.

Merits
 Multiple problems can be discussed & solutions can be derived
 Interaction & interpersonal learning is very high.
Demerits
 Progress is often slow
 Irrelevant issues emerge easily.
 OFF THE JOB TRAINING METHODS
3) Case Study
• Under this method, trainee may be given a problem to discuss which is more
or less related to the principles already taught.
• This methods gives the trainee an opportunity to apply his knowledge to the
solution of realistic problems.
Merits
 Very good methods to develop problem solving skills
 Real world training material can be used
Demerits
 Trainers, Trainee & materials must be updated.
 Background knowledge is very essential

4) Role Playing
• Two or more trainees are assigned role in a given situation, which is
explained to groups.
• No written lines & no rehearsals. Role players have to quickly respond to
situation.

Merits
 A good method to develop interpersonal skills
 The learners are highly active
Demerits
 Trainee may not take the role seriously.
 Suitable only for small group
 OFF THE JOB TRAINING METHODS

5) Audio visual technique

• It is the way of providing training through films, television, audiotapes, video
tapes.
Merits
 The stop action, instant reply, fast or slow motion capabilities of audio visual
can be useful
Demerits
 It is a expensive method.
 Mostly one way communication, less interaction

6) Demonstration
• Here demonstrator (instructor) actually shows the trainee how to do
something.

Merits
 Actual situation or reality is demonstrated
 Useful method to teach students, army, police.
Demerits
 It is only a supportive method.
 Highly qualified trainer is required
 EVALUATING EFFECTIVENESS OF TRAINING

• Training programs should be periodically evaluated to

determine its effectiveness.
• Some of the criteria that are used in evaluating the training
effectiveness are-:
- increased productivity
- Decreased cost/ wastage
- change in behavior of trained staff
- cost benefits analysis

Objectives
 To determine the ability of participants to perform jobs for
which they were trained
 To identify specific nature of training deficiencies
 To determine whether the trainees required any additional
training.
 To know overall cost-benefits situation
 METHODS OF EVALUATING TRAINING EFFECTIVENESS

1) Questionnaire or structured interviews Method

• In this method, supervisors are asked to rate the trainees on
the job efficiency directly related to training objectives.

2) Experimental control- group Method

• Here two groups are selected, one to receive training
(experimental group) and other not to receive training
(control group). Measures are taken to identify relevant
indicators of success (e.g. words types per minute), before &
after training both groups.

3) pre-Post performance method

• In it, the trainee performance is measured before the training
and after the training. Results of pre- post are compared.

4) Longitudinal or time series analysis method

• In this, series of measure are taken. i.e. before the programs
begins, during training & after the programs. The results
obtained are plotted on a graph to determine whether
changes have been occurred.

5) Trainee surveys
• In this, a questionnaire is sent to the trainee after the
completion of the program to get their reflection about the
training programs
EVALUATING TRAINING EFFECTIVENESS- SAMPLE
 MANAGEMENT DEVELOPMENT
CONCEPT
• It develops managerial potential by increasing conceptual, interpersonal & decision making skills. It develops
managerial capability to manage effectively.
• Management development is future-oriented training, focusing on personal growth of the employee.

FEATURES
• It focuses on future responsibilities . It is growth oriented.
• It is on going educational process
• Its target on managerial employee

OBJECTIVES
 Increase managerial capabilities-: Managers acquire capabilities to face challenges & handle responsibilities.
 Enhance managerial potential -: Managerial potential is enhanced through increased conceptual
 Foster team work-: improve managerial communication which foster team work
 Facilitate environmental adaption-: equips managers to proact as well as to respond to changing environmental
forces.
 Improve decision making-: it improves decision making capabilities and creative thinking of managers.
 Facilitate managerial succession-: it facilitate managerial succession to senior level position.
 Improves managerial level satisfaction-: improves job satisfaction by changing their attitudes & behavior towards job.
 HRD PRACTICES IN NEPALESE ORGANIZATION
 Human resource Development has remained an area of low priority in Nepal.
 Most organization lacks comprehensive human resource development plan. They regard training as a cost, not
investment.
 Training need are not properly assessed by Nepalese organization, supervisory recommendation is the widely used
method for determining training needs.
 Nepalese organization use a mix of on-the-job & off-the-job training method.
 On-the-job apprenticeship and internship methods are used for skill and professional job.
 Off-the-job training methods are lecture/conference oriented.
Training institution in Nepal
 Nepal administrative staff college provides various types of off-the-job training to civil servants. But they are remain
largely theoretical.
 TU system also conducts training programs for university employees & others.
 Public sector enterprises like banks, airlines, electricity authority have their own training school.
Some T&D institutes in Nepal are-;
 Nepal administrative staff collage
 Revenue administration training center
 Local development training academy
 Bankers training center
 Management association of Nepal
 Agriculture training center
 Hotel management & tourism training academy
 Health training center
 Nepal airlines training center
 Communication training center
 Cooperative training center
 Civil aviation training center
 Legal services training center etc….
 HRD PRACTICES IN NEPALESE ORGANIZATION
Management Development Programs
• Nepalese organizations do not give adequate attention to developing managers.
• Some of the popular method of management development are coaching & under study assignment. Job rotation is not
effectively used.

Effectiveness of Training
 The evaluation of training is generally based on reaction & learning criteria.
 Behavior & result criteria are generally not used to evaluate training effectiveness
 Trainee survey are widely used method for evaluation.

Training related problems

 Training policy is lacking in most organization.
 The quality of training is poor due to outdated curriculum and training materials, shortage of professional trainers.
 Target group is not clear for training.
 Unclear objectives of training. Training is conducted to meet targets rather than needs.
 Lack of transfer of training job situation. Utilization of trained human resource is poor.
 Evaluation of training effectiveness is lacking.
 Training facilities and programs are mostly Kathmandu-based.
COMPENSATION MANAGEMENT
 COMPENSATION MANAGEMENT- CONCEPT
 It deals about the wages and salary of the employee
 Wages and salary administration is a systematic procedure for
establishing sound compensation structure.
 Job evaluation establishes the relationship between wages on various
jobs within organization.
“employee compensation refers to all forms of pay or rewards going to
employees arising from their employment”- Thomas

There are two types of compensation:

a) Direct Compensation-:
Money is included under direct compensation. They are direct financial
payments in the form of wages, salaries, incentives, commission and
bonuses
b) Indirect compensation-:
Benefits come under indirect compensation. Insurance, pay for illness,
vacation, employer’s contribution for retirement etc are indirect
compensation.

Issues/challenges for HR Managers

• How to establish fair and equitable compensation system?
• How to cope with sudden changes?
• To settle dispute between employers and employees
• Salary and Tax planning
• Balance between short term and long term compensation
 DETERMINANTS OF COMPENSATION

FACTORS AFFECTING COMPENSATION

EXTERNAL INTERNAL
FACTOR FACTORS
Legal Objectives
consideratio of
n compensati
on
Labor
market rates Policies of
compensati
Equity on
consideratio
n
Job
Cost of evaluation
living

Employee
Labor union productivity
pressures
 EXTERNAL FACTOR INFLUENCING COMPENSATION
1) Legal Consideration
• Government laws and regulation affect compensation
management.
• They stipulate minimum wages, overtime rates, tax implication.

2) Labor market rates

• Compensation system should match market rates.
• Skills in short supply carry high rates of compensation
• Rates should be competitive

3) Equity consideration
• Compensation system should be fair in terms of equity
• Rates should be same for similar type of jobs within organization

4) Cost of living
• This factor is important during periods of rising prices
• It adversely affect purchasing power.

5) Union pressure
• Union pressure towards compensation decision affect
• The strength of unions and the employers together within the
organizations ability to pay influence compensation
management.
 INTERNAL FACTOR INFLUENCING COMPENSATION
1) Objectives of compensation management
The objectives may be-:
• Establish fair and equitable pay system
• Attract and retain competent human resource
• Improve motivation and morale
• Control cost by designing lowest cost pay structure
• Improve image of organization as a “fair pay” employers

2) Compensation policies
• The company policies serve as a guideline for formulating
compensation plan.
• Organization can be leader or follower regarding pay.

3) Job evaluation
• It determines relative worth of a job to the organization.
• Compensation system should be designed around job.
• Job description and specification affect pay level.

4) Employee productivity
• It is to link pay with performance
• Employee abilities and motivation affect productivity
 COMPENSATION MANAGEMENT- PURPOSE
1) To attract potential job applicants
• The total compensation program can help assure that pay is sufficient to attract
right people at the right time for the right job.

2) To retain good employees

• Unless the total compensation program is perceived as internally equitable and
externally competitive, good employees are likely to leave.

3) To motivate employees
• Total compensation can help produce a motivated work force by tying rewards to
performance.

4) To administer pay within legal regulation

• There are several legal regulations relevant to total compensation, organization
must be aware of them and avoiding violating them in their pay programs.

5) To facilitate organizational strategic objectives

• Organization objectives might to be an attractive place to work so that it can attract
the best applicants. These objectives can be attended with total compensation.
 COMPENSATION MANAGEMENT- METHODS

1) Base Plus Cost of living allowance (BCOLA)

• This method is based on two factors viz. base and allowances
• COLA is an adjustment to the base salary by a percentage that is assumed to match increases in cost for
goods and services on a national, regional or local level or account for changes in the market.

2) Scale plus cost of living allowances (SCOLA)

• It also has two components viz. scale level for particular level of job plus the COLA given.
• Many companies set a range of pay rates, from minimum to maximum, designed for specific pay grade.
• On the above that a cost of living adjustment/allowance (COLA) is given to the employees as discussed
above

3) Cash incentives
• This methods takes one of the two methods explained above.
• Again, the employee is given, additional compensation to motivate and reward him/her for exceeding
performance goals in the form of cash incentives.

4) Bonus or variable pay

• It is an incentives pay plan which awards employees compensation, in addition to their base salary.
• It is given for achieving, individual or group performance and productivity goals.
 COMPENSATION MANAGEMENT- METHODS

5) Broad banding method

• It means collapsing salary grades and ranges into few wide levels (or bands) each of which contains a
wide range of jobs and salary levels.
• Employee whose job falls in one of these grades decides his/her minimum and maximum salary.

6) Job or skill based pay method

• It is the salary differentiation system that bases compensation on an individual’s experience knowledge,
skills or specialized training.

7) Merit pay method

• It is popular method of compensation used by majority of organization in recent years
• Here base pay increases are determined by individual performance.
 COMPENSATION MANAGEMENT- CURRENT TRENDS
1) skill- based pay
• The basis of pay is moving away from job-based to skill-based.
• Job-based pay consider value of current job where as skill-based pay consider the capability to perform various jobs.
• Skill based pay consider range, depth and types of skills an employee is capable of using.
• Here pay is tied to skill and competency to use them
• Pay rise is tied to proficiency in skills needed in new job

2) Broad banding
• Collapsing salary grades and ranges into fewer levels or band

Rs.5000 Rs.15000

1. Clerical Band
Rs.10000 Rs.30000

2. Professional Band

Rs.20000 Rs.60000

3. Managerial Band
3) Comparable worth
• Women who are performing jobs comparable to men get the same pay.
• For example, women nurse and male electrician who perform jobs of comparable value to employer.

4) Variable pay plans

• It is based on improving production and sharing of prosperity.
 COMPENSATION MANAGEMENT IN NEPALESE ORGANIZATION
 Compensation management in Nepal is largely concerned with pay, benefits and service
 The role of direct compensation is important compared to indirect compensation.
 Most organization lacks compensation policy.
 Minimum wage and bonus are paid to the workers and employee according to law
 In private sector, compensation management is not only legal compliance but also to acquire and retain competent
employees. It also aims to motivate employees for higher performance.
 Since, 1966, wages committee formed by the government has been fixing minimum wages for various categories of
workers.
 Effective February 1, 2016, the new minimum monthly salary for employees in other enterprises is NPR6,205, plus a
“dearness allowance” (essentially a cost of living adjustment) of NPR3,495, for a total of NPR9,700.  The new daily wage
rate for these other enterprise workers is NPR395.
 The pay levels for jobs in Nepal is largely determined by market rates.
 Job grades are legally prescribed for civil service and public sector enterprises. Job grades in private sector differ from
organization to organization
 The civil service act has provided the following compensation system for civil servants :
 Pay and allowance as per prescribed from time to time.
 Medical expenses over the service tenure, equivalent to 12 month, 18 month and 21 month salary for gazette officers,
non-gazette employees and classes employees respectively.
 Pension or gratuity on retirement of the employees
 Disability allowance as prescribed
 One month extra salary for Dashain festival
 Life insurance coverage : Rs 200000 for gazette and Rs 100000 for non gazette employees.
 Pension or gratuity for family in case of employees death
 10% of salary as provident fund
 Health insurance ; travel insurance
 COMPENSATION MANAGEMENT IN NEPALESE ORGANIZATION
• The labor act, 1992 has prescribed the following compensation system for workers and employees :
 Pay and allowance: minimum wages have been prescribed
 Welfare fund as prescribed
 Compensation for disability
 Gratuity, provident fund, medical expenses as prescribed
 Leave and payment for specified accumulated leave
 Housing facilities by allocating 5% of profit
 Day care centers for the children of Women workers as prescribed
• Compensation management in Nepal has remained ineffective due to lack of professional management. It is hoped that
the advent of global companies will have a positive effect on compensation management in Nepalese organization in
future years.
PERFORMANCE APPRAISAL
 PERFORMANCE APPRAISAL- CONCEPT AND NATURE

• Once the employees have been selected, trained, and motivated, they are then appraised for their
performance.
• The other term used for performance appraisal are-: performance rating, employee assessment, personnel
appraisal, performance evaluation and merit rating.
• It helps organization to determine how employees can help to achieve the goals of the organization.
• It comprises of two words viz-: performance and appraisal. Performance means to do something or
produce something. Appraisal means to decide the value of work done.

“ performance appraisal is the systematic description of job-relevant strength and weakness of an individual
or group”

Nature of performance appraisal

 Systematic-: it is a systematic process consisting a series of step. It compares actual performance with
predetermined performance standard.
 Objective-: it is an objective measure of what an employee does. It is based on actual performance.
 Focus-: it focuses on job performance and potential for future development of an employee.
 Periodic-: it is an on going process conducted periodically.
 Judgmental-: it judge actual employee performance. It identifies training and development needs for
employees.
 Corrective-: it focuses on removing barriers to better performance and productivity. It initiates corrective
action.
 PERFORMANCE APPRAISAL- PROCESS

ESTABLISH PERFORMANCE STANDARD

COMMUNICATE PERFORMANCE EXPECTATION TO EMPLOYEES

MEASURE ACTUAL PERFORMANCE

COMPARE ACTUAL PERFORMANCE WITH STANDARDS

DISCUSS THE APPRAISAL WITH THE EMPLOYEES

INITIATE CORRECTIVE ACTION

 PERFORMANCE APPRAISAL- IMPORTANCE/BENEFITS

A) IMPORTANCE TO APPRAISER (ORGANIZATION)

Effective work assignments-: systematic appraisal will provide the executive with a better idea of the strength
and weakness in his department and so enable him to make more effective work assignments.

Clear-cut responsibility for results-: Drawing up a checklist of the responsibilities of the subordinate as well as
the scope of his position will reduce any possible misunderstanding as to performance goals.

Objective basis for discussion of salary and promotion-: when an employee comes to his officer with a
request for salary raise or promotion, appraisal record and last appraisal interview provide an objective basis
for discussion.

B) IMPORTANCE TO APPRAISEE (EMPLOYEES)

How am I doing-: the periodic review tells the subordinate where he stands?

Specific development of subordinates-: it is the guide for coaching and a basis for suggesting further training
which will help the subordinate to improve performance.
 PERFORMANCE APPRAISAL- METHODS

ABSOLUTE RELATIVE COMPREHENSI

STANDARD STANDARD VE METHODS

ESSAY
INDIVIDUAL APPRAISAL BY
APPRAISAL
RANKING RESULTS (MBO)

CRITICAL
INCIDENT
METHOD

GRAPHIC
RATING SCALE

CHECKLIST PAIRED 360 DEGREE

METHOD COMPARISION APPRAISAL
 PERFORMANCE APPRAISAL- METHODS

A) ABSOLUTE STANDARD (METHODS)

• Here the evaluator job is to assess each employees performance against the established written
performance level.
• Such procedure is regarded as absolute because an individual’s evaluation depends on the written
(absolute) standard. A person performance is not based on how one does relative to others in the work
group.

a) Essay Appraisal
 In this method the rater describes the performance, traits and behavior of the employee.
 The writing form were usually developed by HR officer.
 The form may ask each supervisor to state the strength and weakness of the employee, leadership ability,
technical effectiveness, promotion potential and development needs.

Advantages
 It is one of the simplest, oldest and easy method to apply and install
 It also help to test the evaluating capacity of the rater.

Disadvantages
 Managers/supevisors may write biased essay.
 It takes long time to write essay.
 PERFORMANCE APPRAISAL- METHODS
b) Critical incident method
• Here the major performance factor that are important for each groups of job are first identified, then the
supervisor is given a notebook containing these performance categories.
• Frequently throughout the year the supervisor must directly observe and record examples of behavior
under the categories that indicates effective or successful action and those that show ineffective or poor
performance.
Example of Critical incidents for an Asst. Plant Manager

Continuing Duties Targets Critical Incidents

Schedule production Full utilization of Installed new
for plant personnel and production
machinery in the scheduling system,
plant, order decreased late order
delivered on time. by 10% last month,
increased machine
Advantages utilization in plant
 Easy to understand and use by 20% last month
 Less expensive and provide rich information

Disadvantages
 Supervisors may be biased toward incidents that happened recently, because they are easier to recall
 Since it is based on critical incidents only, it does not say anything about the every day situation.
 PERFORMANCE APPRAISAL- METHODS
c) Checklist method
• Under this method, the supervisor does not evaluate employee performance, he supplies report about it
and the final rating is done by the HR department.
• A series of questions are presented concerning an employee’s behavior, the rater then checks to indicate if
the answer to the question about an employee is positive or negative
Sample of checklist items

Sample items Yes No

Does the individual approach customers x
promptly?
Does the individual lose his or her temper in x
public?
Advantages
Does
It brings
theuniformity
individualin evaluation
volunteer to help other x
employees?
Though the preparation of checklist is little bit difficult but it is easiest method to apply

Are supervisor’s orders usually followed?

Disadvantages x
 This method suffer from bias on the part of rater because he can distinguish positive and negative
questions.
 A separate checklist must be developed for different classes of job.
 PERFORMANCE APPRAISAL- METHODS
d) Graphic Rating Scales
• Under this method, the employees are rated on personality characteristics and performance.
• The rater is provided with a printed form for each employee to be rated, containing a number of characteristics to be
rated.
• The characteristics factor differ according to position of the employees to be rated.
• For a workers, rating is based on job knowledge, intelligence, dependability etc. for management personnel rating is
based on leadership quality, creative ability, organizing ability, communication skill, power of judgment etc.
Sample of graphic rating scale items and format

Performance factor Performance rating

Quality of work is the accuracy, skill, Scale 1 Scale 2 Scale 3 Scale 4 Scale 5
completeness of work.
Consisten Occasionally Consistentl Sometim Consistentl
tly unsatisfactor y es y superior
unsatisfac y satisfactory superior
tory

Job knowledge is information pertinent to the job poorly Occasionally Can answer Understa Has
that an individual should have for satisfactory job informed unsatisfactor most nd all complete
performance about y question phase of mastery all
Advantages work about job the job phase of
 It permits a statistical tabulation of scores duties the job
 These score indicates the worth (value) of every individual

Disadvantages
 It assumes each characteristic is equally important for all jobs.
 If not used properly, this method can bring average evaluation of all the employees.
 PERFORMANCE APPRAISAL- METHODS

B) RELATIVE STANDARD (COMPARATIVE METHODS)

This method allow for such statement as-:
• Employee A is better staff on dimension “quality” than employee B
• Both are better performers than employee C.
a) Individual ranking
• This method requires the supervisor just to list the employees in an order from highest to lowest.
• If the evaluator is required to appraise 22 individuals, this method assumes that the difference between
the first and second employee is the same as that between the twenty first and second.

Advantages
 People are ranked according to their performance.
 It becomes easy to rank best and worst employees.

Disadvantages
 The whole man is compared with whole man. But in practice it is very difficult to compare because people
possess different traits.
 This method doesn’t test anything about how much better or how much worse an employee is when
compared to another employee.
 When a large number of employees are working, ranking of individual become a difficult issue.
 PERFORMANCE APPRAISAL- METHODS

b) Paired Comparison
• This method is basically a very organized way of obtaining a rank-order listing of employees.
• It requires the comparison of each employee one at a time

FOR THE TRAIT "QUALITY OF WORK"

Person Rated
As Compared to A B C D E
A + + - -
B - - - -
C - + + -
D + + - +
E + + + -
Advantages
 Rating error can beHere B is the best with 4+
minimized.
 It helps to know overall performance of each employee.

Disadvantages
 This method doesn’t show the amount of difference between persons in ranks.
 It doesn’t consider specific component of behavior.
 PERFORMANCE APPRAISAL- METHODS
C) COMPREHENSIVE METHODS

a) Appraisals by results and MBO

• Result oriented appraisal are the outcome of modern management techniques known as management by
objectives.
• MBO has been described as a philosophy of management which seeks to minimize external controls and
maximize internal motivation through joint goal setting between the managers and the subordinates.
• Here managers and subordinates jointly identifies its common goals, define each individuals major areas of
responsibility in terms of result expected and use this measures as guide of operating the unit.
• The MBO process consists of four steps-:

Advantages-:
 It is based on participative management
Joint goal setting
 High degree of employee motivation can be
obtained

Action planning Disadvantage-:

 It is time consuming
 Tug of war (management may try to set
tough goals whereas employees may prefer
Self-control
low standard goals)

Periodic progress review

 PERFORMANCE APPRAISAL- METHODS

b) 360◦ (Degree) Appraisal

• It is also called multi-rater feedback, multi-source feedback or full-circle appraisal.
• This process involves collecting perceptions about a person’s behavior and the report about that behavior’s
impact on the boss or bosses.
• Each employees has an opportunity to get performance feedback from their supervisors.
• This method also collects four to eight fellow workers of equal status, subordinates and customers.
• The feedback tells the employee what behavior is required to meet customer needs, also exceed customer
expectation.

Advantages (To the individual)

 Individuals get to know how others perceive them.
 It provides feedback essential for learning

Advantages (To the Organization)

 Openness and trust
 It improves customers service
Disadvantages
 One of the costly method of appraisal.
 This method demands lot of time and energy to implement it.
 PERFORMANCE APPRAISAL- EVALUATION INTERVIEW

Preparing for the PE Conducting the PE Review expectation

interview interview

Familiarizing Opening the

job description discussion

Publish the
interview Discussing
schedule in performance
advance

Be prepared for Closing the

discussion interview
 PERFORMANCE APPRAISAL- INFLUENCING FACTORS

a) Interpersonal relation (bias)-: How a supervisor feels about each of the individual’s working for his has a
tremendous effect upon his rating.

b) Leniency error : Each evaluator has his own value system which acts as a standard against which appraisal
are made. In this case, if all individuals in an organization were appraised by the same person, there would
be no problem. The difficulty arises when there is a different raters with different leniency error.

c) Halo error-: halo error or halo effect is a tendency to rate high or low on all factors due to impression of a
high or low rating on some specific factor.

d) Similarity error-: when the evaluators rate other people in the same way that the evaluators perceive
themselves, they are making the similarity error. For example-: the evaluator who perceives himself as
aggressive may evaluate others by looking for aggressiveness. Those employees who demonstrate this
characteristic tend to benefit, while other are penalized.

e) Recency vs. Primacy effect-: Recency refers to closeness to appraisal period. The opposite of recency is
primacy effect. In it, the initial impression influences the decision on the year end appraisal.

f) Central tendency-: Raters who are prone to the central tendency error are those who continual rate all
employees as average. For example-: if a manager rates all subordinates as 2 on a scale of 1 to 4 then no
differentiation among the subordinates exits.
 PERFORMANCE APPRAISAL- PRACTICE IN NEPALESE
ORGANIZATION

FEATURES OF PA IN NEPAL

1) Unclear standard-: The problem of unclear standard is the most common problem in PA in Nepalese
organization. the focus is mostly dominated by subjective judgments.

2) Low priority in practice-: most organization go through PA once in a year. Only few organization have
practical twice in a year.

3) Formal VS Informal-: formal PA is practiced at organized sectors only. Most of the small and medium sized
private organization follow informal and subjective system.

4) Purpose of appraisal-: Though PA has several purpose and uses but in real life situation, it is dominated by
promotion-oriented purpose only.

5) The issue of fairness and transparency-: Due to lack of established system, objective criteria and regular
evaluation fairness and transparency is very low.

6) Vast differences in PA practices among different organization.

 PERFORMANCE APPRAISAL- PRACTICE IN DIFFERENT
SECTORS/ ORGANIZATION

1. GOVERNMENT OFFICES:
Civil service act and rules are developed to appraise the performance of government employees. Appraisal is done once in a year. The marks
are divided as given below-:
Immediate supervisor- 25 Marks
Reviewer - 10 Marks
Review Committee - 5 Marks
Total - 40 Marks

For the purpose of guidance a rating scale is used with different marks as given below-:

outstanding good fair Poor

Supervisor 25 17.75 12.5 6.25
Reviewer 10 7.50 5.0 2.50
Despite having one kind of standardized
Review 5 format3.75
and procedure real 2.5
appraisal is rarely done.
1.25In practice, majority of employee get good marks.
committee
2. Public enterprises or semi-government organization:
If performance appraisal in the public enterprises are done then it is based on “General Principles” prescribed by public service commission. It
is more or less similar to government employees. The process of appraisal is as below-:
i) Supervisor
ii) Reviewer
iii) Division chief/chief executive

3. Private organization
Differ from organization to Organization