HUMAN RESOURCE & PERSONNEL MANAGEMENT

RAVI INDER SINGH

WHAT IS HRM?
y HR IS THE MOST IMPORTANT ASSET FOR ANY ORGN. y MANAGEMENT--y PROCESS OF EFFECIENTLY GETTING ACTIVITIES

COMPLETED WITH AND THROUGH OTHER PEOPLE

WHAT IS A MANAGEMENT PROCESS?

y MUST INCLUDE y GOALS

LIMITED RESOURCES---PEOPLE

y THE PROCESS IS AS FOLLOWS: y PLANNING y ORGANISING y LEADING y CONTROLLING

SO NOW WHAT IS HRM?

y HRM IS CONCERNED WITH THE PEOPLE DIMENSION

OF MANAGEMENT.
y HRM PROCESS IS: y ACQUISITION y DEVELOPMENT y MOTIVATION y MAINTENANCE

ACQUISITION
y HUMAN RESOURCE PLANNING y RECRUITMENT y SELECTION y SOCIALISATION OF EMPLOYEES

INTERNAL--EXTERNAL

DEVELOPMENT

y EMPLOYEE TRAINING y MANAGEMENT DEVELOPMENT y CAREER DEVELOPMENT

MOTIVATION
y JOB DESIGN y PERFORMANCE EVALUATION y REWARDS y JOB EVALUATION y COMPENSATION/BENEFITS y DISCIPLINE

MAINTENANCE

y SAFETY AND HEALTH y EMPLOYEE/LABOUR RELATIONS y OVERALL WORKABLE ENVIRONMENT

HR WHEEL
HUMAN RESOURCE AREAS
TRAINING AND DEVELOPMENT ORGANISATION DEVELOPMENT ORGANISATION/JOB DESIGN HUMAN RESOUCE PLANNING

HUMAN RESOURCE AREAS

y TRAINING AND DEVELOPMENT y ORGANISATION DEVELOPMENT y ORGANISATION/JOB DESIGN y HUMAN RESOURCE PLANNING y SELECTION AND STAFFING y PERSONNEL RESEARCH AND INFORMATION SYSTEMS y COMPENSATION/BENEFITS y EMPLOYEE ASSISTANCE y UNION/LABOUR RELATIONS

OUTPUT OF HR
y QUALITY OF WORK LIFE y PRODUCTIVITY y READINESS FOR CHANGE

y *****FURTHER CHAPTERS*****

EXTERNAL INFLUENCES ON HR

y GOVERNMENT REGULATIONS y LABOUR UNIONS y MANAGEMENT PRACTICE

SCOPE OF HRM
y RANGES FROM ENTRY TO EXIT OF AN EMPLOYEE IN

AN ORGANISATION y BASED ON THE FOLLOWING ACTIVITIES: 1. HR Planning 2. Job Analysis 3. Job Design 4. Recruitment & Selection 5. Orientation & Placement 6. Training & Development

HRM ACTIVITIES CONTD

y Performance Appraisals y Job Evaluation y Employee and Executive Remuneration y Motivation y Communication y Welfare y Safety & Health y Industrial Relations

7 Categories of Scope of HRM

y Introduction to HRM y Employee Hiring y Employee and Executive Remuneration y Employee Motivation y Employee Maintenance y Industrial Relations y Prospects of HRM

ROLE OF HRM
y ADVISORY ROLE

1. 2.
y y

PERSONNEL POLICIES PROCEDURAL POLICIES FUNCTIONAL ROLE SERVICE ROLE

ROLE OF HR MANAGER(TODAY)
y Humanitarian Role y Counselor y Mediator y Spokesman y Problem Solver y Change Agent y Management of Manpower Resources

ROLE OF HR MANAGERS(FUTURE)
y Protection and enhancement of human and non-human y y y y y y

resources Finding the best way of using people to accomplish organizational goals Improve organizational performance Integration of techniques of information technology with the human resources Utilizing behavioral scientists in the best way for his people Meeting challenges of increasing organizational effectiveness Managing diverse workforce

MANAGERIAL FUNCTIONS OF HR
y Planning y Organizing y Staffing y Directing y Controlling

Operational Functions of HRM

y Procurement y Development y Compensation y Integration y Maintenance y Separations

CHALLENGES FACED BY HR
y Globalization y Corporate Re-organizations y Changing Demographics of Workforce y Changed employee expectation y New Industrial Relations Approach y Renewed People Focus y Managing the Managers y Weaker Society interests y Contribution to the success of organizations

STRATEGIC HRM
y STRATEGY?

y STRATEGIC MANAGEMENT..?

STRATEGIC HRM
y STRATEGY? y Strategy is a way of doing something. It includes the

formulation of goals and set of action plans for accomplishment of that goal.
y STRATEGIC MANAGEMENT..? y A Process of formulating, implementing and evaluating

business strategies to achieve organizational objectives is called Strategic Management

DEFINITION OF STRATEGIC MGT

y Strategic Management is that set of managerial decisions and

actions that determine the long-term performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control.

STEPS IN STRATEGIC MGT

y Environmental Scanning y Strategy Formulation y Strategy Implementation y Evaluation & Control:

BENEFITS OF STRATEGIC MGT

y y y y y y y y y y y y

Allows identification, prioritization and exploration of opportunities. Provides an objective view of management problems. Improved co-ordination and control Minimizes the effects of adverse conditions and changes Allows major decisions to better support established objectives Allows more effective allocation of time and resources Allows fewer resources and lesser time devoted to correcting ad hoc decisions Creates framework for internal communication Helps to integrate the individual behaviors Provides basis for the clarification of responsibilities Encourages forward thinking Encourages favorable attitude towards change.

ROLE OF HR IN STRATEGIC MGT

y Role in Strategy Formulation

y Role in Strategy Implementation

HUMAN RESOURCE PLANNING

y Definition 1: y Need, Availability, Supply=Demand y HRP includes estimation of how many qualified people are

necessary to carry out the assigned activities, how many people will be available, and what, if anything, must be done to ensure personnel supply equals personnel demand at the appropriate point in the future.

HUMAN RESOURCE PLANNING

y Definition 2: y Right numbers, Capability, Organization Objectives y HRP is a Process, by which an organization ensures that it

has the right number and kind of people at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives.

HUMAN RESOURCE PLANNING

y Definition 3: y Translation of objectives into HR numbers y HRP is a process of translating organizational objectives and

plans into the number of workers needed to meet those objectives.

IMPORTANCE OF HRP
y Forecast future personnel needs y Cope with change y Creating highly talented personnel y Protection of weaker sections y International strategies y Increasing investments in HR y Resistance to change & move

HRP SYSTEM INCLUDES

y Overall Organization Objectives y Business Environment y Forecasting Manpower Needs y Assessing Manpower Supply y Matching Manpower Demand-Supply factors

Employment Planning
y Employment planning
y

The process by which management ensures it has the right number and kinds of people in the right places at the right time, who are capable of helping the organization achieve its goals

y Steps in the planning process:

1. 2.

Assessing current human resources. Assessing future human resources needs and developing a program to meet those needs.

Employee Assessment
y Human resource inventory report
y A report listing the name, education, training, prior

employer, languages spoken, and other information about each employee in the organization
y Job analysis
y An assessment of the kinds of skills, knowledge, and

abilities needed to successfully perform each job in an organization

Job Analysis Components

y Job description
y A written statement of what a job holder does, how it is

done, and why it is done

y

Tasks, duties and responsibilities that the job entails

y Job specification
y A statement of the minimum acceptable qualifications

that an incumbent must possess to perform a given job successfully

y

Knowledge, skills, and abilities required of the job holder

Recruitment And Selection

y Recruitment
y The process of locating, identifying, and attracting

capable applicants
y Selection process
y The process of screening job applicants to ensure that

the most appropriate candidates are hired

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Traditional Recruiting Sources

y Internal searches y Advertisements y Employee referrals y Public employment agencies y Private employment agencies y School placement y Temporary help services y Employee leasing and

independent contractors

Downsizing Options
y Firing y Layoffs y Attrition y Transfers y Reduced workweeks y Early retirements y Job sharing

HR s Strategic Challenges
y Strategic plan
y A company s plan for how it will match its internal

strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.
y Three basic challenges
y The need to support corporate productivity and

performance improvement efforts. y That employees play an expanded role in employers performance improvement efforts. y HR must be more involved in designing not just executing the company s strategic plan.

The Strategic Management Process

y Strategic management
y The process of identifying and executing the organization s

mission by matching its capabilities with the demands of its environment.

y Strategy
y A strategy is a course of action. y The company s long-term plan for how it will balance its

internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.

Strategic Management Process (cont d)

y Strategic management tasks
y Step 1: Define the Business and Its Mission y Step 2: Perform External and Internal Audits y Step 3: Translate the Mission into Strategic Goals y Step 4: Formulate a Strategy to Achieve the

Strategic Goals
y Step 5: Implement the Strategy y Step 6: Evaluate Performance

Overview of Strategic Management

A SWOT Chart
SWOT Analysis
The use of a SWOT chart to compile and organize the process of identifying company

Strengths, Weaknesses, Opportunities, and Threats.

HR and Competitive Advantage

y Competitive advantage
y Any factors that allow an organization to differentiate its

product or service from those of its competitors to increase market share.

y Superior human resources are an important source of

competitive advantage

Strategic Human Resource Management

y Strategic Human Resource Management

y The linking of HRM with strategic goals and objectives in

order to improve business performance and develop organizational cultures that foster innovation and flexibility.
y Formulating and executing HR systems

HR policies and activities that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Linking Corporate and HR Strategies

HR S Strategic Roles
y HR professionals should be part of the firm s strategic

planning executive team.

y Identify the human issues that are vital to business

strategy.
y Help establish and execute strategy. y Provide alternative insights. y Are centrally involved in creating responsive and market-

driven organizations.
y Conceptualize and execute organizational change.

HR s Strategy Execution Role

y The HR department s strategies, policies, and activities

must make sense in terms of the company s corporate and competitive strategies, and they must support those strategies.

HR s Strategy Formulation Role

y HR helps top management formulate strategy in a

variety of ways by.

y Supplying competitive intelligence that may be useful in

the strategic planning process. y Supplying information regarding the company s internal human strengths and weaknesses. y Build a persuasive case that shows how in specific and measurable terms the firm s HR activities can and do contribute to creating value for the company.

Creating a Strategy-oriented HR System

y Components of the HR process
y HR professionals who have strategic and other skills y HR policies and activities that comprise the HR system

itself
y Employee behaviors and competencies that the

company s strategy requires.

The Basic Architecture of HR

The High-Performance Work System

y High-performance work system (HPWS) practices.
y High-involvement employee practices (such as job enrichment

and team-based organizations),

y High commitment work practices (such as improved

employee development, communications, and disciplinary practices)

y Flexible work assignments. y Other practices include those that foster skilled workforces

and expanded opportunities to use those skills.

Translating Strategy into HR Policy and Practice

Basic Model of How to Align HR Strategy and Actions with Business Strategy

The HR Scorecard Approach

y HR scorecard
y Measures the HR function s effectiveness and efficiency

in producing employee behaviors needed to achieve the company s strategic goals.

y Creating an HR scorecard
y Must know what the company s strategy is. y Must understand the causal links between HR activities,

employee behaviors, organizational outcomes, and the organization s performance. y Must have metrics to measure all the activities and results involved.

Strategic HR Relationships

HR Activities

Emergent Employee Behaviors

Strategically Relevant Organizational Outcomes

Organizational Performance

Achieve Strategic Goals

The HR Scorecard Approach to Formulating HR Policies, Activities, and Strategies

Using the HR Scorecard Approach

y Step 1: y y y y y y

Define the Business Strategy Step 2: Outline the Company s Value Chain Step 3: Identify the Strategically Required Organizational Outcomes Step 4: Identify the Required WorkforceCompetencies and Behaviors Step 5: Identify the Strategically Relevant HR System Policies and Activities Step 6: Design the HR Scorecard Measurement System Step 7: Periodically Evaluate the Measurement System

JOB ANALYSIS
y Job Analysis is a process of collecting information

about a job.
y The process of job analysis results into two sets of data.

1.

Job Description Job Specification

2.

Steps of Job Analysis

y Collecting and recording job information y Checking the job information for accuracy y Writing job description based on information collected to

determine the skills, knowledge, abilities and activities required

y Updating and upgrading this information

PURPOSE OF JOB ANALYSIS

y Human Resource Planning (HRP) y Recruitment & Selection y Training & Development y Job Evaluation y Remuneration y Performance Appraisal y Personnel Information y Safety & Health

PROCESS OF JOB ANALYSIS

y Process 1: Strategic Choices y Process 2: Collecting Information y Process 3: Processing Information y Process 4: Job Description y Process 5: Job Specification

Strategic Choices
y Extent of involvement of employees y Level of details of job analysis y Timing and frequency of Job Analysis y Past-oriented and future-oriented Job Analysis y Sources of Job Data

Strategic Choices
y Extent of involvement of employees: y Extent of employee involvement is a debatable point. Too

much involvement may result in bias in favor of a job in terms of inflating duties and responsibilities. Too less involvement leads to suspicion about the motives behind the job. Besides it may also lead to inaccurate information. Hence extent of involvement depends on the needs of the organization and employee.

Strategic Choices
y Level of details of job analysis: y The nature of jobs being analyzed determines the level of

details in job analysis. If the purpose were for training programs or assessing the worth of job, levels of details required would be great. If the purpose is just clarification the details required would be less.

Strategic Choices
y Timing and frequency of Job Analysis: When do you do

Job Analysis?
y Initial stage, for new organization y New Job is created y Changes in Job, Technology and Processes y Deficiencies and Disparities in Job y New compensation plan is introduced y Updating and upgrading is required.

Strategic Choices
y Past-oriented and future-oriented Job Analysis: y For rapidly changing organization more future oriented

approach would be desired. For traditional organizations past oriented analysis would be required. However more future oriented analysis may be derived based on past data.

Strategic Choices
y Sources of Job Data: y Non-Human Sources y Existing job descriptions and specifications y Equipment maintenance records y Equipment design blueprints y Architectural blueprints of work area y Films of employee working y Training manuals and materials y Magazines, newspapers, literatures

Strategic Choices
y Sources of Job Data y Human Sources y Job Analysis y Job Incumbents y Supervisors y Job Experts

Collecting Information
y Information collection is done on the basis of following 3

parameters
y Types of Data for Job Analysis y Methods of Data Collection y Who to Collect Data

Collecting Information
y Types of Data for Job Analysis: y Work Activities (Tasks details) y Interface with other jobs and equipments (Procedures,

Behaviors, Movements) y Machines, Tools, Equipments and Work Aids (List, Materials, Products, Services) y Job Context (Physical, Social, Organizational, Work schedule) y Personal Requirement (Skills, Education, Training, Experience)

Collecting Information
y Methods of Data Collection: y Observation y Interview y Questionnaires y Checklists y Technical Conference y Diary Methods

Collecting Information
y Who to Collect Data? y Trained Job Analysts y Supervisors y Job Incumbents

Processing Information
y Once the job information is collected it needs to be

processed, so that it would be useful in various personnel functions. Specifically job related data would be useful to prepare job description and specifications, which form the next two processes of job analysis.

JOB DESIGN
y Integration of work, rewards and qualification

y Job Design integrates work content (tasks, functions,

relationships), the rewards and qualifications required including skills, knowledge and abilities for each job in a way that meets the needs of employees and the organization.

STEPS IN JOB DESIGN

y Specification of Individual Tasks y Specification of Methods of Tasks Performance y Combination of Tasks into Specific Jobs to be assigned to

individuals

FACTORS AFFECTING JOB DESIGN

y Organizational factors: y Characteristics of Tasks (Planning, Execution and Controlling

of Task)
y Work Flow (Process Sequences) y Ergonomics (Time & Motion Study) y Work Practices (Set of ways of performing tasks)

FACTORS AFFECTING JOB DESIGN

y Environmental Factors: y Employee Abilities and Availability y Social and Cultural Expectations y Behavioral Elements: y Feedback y Autonomy y Use of Abilities y Variety

TECHNIQUES OF JOB DESIGN: y Work Simplification y Job Rotation y Job Enlargement y Job Enrichment y Autonomous of Self-Directed Teams y High Performance Work Design

RECRUITMENT & SELECTION

y RECRUITMENT y Definition Of Recruitment: y Finding and Attracting Applications y Recruitment is the Process of finding and attracting capable

applicants for employment. The Process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of application from which new employees are selected.

RECRUITMENT
y MEANING OF RECRUITMENT: y Recruitment is understood as the process of searching for

and obtaining applicants for jobs, from among them the right people can be selected. Though theoretically recruitment process is said to end with the receipt of applications, in practice the activity extends to the screening of applications so as to eliminate those who are not qualified for the job.

PURPOSE & IMPORTANCE OF RECRUITMENT

y Determine the present and future requirements in conjunction y y y y y y

with personnel planning and job analysis activities Increase the pool of job candidates at minimum cost Help increase success rate of selection process by reducing number of under-qualified or over-qualified applications. Reduce the probability that job applicants once selected would leave shortly Meet legal and social obligations Identify and prepare potential job applicants Evaluate effectiveness of various recruitment techniques and sources for job applicants.

FACTORS GOVERNING RECRUITMENT

y External Factors: y Demand and Supply (Specific Skills) y Unemployment Rate (Area-wise) y Labor Market Conditions y Political and Legal Environment (Reservations, Labor laws) y Image

FACTORS GOVERNING RECRUITMENT

y Internal Factors y Recruitment Policy (Internal Hiring or External Hiring?) y Human Resource Planning (Planning of resources required) y Size of the Organization (Bigger the size lesser the

recruitment problems)
y Cost y Growth and Expansion Plans

RECRUITMENT PROCESS
y Recruitment Planning y Recruitment Strategy Development y Internal Recruitment (Source 1) y External Recruitment (Source 2) y Searching y Evaluation and Cost Control y Evaluation of Recruitment Process

SELECTION:
y MEANING OF SELECTION: y Selection is the process of picking up individuals (out of the

pool of job applicants) with requisite qualifications and competence to fill jobs in the organization. A formal definition of Selection is as under y Definition of Selection: Process of differentiating
y Selection is the process of differentiating between applicants

in order to identify and hire those with a greater likelihood of success in a job.

PROCESS / STEPS IN SELECTION

y Preliminary Interview y Selection Tests y Employment Interview y Reference & Background Checks y Selection Decision y Physical Examination y Job Offer y Contract of Employment

ESSENTIALS OF A GOOD SELECTION PRACTICE

y Detailed job descriptions and job specifications prepared in y y y y y y

advance and endorsed by personnel and line management Trained the selectors Determine aids to be used for selection process Check competence of recruitment consultants before retention Involve line managers at all stages Attempt to validate the procedure Help the appointed candidate to succeed by training and management development

BARRIERS TO EFFECTIVE SELECTION:

y Perception y y Fairness y Validity y Reliability y Pressure

TRAINING & DEVELOPMENT

y Definition of Training & Development: y Improve performance y Training & Development is any attempt to improve current or

future employee performance by increasing an employees ability to perform through learning, usually by changing the employees attitude or increasing his or her skills and knowledge.

What are the Training Inputs?

y Skills y Education y Development y Ethics y Problem Solving Skills y Decision Making y Attitudinal Changes

Importance of Training & Development

y Helps remove performance deficiencies in employees y Greater stability, flexibility and capacity for growth in an

organization
y Accidents, scraps and damages to machinery can be avoided y Serves as effective source of recruitment y It is an investment in HR with a promise of better returns in

future y Reduces dissatisfaction, absenteeism, complaints and turnover of employees

Need of Training
y Individual level y Diagnosis of present problems and future challenges y Improve individual performance or fix up performance deficiency y Improve skills or knowledge or any other problem y To anticipate future skill-needs and prepare employee to handle

more challenging tasks y To prepare for possible job transfers

Need of Training
y Group level y To face any change in organization strategy at group levels y When new products and services are launched y To avoid scraps and accident rates

Identification of Training Needs (Methods)

y Individual Training Needs Identification y Performance Appraisals y Interviews y Questionnaires y Attitude Surveys y Training Progress Feedback y Work Sampling y Rating Scales

Identification of Training Needs (Methods)

y Group Level Training Needs Identification y Organizational Goals and Objectives y Personnel / Skills Inventories y Organizational Climate Indices y Efficiency Indices y Exit Interviews y MBO / Work Planning Systems y Quality Circles y Customer Satisfaction Survey y Analysis of Current and Anticipated Changes

Benefits of Training Needs Identification

y Trainers can be informed about the broader needs in advance y Trainers Perception Gaps can be reduced between employees

and their supervisors.

y Trainers can design course inputs closer to the specific needs

of the participants
y Diagnosis of causes of performance deficiencies can be done

Methods of Training
y On the Job Trainings y Job Rotation y Job Coaching y Job Instruction y Apprenticeships y Internships and Assistantships

Methods of Training
y Off the Job Trainings y Classroom Lectures y Audio-Visual y Simulation y Case Studies y Sensitivity Trainings y Programmed Instructions y Computer Aided Instructions y Laboratory Training

Barriers to Effective Training:

y Lack of Management commitment y Inadequate Training budget y Education degrees lack skills y Large scale poaching of trained staff y Non-coordination from workers due to downsizing trends y Employers and B Schools operating distantly y Unions influence

INDUCTION & ORIENATION

y Definition 1: y Planned Introduction

y It is a Planned Introduction of employees to their jobs, their

co-workers and the organization per se.

Orientation
y Orientation conveys 4 types of information y Daily Work Routine y Organization Profile y Importance of Jobs to the organization y Detailed Orientation Presentations

Purpose of Orientation
y To make new employees feel at home in new environment y To remove their anxiety about new workplace y To remove their inadequacies about new peers y To remove worries about their job performance y To provide them job information, environment

Prerequisites of Effective Orientation Program

y Prepare for receiving new employee y Determine information new employee wants to know y Determine how to present information y Completion of Paperwork

Problems of Orientations
y Busy or Untrained supervisor y Too much information y Overloaded with paperwork y Given menial tasks and discourage interests y Demanding tasks where failure chances are high y Employee thrown into action soon y Wrong perceptions of employees

JOB EVALUATION
y Scope of Job Evaluation

y The job evaluation is done for the purpose of wage and salary

differentials, demand for and supply of labor, ability to pay, industrial parity, collective bargaining and the like.

Process of Job Evaluation:

y Defining objectives of job evaluation y Identify jobs to be evaluated (Benchmark jobs or all jobs) y Who should evaluate job? y What training do the evaluators need? y How much time involved? y What are the criteria for evaluation? y Methods of evaluation to be used y Wage Survey y Employee Classification y Establishing wage and salary differentials

Methods of Job Evaluation

y Analytical Methods y Point Ranking Methods: Different factors are selected

for different jobs with accompanying differences in degrees and points. y Factor Comparison Method: The important factors are selected which can be assumed to be common to all jobs. Each of these factors are then ranked with other jobs. The worth of the job is then taken by adding together all the point values

Methods of Job Evaluation

y Non-Analytical Methods y Ranking Method: Jobs are ranked on the basis of its title

or contents. Job is not broken down into factors etc.

y Job Grading Method: It is based on the job as a whole and

the differentiation is made on the basis of job classes and grades. In this method it is important to form a grade description to cover discernible differences in skills, responsibilities and other characteristics

Pitfalls of Job Evaluation

y Encourages employees on how to advance in position when

there may be limited opportunities for enhancement as a result of downsizing.

y It promotes internal focus instead of customer orientation y Not suitable for forward looking organizations, which has

trimmed multiple job titles into two or three broad jobs

PERFORMANCE APPRAISALS
y It is a systematic evaluation of an individual with respect to

performance on the job and individuals potential for development.

y It is formal, structured system of measuring, evaluating job

related behaviors and outcomes to discover reasons of performance and how to perform effectively in future so that employee, organization and society all benefits

Objectives of Performance Appraisals

y Use of Performance Appraisals y Promotions y Confirmations y Training and Development y Compensation reviews y Competency building y Improve communication y Evaluation of HR Programs y Feedback & Grievances

TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS

y Past Oriented Methods y Rating Scales y Checklist y Forced Choice Method y Forced Distribution Method y Critical Incidents Method y Behaviorally Anchored Rating Scales

Past Oriented Methods.contd.

y Field Review Method y Performance Tests & Observations y Confidential Records y Essay Method y Cost Accounting Method y Comparative Evaluation Method (Ranking & Paired

Comparisons

Rating Scales:
y Rating scales consists of several numerical scales representing

job related performance criterions such as dependability, initiative, output, attendance, attitude etc. Each scales ranges from excellent to poor. The total numerical scores are computed and final conclusions are derived. Advantages Adaptability, easy to use, low cost, every type of job can be evaluated, large number of employees covered, no formal training required. Disadvantages Raters biases

Checklist
y Under this method, checklist of statements of traits of

employee in the form of Yes or No based questions is prepared. Here the rater only does the reporting or checking and HR department does the actual evaluation. Advantages economy, ease of administration, limited training required, standardization. Disadvantages Raters biases, use of improper weighs by HR, does not allow rater to give relative ratings

Forced Choice Method:

y The series of statements arranged in the blocks of two or

more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment. Advantages Absence of personal biases because of forced choice. Disadvantages Statements may be wrongly framed.

Forced Distribution Method:

y Here employees are clustered around a high point on a rating

scale. Rater is compelled to distribute the employees on all points on the scale. It is assumed that the performance is conformed to normal distribution. Advantages Eliminates Disadvantages Assumption of normal distribution, unrealistic, errors of central tendency

Critical Incidents Method:

y The approach is focused on certain critical behaviors of

employee that makes all the difference in the performance. Supervisors as and when they occur record such incidents. Advantages Evaluations are based on actual job behaviors, ratings are supported by descriptions, feedback is easy, reduces recency biases, chances of subordinate improvement are high. Disadvantages Negative incidents can be prioritized, forgetting incidents, overly close supervision; feedback may be too much and may appear to be punishment.

Behaviorally Anchored Rating Scales:

y Statements of effective and ineffective behaviors determine

the points. They are said to be behaviorally anchored. The rater is supposed to say, which behavior describes the employee performance. Advantages helps overcome rating errors. Disadvantages Suffers from distortions inherent in most rating techniques

Field Review Method:

y This is an appraisal done by someone outside employees own

department usually from corporate or HR department. Advantages Useful for managerial level promotions, when comparable information is needed, Disadvantages Outsider is generally not familiar with employees work environment, Observation of actual behaviors not possible

Performance Tests & Observations:

y This is based on the test of knowledge or skills. The tests may

be written or an actual presentation of skills. Tests must be reliable and validated to be useful. Advantage Tests may be apt to measure potential more than actual performance. Disadvantages Tests may suffer if costs of test development or administration are high

Confidential Records:
y Mostly used by government departments, however its

application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR) and may record ratings with respect to following items; attendance, self expression, team work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness etc. The system is highly secretive and confidential. Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it is highly subjective and ratings can be manipulated because the evaluations are linked to HR actions like promotions etc.

Essay Method:
y In this method the rater writes down the employee

description in detail within a number of broad categories like, overall impression of performance, promoteability of employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses and training needs of the employee. Advantage It is extremely useful in filing information gaps about the employees that often occur in a better-structured checklist. Disadvantages It its highly dependent upon the writing skills of rater and most of them are not good writers. They may get confused success depends on the memory power of raters

Cost Accounting Method:

y Here performance is evaluated from the monetary returns

yields to his or her organization. Cost to keep employee, and benefit the organization derives is ascertained. Hence it is more dependent upon cost and benefit analysis

Comparative Evaluation Method (Ranking & Paired Comparisons):

y These are collection of different methods that compare

performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.
y Ranking Methods: Superior ranks his worker based on merit,

from best to worst. However how best and why best are not elaborated in this method. It is easy to administer and explanation. y Paired Comparison Methods: In this method each employee is rated with another employee in the form of pairs.

Future Oriented Methods

y Management By Objectives: It means management by

y y y y y y

objectives and the performance is rated against the achievement of objectives stated by the management. MBO process goes as under. Establish goals and desired outcomes for each subordinate Setting performance standards Comparison of actual goals with goals attained by the employee Establish new goals and new strategies for goals not achieved in previous year. Advantage It is more useful for managerial positions. Disadvantages Not applicable to all jobs, allocation of merit pay may result in setting short-term goals rather than important and long-term goals etc

Psychological Appraisals:
y These appraisals are more directed to assess employees

potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depend upon the skills of psychologists who perform the evaluation

y Assessment Centers y An assessment center is a central location where managers

may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviors across a series of select exercises or work samples. y Reliability, content validity and predictive ability are said to be high in assessment centers. The tests also make sure that the wrong people are not hired or promoted. Finally it clearly defines the criteria for selection and promotion

360-Degree Feedback:
y It is a technique which is systematic collection of performance

data on an individual group, derived from a number of stakeholders like immediate supervisors, team members, customers, peers and self. In fact anyone who has useful information on how an employee does a job may be one of the appraisers. This technique is highly useful in terms of broader perspective, greater self-development and multi-source feedback is useful. 360-degree appraisals are useful to measure interpersonal skills, customer satisfaction and team building skills. However on the negative side, receiving feedback from multiple sources can be intimidating, threatening etc. Multiple raters may be less adept at providing balanced and objective feedback.

Ethics of Performance Appraisals

y Formal Standardized Performance Appraisal Systems y Uniform to all employees, no illegal differentiations based on y y y y

cast, religion etc. Standards formally communicated to all employees Freedom to review performance appraisal results Written instructions and training to raters All personal decision makers should be aware of antidiscrimination laws

Essentials of a Good Performance Appraisal System

Standardized Performance Appraisal System Uniformity of appraisals Defined performance standards Trained Raters Use of relevant rating tools or methods Should be based on job analysis Use of objectively verifiable data Avoid rating problems like halo effect, central tendency, leniency, severity etc. y Consistent Documentations maintained y No room for discrimination based on cast, creed, race, religion, region etc
y y y y y y y y

EMPLOYEE COMPENSATION & BENEFITS

y Employee Compensation refers to all forms of pay or

rewards going to employees and arising from their employment.

y DIRECT FINANCIAL PAYMENTS y (wages, salaries, commissions and bonus) y INDIRECT PAYMENTS y (financial benefits such as insurance and vacations)

Establishing Pay Rates

y Salary Survey --- determining prevailing wage rates---

BENCHMARK JOB y JOB EVALUATION --- determining a jobs relative WORTH

y GROUP SIMILAR JOBS INTO PAY GRADES y (jobs of approx. equal difficulty) y PRICE EACH PAY GRADE y FINE TUNE PAY GRADES

COMPETENCY BASED PAY

y Where the company pays for the employees

range, depth and types of skills and knowledge, rather than for the job title he or she holds

INCENTIVES
y PIECEWORK y STRAIGHT PIECE RATE y HOUR RATE