Human Resource Management EMBA-HCM

Prof. Uma Sreedhar IBS-Bangalore

Welcome
To EMBA Subject Human Resource Management

Best organisations succeed not because of the people but because they have right people

Nature and Scope of Human Resource Management

After reading this chapter, you should be able to

Understand the Nature, Scope and Objectives of HRM

Definition of HRM Evolution of HRM Difference between PM and HRM HRM model

Function of HRM
Challenges faced by HR professionals

Meaning
HRM is a Process of bringing people and organisations together so that the goals of each are met. To secure the best from people by winning their whole hearted co-operation. It is defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of the Organisation in an effective and efficient manner

EVOLUTION OF HRM
The commodity concept : Labor considered as a commodity to brought and sold. The Factor of Production Concept : Better working conditions and higher earning The Paternalistic Concept : Collective Bargaining Fatherly and Protective Attitude. Welfare Schemes like Health and housing facilities, Pension Plans Etc

The Humanitarian Concept : Social and Ethical Satisfaction,

Hawthorne Experiment The Behavioral Human Resource Concept : Motivational and Group

Dynamics.
Resource : An Asset and an Opportunity

Definition
Human Resource Management is Planning, Organizing, Directing, and Controlling of the Procurement, Development, Compensation, Integration, Maintenance and Separation of Human Resources to the end that individual organizational and Social Objectives are accomplished.

HRM model

Definition
Management Function Planning Organizing Directing Controlling Operative Functions Procurement Development Compensation Integration Maintenance Separation To Achieve Individual Functional Organisational Societal

Objectives are accomplished

Challenges faced by HR Professionals

Globalisation Corporate Reorganisation New Organisational forms Changing demographics of workforce Changing employee expectations New Industrial Relations approach Renewed focus on people Managing the managers Interests of the weaker sections of the society Talent Management and Employee Retention

Human Resource Planning

Human Resource Planning aims at getting the right number of qualified people into the organisation at the right time. The process involves assessing current human resources, estimating the supplies and demand for labour and matching demand with current supplies of labour

The HRP Process

Manpower Planning Process - Corporate Analysis

(a). Objectives and Strategies
(b). Company Organization Plans (c). Market forecasts and Budegets. (d). Financial Plans (e). Production Targets. Demand Forecast (a). Numbers Manpower Gaps Supply Forecast (a). Manpower Inventory (b). Losses and addition (c ).External Supply

(b). Job Categories

(c ). Skill requirements.

(a). Surplus of Numbers and skills

(b). Shortages Manpower Plans

(a). Recruitment and Selection (b). Training and Development (c ). Redeployment/ Retrenchmant (d). Redundancy (e). Retention/ Internal Mobility (f). Productivity

Factors affecting HRP:

1. Type and Strategy of Organisation.

2. Organisational growth cycles and planning.

3. Environmental uncertainties. 4. Time horizons. 5. Type & quality of forecasting information. 6. Nature of Jobs being filled.

7. Off-loading the work

PROGRAMME PLANNING OPTIONS

Hire new full-time employees.
Offer incentives for postponing retirement. Re-hire retired employees on part-time basis. If a shortage of employees is expected Attempt to reduce turnover. Bring in overtime for present staff. Subcontract work to another company Hire temporary employees. Re-engineer to reduce needs Do not replace employees who leave. Offer incentives for early retirement. If a surplus of employees is expected

Transfer or re-assign excess employees.

Use slack time for employees training or equipment maintenance. Reduce work hours Lay-off employees

Job Analysis
It involves the identification and precisely identifying the required tasks, the knowledge and the skills necessary for performing them and the conditions under which they must be performed. Job analysis is the process of studding and collecting information relating to the operation and responsibilities of a specific job.

USES OF JOB ANALYSIS

HRP

Recruitment & Selection

Training & Development Job Description Job Analysis Job Specification Remuneration Performance Appraisal Personnel Information Safety and Health Job Evaluation

METHODS OF COLLECTING JOB DATA

Observation

Interviews

Questionnaire

Job

Data

Check lists

Technical Conference

Diary

Specimen of Job Description

Title Code Department Summary Duties Compensation manager HR/2310
Human Resource Department Responsible for the design and administration of employee compensation programmes.
Conduct job analysis Prepare job descriptions for current and projected positions Relate salary to the performance of each employee Conduct periodic salary surveys

Working conditions Report to

Normal, Eight hours per day. Five days a week Director, Human Resource Department

Job Specification
Education Experience Skill, Knowledge, Abilities MBA with specialisation in HRM/MA in social work A degree or diploma in Labour Laws is desirable
At least 3 years experience in a similar position in a large manufacturing company Skill in writing job descriptions, in conducting job analysis interviews, in making group presentations. Ability to conduct meetings, to plan and priorities work. The position may require upto 15 percent travel Preferably below 30 years

Work Orientation Factors Age

STRATEGIC CHOICES
Strategic Choices

Gather Information
Uses of Job Description and Job Specification Personnel Planning Process Information Performance Appraisal Hiring Training and Development Job Description

Job Evaluation and Compensation

Health and Safety Employee Discipline Work Scheduling Career Planning

Job Specification

Source: Adapted fro Personnel/Human Resource Management by Leap and Crino, p.121

Wage and Salary Administration

The main objective of salary Administration are to design a cost effective pay structure that will attract, motivate and retain competent employees and that will also be viewed as fair by these employees. Apart from meeting legal requirements, organization have to take care of ever rising employee expectations and competitive pressures while designing an effective compensation plan

In this session.
Evolution of Wages & Salaries Concepts of Wages and Salaries 3 premises of Wages Different types of Wages Factors affecting Wages & Salaries Labour Laws Calculations of Wages Theory of Wages Pay structure

Living Standards in India.

Increasing middle class from 250 mn to 300 mn. 1 mn new mobile subscriptions every month 10,000 motor cycles purchased everyday Banks are making 15 bn a year in home loans Average purchase of clothes by a middle class accounts to Rs 4,000/- every month 40.26% of household have television in 2003, as compared to 31.60 % in 2001 In India, the salary level of employee increases every year by 20%. *Source:- Oct 23, 2003 New York Times

Evolution of Wages and Salaries

Phase I

Phase II

Phase III

Phase IV

Basic definitions
Compensation: Consideration for which labour is exchanged. Wages & Salaries are compensation paid in form of cash. It consists of Bonus, Allowance, OT, social security payment benefits etc.

Wages: are compensation. This includes basic wages, allowances, bonuses. A cost of production in the view of employers. Paid to labours who are involved in production or commercial activities.
Salaries: Compensation paid to indirect labour involves supervisors, managers & supporting staffs. Salaries are mostly in the form of time rate, mostly on monthly basis.

Basic definitionscontd
Wage rate: Rate of wage of a worker per unit time. This does not include any allowance or bonuses or over-time payment etc. Wage Scale: Wage scale is listing of standard wage rate in a proper sequence, according to the size of rate.

Three premises of Wage

Internal Equity: More difficult jobs are paid more External Equity: Jobs are fairly compensated in comparison to similar jobs in the labour market. Individual Equity: Equal pay for equal work

Different types of Wages

Minimum Wage: wage level fixed by the government which it considers adequate taking into account the cost of living. Living Wage: Government defines Living Wage is one which should enable the earner to provide himself and his family not only the bare essentials of food, clothing and shelter, but also comfort, education, protection against ill health etc Fair Wage: Fixed by employer. It is a wage above the minimum wage and below the living wage. Real Wage: Expressed in terms of goods and services which can be purchased by dividing nominal wages by CPI.

Factors affecting Wage and Salary

External Factors:
Government Legislations Market Rate

Labour supply and demand

Cost of Living Labour Unions

Factors affecting Wage and Salary

Internal Factors:
Ability to pay Job Evaluation & PA The Employee
Age, Qualifications, Promotions, Hazards involved in the job, Industry involved in the job

Government Legislations Minimum Wages Act, 1948 Minimum wages to certain sweated and unorganized sectors covered in the act. Can be fixed by hour, day, month or any other longer period. Subjected to be revised every 5 years.

Government Legislations
The Payment of Wages Act, 1936 Regular payment without any unauthorised deductions to persons who are employed in any industrial establishment or factory or railway or by a railway contractor whose monthly wages are less than Rs 1600/ Permissible deductions to be made from the employees salary: Fine Deductions for absence Deductions for loss of goods entrusted to worker House given by employer Services provided by employer Advance provided by employer PF, Insurance etc.

Government Legislations
Payment of Bonus Act, 1945 The important provisions of of the Act are: 60% of the surplus (67% of incase of foreign companies) should be allocated for the payment of Bonus. Salary for the purpose of bonus means Basic pay+DA Employees drawing up to Rs 2500/- are eligible for bonus. Employees dismissed of fraud, theft are disqualified for bonus Minimum of 8.33% or maximum of 20% bonus is given

Methods of Wage payment

Time Wage System:

Workers are paid on the basis of the time spent on the work irrespective of the amount of work done. The basis of time may be hour, day, week or month.

Differential piece rate system: In this system, the rater per piece is increased, as the output level is increased. Increase in rates may be proportionate to increase in output.

Theory of Wages
Subsistence theory: Propounded by David Ricardo Proposes the labourers are paid to enable them to subsist and perpetuate the race without increase or diminution Also known as Iron Law of Wages Wage Fund theory: Propounded by Adam Smith Wage level is a function of surplus available. Higher the fund, higher the pay, Lower the fund, Lower the pay Focus on employer and his capacity to pay

Theory of Wages Residual Claimant Theory: Propounded by Francis A. Walker Land, labour, Capital & entrepreneurship add value to the product. Revenue earned is first distributed to land, capital and entrepreneurship and the remaining was paid to labour. Marginal Productivity theory: Propounded by Phillips Henry Wicksteed and John Bates Clark Wage determined by the labour market. Employer continues to employ as long as the value addition by the marginal work is more than the cost.

Pay structure

Basic Pay: is the basic wage decided with the criteria the skills, experience needed, difficulty (both physical and mental) involved, training need, responsibilities involved and hazardous nature of the job.
Dearness Allowance (DA): is paid to employees in order to enable them to face the increasing dearness of essential commodities. When prices go down DA can always be cut down to size.

Fringe Benefits Refers to the extra benefits paid by the employers. They are the compensation. supplementary form of

It is paid to all the employees.

Types of Fringe Benefits

Payment for Time not worked

Hours of Work
Paid Holidays Shift Premium

Holiday Pay
Paid Vacation Employee Security

Retrenchment Compensation
Lay Off compensation

Types of Fringe Benefits

Safety and Health

Safety measures
Workmens compensation Health benefits

Welfare Recreational Facilities

Canteen Housing

Counseling
Holiday Home Education facilities

Transportation

Types of Fringe Benefits

Old age retirement benefits

PF Gratuity

Medical benefits
Pension ESI

Are Wages and Salaries used as an advantage by the organisations?

Facts and Figures

60% of employees consider an organisation good to work on the basis of their pay scale offered.
80% of the organisation say that their main advantage is the pay scale. The benefits and incentives constitute nearly 40 % of the money earned by an employee
Source: BT-ORG-MARG Survey 2002

References

Personnel Management & Industrial Relations by Latha Nair & N G Nair Dynamic Personnel Administration by Prof. M N Rudrabasavaraj

www.nytimes.com

Difference between Wage and Salary

Wage : The amount paid by the employer for the services of hourly, daily, weekly fortnightly employees (ILO).
Salary : Remuneration paid to the clerical and management personal employed on a monthly or yearly basis (White Collar Employees).

CHAPTER: 7

PERFORMANCE APPRAISAL
Definition Problems of Performance Appraisal Methods

Performance Appraisal
PA is the process of assessing the performance and progress of an employee or of a group of employees and his potential for future development. According to Flippo, PA is a systematic, periodic and an impartial rating of an employees excellence in matters pertaining to his present job and his potential for a better job

Performance Appraisal Process

PERFORMANCE APPRAISAL

My Company pays for performance. Unfortunately, no one here knows how to measure it, ---- Anonymous PA is the Process of assessing the performance and progress of an employee or of a group of employees and his potential for future development. According to Flippo, PA is a systematic, periodic and an impartial rating of an employees excellence in matters pertaining to his present job and his potential for a better job.

The Process of Performance Appraisal

Problems in PA: 1. Errors in Rating: (a) (b) (c) (d) (e) (f) Halo Effect Stereotyping Central Tendency Constant Error Personal Bias Spill Over Effect

2. Lack of Reliability 3. Incompetence

4. Negative Approach
5. Multiple Objectives. 6. Resistance 7. Lack of Knowledge

Essentials of an Effective Performance Appraisal System

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Mutual Trust Clear Objectives Standardisation Training Job Relatedness Documentation Feedback and Participation Individual Differences Post Appraisal Interview Review and Appeal

Behaviourally Anchored Rating Scales (BARS)

This method combines graphic scales with critical incidents method. BARS are descriptions of various degrees of behaviour relating to specific performance dimensions. The steps involved in constructing BARS are as follows: (a) Identify Critical Incidents Job holders/ supervisors describe specific eg. Of both effective / ineffective job behaviours. (b) Select Performance Dimensions The behavioral incidents are clustered into smaller set (usually 5 to 10) of performance dimensions.

(c) Retranslate the Incidents Another group of persons assign each incident to the dimension that it best describes. Incidents for which there is less than 75% agreement with the first group are not retranslated. (d) Assign Scales to Incidents Rate each incident on 7-9 point scale. Rating is done on the basis of how well the behaviour described in the incident represents performance on the appropriate dimensions. S.D 1.5 < on the seven point scale are included in the final anchored scales.

(e) Develop Final Instrument One Scale per dimension

APPRAISAL BY RESULTS OR MBO

Developed by PETER DRUCKER in 1954
Also Known as work planning and review or goal setting approach to appraisal.
MBO is defined as a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individuals major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contributions of each of its members.

MBO Process
1) Set Organisational goals Goals of the organisation in key areas of performance are laid down. Goals are defined in clear, precise and measurable terms. Analysis of internal and external environment of the organisation is made to set these goals. 2) Defining Performance Targets Performance standards for each employee are defined. Responsibilities based on org. charts and job descriptions. Each subordinate writes down his own performance goals which are work related and career oriented. Managers also writes down and discuss them reach an agreement and put the agreed goals in writing. Employees at all levels are actively involved in goal setting.

3) Performance Reviews
Frequent performance reviews held and progress is assessed, weaknesses and constraints are identified.

4) Feedback
Feedback on performance is communicated to the employee so that he can regulate and improve upon his own performance. Rewards are decided and new goals and targets are determined for the next period.

Advantages of MBO
1. Ends-means Chain
Makes goals more explicit & focuses attention on key result areas.

2. Role Clarity
Helps to avoid role ambiguity & role conflict. 3. Objective appraisal Objective criteria for evaluating performance.

4. Motivation & Commitment

Active participation helps to satisfy ego & self actualisation needs. Job satisfaction & morale tends to be high because of close linkage between individual & organisational goals . 5. Management Development Continuous feedback & opportunities for self control help to develop leadership potential of executives.

6. Coordination
Harmony between objectives at different levels provided a sense of common direction to all.

Limitations of MBO
Difficulty in goal setting
Managers may ignore qualitative goals. Short Term measure may override Long Term measure. Blue collar workers are often unable to set their job goals.

Problems of understanding

Participation may need to tug of war where subordinate tries to set lower targets & superior insists on higher targets.

Lack of Understanding Lack of top management support & hasty implementation may also cause failure.

Time Consuming & Expensive

A Manager may become so engrossed in performing assigned activities that he looses the sight of the goal. This is called the activity trap.

Appraisal Interview In this Interview feed back on performance is provided. The rater explains his ratings to the employee and traits taken into consideration for appraisal.
1. Tell & Sell Interview The purposes of this interview are a) To let the employee know how well he is doing. b) To gain the employees acceptance of the evaluation. c) To draw up a plan of improvement for him. 2. Tell & Listen Interview

To communicate the appraisal to the employee & Listen sympathetically to his reactions.
3. Problem Solving Interview

The aim is not appraisal but development of an employee.

Appraisal of Potential
Appraising potential is different from assessing performance. Potential refers to the abilities present but not currently utilised. It can be judged by a) Reviewing Present Performance b) Analysing Personality Traits c) Relooking at Past Experience d) Considering Agent Qualification e) Explaining unused knowledge of & skills of an employee

CHAPTER: 8

COLLECTIVE BARGAINING, HEALTH & SAFETY AND STRATEGIC HRM

Agenda
Meaning and Features
Objectives and Types of Bargaining Process of Collective Bargaining Collective Bargaining in India Conditions for Effective Bargaining Industrial Dispute

MEANING
Its a method by which trade unions strive protect and improve working conditions of workers. the to the the

The ongoing process of negotiation between representatives of the workers and employers to establish the conditions of employment.

FEATURES
Collective Strength Voluntary Continuous

Dynamic Power Relationship Representation Flexible

1. Collective
In 2 ways:
Workers collectively bargain Workers and management jointly arrive at a solution

2. Strength Both parties bargain from a position of equal strength.

3. Voluntary Both the parties come to negotiating table voluntarily for resolving several troubling issues.

4. Continuous It does not commence with negotiations and end up with an agreement only, it also includes implementation of the agreement and further

negotiations.

5.

Dynamic
The way agreements are arrived at, the way they are implemented, the mental make-up of parties involved keeps changing.

6.

Power relationship Management tries to retain its control on workplace matters and unions attempt to strengthen their hold over workers without any dilution of their powers.

7. Representation Employers carries out negotiation with the representatives of unions. 8. Flexible It has sufficient flexibility because no party can afford to be inflexible and rigid in such situation.It is not a one way street but a give and take process

OBJECTIVES To settle disputes/conflicts To protect the interests of workers To resolve the differences between workers and management To avoid third party intervention

TYPES
Conjunctive/Distributive Bargaining Cooperative Bargaining

Productivity Bargaining
Composite Bargaining

PROCESS OF COLLECTIVE BARGAINING

Identification of the problem Preparing for negotiations Negotiation of agreement Implementation of contract

Vs
Collective Bargaining
1. Regulation of terms and conditions of employment of workers between their bargaining agent and employers. 2. It is a kind of rule making exercise.

Negotiation Skills
Settlement of disputes between two or more parties wherein all modify their demands to achieve an acceptable compromise. It is a deliberate, explicit event.

Collective bargaining in India

Roots in Great Britain created by Industrial Revolution Trade unions came to India in 1990s Grew at par with the growth of trade unionism

INDUSTRY

COMMITTEES

Engineering
SAIL TISCO

CII
240 Trade Union Federations 1 Trade union

Railways, Post,Telegraph
Coal, Steel, Ports, Docks Media, sugar

Pay Commission Awards

Joint Coordination Committees Wage boards

Cement

Cement Industry Arbitration

Causes for the limited success of CB in India

Problems with the unions Legal problems

Political interference
Attitude of management

Conditions Essential For Effective Bargaining

Unanimity among workers

Strength of both the parties

Attitude of the parties Representative authority

Suggestions for Effective Implementation

Unions should be made strong

Inference of political leaders should be avoided

Govt. should make effort Management should develop positive attitude

Recommendation of National Commission

Govt. intervention to be reduced

Trade unions to be strengthened

Legal provision should be made

Contd.
Workers should be made conscious about their rights
One union for one plant or industry Govt. policy should be declared

INDUSTRIAL DISPUTE
It means any dispute or difference between employers between employers and workmen and between workmen and workman, which is connected with employment or non-employment or terms of employment or with conditions of labour of any person.

HUMAN RESOURCE INFORMATION SYSTEM

A human resource information system (HRIS) is a systematic procedure for collecting, storing, maintaining, retrieving and validating data needed by an organisation about its human resources.

HRP & Analysis

Org charts
Staffing Projections Skills Inventories Job Analysis

Employee and Labor Relations

Equal Employment Opportunity

Health, Safety and Security

HRIS

Staffing

W&S Administration

HRD & Career and Succession Planning

HEALTH AND SAFETY

Health is a state of complete physical, mental and social well being of an individual and not merely the absence of illness.
What is Safety? Safety means freedom from the occurance or risk of injury or loss Industrial safety refers to the protection of workers from the danger of industrial accidents..

An accident is an unplanned and uncontrolled event in which an action or reaction of an object, substance, person or a radiation results in personal injury. Types of Accidents

1. Internal or External Injury

2. Major or Minor Injury

3. Fatal or Disability

Accidents

Internal

External

Major

Minor

Fatal

Disability

Temporary

Permanent

Partial

Total

Partial

Total

Safety Process
Strategic Choices Development of Safety Policy Organisation of Safety

Strategic Choices

Development of Safety Policy

Organisation of Safety

Significance of Industrial Health

To maintain and improve productivity and quality of work.. To minimise absenteeism and labour turnover. To reduce industrial unrest, indiscipline and accidents. To improve employee motivation and morale.

To reduce spoilage and cost of operations.

To preserve the physical and mental health of employees.

Working conditions affecting health

Cleanliness.
Lighting. Temperature and Ventilation Freedom From Noise Dust Control

Working Space and Seating Arrangement.

STRATEGIC HRM
A Strategy is a way of doing something It usually includes the formulation of a goal and set of action plans for accomplishment of that goal. It is a process of formulating, implementing and evaluating business strategies to achieve organisational objectives. It is a 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 involved in Strategic Management

Analyse the opportunities and threats or constraints that exist in the external environment.
Formulate strategies that will match the organisations strengths and weaknesses with the environmental threats and opportunities. Implement the strategies. Evaluate and control activities to ensure that the organisations objectives are achieved.

Strategic Management Process

Environmental Scanning Strategy Formulation
Corporate Strategy Formulation Business Unit Strategy Formulation

Strategy Implementation

Evaluation and Control

External

Programmes Budget Procedures

Strategic Control Process and Performance

Internal

Functional Strategy Formulation

Corporate level strategies

1. Growth strategies (a) Internal growth (c) Horizontal related diversification (e) Vertical integration of related businesses (g) Mergers (b) Horizontal integration (d) Conglomerate diversification (f) Vertical integration of unrelated businesses

2. Stability strategies
3. Retrenchment strategies (a) Turnaround (b) Divestment

(c) Liquidation

Strategy Formulation
Strategies are formulated at three levels: Corporate level, Business unit level, and Functional level

CHAPTER: 9 ETHICAL ISSUES IN HRM & HUMAN RESOURCE AUDIT

Ethical Issues in HRM

Ethics refers to a system of moral principles a sense of right and wrong, and goodness and badness of actions and the motives and consequences of these actions.

Ethical Issues in HRM

Cash and Incentive plans Performance appraisal Race and disability

Ethical Issues

Employment issues

Privacy issues

Safety and health

Restructuring And layoffs

Human Resource Audit

An HR audit is a tool for evaluating the personnel activities of an organization. The audit may include one division or an entire company. It gives feedback about the HR functions to operating managers and HR specialists. The audit is an overall quality control check on HR activities in a division or company and an evaluation of how these activities support the organizations strategy.

Benefits of HRM audit

Identification of the contributions of the HR department to the organization Improvement of the professional image of the HR department. Encouragement of greater responsibility and professionalism among members of the HR department Clarification of the HR departments duties and responsibilities, Simulation of uniformity of HR policies and practices Finding critical personnel problems Ensuring timely compliance with legal requirements

Questions & Answers

Thank You