Professional Documents
Culture Documents
FARIDABAD
Chapter : 1
Human Capital Management
1.1 INTRODUCTION
Before we define HRM, it seems pertinent to first define the term “human
resources.” In common parlance, human resources mean people. OR
Personnel means the persons employed. Personnel management is the
management of people employed.
1
“The management of human resources is viewed as a system in which
participants seeks to attain both individuals of group goals”.
2
System: System is a particular set of procedures or devices designed to
control a process in a predictable way. For e.g. Staffing System of an
Organization.
As a process it includes:
Human Resource Planning;
Job and Work Design;
Staffing;
Training and Development;
Performance Appraisal and Review;
Compensation and Reward;
Employee protection and representation;
Organization Improvement.
3
Industrial Relations Aspect: concerned with trade union negotiations,
settlement of industrial disputes, joint consultation and collective
bargaining.
Dimensions PM HRM
Nature of relations Pluralist Unitarist or neo-unitarist
Perception of conflict Conflict is Conflict is pathological
institutionalized
Contract Emphasis on compliance Beyond contract commitment
Role of procedures Rules dominated Culture and values dominated
Planning perspective Adhoc, reactive Integrated, proactive
Acceptability of Acceptable Non desirable
unions
Level of trust Low High
Key relation Labour management Customer
Management’s Role Transactional Transformational
Basis of job design Division of labour Teams
Key people PM/IR specialist Line people and general mangers
Skills acquisition Training and Learning Organization
Development
Reward Management Standardized job Performance related
evaluation
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4. It is a major part of the general management function and has roots and
branches extending throughout and beyond each Organization;
5. Human Resource Management is of a continuous nature;
6. Human Resource Management attempts at getting the willing co-
operation of the people for the attainment of the desired goals.
Personnel
Administratio
Employee n
Relations HRM
Industrial
Relations
Fig, 1
5
To establish and maintain a productive and self respecting
relationship among all members of an Organization;
To establish and maintain an adequate organizational
structure;
To bring about maximum individual development of the
members of an Organization;
to maintain a high morale and better human relations inside
an Organization by sustaining and improving the conditions
which have been established so that employees may stick to
their jobs for a longer period;
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Advice and counseling the employees.
Personnel Administration:
These functions relate to the function of managing people from the lower to
the upper level of the Organization and embraces policy determination as
well as implementation of policies by the personnel at the lower levels;
Managerial Functions:
Management is Personnel administration. It is the development of the people
and not the direction of the things. Managing people is the heart and essence
of being a manager. Thus, a Human Resource Manager is a manager and as
such he performs the basic functions of management.
Outputs
Goods and
services needed
by the
Feedback of significant deviations from planned performance organization
customers
7
(Managerial Functions)
Fig: 2
Operative Functions:
These functions are concerned with the activities specifically dealing with
procuring, developing, compensating and maintaining an efficient work
force. These functions are also known as service functions.
Procurement Function;
Development function;
Compensating function;
Integrating function;
Maintenance function.
Managerial Functions:
8
coordinate various managers at different levels as far as personnel
functions are concerned. Personnel management function should also be
coordinated with other functions of management like management of
money, machine, and material.
Controlling: Controlling involves checking, verifying and comparing of
the actualize with the standards, identification of deviations if any and
correcting of identified deviations. Thus, action and operation are
adjusted to predetermined plans and standards through control.
Operative Functions:
The operative functions of human Resource Management are related to
specific activities of personnel management e.g. employment,
development, compensation & Relations. All these functions are
interacted by managerial functions.
9
such as job analysis, human resource planning, recruitment, selection,
placement, induction and internal mobility.
10
Political Trade
Unions
The internal environment also affects the job of a personnel manager. The
internal environmental factors include Organization objectives, policies,
organizational structure, and the functional areas of the Organization with
which the personnel manager works continuously like finance, marketing
and production. Impact of internal environment factors is profound as they
frequently and closely interact with HRM function in an Organization.
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to the techniques of management unlike money, material and machine. The
changes includes in the external environment are:
Technological obsolescence;
Cultural and social changes;
Changes in the policies of govt.;
Politics and the like.
With the result, the work environment changes thereby affecting their
productivity level.
Considering the complexities and the challenges in the HRM now and in
near future management has to develop sophisticated techniques and
efficient specialists to among the personnel on sound lines
12
In the modern era, the personnel manager typically performs a variety of the
roles, such as a role of a conscience, of a counselor, a mediator, a company
spokesman, a problem solver and a change agent. He performs many roles as
per needs of the situation. Such as:
I. The conscience role is that of humanitarian who reminds the
management of its moral and ethical obligations to its employees;
II. The personnel manager plays the role of a counselor to whom the
employees frequently go for consultation and with whom they
discuss their marital, health, mental, physical and career
problems;
III. As a mediator, he plays the role of a peacemaker, offering to
settle the disputes that may arise among individuals or groups.
He acts a liaison and communicating link between an individual
and a group and between labour and management;
IV. The personnel a manger has always been a frequent spokesman
for or representative of the company because he has a better
overall picture of his company’s operation, since he deals
intimately with many key organizational activities and functions;
V. The personnel manager also acts as a problem solver with respect
to the issues that involves human resources management and
overall long range organizational planning;
VI. He works as a change agent within the organization because he is
best suited to introduce and implement major institutional
changes. He takes initiative for installing organizational
development programmes and convinces the top management of
their need. It is he who alerts the top management regarding
managerial obsolescence in his organization;
VII. The personnel manager plays many other roles as well. Any
matter which need someone’s attention and which no body wants
to deal with is, often handled by the personnel department. Such
activities may be peripheral but important and crucial to the
efficient and effective operation of an organization.
It has been now fully recognized that the basic role of the personnel manager
if “the management of the manpower resources.” Such management is
concerned with “leadership” both in-group and individual relationship, and
labour management relations. It effectively describes the process of
planning, and directing the application, development and utilization is now
considered as one of the four main functions, viz. finance, production,
marketing, and human relations.
13
The ideal personnel manager is not a “decision maker” but a counselor not
“collector of responsibilities” but an “advisor” to help the management make
more reliable personnel decisions. In any organization it is these “line man”
who determine the “personnel climate” for the entire organization. If the
personnel man can meet the challenge of “staff role” he would make the
effective contribution to industry.
Table 2
1.11Evaluating HR Function
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Organizations can promote human excellence by offering a potential site for
the flowering most forms of human excellence. Within an organization, if
there is meritocracy, people compete for promotion and other rewards on the
basis of good work rather than on the basis of “pull.” Recognition and
rewards for creative ideas, discoveries, inventions, innovations etc. promote
creative excellence. The human resource development movement in industry
is aimed at facilitating organizationally useful individual growth and
development. The more an organization promotes individual or team
excellence, the more the organization itself is likely to excel because the
work of any organization is dependent on the work of its individual
members and employee groups.
The human factor across all organizations comprises three basic elements:
1.11.1Organization Climate:
1. Do people feel they are giving enough responsibility?
2. Do people know what is expected of them in the shape of objectives
and standards of performance?
3. Do people see themselves being fairly rewarded for their work and
feel that promotion policies are fair?
4. Do the employees feel that they belong to a worthwhile company and
are valuable members of working teams?
5. Is there adequate feedback to people on their performance, whether it
is good, bad or indifferent?
6. Is there sufficient to challenge in their jobs?
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7. Are people given enough support by their managers or supervisors in
the shape of guidance or help?
PERSONNEL POLICIES
2. To ensure that its employees are informed of these items of policy and
to secure their cooperation for their attainment;
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enterprise and to carry out their duties in the most willing and
effective manner;
5. To protect the common interest of all the parties and recognize the
role of trade union in the organization.
6. To provide for a consultative participation by employee in the
management of an organization and the framing of condition for this
participation, which, however shall not take place in technical,
financial or trading policy;
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11. To provide for the payment of fair an adequate wages and salary to
the workers so that their healthy cooperation may be ensure for efficient
working of the undertaking;
1. The statement of any policy should be definite, positive, clear and easily
understood by anyone in the organization so that what it proposes to
achieve is evident.
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6. It should recognize the desire of many workers for recognition as groups
in many of their relationships.
7. It should be formulated with due regard for the interests of all the
concerned parties-the employers, the employees and the public
community.
10.It should be consistent with public policy, i.e., with the spirit rather than
the letter of the law, so that the intensions and settled course of an
organization are appreciated in terms of public opinion from the
standpoint of national, economic and social justice for the employees and
for the community at large.
12.It must have not only the support of the management but also the co-
operation of employees at the shop floor level and in the office.
16.It must make a measurable impact, which can be evaluate and qualified
for the guidance of all concerned, especially in the field of the three ‘R’s
of personnel management viz., recruitment, retainment and retirement.
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18.It should have a sound base in appropriate theory and should be
translable into practices, terms and peculiarities of every department of
an enterprise.
INTRODUCTION
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The estimated manpower requirements (including expectations of
manpower utilization);
The analysis of the external manpower market situation,&
The resulting estimate of manpower availability from the two
dimensions.
21
All organizations perform human resource planning, either formally or
informally. The major reasons for employment planning are:
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organization to quickly identify and hire employees with new skills that
previously weren’t needed by the organization.
Without an effective HR plan to support the recruitment and
selection
functions in the organization, it will be impossible to move fast enough to
stay competitive. Thus, organizations are becoming more dependent on an
ability to gather relevant information about their environment and to react to
this information.
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data become inputs to facilitate decisions about training, promotion,
demotion and similar decisions.
Variances End
If None:
If surplus If Shortage
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Decisions: Decisions:
Layoff etc. Overtime etc.
End End
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10.Enlist some key organizational indicators, which could highlight the
practice of favorable HRM policies in the work set up?
11.Discuss the issues impending on future HR managers.
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Job Analysis
Key terms:
26
Today, however, the word job has many mutations depending upon how,
when and by whom it is used. It is often used interchangeably with the terms
like position and tasks. Before proceeding with a detailed discussion on “job
Analysis” it would be fruitful to familiarize ourselves with terms that form
specific job attributes.
4
3
2
1
1 – Micro Motion
2 – Elements
3- Tasks
4- Duties
5- Positions
6- Job
7- Job Family
8- Occupation
9- Career
Micro Motion: The simplest unit of work is the micro motion. A micro
motion involves a vary elementary movement such as reaching different
work performed in an organization can be traced from a micro motions to an
occupation grasping, positioning and releasing an object. It is the most
elementary unit in to which a job can be broken down.
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A position constitutes specific duties and tasks group together. In an
organization there may be one or more person assigned a position. A position
constitutes the whole unit of work assignment
A job family is a group of two or more jobs that either call for similar
worker characteristics or contain parallel work tasks as determined by job
analysis.
Having familiarized oneself with the basic conceptual framework which acts
as foundation stone for the knowledge on job analysis, we shall now proceed
with a step-by-step discussion of the main topics.
Job Analysis
Job Analysis is a written record of actual requirements of the job
activities.
Definitions:
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A job analysis results in two important documents:
• Job Description;
• Job Specification.
Job Description:
Job Specification:
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helps in charting the channels of promotion and in showing lateral
lines of transfer;
• Wage and Salary Administration: By indicating the qualification
required for doing a specified job and the risks and hazards involved
in its performance, it helps in salary and wage administration. Job
analysis is used as a foundation for job evaluation;
• Job Re-Engineering: Job Analysis provides information, which
enables us to change jobs in order to permit their being managed by
personnel with specific characteristics and qualification.
• Employee Training and Management Development: Job Analysis
provides the necessary information to the management of training and
development programmes. It helps to determine the content and
subject matter of in training courses. It also helps in checking
application information, interviewing, weighing test results, and in
checking references.
• Performance Appraisal: It helps in establishing clear cut standards
which may be compared with the actual contribution of each
individual;
• Health and Safety: It provides an opportunity for identifying
hazardous conditions and unhealthy environmental factors so that
corrective measures may b taken to minimize and avoid the possibility
of accidents.
• Employee Orientation: Effective job orientation cannot be
accomplished without a clear understanding of the job requirements.
The duties and responsibilities of a job must be clearly defined before
a new employee can be taught how to perform the job.
• Utilizing Personnel: Job Analysis information can help both
employees and managers, pinpoint the root of a problem if employee
functions are not adequate.
In sum, it may be noted that job analysis is a systematic procedure for
securing and reporting the information, which defines a specific job.
Step 1: Studying job vis a vis the organization: Review the available
Background information through organization workflow or process
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charts. Studies the job inter relationships. Often, a restructuring,
down
sizing, merger, or rapid growth will initiate this review.
Job Performance
Observation Degree of
Interview interaction
Critical incident technique with
Data Collection methods Questionnaires personal
Diary method
Training material
Dictionary of occupation
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Step 7: Review and update of information: If no major changes have
occurred in the organization, then a complete review of all jobs
should be performed every three years.
1. Job Identification;
2. Significant characteristics of a job;
3. What the typical worker does;
4. Which materials and equipment of a worker uses;
5. How a job is performed;
6. Required personnel attributes;
7. Job relationship.
Recruitment
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Recruiting is the discovering of potential candidates for actual or
anticipated organizational vacancies or from other perspective, it is a linking
activity- bringing together those with jobs to fill and those seeking jobs.
“ Recruitment a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for
attracting that manpower in adequate numbers to facilitate effective selection
of an efficient working force”
Yoder & others
Objectives of recruitment:
♦ To attract people with multi dimensional skills and experience that suit
the present and future organizational strategies;
♦ To induct outsiders with a new perspective to lead the company;
♦ To infuse fresh blood at all levels of the Organisation;
♦ To develop an organizational culture that attracts competent people to the
company;
♦ To search or head hunt/ head pouch people whose skills fit the company’s
values;
♦ To devise methodologies for assessing psychological traits;
♦ To seek out non-conventional development grounds of talent;
♦ To search for talent globally and not just with in the company;
♦ To design entry pay that competes on quality but not on quantum;
♦ To anticipate and find people for positions that does not exist yet.
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Fig. 1:Recruiting and other Human Resource Management activities
Which provides
new employees
for
♦ Orientation;
♦ Training/
Development;
♦ Etc.
There are a number of factors that affect recruitment. These are broadly
classified in to two categories:
1. Internal Factors;
2. External Factors.
External Factors: The external factors include supply of and demand for
human resources, employment opportunities and /or unemployment rate,
labour market conditions, political and legal requirement and govt. Policies,
social factors, information systems etc.
External factors:
Socio economic factors;
Supply and demand factors;
Employment rate;
Labour market conditions;
Political, legal and governmental factors;
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Information systems.
Internal Factors: The internal factors include the company’s pay package
including salary, fringe benefits and incentives, quality of work life,
organizational culture, career planning, growth opportunities, size of the
company, company’s product and services, company’s growth rate, role of
trade unions and cost of recruitment.
Internal factors:
Company’s pay package;
Quality of worklife;
Organizational culture;
Career planning and growth;
Company’s size;
Company’s products and services;
Geographical spread of the company’s operations;
Company’s growth rate;
Role of trade unions;
Cost of recruitment;
Company’s name and fame.
Internal Environmental
External Environmental
Influences:
Influences:
♦ Strategy;
♦ The union;
♦ Goals;
♦ Govt. Requirements,
regulations and laws; ♦ Organizational Culture;
♦ Economic conditions; ♦ Nature of the task;
♦ Composition of the labour ♦ Work Group;
HRM activities:
Effectiveness
♦ Equal employment People
Criteria:
opportunities; Abilities;
Performance;
♦ Job analysis; Attitudes
Satisfaction;
♦ Recruitment; Preference
Absenteeism;
♦ Planning; s;
Turnover;
Organisation End
♦ Selection; Scrap rates;
Results; Grievance rates;
♦ Training and development; Competitive
♦ Career planning and Accident rates.
35 products;
development; Competitive
♦ Benefits and services; services.
Sources of Recruitment
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Dependents of Deceased, Disabled, Retired and Present
Employees: Some organizations with a view to developing the
commitment and loyalty of build up image provide employment to the
dependent(s) of deceased, disabled and present employees. Such
organizations find this source as an effective source of recruitment.
Promotions: Most of the internal candidates would be stimulated to
take up higher responsibilities and express their willingness to be
engaged in the higher level jobs if management gives them the
assurance that they will be promoted to the next higher level.
Transfers: Employees will be stimulated to work in the new sections
or places if management wishes to transfer them to the places of their
choice.
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As promotion is based on seniority, the danger is that really capable
hands may not be chosen. The likes and dislikes of the management may
also play an important role in the selection of personnel.
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Similar Organizations: Generally, experienced candidates are available
in organizations producing similar products or are engaged in similar
business. The management can get most suitable candidates from this
source. This would be the most effective source for executive positions
and for newly established organizations or diversifies or expanded
organizations.
Advertising: Advertising is widely accepted technique of recruitment,
though it mostly provides one-way communication. It provides the
candidates in different sources, the information about the job and
company and stimulates them to apply for jobs. It includes advertising
through different media like newspapers, magazines of all kinds, radios,
television etc.
Employee referrals: Friends and relatives of present employees are also
a good source from which employees may be drawn. When the labour
market is very tight, large employers frequently offer their employee’s
bonuses or prizes for any referrals that are hired and stay with the
company for a specific length of time.
WALK IN: The busy organizations and the rapid changing companies do
not find time to perform various functions of recruitment. Therefore, they
advise the potential candidates to attend for an interview directly and
without a prior application on a specified place. The suitable candidates
among the interviewees will be selected for appointment after screening
the candidates through tests and interviews.
Consult In: The busy organizations encourage the potential job seekers
to approach them personally and consult them regarding the jobs. The
companies select the suitable candidates from among such candidates
through the selection process.
Head Hunting: The companies request the professional organizations to
search for the best candidates particularly for the senior executive
positions. The professional organizations search for the most suitable
candidates and advise the company regarding the filling up of the
positions. headhunters are also called search consultants.
Body shopping: Professional organizations and the hi tech training
institutes develop the pool of human resources for the possible
employment. The prospective employers contact these organizations to
recruit the candidates. Otherwise, the organizations themselves approach
the prospective employees to place their human resources. These
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institutions are called body shoppers and these activities are known as
body shopping.
Business Alliances: Business alliances like acquisitions, mergers, and
takeovers help in getting human resources. In addition, the companies do
also have alliances in sharing their human resources on ad-hoc basis.
Tele Recruitment: The technological revolution in the Tele
communication helped the organizations to use Internet as a source of
recruitment. Organizations advertise the vacancies through the World
Wide Web (www) Internet. The job seekers send their applications
through e-mail or Internet.
SELECTION
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The selection procedure is the system of functions and devices adopted
in a given company to ascertain whether the candidate’s specifications
are matched with the job specifications and requirements or not.
The selection procedure cannot be effective until and unless:
1. Recruitment’s of the job to be filled, have been clearly specified (Job
analysis, etc.
2. Employee specifications (physical, mental, social, behavioral, etc.)
have been clearly specified;
3. Candidates for screening have been attracted.
SELECTION PROCEDURE
Application Form
Written Examination
Preliminary Interview
Group Discussion
42
Tests
Final Interview
Medical Examination
Reference Checks
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applicants are brought around a conference table and are asked to discuss
either a case study or a subject matter.
Tests: The next stage in the selection process is conducting different
tests. The objective of tests is to solicit further information to assess the
employee suitability to the job. The important tests are:
• Aptitude Test:
a) Intelligence test
b) Mechanical Test
c) Psychomotor Test
d) Clerical Test
• Achievement Test:
a) Job Knowledge Test;
b) Work Sample Test.
• Situational Test:
a) Group Discussion;
b) In Basket.
• Interest Test:
• Personality Test:
a) Objective Test;
b) Projective Test.
• Aptitude Tests: These tests measure whether an individual has the
capacity or latent ability to learn a given job if given adequate training.
Aptitudes can be divided in to general and mental ability or intelligence
or specific aptitudes such as mechanical, clerical, manipulative capacity
etc. These are:
1. Intelligence Tests: These tests in general measure intelligence quotient
of a candidate. In detail these tests measures capacity for
comprehension, reasoning, word fluency, verbal comprehension,
numbers, memory and space.
2. Mechanical Tests: These tests measure the capacities of spatial
visualization, perceptual speed and knowledge of mechanical matter.
3. Psycho meter Tests: These tests measure abilities like manual dexterity,
motor ability and eye hand coordination of candidates.
4. Clerical Aptitude: Measure specific capacities involved in office work,
items of this test include spelling, computation, comprehension,
copying, word measuring etc.
• Achievement Tests: These tests are conducted when applicants claim to
know something as these tests are concerned with what one has
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accomplished. These tests are more useful to measure the value of
specific achievement when an Organisation wishes to employ
experienced candidates. These are:
1. Job Knowledge Test: Under this test a candidate is tested in the
knowledge of a particular job.
2. Work Sample Test: Under this test a portion of the actual work is given
to the candidate as a test and the candidate asked to do it.
• Situational Test: This test evaluates a candidate in a similar real life
situation. In this test the candidate is asked either to cope with the
situation or solve critical situation of the job.
1. Group Discussion: This test is administered through group discussion
approach to solve a problem under which candidates are observed in the
areas initiating, leading, proposing valuable ideas, conciliating skills, oral
communicating skills, co-ordination and concluding skills.
2. In Basket Test: The candidate in this test is supplied with actual letters,
telephone and telegraphic message, reports and requirements by various
officers of the Organisation, adequate information about the job and
Organisation. The candidate is asked to take decisions on various items
based on the in basket information regarding requirements in the
memoranda.
• Interest Tests: These tests are inventories of the likes and dislikes of
candidates in relation to work, job, occupations, hobbies and recreational
activities.
• Personality Tests: These tests prove deeply to discover clues to an
individual’s value system, his emotional reactions, and maturity and
characteristic mood.
1. Objective Test: most personality tests are objective tests as they are
suitable for group testing and can be scored objectively.
2. Projective tests: Candidates are asked to project their own interpretation
of certain standard situations basing on ambiguous pictures, figures etc.,
under these tests
Final Interview: Final Interview is usually followed by testing. This is
the most essential step in the process of selection. In this step the
interviewer matches the information abstained about the candidate
through various means to the job requirements and to the information
obtained through his own observation during interview.
Types Of Interview:
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A predetermined Useful for valid results,
Structured checklist if questions, especially when dealing
usually asked of all with large number of
applicants. applicants.
Unstructured Few, if any, planned Useful when the
questions. Questions are interviewer tries to
made up during the probe personal details of
interview. the candidate to analyze
why they are not right
for the job.
Mixed A combination of A realistic approach that
structured and yields comparable
unstructured questions, answers plus in depth
which resembles what, insights.
is usually done in
practice.
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gross emoluments, benefits provided, rate of absence, willingness of the
previous employer to employ the candidate again etc.
Final decision by the line manager concerned: The line manager
concerned has to make the final decision whether to select or reject the
candidate after soliciting the required information through different
techniques. A true understanding between the line managers and
personnel mangers should be established to take proper decisions.
Employment: Thus, after taking the final decision the Organisation has
to intimate the decision to the successful as well as unsuccessful
candidates. The Organisation sends the appointment orders to the
successful candidates either immediately or after sometime depending
upon the time schedule.
Placement
When once the candidate reports for duty, the Organisation has to place
him initially in that job for which he is selected. Immediately the
candidate will be trained in various related jobs during the period of
probation of training or trial. The Organisation, generally, decides the
final placement after the initial training is over on the basis of
candidate’s aptitude and performance during the training/probation
period. Probation period generally ranges between six months and two
years. If the performance is not satisfactory, the Organisation may
extend the probation or ask the candidate to quit the job .If the
employee performance during the probation period is satisfactory, his
services will be regularized and he will be placed permanently on a job.
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Assign the individual to specific job after further counseling
and assessment
INDUCTION
Introducing the new employee who is designated as a probationer to the
job, job location, surroundings, Organisation, organizational
surroundings, various employees is the final step of employment
process. This process is important because of the high turnover rate
among the new employees compared to that among senior employees.
This is mainly because of the problem of adjustment and adaptability to
the new surroundings and environment. further absence of information,
lack of knowledge about new Organisation, cultural gap, and behavioral
variations, different levels of technology, variations in the requirements
of the job and the Organisation also disturb the new employee.
Induction is necessary as the newcomer feel insecure, shy,
nervousness and disturbing. This situation leads to instability and
turnover.
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Objectives of Induction:
I. Putting the new employee at his ease;
II. Creating interest in his job and the company;
III. Providing basic information about working arrangements;
IV. Indicating the standards of performance and behavior expected of
him. Making the employee feel that his job, however small, is,
meaningful, that he is not a cog in the vast wheel;
V. Informing him about training facilities;
VI. Creating the feeling of social security;
VII. Minimizing the reality shock which would be caused due to
incompatibility caused between the employee expectations and
actually what the company provides/offers regarding pay,
benefits, status, working conditions, responsibility, opportunity
for growth, innovations, creative ideas etc.
Advantages of Induction
I. First impression matters a good deal and results in less turnover;
II. Newcomer adjusts himself to the work quickly, and it saves the
time of the supervisor;
III. Reduces employee dissatisfaction and grievances;
IV. Develop a sense of belongings and commitment.
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performance. Willful violation of rules & regulation by the employee is
treated as misconduct.
TRAINING
Training is the act of increasing the knowledge and skill of an individual for
doing a particular job. In the present scenario training is increasingly viewed
as a means of fostering the growth of the individual employee but as an
integrated part of organizational growth.
Training is a process of learning a sequence of programmed behaviour. It is
application of knowledge. It gives people an awareness of the rules and
procedures to guide their behavior. It attempts to improve their performance
on the current job or prepare them for an intended job. Development is a
related process. It covers not only those activities, which improve job
performance, but also those, which bring about growth of the personality;
help individual in the progress towards maturity and actualization of their
potential capacities so that they become not only good employees but better
man and women.
Definition Of Training:
“Training is the act of increasing the knowledge and skills of an employee
for doing a particular job.”
Edwin.
B.Flippo
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“Training is the organized procedure by which people learn knowledge and
\or skill for definite purpose”.
Dale
S.Beach
It is the training that bridges the gap between Job requirements and
employees present specifications. Training is a process by which attitudes,
skills and abilities of employees to perform specific jobs are increased.
Thus, it can be concluded that training is a process that tries to improve
skills or add to the existing level of knowledge so that the employee is better
equipped to do his present job, or to mould him to be fit for a higher job
involving higher responsibilities. In other words, training is a learning
experience that seeks a relatively permanent change in an individual that will
improve his/her ability to perform his job.
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“Why” such learning takes place;
“When” learning occurs.
Objectives Of Training
The primary purpose of training is to establish a sound relationship
between the worker and his job –the optimum man task relationship.
To upgrade skills and prevent obsolescence.
To develop healthy and constructive attitude
To prepare employees for future assignments
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Organization Level: -
Individual Level: -
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Organizational Analysis: - It involves a study of entire organization
Training methods are means of attaining desired objectives set for a training
programme. In practice, a variety of training methods are employed for
achieving these objectives. But an organization cannot use all types of
training methods for the reason like cost involved and also their relevance to
organizational need hence, organization needs to select a method or mix of
methods to meet its training needs the choice of training method would
depend on a Varity of factors, such as purpose of training, nature of contents,
relevance to the participants, level of trainees, competence of
trainers/instructors, cost, etc.
Depending on the training result and the process employed to
attain these, the various training methods can broadly categorized into four
groups as under:
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methods. The main methods, which fall into this category, are discussed
here under:
Coaching: this is similar to the JIT .in this method, the superior
teaches or guides the new employee about the knowledge and
skills of a specifically defined job. The superior points out the
mistakes committed by the new employee and then also gives
suggestions to improve upon.
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OF THE JOB TRAINING METHOD: -
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that it dose not provide for active involvement of the
trainees.
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The term “development” implies overall development in a person.
Accordingly, Management development means not only improvement in
job performance, but also improvement in knowledge, personality,
attitude, behaviorism of an executive, etc. It means that
executive/management development focuses more on the executive’s
personal growth.
Management Development is a systematic process of growth and
development by which managers develop their abilities to manage.
Management Development is concerned with improving the performance
of the managers by giving them opportunities for growth and
development.
Definition:
“Executive /Management Development includes the process by which
managers and executives acquire not only skills and competency in their
present job but also capabilities for future managerial tasks on increasing
difficulty and scope. ” Flippo.
“Any activity designed to improve the performance of existing managers
and to provide for a planned growth of managers to meet future
organizational requirements is called management development.”
S.B.Bhudiraja
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On-The-Job Technique Off-The-Job Technique
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3. Role Playing: A problem situation is simulated by asking the
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Objectives of Executive/Management Development
1. Improve the performance of mangers at all levels;
2. Identify the persons in the organization with the required potential and
prepare them for higher position in future;
3. Ensure availability of required number of executives mangers
succession who can take over in case of contingencies as and when
these arise in future;
4. Prevent obsolescence of executives by exposing them to the latest
concepts and techniques in their respective areas of specialization;
5. Replace elderly executives who have risen from the ranks by highly
competent and academically qualified professionals;
6. Improve the thought process and analytical abilities;
7. Provide opportunities to executives to fulfill their career aspirations;
8. Understand the problem of human relations and improve human
relations skills.
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Marketing & Sales
Q 1: How to forecast demand?
Q 2: How to generate new product ideas?
Q 3: How to launch a new product?
Q 4: How to determine the profitability of a product or product line?
Q 5: How to improve product design?
Production
Q 1: How to remove factory bottleneck?
Q 2: How to improve product quality and reliability?
Q 3: How to cope with complex mixes? Such as several factories, delivery to
many customers, or several products from many raw materials available
from many different sources, or several products profitability made by
several process, etc.
Q 4: How to cut labour cost?
Q 5: How to improve labour relations?
Human Resource
Q 1: How to improve training methods?
Q 2: How to bring order and equality into wages and salary schemes?
Q 3: How to recruit the right number of the right type of people?
Purchasing
Q 1: How to check quality and reliability of raw materials?
Q 2: How to cut down the cost of purchasing holding stocks?
Research
Q 1: How to reduce the time taken to complete research?
CAREER MANAGEMENT
Introduction
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Career Management: A career is all the jobs that are held during ones
working life. Edwin B. Flippo defines career as a sequence of separate but
related work activities that provides continuity and, order and meaning in a
person’s life.
Following are the key ingredients for career management, which focuses on
the process of implementing organizational career planning.
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Career management involves both organizational actions and individuals’
initiatives to ensure that when the career plans developed by the
organizational requirements and individuals aspirations undergo
unanticipated changes, they are managed appropriately on a continuing
basis.
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HR APPROACHES TO IMPROVING COMPETENCIES
Following are the approaches, which help in improving competencies among
the employee of the organization.
1. Incentives. The term in incentives means an inducement, which
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used to teach the employee the most efficient and effective ways of
performing their job. Also used for better quality of their working.
4. Off the job techniques: - Many Techniques could be very effectively
SUCCESSION PLANING
Meaning:
Organizations run on eternal basis. The survival and thrive of any
organization on continuous basis requires a succession of person to fill key
position. This is done through “ succession planning.”
SOURCES
1. Internal Sources;
2. External Sources.
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supervisors to identify the internal employees having potentialities to
replace them in jobs should the need arise.
Socialization
Concepts of socialization:
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appropriate role behavior and adjustment to the norms and value of the work
group.”
Pre- arrival: the pre- arrival phase explicitly recognizes that all the new
recruits arrive the organization with a set of values attitudes expectation and
learning. in other word pre arrival refers to all the learning that occurs before
a new member joins the organization.
Encounter: upon entry into organization, the new member enters the
encounter stages. The role-playing starts here. The member’s starts
comparing expectation, the image of the organization, which he had formed
during pre arrival phase with reality. If expectation and reality concur the
encounter is smooth. But seldom it concurs. When the two differ, stress and
frustration set in what follows thereafter is mental process of adjustment. In
the process of adjustment. In the process of adjustment the individual tries to
replace his/her own values and norms with those of the organization. At the
other extreme, the member simply cannot reconcile to those values and
norms of the organization and gets disillusioned and quits the job.
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MANAGING ORGANISATIONAL RENEWAL
You’ve just taken over as CEO of a company; what aspects of that company
can you change / there are several, including its strategy, culture, structure
tasks, technologies, and the attitudes and skills of its people. All such
changes will require the support and expert advice of the HR department.
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TASK REDESING: The task and authority assigned to individual
and teams within the organization are often changed as well.
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Review and Discussion questions
1. Briefly describe the concept of job analysis, and explain the job
analysis process.
2. From the Human Resource Manager points of view, what are the uses
of job analysis?
3. Define recruitment. Bring out the factors which effect recruitment?
4. What are the various sources of recruitment? Discuss their relative
merits and demerits?
5. If you were a personnel officer in a scientific institution and asked to
recruit scientists, which source of recruitment you will use for this
purpose and why?
6. What are the key attributes that make a recruitment programme
effective?
7. What do you mean by training? How will you identify the training
needs in an organization?
8. What are the objectives of training? Explain the need for training in an
industrial organization?
9. “Training programmes are helpful to avoid personnel obsolescence ”
Discuss.
10.Explain the various methods of training.
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11.Write short notes on:
Management Games;
Case Study;
Vestibule Training;
Sensitivity Training;
Transactional Analysis.
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Unit III
HUMAN RESOURCE DEVELOPMENT
HRD implies that the organization wants to enhance the overall capabilities of its
employees to develop their potential in directions best suited to them.
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• To develop an organizational climate to bring about team spirit and group
dynamism.
EXCELLENCE
TRAINING
There are efforts being made to synchronies three basic elements of HRD:
• Education
• Training
• Development
To fulfill desired objectives. Training and education can be appraised immediately by
simple question answer approach but development evaluation needs ability to predict the
long term results.
A realistic and long-term HRD plan appears to be difficult but if planned properly, funded
adequately and supervised minutely, implementation of HRD practice helps the
organization to grow fast.
It is with belief that under certain circumstances people are capable of improving
their capability.
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In an organizational context HRD “…is a process by which employees of an
organization are helped in a continuous and planned way to acquire or sharpen
capabilities.
Benefits Of HRD
Unlike education, training in HRD not only develops the competence of the individuals
but also develops his/her latent potential for the total effectiveness of the organization.
The benefits from HRD are therefore many. Some of them are:
It helps employee to diagnose his/her own strengths and weaknesses.
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It helps employee to develop himself/her in a given organizational climate to
improve not only his/her performance but that of the organization.
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• Role analysis • Practice Solving
exercises Organizations • Better Utilization
• Potential • More Trust of Human
development • Collaboration & Resources
exercisers Team Work • Better
• Training • Authentic Organizational
communication Health
• Openness
policies • More Teamwork,
• Risk taking
• Job Rotations Synergy and
• Value Generation
• OD exercises Respect of each
• Clarification Of
other
• Rewards
Norms & Standards
• Job enrichments • Increased
programs Communication
• Other mechanisms • More Objective
rewards
• Generation of
objective, Data on
employee etc
Other Factors
Other Factors Other Factors
Environment, Technology,
Resource Availability,
Personnel Policies, Top Environment,
History Nature of Business
Management styles, Inve- etc
Founded on the belief that people are capable of growth and management has to
create an environment of growth.
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For operational purposes large Organizations focus on HRD, generally the areas
concern are Recruitment, raining, Appraisal, planning etc.
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LEARNING AND DEVELOPMENT
Learning is a kind of action, and it takes place through number of development methods
undertaken by the organizations. There are four important points in terms of learning and
development.
Any temporary change in behavior due to fatigue or any reason is not a part of
learning.
The most effective and quick method of Learning is Learning on the job, this is been
referred as on the job training. In this method the trainee has direct personal
responsibility.
The technique of on the job training is very useful in the case of leaning and
Development in teaching skills at the work place or the desk or in the laboratory.
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The focus is mainly on imparting practical inputs in order to convert it into a more
fruitful training.
Benefits Of On The Job Training In Order To Highlight The Relevance Of Learning And
Development:
The trainee learns effectively as he experiences the same problem, which he will
be facing on the job.
Benefits Of Job Rotation Method In Order To Highlight The Relevance Of Learning And
Development.
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It is mainly used for management development methods where managers are
exposed to handle the situation of other departments.
Such a exposure gives you the opportunity of acting in a service role with
increased knowledge and sensitivity.
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PERSONAL DEVELOPMENT PLANNING
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Advantages Of Personal Development Planning
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TRAINING
Training is the act of increasing the knowledge and skill of an individual for dong a
particular job. In the present scenario training is increasingly viewed as a means of
fostering the growth of the individual employee but as an integrated part of organizational
growth.
Definition Of Training:
Dale S.Beach defines training as “---the organized procedure by which people learn
knowledge and \or skill for definite purpose”.
It is the training that bridges the gap between Job requirements and employees present
specifications.
Objectives Of Training
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To savagely cut waste.
Organization Level: -
It improves the job knowledge, skills and morale of the work force
Individual Level: -
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Provision for annual or periodic surveys in order to ensure that training is need
based and development oriented.
Identification of priority area since resources are always scarce and programs
must be prioritized according to felt needs.
Training Techniques
Coaching
Programmed learning
Job rotation
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Lecture
Conference
Laboratory training
Role Playing
Case study
In basket
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MANAGEMENT DEVELOPMENT
There are mainly two techniques of management development, one is the formal
training and the other is through the on the job experience.
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On The Job Techniques
1 Coaching: In coaching the trainee is place under a particular supervisor who acts as an
instructor and teaches job knowledge and skills to the trainee.
2. Job Rotation: The transferring of executive s from job to job and from department to
department in a systematic manner is called job rotation.
2. Under Study: An under study is as person who is in training to assure at a future time,
the full responsibility of the position currently held by his superior.
10. The Case Study: Cases are prepared on the basis of actual business situations that
happened in various organizations.
11. Incident Method: This method was developed by Paul Pigors. It aims to develop
the trainee in the area of intellectual ability, practical judgment and social
awareness.
13. In Basket Method: The trainees are first given background information about a
simulated company, its products, key personnel, various memoranda and all data
pertaining to the firm. The trainee has to understand all of this and make notes of
it.
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14. Sensitivity Training: The main objective of sensitivity training is the
“Development of awareness of and sensitivity of behavioural patterns of oneself
and others”.
15. Simulation: Under this technique the situation is duplicated in such a way that it
carries a closer resemblance to the actual job situation.
16. Managerial grid: It is a six-phase programme lasting from three to five years. It
stats with upgrading managerial skills, continues to group improvement, improves
inter group relations, goes into corporate planning, develops implementation
method and ends with an evaluation phase.
18. Lectures: It is the simplest technique. The lacquerer organizes the material and
gives it to a group of trainees in the form of talks.
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CONCEPTS AND AREAS OF MANAGEMENT OF
MANAGEMENT DEVELOPMENT PROGRAMMME
General administration
Q 1: How to decide overall company strategy?
Q 2: How to evaluate capital expenditure proposals?
Q 3: How to improve the flow of information needed to control the organization?
Q4 : How to launch a new project?
Production
Q 1: How to remove factory bottleneck?
Q 2: How to improve product quality and reliability?
Q 3: How to cope with complex mixes? Such as several factories, delivery to many
customers, or several products from many raw materials available from many different
sources, or several products profitability made by several process, etc.
Q 4: How to cut labour cost?
Q 5: How to improve labour relations?
Human Resource
Q 1: How to improve training methods?
Q 2: How to bring order and equality into wages and salary schemes?
Q 3: How to recruit the right number of the right type of people?
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Purchasing
Q 1: How to check quality and reliability of raw materials?
Q 2: How to cut down the cost of purchasing an holding stocks?
Research
Q 1: How to reduce the time taken to complete research?
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CAREER MANAGEMENT
Career Management: A career is all the jobs that are held during ones working life.
Edwin B. Flippo defines career as a sequence of separate but related work activities that
provides continuity and, order and meaning in a person’s life.
Career management focuses on career goals and it is the process of designing and
implementing goals, plans and strategies to enable the organization to satisfy employee
needs while allowing individuals to achieve their career goals.
Following are the key ingredients for career management, which focuses on the process
of implementing organizational career planning.
Involvement of superiors.
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Climate setting for career development.
To select a field of employment and employer: - One cannot manage his career
unless one has a long-range objective and the first point is to think in terms of where
you ultimately want to be. Other important point is to view your potential employer
and position in terms of long-range career goals.
To know where you are: - To be aware of the opportunities available to you in the
current position and to carefully and honestly posses current performance.
Plan your exit: - To leave the current organization on good terms and not under
questionable circumstances.
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HR APPROACHES TO IMPROVING COMPETENCIES
Following are the approaches, which help in improving competencies among the
employee of the organization.
5. Incentives. The term in incentives means an inducement, which rouses of,
stimulates one to action in a desired action. An incentive has a motivational
power, and may be broadly grouped into
(a) Financial incentives: - Common use of money as incentive are in form of
wages and salaries, bonus, retirement benefits, medical reimbursement,
etc. money plays a significant role in satisfying physiological and security/
social needs.
(b) Non-Financial Incentive: - the following non – financial incentives could
be effectively used-
i. Appreciation of work Done
ii. Competition
iii. Knowledge of result
iv. Worker’s participation In Management:
v. Opportunity for Growth
vi. Suggestion System
vii. Job Enrichment
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8. Off the job techniques: - Many Techniques could be very effectively used for the
purpose and these are: -
e) The Case Study
f) Role Play
g) In-Basket Method
h) Sensitivity Training
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Human Resource Management
Unit IV
Performance Appraisal
Once the employee has been selected, trained & motivated. , He is then
appraised for his performance .Performance appraisal is the step where
the management finds out how effective it has been at hiring and
placing employees .If any problems are identified steps are taken to
communicate with the employees & to remedy them.
Definitions
It is defined “ as a process of evaluating the performance of a job in terms of
its requirement.”
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are discussed .The final step is initiation of corrective action where
necessary.
Establish performance standards
Traditional methods:
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are selected for the purpose of analysis (such as leadership,
dependability & imitative) the scale of man is also created for each
selector.
7. Free Essay Method: Under this supervisor make s a free form, open
ended appraisal of an employee in his own words & puts down his
impression about the employee .He take into account of these factors
like relationship with fellow supervisors, job knowledge & potential,
employee characteristics & attitudes, physical conditions,
development needs for future.
MODERN METHODS
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social situations using a number of assessors & a variety of procedures.
The most important feature of the assessment centre is job related
simulations. These simulations involve characteristics that
Managers feel are important to the job success. The evaluators observe
& evaluate participants as they perform activities commonly found in
these higher levels of jobs.
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ineffectively it represents performance on the appropriate
dimensions.
(e) Develop Final Instrument: Subsets of incidents are used as
behaviour anchors for the performance dimensions.
In 360 degree feedback the appraisal should may be done by any person
who has thorough knowledge about the job done by the contents to be
appraised, standards of contents & who observes the employee while
performing the job .The appraiser should be capable of deciding what is
important & what is relatively less important. He should assess the
performance without bias .The appraisers are supervisors, peers,
subordinates employees themselves users of services & consultant.
Performance appraisal by all these parties is called 360-degree feedback.
Definition
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360-degree feedback, as the term implies, brings together formal appraisals
from everybody that the person being assessed comes into contact with—
line managers, subordinates, colleagues, peers, and even outsiders such as
clients. Another name for it is multi-source feedback and a variant is
upward feedback, in which subordinates appraise their supervisor’s
performance. Though it is frequently intimidating or dispiriting for the
person concerned, some studies indicate that such feedback can be helpful
in changing behaviour and improving performance. However, others
suggest that the technique shows little or no improvement over more
traditional methods and has the disadvantage that results need skilled
interpretation.
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critical, should be presented, with the aim of highlighting and acting
on areas for development.
• Results can be aggregated to give you some feedback on
organizational strengths and weaknesses in relation to your business
objectives and training strategy.
1. The participant and his or her boss, peers and direct reports fill in surveys.
Responses of the peers and direct reports are kept entirely anonymous.
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3. Participants use the information from the feedback report to establish
goals and ongoing action plans, aimed at better utilizing their strong points
and improving their weaker skills. They can use the 360° process before
and after training opportunities to measure their effectiveness and measure
gains.
The process leads to better job performance, as participants use the 360° to
sharpen their skills. As a consequence, productivity in the workplace
increases, and a company enjoys more success.
Groups have found that the 360° process is an excellent method for
establishing specific training needs.
When a business has a clear objective to accomplish or a specific mission
to carry out, a 360° assessment can be a valuable tool. It can help everyone
to focus on skills consistent with the company's goals and to target their
development plans to fit the direction the business is taking.
If a business is struggling in a particular area, a 360° system can help
identify the skills requiring attention. Participants can then make the
chances necessary to remove obstacles to success.
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The organization can develop appropriate skills to consistently
reflect company values. Continuous progress can be achieved
through periodic reevaluations using the 360° system.
Most businesses initially use the 360° feedback for employee development.
Some begin by using it for development planning and then expand to use
the 360° system for appraisal and pay decisions. Later, they may also use it
in promotion and succession planning.
When the initial use is for development only, everyone has a chance to
become familiar with the process and make any necessary adjustments. It
also allows time to build trust in the value of the 360°. For uses other than
development, specific legal guidelines must be followed.
When implementing a 360° system, its use must be taken into account. For
instance, companies will need to have a policy about who sees the 360°
survey results. When the feedback will be used solely for development, the
participant might be the only person to see the report. If the results will be
used for performance management, both the participant and his or her boss
will review the report.
Employee Compensation
Wage & salary refers to the establishment & implementation of the sound
policies & practices of the employees compensation . It includes such as
such areas as job evaluation , surveys of wage & salary, analysis of relevant
organizational problems ,development & maintenance of wage structure,
profit sharing & incentives etc. The basic purpose of wage & salary
administration is to establish & maintain an equitable wage & salary
structure .The secondary objectives to establishment & maintenance of an
equitable labour –cost structure .The compensation is mainly concerned
with the financial aspects of the needs ,motivation & rewards. Managers
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Must analyse the needs of the employees so that reward can be designed to
satisfy some needs.
Definition:
Compensation:
Compensation may be defined” as money received in the performance of
work , plus many kinds of benefits & services that organization provides
their employees .” Money is included under direct compensation while
benefits come under Indirect Compensation. may consist of life ,accident &
health insurance ,employer’s contribution to retirement ,pay for vacation or
illness .
Wages:
Wages are defined as the remuneration paid for the services of labour in
production, periodically to an employees /worker. These are generally refers
to hourly rate or daily rate paid to such groups as production & maintenance
employees (Blue Collar).
Salary:
Salary on the other hand refers weekly or monthly rates paid to the weekly
or monthly rates paid to clerical, administrative & professional employees
(White collar workers)
The aims of wage and salary administration are numerous and sometimes
conflict with each other. The main objectives of wage and salary
administration are:
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payment of salaries at that level, where they can attract competent and
qualified people.
2. To secure internal and external equity: Internal equity does mean
payment of similar wages for similar job within the organisation.
External equity implies payment of similar wages to similar jobs in
comparable organisations.
3. To retain present employees: The organisation must keep the wage level
at the competitive level, in order to prevent such quits.
4. To ensure desired behaviour: Good compensation reinforce desired
bahaviour like performance, loyalty, accepting new responsibilities and
changes etc.
5. Control costs: To keep labour and administrative costs in line with the
ability of the organisation to pay.
6. Comply with Legal regulations: A sound wage and salary system
considers the legal challengers imposed by government and ensures the
employer’s compliance.
7. To pay according to the content and difficulty of the job and in tune with
the effort and merit of employees.
8. To facilitate pay roll administration of budgeting and wage and salary
control.
9. To simplify collective bargaining procedures and negotiations.
10.To promote organisation feasibility.
There are several principles of wage and salary plans, policies and
practices. The important of them are:
1. There should be definite plan to ensure that differences in pay for
jobs are based upon difference in job requirements.
2. The general level of wages and salaries should be reasonably in
line with that prevailing in the labour market.
3. Wage and salary plans and policies should be sufficiently flexible.
4. Job evaluation must be done scientifically.
5. Wage and salary administration plans must always be consistent with
overall organisational plans and programmes.
6. Wage and salary administration plans and programmes should be in
conformity with the social and economic objectives of the country like
attainment of equality in income distribution and controlling
inflationary trends.
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7. Wage and salary administraion plans and programmes should be
responsive to the changing local and national conditions.
8. These plans should be simplify and expedite other administrative
processes.
3. Prevailing Market Rate: The next factor is the prevailing market rate or
known as going market rate or comparable wage .It includes the
competition demand ,then the government laws & judicial decision ,trade
union encourages this practice so that people have equal pay ,equal work.
5. The Living wages : It means that the wages paid should be adequate to
enable employees to maintain himself & his family at a reasonable level
of existence .
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6. Productivity : It is the another criteria measured in the terms of output
per man hour . Technological improvement, better organization &
management the development of better methods of production by labour
& management ,greater skill by labour are responsible for the increase in
productivity .
7. Trade Union Bargaining Power : The trade unions play an important
role ,generally the stronger & powerful the trade union, the higher wages,
As a strike or threat of strike is the most powerful weapon used by
them .
WAGE CONCEPTS
Minimum Wage: must provide not merely for the bare sustenance of life but for the
preservation of the efficiency of the workers by providing some measure of education,
medical requirements and amenities. This is the wage established according to the
provisions of the law.
Living Wage: It represents a standard of living, which provides not merely for bare
physical sustenance but decency, protection against illness, requirements of essential
social needs and some insurance against important misfortunes;
Fair Wage: The wage, which is decided according to the productive contribution of the
work done by him.
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COMPONENTS OF THE COMPENSATION SYSTEM
Jobs offered by an organization vary in terms of their values. Job value is ascertained by
job evaluation. Jon evaluation is a systematic method of appraising the value of each job
in relation to other jobs in an organization. We have already discussed the job evaluation
method of in the previous chapter on job evaluation.
Once all the jobs are assigned values, then these are placed in a grade, or say, a rate per
job. These grades are arranged in an hierarchical order starting with lower to higher jobs.
Thus, job and salary structure consist of the various salary grades and their different
levels of single jobs or group of jobs.
Basic Wage/Salary;
Dearness Allowance;
House Rent Allowance;
City Compensatory Allowance;
Conveyance Allowance;
Leave Travel Concession;
Education Subsidy;
Bonus (Profit bonus /Incentive Bonus);
Medical;
Provident Fund;
Pension;
Overtime;
Fringe benefits;
Social security benefits.
In case of executives, various reimbursements are also made as part of their salaries.
These are:
Company leased accommodation;
Servant salary reimbursement;
Company maintained car;
Driver salary reimbursement;
House maintenance reimbursement;
Children education;
Scholarship to the children;
Electricity, water, gas charges reimbursement;
Insurance premium;
Hospitalization;
Office maintenance at residence;
Household furniture and appliances;
Holiday homes;
Interest free loans for house building & many more.
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In short, the main objective of wage and salary administration is to establish and maintain
an equitable wage and salary system to obtain, retain, and motivate people to required
skill in an organization. The whole administration of wage and salary payment is based
upon three principles, namely, external equity, internal equity and individual equity.
Job Evaluation
Introduction
Job evaluation is the output provided by job analysis. As seen earlier, job
analysis describes the duties of a job, authority relationships, skills required,
conditions of work, and additional relevant information. Job evaluation on
the other hand, uses the information in job analysis to evaluate each job-
valuing its components and ascertaining relative job worth. It involves, in
other words, a formal and systematic comparison of job relative to another,
so that a wage or salary hierarchy results. So it is a process by which job in
an organization are evaluated.
If job values are not properly studied, it is very likely that jobs would not be
properly priced, i.e., high valued jobs may receive less pay than low valued
jobs. When employee realizes that this is happening, they become
dissatisfied. They may leave the organization, reduce their efforts or perhaps
adopt other modes of behavior detrimental to the organization.
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To secure and maintain complete, accurate and impersonal
description of each distinct job;
Provides standard procedure for determining the relative worth
of each job
For promotion and transfer
To ensure wages are paid to all qualified employees for like
work;
To consider fair and accurate consideration of all employees for
advancement and transfer;
To provide information for ‘work organization, employees’ selection,
placement, training and numerous other similar problem;
Step 2: Select and prepare job evaluation plan- Means job must be
broken into small components i.e it should involve the selection of
factors, elements needed for the performance of all jobs for which
money is paid, determining their value and preparing return
instructions for evaluation.
Step 3:Classify Jobs: This Requires grouping for arranging jobs in a correct
sequence in terms of value to the firm and relating them to money
terms in order to ascertain their relative value.
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ADVANTAGES OF JOB EVALUATION
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4) Job factors fluctuate because of changes in production, technology,
information system, and division of factors and such other factors.
Therefore the evaluation of the job today is made on the basis of job
factors and does not reflect the time job factor in future.
5) Job evaluation takes a long time to install, requires specialized
technical personnel, and may be costly.
6) A large number of jobs are called ‘red circle jobs’. Some of these may
be getting more and other less than the rate determined by job
evaluation.
Generally speaking, the following five steps are involved in the system:
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Step 4 : Ranking of all jobs. Each job is than compared in details with other
similar job to establish its exact rank in the scale. For this each rater must be
given a set of ‘index card’, each of which contains a brief description of
jobs. These jobs are than ranked from ‘lowest to highest’ or from ‘highest to
lowest’ are ranked first and than the next highest and next lowest and so
forth until all the cards have been ranked.
Step 5: Preparation of job classification from the rating: The total ranking is
divided into an appropriate number of groups or classifications, usually 8 to
12. All the jobs within a single group or classification receive the same wage
or range of rates.
Demerits:
1. As there is no standard for an analysis of the whole job position
different bases of comparison between rates occur. The process is
initially based on judgment and tends to be influenced by a variety of
personal biases.
2. The system merely produces a a job order and does not indicate yo
what extent it is more important than the one below it.
3. Specific job requirements are not normally analysed separately.
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grouped into classes or grades which represent different pay levels ranging
from low to high.
Steps:
The following 5 steps are generally involved:
1. The preparation of job descriptions, which gives us basic job
information usually derived from a job analysis.
2. The preparation of job descriptions, so that different levels or grades
of job may be identified.
3. Selection of grades and key jobs. About 10 to 20 jobs are selected,
which include all the major department and functions and cover all the
grades.
4. Grading the key jobs. Key jobs are assigned to an appropriate grade
levels and their relationship to each other studied.
5. Classification of all jobs. Jobs are classified by grade definitions. All
the job in the same grade receive the same wage or range of rates. For
example, menials may be put into one class, clerks in another, junior
officers in other class, and the top executive in high class.
Merits:
1. This method is simple to operate and understand, for it does not take
much time or require technical help.
2. The use of fully described job classes meets the need for employing
systematic criteria in ordering jobs to their importance. Since many
workers think of job in, or related to, cluster or groups, this method
makes it easier for them to understand rankings.
3. If an organization consists of 500 people holding to different jobs, the
jobs might be broken up into perhaps 5 classes, arranged in order of
importance from high to low, and described class by class.
4. The grouping of jobs into classifications makes pay determination
problems administratively easier to handle. Pay grades are determined
for, and assigned to, all the job classifications.
5. It is used in important government and operates efficiently, but it is
rarely used in an industry.
Demerits
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evaluations by executives establish the major classes, and determine
into which classes each job should be placed.
2. Since no detailed analysis of a job is done, the judgment in respect of
a whole range of jobs may produce an incorrect classification.
3. It is relatively difficult to write a grade description. The system
become difficult to operate as the number of job increases.
4. It is difficult to know how much of a job’s rank is influenced by a man
on the job.
5. The system is rather rigid and unsuitable for a large organization or
for very varied work.
This method is the most widely used type of job evaluation type. It requires
a identifying number of compensable factors and than determining degree to
which each of these factor is present in the job. Once the degree to which
each factor is determined, the corresponding number of points of each factor
are added and an overall point value is obtained.
Steps : This system requires a detailed examination of the jobs. The Steps in
these method followed are:
Step 1: The jobs have to be determined first which are to be evaluated. They
are usually clustered. The jobs, which require (1) similar activities, (2) the
same workers characteristic or traits and work on the same kind of materials
(say wood or metal are placed in the same cluster or family).
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weight than “physical requirements”. The opposite might be true of “factory
jobs”.
Step 5: The next step is to assign money values to points. For this purpose,
points are added to give the total value of a job; its value of a job is
translated into terms of money with a pre-determined formula.
Steps involved:
Step 1: Clear-cut job descriptions are written and job specifications are
preferably in terms of compensable factors. The people specifications are
generally provided with a set of definitions which have been used in each of
the compnsable factor selected.
Step 2: Selecting of key jobs: Such jobs are those jobs which represent the
job under study; and for which pay is determined to be standard or reference
points and for which there is no controversy between management and the
employees.
Step 3: Ranking of key jobs: Several different members of the job
evaluation committee rank the key job on each of five factors (mental
requirements, physical requirements, skill requirements and working
conditions).
Step 4: Valuing the factors: The basic pay for each ‘key’ job is allocated to
each factor.
Step 5: Comparing all job with each jobs: All the other jobs are than
compared with the key jobs, factor by factor, to determine their relative
importance and position in the scale of jobs.
Step 6: Establishing the monetary units value for all jobs: monetary values
are assigned to each factory of every key job.
Merits:
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1. It is a systematic, quantifiable method for which detailed step by step
instructions are available.
2. Jobs are compared to other job to determine a relative value.
3. It is a fairly easy system to explain to employees
4. There are no limits to the value, which may be assigned to each factor.
5. The plan does not require a translation from points to money.
6. The reliability and validity of the system are greater than the same
statistical measures obtained from group standardized job analysis
plans.
Demerits:
1. It is costly to install, and somewhat difficult to operate for any one
who is not acquainted with the general nature of the job evaluation
techniques.
2. Wage level change from time to time, and there minor inconsistencies
may be brings in order to bring all the job in alignment.
3. Money rates, when used as a basis of rating, tend to influence the
actual rate more than the abstract rate.
4. The system is complex and cannot be explained to, and understood by
every day non-supervisory organizational employees.
Once a job is evaluated, or say ranked, the next step is to convert this
measurement in to salary bracket. In other words, it implies simply breaking
up the total salary structure in to sun divisions corresponding to the number
of classes of job arrived at through job evaluation. However, several other
factors also need to be looked in to before a right type of salary structure is
evolved.
Establishing Pay Equity
People have no basic or instinctive need for money, a commodity that is
important only if it can satisfy other needs. Organizations frequently
overestimate the value workers place on monetary rewards. The equity
theories can help explain employees’ reaction to compensation system.
EQUITY:
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Equity is the balance between the inputs an individual brings to a job and the
outcome he or she receives from the it. An employee input includes
experience, education, special skills, effort and time worked. Outcomes
include pay benefits, achievement, recognition and any other rewards.
However, inputs and outcomes are in different units, and are hard to compare to each
other directly. Thus, equity theory suggests that individuals determine whether they
are being fairly treated by comparing their own input/outcome ratio to the
input/outcome ratio of someone else. This other person may be in the same job or in
other jobs, in the company or outside the company, in the same industry or outside the
industry sense of inequity arises when the comparison process uncovers an imbalance
between inputs and outcomes of the employees compared with others.
Equity Theory
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Action to Restore Equity from Over-Reward Equity
1. Person could increase contributions (work harder or longer, cultivate
additional skills).
2. Persons could ask for a pay cut.
3. Person could attempt to get other a raise.
4. Person could attempt to get other to reduce his or her contribution.
5. Last resorts: Quit the job or choose another comparison other.
Internal Equity:
External Equity:
Individual Equity:
It refers to comparisons among individuals in the same job with the same
organization
The major purpose of job evaluation is to determine the relative worth of the
jobs within an organization. A systematic comparison can define an internal
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job hierarchy that ranks jobs in terms of their relative contribution to the
organizational objectives.
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3. Selecting Organizations to Survey:-Identifying organizations to
survey can be important. Organizations to covered in a wage survey
typically include those that
Employ workers with the same skills.
Are within geographic distances that would make employees willing
to commute or relocate, and
Are in the same or similar industry.
However, the considerations that go into selecting a set of organizations to
be surveyed vary for different jobs.
4. Collecting Data: - rather than running their own wage survey, many
organizations obtain the results of surveys undertaken by industry
associations, professional associations, government agencies, or
consulting firms. Numerous annual surveys cover a wide choice of job
families and industries. At local levels, chapters of Society for Human
Resource Management or Chambers of Commerce often undertake
surveys for their membership. For a company that wants to collect and
analyze its own data, it is important to obtain information on the
characteristics of the responding organization, as well as on both
direct and indirect compensation. The organizational information is
needed to judge the comparability of the competitor in terms of size,
products, and financial condition. It is also crucial to know the types
and amounts of benefits offered as well as incentives and hourly pay.
Of the three summary measures, the median is the most useful in
setting wage ranges. The mean can easily become distorted if a few
workers are paid at extreme rates. The median is not the subject to
such distortion.
5. Pay Level Policy: - once an organization has completed an internal
job evaluation and obtained wage survey data, it needs to translate this
information into pay rates for each class of jobs. This process involves
appropriate interpretation of survey results, the merging of the job
evaluation with the survey data, and consideration of the
organization’s pay level policy.
As mentioned earlier, jobs evaluated as having nearly the same value are
usually combined into a single wage grade. A single wage may be selected
for each grade and paid to every person whose job falls in the grade. More
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commonly, however, a range of pay rates is set for each grade. When a range
is set, the issue of individual equity becomes salient, and the organization
must have a system for determining where in the range the compensation of
each employee should be.
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voluntary schemes for the post retirement ,medical ,educational ,cultural &
recreational needs of the workmen.”
1) Wages are directly related to the work done & paid regularly usually
weekly monthly & benefits which a worker enjoys in addition to the
wages or salary he receives.
2) Benefits are not given to workers for any specific jobs they have
performed but are offered to them to stimulate their interest in their
work & to make their job more attractive & productive for them.
3) Fringe represents a labour cost for the employer , it is basically an
expenditure incurred
4) Fringe is never a direct reward geared to the output, effort for merit of
an employees not on the basis of hard work or long hours of work but
on the basis of length of services ,his sickness ,sex the hazard of life .
5) The fringe benefit is enjoyed by all .
6) Fringe benefit must constitute a positive cost to the employer &
should be incurred to finance an employee benefit.
COVERAGE/SCOPE OF BENEFITS
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(a) Employers Contribution stipulated in legal enactment: old age,
survivor, disability health
(b) Payments under the workmen’s compensation Act.
(c) Supplemental unemployment benefits
(d) Accident insurance
(e) Pensions
(f) Contribution to the saving plans & health & welfare benefits.
(a) Rest Period: Among the office jobs the breaks popularly known
as rest break or coffee break are allowed during the day to the
workers
(b) Holidays: Holidays which includes Christmas ,New Years, Holi
,Diwali on which the employees have to be paid & they do not
have to work.
(c) Vacation : Paid vacations vary from 15 days to 1month in a year
.
(d) Sick Leave : This is provided to the employees when is out on
illness
(e) Severance Pay : This provides one time payment to an employee
when he is terminated
(f) Leave of Absence: These are generally educational leave
provided to managers or management trainees during training
period .
(g) Pension Programmes
(h) Insurance
EMPLOYEES SERVICES
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1) Services related to the type of work performed, including subsidies for
the purchase & upkeep clothing, uniforms
2) Eating facilities cafeteria, lunch rooms, canteens, lunch rooms
3) Transportation facilities including parking & bus services
4) Childcare facilities, comprising nurseries, day care centers for
children.
5) Housing services including company owned housing projects.
6) Financial & legal services including sponsoring of loan funds.
7) Recreational social & cultural programmes including athletics, beauty,
social clubs , parties ,picnics .
8) Educational services
9) Medical services
10)Flexitime
POTENTIAL APPRAISAL
“People are like icebergs. What you see above the surface
(performance) is only a small part. A large part of the attributes needed
to perform excellently in future job, which I call potential is not
immediately visible. It is hidden below surface.”
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1. Ability to foresee future opportunities.
2. Consistency in approach and performance.
3. Responsive to condition whatever comes in the way.
4. Person with high level of integrity.
5. Broader vision and micro perception.
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This system reduces labour cost, result in increase in real wages and
motivate performance. They provide a method of absorbing cost escalation
on account of pay increases and thus help in sustaining competitiveness of
the organization.
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determining the quantum cannot be explained to employees who are not
given such awards. This may evoke jealousy and friction and may thus
jeopardize cooperation and goodwill.
2.Incentive schemes
Output based incentive scheme are appropriate where tasks are repetitive
and measurable
These involve the following steps:
1. Selecting the objectives
2. Determining the parameters of performance in accordance with the
objective
3. Determining the norms or base values or benchmark values for each
parameter
4. Determining performance reward relationship
5. Fixing the relative importance of the selected parameters that is, their
weightings.
6. Designing information and procedure formats.
7. Determining the maximum payable incentive amount (incentive
opportunity) and payment period.
8. Formulating a communication and review scheme
These are, however, not suitable for technology and service activities,
which require information sharing problem solving and team work.
Productivity gain or profit sharing or employee stock option plan (ESOP)
may be suitable types for such activities
Productivity bargaining
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wage increase in return for assurance and promise from union in return
for achieving production targets. This method implies:
a) A detailed analysis of the firms operations
b) The identification of cost reduction possibilities
c) Estimation of savings in cost
d) The development of a system of indexing wages increase with cost
reduction actually realized over time.
Long term incentive in the form of employee stock options schemes are operated both
to improve long-term incentives and to reduce fixed cost.
ESOP envisages employee participation in and ownership of company equity. This plan
is intended to provide an incentive to the employees to improve the all round
performance and growth of the company and share its prosperity. The plan usually
involves allotments of equity shares according to laid down procedure and subject to
governmental regulations, laws and rules. The employees benefit in the form of enhanced
market value of his share and capital gains, which in turn depend on company and
employee performance .several software and high tech organization such as infosys have
conceived and designed such plans .
nature of technology, the nature of profits the nature of markets, the human
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resource strategy and business objective. For reviewing an incentive scheme
1. Level of education
2. Trade union
3. Organization culture
4. Package of monetary and non monetary incentives
5. Rewarding good performance
6. Performance pay and performance management
7. Caveats
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5. What do you mean by fringe benefits? What is the rationale
behind offering benefits to the employees?
6. Appreciate the need for and significance of Fringe Benefits.
7. What is meant by remuneration /compensation? What are the basic
objectives and principles of wage and salary administration?
8. What do you mean by wage structure? Outline the components of wage
and salary administration.
9. Explain wage determination process in detail.
10.What is Job Evaluation? What are the objectives of Job
Evaluation?
11.Discuss the advantages of Job Evaluation? Does job evaluation
have any limitations? What are these?
12.Briefly explain the various methods of Job Evaluation.
13.“Job Evaluation is the ranking of job not the job holder.”
Discuss.
14.What are the three elements of compensation equity? Why is
each important?
15.What does equity theory says about the way individuals
evaluate and respond to their pay level?
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