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OUM Business School

BBPB2103
Human Resource Management

Copyright © Open University Malaysia (OUM)


BBPB2103
HUMAN RESOURCE
MANAGEMENT
Dr Siti Zubaidah Othman
Nor Azimah Chew Abdullah
Wan Din Wan Daud
Tang Swee Mei
Hj Yaakob Ibrahim
Dr Ho Jo Ann

Copyright © Open University Malaysia (OUM)


Project Directors: Prof Dr Mansor Fadzil
Prof Dr Wardah Mohamad
Open University Malaysia

Module Writers: Dr Siti Zubaidah Othman


Nor Azimah Chew Abdullah
Wan Din Wan Daud
Tang Swee Mei
Universiti Utara Malaysia

Hj Yaakob Ibrahim
Dr Ho Jo Ann
Universiti Putra Malaysia

Moderators: Peter Johnson

Assoc Prof Dr Khulida Kirana Yahaya


Universiti Utara Malaysia

Developed by: Centre for Instructional Design and Technology


Open University Malaysia

Printed by: Meteor Doc. Sdn. Bhd.


Lot 47-48, Jalan SR 1/9, Seksyen 9,
Jalan Serdang Raya, Taman Serdang Raya,
43300 Seri Kembangan, Selangor Darul Ehsan

First Edition, November 2008


Second Edition, December 2013 (rs)

Copyright © Open University Malaysia (OUM), December 2013, BBPB2103


All rights reserved. No part of this work may be reproduced in any form or by any means
without the written permission of the President, Open University Malaysia (OUM).

Copyright © Open University Malaysia (OUM)


Table of Contents
Course Guide xi xvi

Topic 1 Introduction to Human Resource Management 1


1.1 Definition of Human Resource Management 2
1.1.1 Differences between Personnel Management 2
and Human Resource Management
1.2 Importance of Human Resource Management 4
1.3 Background of Human Resource Management in Malaysia 7
1.4 Functions of Human Resource Management 8
1.5 Challenges of Human Resource Management 11
1.6 Human Resource Management Issues 15
Summary 19
Key Terms 19

Topic 2 Legal Environment 20


2.1 Employment Act 1955 21
2.1.1 Contract of Service 23
2.1.2 Payment of Wages 24
2.1.3 Recruitment of Women 24
2.1.4 Maternity Coverage 25
2.1.5 Normal Hours of Work 25
2.1.6 Rest Day, Holidays and Leaves 26
2.2 Industrial Relations Act 1967 29
2.2.1 Protection of Rights 30
2.2.2 Recognition and Scope of Trade Unions 30
2.2.3 Collective Bargaining and Agreements 31
2.3 Trade Unions Act 1959 31
2.4 Occupational Safety and Health Act (OSHA) 1994 32
2.5 Employees Social Security Act 1969 34
2.6 Human Resource Development Act 1992 36
2.7 Employees Provident Fund Act 1991 37
2.8 WorkmenÊs Compensation Act 1952 39
Summary 42
Key Terms 42

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iv TABLE OF CONTENTS

Topic 3 Job Analysis and Design 43


3.1 Job Analysis 44
3.1.1 Job Analysis Approach 48
3.1.2 Job Description and Specification 52
3.1.3 Uses of a Job Analysis 54
3.2 Job Design 55
3.2.1 Behavioural Matters 56
3.2.2 Industrial Engineering Matters 58
3.2.3 Ergonomic Matters 59
3.2.4 Job Design to Increase Employee Contributions 60
3.2.5 Suitability of Work Time Table 64
Summary 67
Key Terms 67

Topic 4 Planning and Employee Recruitment 68


4.1 Human Resource Planning 69
4.1.1 Importance of Human Resource Planning 69
4.1.2 Human Resource Planning and Strategic Planning 70
4.1.3 Human Resource Planning Process 75
4.2 Recruitment 82
4.2.1 Internal Recruitment 83
4.2.2 External Recruitment 84
Summary 90
Key Terms 90

Topic 5 Selection 91
5.1 Selection Process 92
5.2 Information Reliability and Validity 93
5.2.1 Information Reliability 93
5.2.2 Information Validity 94
5.3 Selection Methods 96
5.3.1 Information Sources 97
5.3.2 Employment Test 99
5.3.3 Job Interview 101
5.3.4 Reaching Selection Decision 105
Summary 110
Key Terms 111

Topic 6 Performance Evaluation 112


6.1 Definition of Performance Evaluation 113
6.2 Purpose and Uses of Performance Evaluation 113
6.3 Main Causes of Performance Evaluation Failure 115
6.4 Performance Evaluation Process 116

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TABLE OF CONTENTS v

6.5 Responsibility of Evaluating 120


6.6 Performance Evaluation Method 123
6.6.1 Trait Methods 123
6.6.2 Behavioural Methods 125
6.6.3 Result Methods 128
6.7 Errors in Performance Evaluation 130
6.8 Performance Interview 133
Summary 136
Key Terms 136

Topic 7 Compensation Administration 137


7.1 Definition of Compensation 138
7.2 Types of Compensation 138
7.3 Strategic Compensation Planning 140
7.4 Factors That Influence Wage Rate 142
7.5 Compensation Administration Components 145
7.5.1 Achieving Internal Equity: Job Evaluation 146
7.5.2 Achieving External Equity: Market Survey 151
7.5.3 Achieving Individual Equity 154
7.6 Compensation Administration Issues 155
Summary 158
Key Terms 158

Topic 8 Incentives and Benefits 159


8.1 Incentives 160
8.1.1 Importance and Relevance of an Incentive Plan 160
8.1.2 Advantages of an Incentive Payment Programme 161
8.1.3 Characteristics of an Effective Incentive Plan 161
8.1.4 Incentive Plan Administration 162
8.1.5 Types of Incentive Plans 162
8.2 Benefits 168
8.2.1 Characteristics of an Effective Benefit Programme 169
8.2.2 Types of Benefit Programme 171
Summary 176
Key Terms 177

Topic 9 Employee Rights and Discipline 178


9.1 Understanding the Rights of Employees and Employer 179
9.2 EmployeesÊ Discipline 180
9.2.1 Problematic Employees and Misconduct 181
in an Organisation
9.2.2 Procedures and Discipline 182
9.2.3 Disciplinary Approaches 184

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vi TABLE OF CONTENTS

9.2.4 Misconduct Outside the Organisation 189


9.2.5 Alternative Disagreement Resolution Procedure 190
9.2.6 Termination of Contract Procedures 192
9.2.7 Guideline in Implementing Fair Disciplinary Action 193
Summary 196
Key Terms 197

Topic 10 Employee Relations Dynamics 198


10.1 Workers Union Scenario in Malaysia 199
10.1.1 Purpose of Employees Participating in 200
Workers Union
10.2 Structure and Functions of Trade Unions in Malaysia 201
10.2.1 Functions of Trade Union 201
10.2.2 Establishment of Trade Union 202
10.2.3 Becoming a Member of a Trade Union 202
10.2.4 Trade Unions Fund 203
10.2.5 Types of Trade Unions 204
10.3 Collective Bargaining 207
10.3.1 Collective Bargaining Process 208
10.3.2 Industrial Actions 209
10.3.3 Dispute Solving Procedures 211
Summary 214
Key Terms 214

Topic 11 Employee Safety and Health 215


11.1 Understanding the Concepts of Occupational Safety 216
and Health
11.2 Laws Related to Occupational Safety and Health 217
11.2.1 The Factories and Machinery Act 1967 217
11.2.2 Occupational Safety and Health Act 1994 218
11.3 Safety and Health at Work 223
11.3.1 Accidents in the Workplace 224
11.3.2 The Risk of Chemical Substances 227
11.3.3 Air Quality in the Building 228
11.3.4 Video Terminal Appearance 229
11.3.5 Injuries of Frequent Movement 229
11.4 Issues Related to Safety and Health 231
11.4.1 Violence and Dangerous Work Environment 231
11.4.2 Work Stress 231
11.4.3 HIV/AIDS in the Workplace 233
11.5 From the Safe and Healthy Work Environment 234
11.5.1 Employee Aid Programme 234

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TABLE OF CONTENTS vii

11.5.2 Safety Programmes 235


11.5.3 Health Programme 237
Summary 240
Key Terms 240

Answers 241

References 270

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COURSE GUIDE

Copyright © Open University Malaysia (OUM)


Copyright © Open University Malaysia (OUM)
COURSE GUIDE DESCRIPTION
You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through
the course material. It also suggests the amount of time you are likely to spend in
order to complete the course successfully. Please keep on referring to the Course
Guide as you go through the course material as it will help you to clarify
important study components or points that you might miss or overlook.

INTRODUCTION
BBPB2103 Human Resource Management is one of the courses offered by the
Faculty of Business and Management at Open University Malaysia (OUM). This
course is worth three credit hours and should be covered over 8 to 15 weeks.

COURSE AUDIENCE
This is a core subject for students of the Bachelor of Management and Bachelor of
Business Administration programmes. It is also a fundamental major course for
students taking the Bachelor of Hospitality Management programme. For
students taking the Bachelor of Human Resource Management programme, this
course is a core major subject.

As an open and distance learner, you should be able to learn independently and
optimise the learning modes and environment available to you. Before you begin
this course, please confirm the course material, the course requirements and how
the course is conducted.

STUDY SCHEDULE
It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend
120 study hours. Table 1 gives an estimation of how the 120 study hours can be
accumulated.

Copyright © Open University Malaysia (OUM)


xii COURSE GUIDE

Table 1: Estimation of Time Accumulation of Study Hours

Study
Study Activities
Hours
Briefly go through the course content and participate in initial discussion 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), test(s) and examination(s) 20
TOTAL STUDY HOURS 120

COURSE OUTCOMES
By the end of this course, you should be able to:
1. Elaborate on the definition of human resource management and its
functions in an organisation;
2. Explain the roles of the human resource manager in designing the course of
an organisation; and
3. Discuss the effects of change and development during human resource
management in an organisation.

COURSE SYNOPSIS
This course is divided into 11 topics. The synopsis for each topic is presented
below:

Topic 1 is an introduction to human resource management. Discussion starts


with the definition of human resource management. Students are then exposed to
the importance of human resource management and the environment of human
resource management in Malaysia. Aside from that, students are also exposed to
the five main functions of human resources, as well as the challenges and issues
faced in human resource management.

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COURSE GUIDE xiii

Topic 2 discusses the legal environment in Malaysia which affects human


resource management practices in Malaysia. Students are exposed to some major
Acts which are closely related to human resource management practices. Among
the Acts discussed are the Employment Act 1955, Industrial Relations Act 1967,
Trade Unions Act 1959, Occupational Safety and Health Act 1994, EmployeesÊ
Social Security Act 1969, Human Resource Development Act 1992, Employee
Provident Fund Act 1991 and Workmen's Compensation Act 1952.

Topic 3 explains job analysis and job design. In job analysis, the aim and methods
of analysis will be discussed. The results of the process are job description and
specification. The second part of this topic discusses how an organisation designs
jobs to cater to its establishment and employees.

Topic 4 touches on human resource planning and the activities involved in


recruitment. It discusses how an organisation tracks the movement of its
employees into, within and outside of its organisation. The second part of this
topic discusses how an organisation attracts potential candidates to join its
organisation.

Topic 5 discusses how an organisation selects qualified candidates to join its


organisation. The selection method involves the process of information gathering
of candidates, and the process of deciding whether the candidate would be
accepted or rejected for the post.

Topic 6 elaborates on the performance evaluation process, the sources and


methods to evaluate employee performance and performance discussion process.
Performance evaluation also explains a few errors made by managers or
supervisors when evaluating employees.

Topic 7 compensation discusses the types of compensation offered by an


organisation to its human resources so that employees are more motivated to
work. Compensation also touches on three significant components in
determining the salary scale of an organisation, which are internal equity,
external equity and individual equity; as well as factors that influence the wage
level.

Topic 8 discusses incentives and benefits. Students will be exposed to some


aspects of incentives such as the importance and advantages of an incentive
programme, the characteristics of an effective incentive plan and the types of
incentive plans. Apart from that, students will also be exposed to benefits such as
the characteristics of effective benefits and types of benefits that can be offered by
the employer to their employees.

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xiv COURSE GUIDE

Topic 9 discusses two main topics which are employeeÊs rights and discipline.
Discussion begins with the rights of employees and employers. Next, students
will be exposed to issues related to employee discipline such as recognising
problematic workers and the types of misconduct which exist in an organisation,
as well as looking at some disciplinary approaches that can be practised. Apart
from that, students are exposed to misconduct outside of an organisation and the
techniques used to solve them. Disciplinary issues, alternative conflict resolution
procedure and the procedure for termination of contract due to misconduct will
also be explained. The end of the topic gives some guidelines in carrying out a
fair disciplinary action.

After understanding employeeÊs rights and discipline, the next discussion will
touch on the dynamics of employee relations.

Topic 10 talks about workersÊ union in Malaysia and why employees participate
in unions, as well as the functions and structure of a union. The discussion ends
by looking at the bargaining process, which is usually carried out when issues
arise in trade.

Topic 11 ends this course by discussing work safety and health. In this topic,
students are exposed to the laws and hazards related to safety and health at the
workplace. Also discussed are related issues. At the end of the topic, students are
given some ideas on how to create a safe and healthy work environment.

TEXT ARRANGEMENT GUIDE


Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:

Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.

Self-Check: This component of the module is inserted at strategic locations


throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learnt thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.
Copyright © Open University Malaysia (OUM)
COURSE GUIDE xv

Activity: Like Self-Check, the Activity component is also placed at various


locations or junctures throughout the module. This component may require you to
solve questions, explore short case studies, or conduct an observation or research.
It may even require you to evaluate a given scenario. When you come across an
Activity, you should try to reflect on what you have gathered from the module and
apply it to real situations. You should, at the same time, engage yourself in higher
order thinking where you might be required to analyse, synthesise and evaluate
instead of only having to recall and define.

Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.

Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.

References: The References section is where a list of relevant and useful


textbooks, journals, articles, electronic contents or sources can be found. The list
can appear in a few locations such as in the Course Guide (at the References
section), at the end of every topic or at the back of the module. You are
encouraged to read or refer to the suggested sources to obtain the additional
information needed and to enhance your overall understanding of the course.

PRIOR KNOWLEDGE
There is no prerequisite requirement for learners prior taking this subject.

ASSESSMENT METHOD
Please refer to myINSPIRE.

REFERENCES
Alex K. B. Yong. (1996). Malaysian human resource management. Malaysian
Institute of Management.

Armstrong, M. (2012). Armstrong's Handbook of Human Resource Management


Practice (12th ed.). London: Kogan Page.
Copyright © Open University Malaysia (OUM)
xvi COURSE GUIDE

Bohlander, G., & Snell, S. (2012). Managing human resources


(16th ed.) Ohio: South-Western College Publishing.

Dessler, G. (2013). Human resource management (13th ed.). England: Pearson


Education Limited.

Decenzo, D. A., & Robbins, S. P. (1999). Human resource management (6th ed.).
New Jersey: John Wiley & Sons.

Ivancevich, J. M. & Konopaske, R. (2012). Human resource management (12th ed.).


USA: McGraw-Hill.

Maimunah Aminuddin. (1997). A guide to human resource management attracting


and keeping good people (2nd ed.). Shah Alam: Penerbit Fajar Bakti.

Maimunah Aminuddin. (1997). Human resource management (2nd ed.). Shah


Alam: Penerbit Fajar Bakti.

Maimunah Aminuddin. (2008). Human resource management. Principles and


Practices. Shah Alam: O'xford University Press.

Maimunah Aminuddin. (1996). Malaysian Employment Law and Industrial


Relations (2nd ed.). Malaysia: McGraw-Hill.

Mondy, R. W., & Mondy, J. B. (2013). Human resource management (13th ed.).
England: Pearson Education Limited.

TAN SRI DR ABDULLAH SANUSI (TSDAS)


DIGITAL LIBRARY
The TSDAS Digital Library has a wide range of print and online resources for the
use of its learners. This comprehensive digital library, which is accessible
through the OUM portal, provides access to more than 30 online databases
comprising e-journals, e-theses, e-books and more. Examples of databases
available are EBSCOhost, ProQuest, SpringerLink, Books24x7, InfoSci Books,
Emerald Management Plus and Ebrary Electronic Books. As an OUM learner,
you are encouraged to make full use of the resources available through this
library.

Copyright © Open University Malaysia (OUM)


Topic Introduction
to Human
1 Resource
Management
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Define human resource management;
2. Explain the significance of human resource management;
3. Discuss functions of human resource management;
4. Examine challenges faced by human resource management; and
5. Evaluate issues related to human resource management.

INTRODUCTION

„From the amazing economic experience two decades ago, among countries
that before had limited ‰natural resources„, it is clear that the most important
resources to a country are talent, skills, creativity and the effort of its people.
Brain power is a source that is much more valuable than natural resources.
People are our main resources. Without doubt, in the 1990s and beyond,
Malaysia must give its utmost attention towards the growth of this very
crucial resource.‰
Vision 2020 - Tun Dr Mahathir Mohamad,
Former Prime Minister of Malaysia

Copyright © Open University Malaysia (OUM)


2 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

At one time, many observers were of the opinion that machines would take over
the functions and roles of employees in an organisation. However, the opposite
happened. Like what Tun Dr Mahathir said, human resources are becoming
more important in todayÊs organisations, especially in knowledge-based
industries such as software and information services.

The success or failure of an organisation most of the time relies on the


knowledge, skills and ability of its employees. Many experts feel that an
organisation is able to achieve greater advantage if it has valuable human
resources which are difficult to acquire, imitate and well-managed.

Human resource management is one of the most important management


functions in an organisation as it is able to obtain and develop dynamic and
qualified employees.

1.1 DEFINITION OF HUMAN RESOURCE


MANAGEMENT
Human resource management consists of philosophies, policies, programmes,
practices and decisions related to employee management in an organisation. Its
aim is to simplify and increase the usage of employees effectively in order to
achieve organisational and employee goals.

Human resource management focuses on managing the workforce in order to


take care of employee and employer relations, especially in using employees
productively to reach the organisationÊs strategic business objectives and to fulfill
employee needs.

In the past, human resource management was also known as personnel


management. However, the term „personnel management‰ was changed to
„human resource management‰ in the 1970s, and is widely used today. This
development is in line with changes in the international level, which recognises
human resources as a major source in an organisation. Nevertheless, there are
still groups that refer to human resource management as personnel management.

1.1.1 Differences between Personnel Management


and Human Resource Management
There are some who are of the opinion that personnel management and human
resource management are the same. They view human resource management as
a modern version of personnel management due to technological changes in the
current work environment and a shift in social values.

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 3

However, there are other groups who think that personnel management and
human resource management differ in terms of the roles they play, their scope
and their actions. Human resource management portrays a much wider
perspective, which includes:
(a) Issues pertaining to employee safety and health;
(b) Industrial relations;
(c) Stress in the workplace; and
(d) Employee satisfaction in increasing an organisationÊs effectiveness.

Human resource management recognises the importance of manpower and it


sees employees as valuable assets to an organisation. Employees are complex
resources that can be driven and developed progressively for the benefit of the
organisation and the employees themselves. Human resource management looks
at employee needs in the perspective of the organisation and it takes into account
external influences in the business environment. It also acts as a change agent for
an organisation.

Personnel management is said to be more operational in nature, and it stresses on


the micro level as opposed to human resource management. It focuses solely on
employee administration. It provides support services to maintain employees in
the present organisation structure such as:
(a) Determining a sufficient number of employees;
(b) Assigning suitable tasks and responsibilities to employees;
(c) Hiring employees;
(d) Paying employees;
(e) Managing matters concerning promotions; and
(f) Monitoring employee discipline.

Personnel management does not contribute to the organisationÊs strategic


planning. It is more reactive in nature and ensures the everlasting status quo in
an organisation. Table 1.1 simplifies the differences between human resource
management and personnel management.

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4 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Table 1.1: Differences between Human Resource Management and Personnel


Management

Human Resource Management Personnel Management


Handles macro issues Handles micro issues
Planned and long term Ad hoc and short term
Proactive Reactive
Involves ongoing strategies to More administrative in nature
manage and develop an
organisationÊs workforce
Report to the Chief Executive Officer Report to the line manager
Plays a role in decision making No role in decision making
Acts as a change catalyst Maintains the status quo
Facilitates an organisationÊs positive Does not take into account the effects
culture of culture
Source: Adapted from Yong, A. K. B. (1996). Malaysian human resource management.
Kuala Lumpur: Malaysia Institute of Management.

EXERCISE 1.1

1. Give the definition of human resource management.


2. What are the differences between human resource management
and personnel management?

1.2 IMPORTANCE OF HUMAN RESOURCE


MANAGEMENT
Human resources are an important resource to an organisation as technological
resources are limited. Therefore, human resource management is essential so as
to manage and conduct employees effectively in order to help the organisation
achieve competitive advantage.

Human resource management also plays an important role in identifying human


resource problems in a firm and providing solutions to the firm.

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 5

Apart from that, it is able to influence and increase employeesÊ commitment, and
motivate them at the same time. This, in hand, will increase the organisationÊs
performance through an increase of employeesÊ productivity.

At one time, human resource management was not related to an organisationÊs


profit. Due to that, it did not play an important role in the organisationÊs strategic
planning. Now, human resource management is starting to gain more attention
in the development of strategic planning to most organisations, due to the effects
of human recognition in an organisation. Moreover, the main human resource
management strategy is integrated in the organisation strategy.

Human resource management strategy views organisation strategy on employee,


profit and effectiveness as a whole. Effective human resource management
activities and programmes ensure an effective organisation; therefore, it helps an
organisation achieve competitive advantage.

Human resource management is also responsible for managing any changes that
happen in an organisation due to merging activities, business downsizing and
various workforce cultures. Figure 1.1 shows a few of the main roles of the
human resource management department.

Figure 1.1: Role of human resource management department


(a) Planner
Plans matters related to staffing, such as planning manpower needs,
recruitment and employee selection.
(b) Facilitator
Prepares training opportunities and career development for employees and
conducts orientation sessions for new employees.

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6 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

(c) Coordinator
Coordinates matters related to employee health and safety, amenities and
benefit.
(d) Auditor
Oversees employee performance and controls compensation offers such as
rewards and benefits to employees and evaluates accident and injury reports.
(e) Mediator
Human resource management division acts as the middleman in matters
pertaining to employee disciplinary issues, consultation with workerÊs
union, conflict handling and employee dissatisfaction.

Human resource management is essential to ensure the organisationÊs


perpetuation and effectiveness. Some of human resource managementÊs
contributions in achieving an organisationÊs effectiveness are:
(a) Helping the organisation achieve its targets;
(b) Fully utilising the skills and ability of the workforce;
(c) Providing the organisation with trained and motivated employees;
(d) Increasing employeesÊ job satisfaction;
(e) Developing and maintaining the quality of employee work environment;
(f) Delivering human resource management policy to every employee;
(g) Helping to maintain social responsibility and ethical conducts; and
(h) Managing changes to benefit employees and the organisation.

ACTIVITY 1.1
If you are the Head of the Human Resource Department in your
organisation, what do you think are the important roles of your
department?

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 7

1.3 BACKGROUND OF HUMAN RESOURCE


MANAGEMENT IN MALAYSIA
Since the 1980s, management teams in Malaysian firms have shown an increase
in the usage of the term „human resource management‰ to replace the term
„personnel management‰. This is in line with the development of human
resource management in the international level. Besides that, Malaysian
authorities have embraced this change by taking the initiative in replacing the
Ministry of Labour with the Ministry of Human Resources in 1990.

In order to achieve Vision 2020 and ensure that Malaysia become a developed
country by 2020, various efforts have been planned to develop the human capital
resources. Among them are:
(a) Rearranging the education system;
(b) Allocating the Human Resource Development Fund under the Human
Resource Development Act 1992;
(c) Encouraging the involvement of public and private sectors in contributing
to education and training; and
(d) Encouraging continuous learning.

In Malaysia, human resource management is a field that is expanding swiftly,


especially in training and development. This is a result of the governmentÊs
efforts in encouraging training and development, particularly in the
manufacturing sector. A Human Resource Development Fund was created under
the Human Resource Development Act 1992 by collecting levy from registered
employers. These employers then utilise the fund to train or retrain their
employees.

There are a few more Acts that influence human resource management practices
in Malaysia. Among them are Employment Act 1955, Industrial Relations Act
1967 and Occupational Safety and Health Act 1994. All the Acts related to the
human resource management environment in Malaysia will be discussed further
in Topic 2.

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8 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

1.4 FUNCTIONS OF HUMAN RESOURCE


MANAGEMENT
Human resource management functions as a reference towards the
implementation of task and responsibility of providing and coordinating human
resources in an organisation. Usually, most human resource management
functions of a small organisation are carried out by the owner or the operations
manager, apart from carrying out other business activities.

A medium-sized organisation usually employs a human resource manager or


personnel responsible for conducting all matters pertaining to human resource.
Most of the time, the human resource manager does not specialise in any human
resource functions.

On the other hand, a larger organisation will have its own human resource
management department which is responsible for carrying out all the functions
of human resources. Each human resource function is managed by human
resource experts specialising in a field.

Human resource management functions are not only about record keeping and
updating files. They involve a holistic and integrated approach that includes
various activities designed to contribute to the effectiveness of an organisation.
Figure 1.2 shows the main functions of human resource management in an
organisation.

Figure 1.2: Functions of human resource management

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 9

(a) Staffing
Staffing involves human resource planning process, job analysis,
recruitment and selection of manpower.
(i) Human Resource Planning
Human resource planning is a forecasting process or a requirement
needed by an organisation to achieve its objectives, aside from
developing and implementing activities to fulfil organisation needs.

It is used to ensure the organisation has ample workforce and suitable


employees at the right time and place. Human resource planning is
important so that there will not be any surplus or insufficient
manpower. This is also to ensure that employees are able to carry out
their duties efficiently.
(ii) Job Analysis
Human resource management department conducts job analysis to
develop specific requirements for a job in an organisation. It is a
process of gathering information on a particular job by identifying the
responsibilities and duties related to the post. Information from the
job analysis will be used to develop jobs, prepare job details and job
specifications.
(iii) Recruitment
Recruitment is a process of identifying and encouraging interested
and potential job candidates to apply for available posts in an
organisation. Task details and job specifications provide information
on candidatesÊ eligibility and explanation on job requirements.
(iv) Selection
Selection is a process of identifying the most suitable candidate to fill
a vacant post whereby the candidate is chosen from a group of
applicants obtained from the recruitment process. Some of the
procedures usually practised in the selection process include checking
the application form and résumé (curriculum vitae), checking the
candidateÊs background, conducting interviews and conducting
selective tests such as physical and personality tests.
(b) Human Resource Development
Human resource development is a process aimed at producing employees
who are well informed, skilful and understand their goals as well as the
organisationÊs goals. In addition, human resource development is designed
to help employees contribute positively to the organisation through
excellent and satisfactory work performance.

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10 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Activities in human resource development include conducting orientations


for new employees, and identifying, designing and carrying out training
programmes to increase employeesÊ skills and abilities. They are also aimed
at producing a culture that appreciates and rewards continuous learning
efforts.

Employee performance is evaluated after training to monitor the


effectiveness of the training programme. Human resource development
also stresses on an employeeÊs career development in the organisation by
providing new skills and abilities needed in his or her job scope, as well as
helping employees develop their own career plans.

(c) Compensation and Benefits


Compensation and benefits are part of human resource management
functions which are related to rewards, whether they are financial rewards
or non-financial rewards. They are given to employees as part of work
relations. The human resource management department is responsible for
designing and implementing a compensation and benefits system to every
employee. Apart from that, it needs to ensure that the compensation and
benefits system is fair and consistent.

(d) Safety and Health


The human resource management team needs to be sensitive towards creating a
work environment that is able to prevent any safety and health hazards.
„Hazard‰ refers to a potential circumstance which can cause injury to an
employee, therefore lessening his or her ability. Due to that, the human resource
management department is responsible to design and implement health and
safety programmes to ensure the safety of its employees.

(e) Work Relations


Work relations is also known as industrial relations or business relations. It
refers to the relationship between employer and employee or workersÊ
union that represents employees. A harmonious employer and employee
relationship ensures the stability and strength of an organisation. The
human resource management department needs to act as a medium
between the organisation and the workersÊ union. A workersÊ union
represents employees in matters regarding collective consultation,
disciplinary conduct and employee complaints.

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 11

EXERCISE 1.2
List five main roles of human resource management. Elaborate
briefly on each function based on your working environment.

1.5 CHALLENGES OF HUMAN RESOURCE


MANAGEMENT
We often read in the newspapers about sexual harassments, misconducts and the
misuse of power in the workplace. There are many challenges faced by human
resource management nowadays. Among them include:
Globalisation
Challenges in technology
Managing change
Human resource development
Market reaction
Cost reduction
Economic climate
Legal system

(a) Globalisation
Mergers, takeovers and competition among international industries and
businesses are expanding. To remain and compete in the market, more
firms are starting to explore the global market. Indirectly, this causes them
to face issues such as culture, legal and business practice differences.

An organisation has to identify a human resource manager who is able to:


(i) Perform his duties in a foreign country;
(ii) Design training programmes and development opportunities to
increase his understanding of foreign work practice and culture; and
(iii) Make changes to the compensation plan to ensure fair and suitable
payment scheme cutting across different geographical areas and
different costs of living.

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12 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

ACTIVITY 1.2

Read the following journal article and discuss the impact of


globalisation on HRM and employment relation. The journal article
can be found in OUM Digital Library.

Hunter, L. W., & Katz, H. C. (2012). The impact of globalization in


human resource management and employment relations in the US
automobile and banking industries. The International Journal of
Human Resource Management, 23(10), 1983-1988.

(b) Challenges in Technology


Progress in technology has done a lot to influence human resource
management. From manual employees to knowledgeable employees,
innovation in technology has caused a sudden change in form, structure and
employment needs. Knowledgeable employees need to be equipped with
skills to enable them to make plans and decisions, identify problems and solve
them. In many cases, employees need to be retrained to enable them to carry
out responsibilities and their new roles. Therefore, an organisation needs to
prepare training and development programmes to help employees increase
their skills in order to fulfil the demands of a knowledgeable employee.

Aside from that, the use of human resource information technology has
influenced a lot of todayÊs human resource management practices, such as:
(i) Providing up-to-date information to aid the human resource management
department in forecasting, overseeing and making decisions.
(ii) Changing the method of information gathering on employment;
speeding up the processing of information and increasing internal and
external communication processes.

(c) Managing Change


Technology and globalisation are two main factors that force change to happen
in an organisation. An organisation that always maintains its status quo will
not be able to compete in a market that is fast developing and competitive.
Ordinarily, an organisation has to adjust the way it operates to maintain the
effectiveness of its business. This can be done through total quality
programmes, downsizing, re-engineering, outsourcing and mergers.

Changes can happen reactively or proactively:


(i) A reactive change is due to external influences.

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 13

(ii) A proactive change is the managerÊs initiative to grab available


opportunities, especially in a fast changing industry, such as the
technology industry.

However, changes do not happen spontaneously. This is because most of us


are resistant to changes. Therefore, the human resource management
department plays a role to help the change process in the organisation.

(d) Human Resource Development


An organisation needs to manage its human resources well if it intends to
compete in the global market. Human resources that have economic value
by way of knowledge, skills and ability gives a huge impact on the
organisation. In order to form a valuable team, an organisation needs to
strategise to ensure its resources are:
(i) Knowledgeable;
(ii) Skilful; and
(iii) Experienced.

Staffing programmes must identify, recruit and select quality candidates.


Training programmes complement the staffing process to increase
employeesÊ skills. In addition, employees need their own career
development opportunities. Therefore, the human resource management
department needs to arrange suitable programmes to develop its human
resources, as well as to ensure that employeesÊ duties and needs are
flexible, thus allowing for a continuous learning process and employee
development to happen.

(e) Market Reaction


Fulfilling customersÊ expectations and needs is important for an
organisation to be able to compete in the local and foreign markets. Some of
the approaches often used to respond to the markets are:
(i) Implementing a total quality management programme; and
(ii) Re-engineering process.

Both approaches have direct implications to human resources. To ensure


the effectiveness of the programmes, the management team needs to make
some drastic changes to its human resource management programmes
which focus on issues such as:
(i) Employee motivation;

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14 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

(ii) Changes to organisation culture; and


(iii) Employee education.

(f) Cost Reduction


Some of the important elements to enable an organisation to have
competitive advantage and to maximise its effectiveness are cost reduction
and increase in productivity. Human resource cost is one of the biggest
expenditure components in an organisation, especially organisations that
specialise in knowledge and services.

Ordinarily, organisations will have to rearrange their firms to reduce labour


costs through activities such as:
(i) Downsizing;
(ii) Outsourcing; and
(iii) Mergers.

Most of the time, these actions cause employee surplus, which then forces
the management to reduce the number of employees through the process of
„laying off‰ staff. This issue needs to be handled wisely and fairly by the
human resource management team to avoid problems and employee
dissatisfaction that might affect the organisationÊs performance.

(g) Economic Climate


The economic environment will influence the financial standing of an
organisation, and the organisation must change its business strategy to
remain or compete in the market. Consequently, an organisationÊs human
resource strategy must also change to be in line with the business strategy,
especially human resource planning.

In the event of economic growth, demand for labour force will increase due
to an increase in production. In these circumstances, organisations will
experience a situation whereby the labour market is limited.

On the other hand, when an economic depression occurs, the organisationÊs


business is affected and the number of employees needs to be reduced
through some approaches such as forced or voluntarily termination and
early retirement.

(h) Legal System


Organisations must be sensitive to the legal system of the place where it
operates. Any changes and job implementation must be given attention in
order to avoid any legal actions. In Malaysia, there are a few Acts related to
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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 15

the work environment such as Employment Act 1955, Occupational Safety


and Health Act 1994 and Industrial Relations Act 1967.

ACTIVITY 1.3
Choose one of the eight human resource management challenges.
Obtain information from the human resource manager in your
workplace about the challenge you have chosen.

1.6 HUMAN RESOURCE MANAGEMENT


ISSUES
Apart from facing challenges in managing human resources as discussed in the
previous subtopic, organisations must also be aware of issues relating to human
resource management such as:
Diversity in the workforce
Employee age distribution
Women and dual income families
Increase in education level
Employee rights
Personal issues
Attitude change towards work
Balance between career and family

(a) Diversity in the Workforce


This strategy is able to give a distinct effect on an organisation. Normally,
an organisation that practises this particular strategy is seen as an
organisation that performs social responsibility, and thus acquires
satisfying returns on the products and services offered to its customers.
However, diversity in the workforce does not affect human resource
management in terms of strategic planning, recruitment, training and
health. There are no ideal methods or formulae when it comes to managing
diversity in the workforce.

(b) Employee Age Distribution


The fluctuation of birth rates causes a change in the employee age
distribution pattern in the labour market. For example, in the United States,

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16 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

the number of employees (aged 55 and above) that are supposed to retire is
increasing and is believed to reach 23.9% in 2018. On the other hand, in the
same year, the number of younger workforce (16 to 24) is expected to slip to
12.7%. This will cause a gap in the labour force for that particular year. An
unbalanced employee age distribution in the labour market will complicate
human resource management processes, especially human resource
planning, recruitment, training and career development.
(c) Women and Dual Income Families
Women's involvement in the working world has shown a drastic increase.
Statistics have shown that two-thirds of married couples come from dual
income groups. This phenomenon gives a big implication to working
couples and employers in aspects of recruitment and placement. In other
words, one party's career change will affect the other party's career. For
example, if the husband is transferred to another place due to promotion,
the wife has to decide whether to follow the spouse or remain in her
workplace, thus resulting in them living apart.

In addition, most working women have toddlers and they need the services
of a nursery. Employers, especially the human resource management
department, may need to prepare suitable amenities to fulfil the needs of
the women workers as well as arrange certain programmes such as:
(i) Flexible working hours;
(ii) Handling sexual harassment issues; and
(iii) Equal pay without gender discrimination.
(d) Increase in Education Level
The education level of the labour force has shown a drastic increase with
the presence of an improved education system. Highly educated employees
often have high hopes on employment and opt for careers that are
challenging and interesting. Therefore, the management team has to carry
out continuous evaluation to ensure employees' talents and abilities are
fully utilised, and jobs offered are challenging and employees are given the
opportunity to develop their careers.

(e) Employee Rights


From time to time, authorities will give serious attention to employee
rights. A number of rules and laws have been enacted to ensure the rights
of employees are looked after. Some of them are:
(i) Employment Act 1955;
(ii) Employee Social Security Act 1969; and
(iii) Occupational Safety and Health Act 1994.
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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 17

As a result, the human resource management team needs to be careful in


any legal actions taken so that the organisation will not face any legal actions.
(f) Personal Issues
Personal issues are starting to get attention from employees and their
employers. It is the responsibility of the manager and staff from the human
resource management department to manage all employee information
well so that employeesÊ personal information is not circulated and misused
by irresponsible people.
(g) Attitude Change towards Work
Employees nowadays value lifestyle satisfaction which can be achieved by
balancing between challenges and rewards rather than the relationship
between work and lifestyle. Apart from that, employees are also more
attracted to interesting jobs, and opportunities to develop themselves
through the tasks offered to them. This change has prompted human
resource management to come up with ways on how to manage and
motivate employees. Consequently, the roles of human resource
management are becoming more complex as opposed to previous situations
whereby employees are only concerned about the economic values of their
jobs to support their families.
(h) Balance between Career and Family
Finding a balance between career and family is an issue faced by employees
nowadays. Employees are no longer willing to work overtime even though
they are offered higher pay. This is because they would rather spend time
with their family. As a result, family-friendly concepts have been
introduced by many organisations.

Among the family-friendly programmes introduced are part-time jobs,


work sharing, maternity leave, flexible working hours, child nursing leave
and telecommunication services. However, these programmes are not well
received by single employees as they do not get to enjoy any of the perks
and benefits from the programmes.

ACTIVITY 1.4
If you are a human resource manager and most of your employees
are women, which issue would be important for you to consider?
Why?

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18 TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

EXERCISE 1.3
Multiple Choice Questions
1. In order to enable an organisation to compete in the 21st
century, human resource management needs to focus on
_____________.
A. Developing production planning
B. Rationalising scientific management principles
C. Using the Howthorne test
D. Developing a skilful and flexible workforce

2. Below are the main activities of the human resource


management department EXCEPT _____________.
A. Directing the operations manager
B. Giving services, advice and counselling
C. Developing and implementing organisation policies
D. Administering recruitment and training programmes

3. The key to quality products and services for an organisation


depends on how it manages _____________.
A. Budget
B. Projects
C. Labour unions
D. Employees

4. The human resources owned by an organisation can be used


to compete if the resources are _____________.
A. Paid special attention
B. Well looked after
C. Well managed
D. Given attractive rewards

5. Which of the following is NOT one of the main technological


effects on human resource management?
A. Technology has changed the methods used to gather
information on employee transfer.
B. Technology has sped up employee intake data
processing.
C. Technology has eliminated supervising roles in
employee management.
D. Technology has improved internal and external
communication processes.

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TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 19

Essay Questions
1. List six challenges often faced by the human resource
management department in achieving competitive advantage.
2. List four programmes that can be introduced by an
organisation to its employees to help them reduce the conflict
between career and family.
3. Employees nowadays have shown an attitude change towards
employment. Briefly discuss this issue.
4. Human resource management activities are important to
ensure the effectiveness of an organisation. List five human
resource management contributions in helping to achieve an
organisation's effectiveness.

In the event of uncertain economic circumstances, in addition to the shift


from an industrial community to an informative community, the importance
of human resources in an organisation is becoming more distinct.
Therefore, organisations need to update their human resource management
strategy to ensure the effectiveness of their business.
An organisation with an effective human resource management should be
able to merge its diverse and different human resources to achieve the
general target of the organisation, and at the same time tackle the challenges
and issues of human resource management efficiently and effectively.

Compensation and benefits Safety and health


Human resource management Staffing
Personnel management Work relations

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Topic Legal
Environment
2
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Identify legal Acts that influence human resource management;
2. Explain the aspects in each Act that influence human resource
management; and
3. Discuss the purpose of each work-related Act enacted by the
Malaysian government.

INTRODUCTION

EMPLOYMENT ACT (AMENDMENT) 2000

SETTING DATE OF PRELIMINARY ENFORCEMENT

In delivering the power vested by subsection 1(2) Employment Act


(Amendment) 2000 [Act A1085], the Minister has established 1 October 2000
as the date the Act to be enforced. Dated 28 September 2000.

Tan Sri Dr Fong Chan Onn


Former Minister of Human Resources

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TOPIC 2 LEGAL ENVIRONMENT 21

The passage shows the Employment Act (Amendment) 2000, which was
announced by Tan Sri Dr Fong Chan Onn, former Minister of Human Resources.
The laws and regulations concerning employment and work relations enacted by
the authorities are regularly amended to fulfil current needs.

These laws and regulations influence policies, activities and human resource
management programmes formed by an organisation. The organisationÊs
management team, especially the human resource management unit, needs to
create policies and procedures which abide by the law, so that all actions taken
will be according to the law.

Among the Acts related to human resource management in Malaysia are the:
(a) Employment Act 2000
(b) Industrial Relations Act 1967
(c) Trade Unions Act 1959
(d) Occupational Safety and Health Act 1994
(e) Employees' Social Security Act 1969
(f) Human Resource Development Act 2001
(g) Employees Provident Fund Act 1991
(h) WorkmenÊs Compensation Act 1952

2.1 EMPLOYMENT ACT 2000

ACTIVITY 2.1
Before you explore the legal aspects related to work relations, try to
think about what will happen to the work relations between
management and employees if there is no legal system enacted to
protect the rights of both parties.

The Employment Act 1955 was enacted with the purpose of protecting
employees from being exploited by employers, and became the legal
foundation in highlighting the minimum conditions and terms related to
work that need to be followed by management.

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22 TOPIC 2 LEGAL ENVIRONMENT

A few amendments have been made to the Act since it was enforced and the
latest amendments were made in the year 2011. This act is referred to as the
Employement (Amendment) Act 2012. Some of the amendments found in this act
included:

(a) New definitions of „contractor for labour‰, „part-time employee‰ and


„sexual harassment‰ (Part I, Section 2);
(b) Payment of wages (Part III, Section 19 & 22);
(c) System of payment of wages (Part V, Section 25);
(d) Contractors, principals and contractors for labours (Part VII, Section 33A);
(e) Maternity protection (Part IX, Section 44A);
(f) Domestic servants (Part XI, Section 57A & 57B);
(g) Public holidays (Part XII, Section 60D);
(h) Employment of foreign employees (Part XIIB, Section 60K);
(i) Complaints and inquiries (Part XV, Section 69B); and
(j) Sexual harassment (Part XVA).

Employment Act 1955 consists of employment who are contractuallly bound to


the management and:

(a) Their monthly salary is not over RM2,000; or


(b) Not taking into account their monthly total earing and work as a:
(i) Manual labourer; or
(ii) Supervisor to manual labourers; or
(iii) Person involved in handling motor vehicles; or
(iv) Domestic employee.
In this topic, we will only discuss a few important elements concerning work
relations mentioned in Emplyoment Act 1955 as shown in Figure 2.1.

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TOPIC 2 LEGAL ENVIRONMENT 23

Figure 2.1: Employment Act 1955

2.1.1 Contract of Service


A contract of service is an agreement whereby employers agree to employ a
worker to work and the worker agrees to serve as an employee. This can be done
verbally, in writing, explicitly or implicitly. However, in certain instances such as
the following, the contract of service needs to be done in writing:

(a) Work that involves a duration of more than one year; or


(b) An apprenticeship contract that is not less than two years.

The Employment Act 1955 also allocates a few prohibitions towards the contract
of service such as:

(a) Barring employees from participating in any trade union activities and
associations; and
(b) Setting conditions on how employees spend their fee.

Apart from that, the end of a contract of service notice needs to be stated in the
contract of service. If the notice period is not set in the contract of service, the
minimum period of notice that is allocated under the Employment Act 1955 is as
shown in Table 2.1.

Table 2.1: End of Service Notice

Period of Employment Period of Notice


Less than 2 years 4 weeks
2 years or more, but less than 5 years 6 weeks
5 years or more 8 weeks

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24 TOPIC 2 LEGAL ENVIRONMENT

ACTIVITY 2.2
Even though a contract of service can be made verbally or in
writing, what are the terms that need to be given to an employee in
writing or before he or she starts working?

2.1.2 Payment of Wages


The period of payment of wages cannot extend to more than a month and
employers need to pay their employees no later than the seventh day after the
last day of payment period. However, as the meaning of wages include overtime,
the organisations found it difficult to calculate overtime payments in time to
meet the seventh day requirement. Therefore, the new amendments in the
Employment (Amendment) Act 2012 under section 19(2) stated that employers
are allowed to pay wages for work done on a rest day, public holiday and
overtime not later than the last day of the next wage period. As such, the
employer can pay the employees their wages for the month by the seventh of the
following month and make payment for work done on a rest day, public holiday
and overtime with the following month's wages.

It is the right of employers to stop making any payments to the employees if the
employees are not present at work due to imprisonment or attending court
unless their attendance in court is as witness to the employers.

ACTIVITY 2.3
If your payment period is from the 14th to the 13th of the next month,
according to the Employment Act 1955, what is the last day that your
employer needs to pay your fee?

2.1.3 Recruitment of Women


According to the Employment Act 1955, female employees working in the
industrial and agricultural fields are not allowed to work from 10pm to 5am.
However, employers can apply to the Director General of the Labour
Department to enable the female employees to work at these times.

Study the Employment Act 1955: Part VIII and find the protections that need to
be given by employers to female employees.

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TOPIC 2 LEGAL ENVIRONMENT 25

2.1.4 Maternity Coverage


Female employees have the right to maternity leave of at least 60 days for every
delivery; and a maternity allowance at the rate of a normal fee or their monthly
salary if they have already been employed by the employer:
(a) At any time in the four months immediately before their confinement; and
(b) For a period of, or periods amounting in the aggregate to, at least 90 days
during the nine months immediately before their confinement; and
(c) Inform the employer four months before their confinement.

However, female employees who have five or more living children are not
eligible to maternity allowance. Apart from that, female employees have the right
to take 30 days of maternity leave prior to or right after the delivery.

Previously, a female employee who is not within the scope of the Employment
Act 1955 was not entitled to maternity coverage unless the contract of service
stipulates otherwise. However, with the Employment (Amendment) Act 2012
under Section 44A, the scope of maternity coverage has been extended to all
female employees who are employed under a contract of servise irrespective of
wages.

2.1.5 Normal Hours of Work


Figure 2.2 shows the normal work hours according to the Employment Act 1955. The
Employment Act 1955 states that work hours cannot exceed five hours without
being given any rest of at least 30 minutes. For example, if work hours are from 8am
to 5pm, employees must be given rest 30 minutes before 1pm or, at the latest, 1pm.

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26 TOPIC 2 LEGAL ENVIRONMENT

Figure 2.2: Normal Hours of work according to the Employment Act 1955 (Section 60A)

Apart from that, the employees should not be required under their contract of
service to work more than eight hours a day (not including rest period). If an
employeeÊs work hours are from 9am to 6pm (nine hours), he needs a rest from
1pm to 2pm (one hour).

The total working hours in one week should not be more than 48 hours.
However, employees are allowed to work overtime. The maximum number of
overtime allowed for an employee is 104 hours in one month, unless exempted
by the Minister under section 2B.

ACTIVITY 2.4
Go online and find out three types of eligible unused sabbatical
leave during employment.

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TOPIC 2 LEGAL ENVIRONMENT 27

2.1.6 Rest Days, Hours of Work, Holidays and Other


Conditions of Service
Every employee has the right to enjoy a minimum number of rest days, hours of
work, holidays and other conditions of service under the contract of service as
enacted in the Employment Act 1955. Among the holidays covered in this Act
are:
(a) Rest Days
Employees shall be allowed whole day of rest in a week. However in cases
where they are required to continually engage in work on a rest day (due to
the nature of the job), he shall be paid accordingly as shown below:
(i) Employee employed on daily, hourly or other similar rate (Table 2.1):

Table 2.1: Daily/Hourly Wages for Rest Days

No. of Hours of Work Wages


Does not exceed half of normal hours of work. 1 day wage at ordinary rate.
More than half but does not exceed his 2 days wages at ordinary rate.
normal hours of work.

(ii) Employee employed on a monthly or weekly rate of pay (Table 2.2):

Table 2.2: Monthly/Weekly Wages for Rest Days

No. of Hours of Work Wages


Does not exceed half his normal hours of Half day of ordinary rate.
work.
More than half but does not exceed his 1 day of at ordinary rate.
normal hours of work.

(iii) For work done exceeding normal hours of rest day in (i) or (ii), he
shall be paid no less than 2 times his hourly rate of pay.

(iv) For these employed on piece rates who works on rest day, he shall be
paid 2 times his ordinary rate per piece.

(b) Weekly Leave


Employees have the right to enjoy one day of leave every week. In certain
situations, such as when the workplace is far away and travelling takes a
long time, employees are allowed to group their weekly leave on the

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28 TOPIC 2 LEGAL ENVIRONMENT

condition that the employers ask for permission from the Minister of
Human Resources.

(c) Public Holidays


Employees have the right to enjoy 11 days of gazetted public holiday which
are set for that particular year. The 11 public holidays must cover these five
days:
(i) National Day;
(ii) Birthday of the Yang di-Pertuan Agong;
(iii) Birthdays of the Sultan and Yang di-Pertuan Negeri or Federal
Territory Day;
(iv) Labour Day; and
(v) Malaysia Day.

(d) Annual Leave


Employees have the right to obtain a minimum number of annual leave
according to their service period, as allocated in the Employment Act 1955,
shown in Table 2.3:

Table 2.3: Annual Leave Entitlements

Employment Period Number of Days Allowed


Less than 2 years 8 days
2 years or more, but less than 5 years 12 days
5 years or more 16 days

Employees who are absent from work without permission from employers
and without any appropriate reason, and whose absence exceeds 10% of
working days for 12 months continuously are not eligible to get annual
leave for the duration concerned.

(e) Sick Leave


The minimum sick leave for all employees allocated under the Act is as
shown in Table 2.4.
Table 2.4: Sick Leave Entitlements

Employment Period Number of Days Allowed


Less than 2 years 14 days
2 years or more, but less than 5 years 18 days
5 years or more 22 days

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TOPIC 2 LEGAL ENVIRONMENT 29

Employees also have the right to enjoy 60 days of medical leave if they are
hospitalised. However, this 60-day eligibility will be reduced to follow the
number of standard medical leave that has already been utilised. For example, if
an employee who is hospitalised has taken 10 days of medical leave earlier, then
his right to medical leave due to hospitalisation is only 50 days.

Find out online what actions can be taken against employees who often take sick
leave and emergency leave which exceed the limit.

EXERCISE 2.1
1. When does wage need to be made by employers to their
employees?
2. How long a period must a resignation/end of contract of
service notice be given if an employee has serviced for two
years and five months?
3. If an employee experiences a critical illness that requires him
or her to be hospitalised, how many medical leave is he or she
entitled to under the Employment Act 1955?
4. Can a contract of service put any conditions on how its
employees should spend their earnings? Explain.

2.2 INDUSTRIAL RELATIONS ACT 1967


(REVISED 1976)
The Industrial Relations Act 1967 is an act that emphasises on employer-
employee relations and their trade union.

This Act is also intended to prevent any differences or disputes that arise from
this relationship, as well as to deal with any trade disputes and related matters.
The purpose is to creat industrial harmony. Among the aspects covered in the
Act include protection for all parties, recognition and trade union scope, and
collective bargaining and agreements. Figure 2.3 shows the items contained in
the Industrial Relations Act 1967.

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30 TOPIC 2 LEGAL ENVIRONMENT

Figure 2.3: Industrial Relations Act 1967

2.2.1 Protection of Rights of Workmen and


Employers and their Trade Unions
Employee or employers cannot be forced or stopped from being involved in
trade union activities. Furthermore, the management is prohibited from setting
any conditions in the contract of service that is intended to prevent employees
from being involved in any trade union activities. However, employees who plan
to join any activities related to the union must first present a written application
to their employers to obtain approval for leave.

2.2.2 Recognition and Scope of Representation of


Trade Unions
Trade unions that plan to represent employees must present an application of
recognition to the organisation. After receiving the application, the management
must take these actions in the period of 21 days:
(a) Give recognition; or
(b) Reject the application and present the reasons in writing; or
(c) Upon recognation, employer or trade union of employers should notify the
Director General.

If a certain trade union representing an employee has been given recognition,


then the other unions intending to represent the particular employee are not
allowed to make any recognition claims except:
(a) Withdrawn made by Trade Union and the Director General has been
notified; and
(b) The minister decision not to accord recognition.

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TOPIC 2 LEGAL ENVIRONMENT 31

2.2.3 Collective Bargaining and Agreements


After receiving recognition from the management, the trade union can invite the
management to hold a collective bargaining in writing together with proposals
for a collective agreement. The management has to reply in writing within 14
days of receipt of the invitation. Next, a collective bargaining needs to be held
within 30 days of receipt of the reply accepting the invitation.

EXERCISE 2.2

1. State the actions that need to be taken by employers after


receiving an application for recognition from a workersÊ union
planning to represent their employees.
2. What is the time period allocated, under the Industrial Relations
Act 1967, for the management to reply to a request from workers
to set up trade union in the company.

2.3 TRADE UNIONS ACT 1959

The right to form an Association is a right guaranteed by Article 10 of the


Federal Constitution and this is also emphasised in both the Employment Act
1955 as well as the Industrial Relations Act 1967.

Bounded under the category of „Employment Relations‰, this Act therefore


governs the registration of a trade union. Any newly formed trade union(s)
are therefore required to apply for registration within a month of their
formation.

The Act also covers the membership criteria as well as the rights, powers and
responsibilities of a trade union and its managerial prepogatives for any
collective bargaining.

The purpose of the Trade Unions Act 1959 is to:


(a) Encourage industrial relations, amend work terms, social and economic
status and increase productivity;
(b) Underline the relationship between employees and employers;

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32 TOPIC 2 LEGAL ENVIRONMENT

(c) Represent employees or employers in any trade disputes;


(d) Promote or organise any legitimate industrial related issues; and
(e) Plan and support any actions such as industrial strike.

A trade union must be registered within one month from its establishment date.
However, a period of registration of not more than six months is allowed if it is
deemed appropriate.

Among the membership conditions which are allocated in this Act are:
(a) Anyone planning to be the member of a union must be above 16 years old.
(b) Members under 18 years old are not eligible to vote in these matters:
Organising strikes;
Dissolving the union;
Amendment concerning member liabilities and benefits.
(c) Members under 21 years old are not allowed to hold any post in the union.

EXERCISE 2.3

TRUE (T) or FALSE (F) Statements


1. Anyone above 16 years old can join a trade union.
2. Those under the age of 18 have limited participation in union
activities.
3. Those above 18 years old can be officers in a workersÊ union.
4. The management has the right to stop its employees from
joining workersÊ union activities.

2.4 OCCUPATIONAL SAFETY AND HEALTH


ACT (OSHA) 1994
This Act was enforced throughout Malaysia for all industries except the armed
forces and shipping related employments which are protected under the
Merchant Shipping Ordinance 1952 and the Merchant Shipping Ordinance 1960
for Sabah and Sarawak.

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TOPIC 2 LEGAL ENVIRONMENT 33

Among the objectives of this Act are to:


(a) Ensure the safety, health and welfare of employees at the workplace;
(b) Protect others that are present at the workplace from any accidents that
might be triggered by workersÊ activities;
(c) Ensure that the work environment is conducive; and
(d) Enable related legalities be replaced in stages by industrial rules and
regulations which are approved and practised by all in order to maintain
and increase the standard of safety and health at the workplace.

This Act requires the management to establish a safety and health committee if it
has 40 or more employees in the workplace or if directed by the Director General.

Employers requirement under OSHA (1994) Act.

Employers must comply to the following:

(i) Ensure the safety of employees at the workplace;


(ii) Draft and disseminate the safety policy;
(iii) If an organisation has more than 40 staff, it is required to appoint a safety
committee;
(iv) Appoint dedicated safety and health officer (under scope of relevant
regulation);
(v) Provide training supervision and information on safe work practice; and
(vi) Report serious accidents to Department of OSHA.

Further discussion concerning the Occupational Safety and Health Act 1994 will
be provided in Topic 11.

Visit http://www.dosh.gov.my to get information about the rules listed in the


Occupational Safety and Health Act 1994.

EXERCISE 2.4
1. State the objectives of the Occupational Safety and Health Act 1994.
2. What are the employers requirement on safety and health
committee at the workplace as stipulated under OSHA (1994)?

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34 TOPIC 2 LEGAL ENVIRONMENT

2.5 EMPLOYEES’ SOCIAL SECURITY ACT 1969


(SOCSO)
The Social Security Organisation is an organisation set up to administer, enforce
and implement the EmployeesÊ Social Security Act 1969 and the EmployeesÊ
Social Security (General) Regulations 1971.

SOCSO is the abbreviation for the Social Security Organisation. It is commonly


known in Malay as PERKESO or Pertubuhan Keselamatan Sosial. Initially,
SOCSO or PERKESO was a government department which was then converted
to a statutory body in 1985.

The Social Security Scheme aims to protect employees from any unexpected
occurrences such as disasters, accidents and death at the workplace. This scheme
ensures benefits payment to employees and their dependants through two
protection schemes as shown in Figure 2.4.

Figure 2.4: EmployeesÊ Social Security Act 1969 protection scheme

(a) The Employment Injury Insurance Scheme


This scheme protects employees from disasters at work including industrial
accidents, accidents that occur during business related travels, and service
illnesses, which are illnesses caused by employment. Under this scheme,
only employers are required to make monthly contributions to every
employee with the rate of 1.25% of their monthly salaries.
(b) The Invalidity Pension Scheme
This scheme gives a 24-hour protection to employees against accidents or
fatalities without considering the cause. The management must contribute
0.5% of the employeeÊs salary, and the employee must also contribute 0.5%
of his or her salary.

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TOPIC 2 LEGAL ENVIRONMENT 35

Information about contribution to SOSCO is as follows:


(a) An employee employed under a contract of service or apprenticeship and
earning a monthly wage of RM3,000 and below must compulsorily register
and contribute to SOCSO regardless of whether the employment status is
permanent, temporary or casual in nature.
(b) An employee must be registered with the SOCSO irrespective of age.
(c) SOCSO only covers Malaysian workers and permanent residents. Foreign
workers, on the other hand, are protected under the WorkmenÊs
Compensation Act 1952.
(d) SOCSO does not cover the following categories of person:
(i) A person whose wages exceed RM3,000 a month and has never been
covered before.
(ii) Government employees.
(iii) Domestic servants employed to work in a private dwelling house
which includes chefs, gardeners, house servants, watchmen,
washerwomen and drivers.
(iv) Employees who have attained the age of 55 only for purposes of
invalidity but if they continue to work they should be covered under
the Employment Injury Insurance Scheme.
(v) Self-employed persons.
(vi) Foreign workers.

EXERCISE 2.5

1. The Social Security Act 1969 protects all employees that are
employed under one contract of service with a salary of not
more than RM___________.
2. The amount of contribution that needs to be made by both the
employer and the employee under the Invalidity Pension
Scheme is _____________.

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36 TOPIC 2 LEGAL ENVIRONMENT

2.6 HUMAN RESOURCE DEVELOPMENT ACT


2001
This Act aims to increase employee training by imposing and collecting
human resource development levies, apart from establishing Human
Resource Development Councils and Human Resource Development Funds
for this purpose.

Every employer registered with the Human Resource Development Council will
have to pay a human resource development levy for every employee based on
their wages. Registered employers that have made the payment are entitled to
apply for financial aid or the services allocated in this Act for the purpose of
encouraging employee training. Table 2.5 shows the levy rate imposed according
to the set criteria in the Human Resource Development Act 2001.

Table 2.5: Levy Rate According to Sector

Levy Rate Based


Criteria
on Employee Fee
Manufacturing sector with 50 or more employees 1%
Manufacturing sector with employees more than 10 and not
exceeding 50 employees with a paid up capital of RM2.5 million 0.5%
and above
Service sectors with 10 or more employees 1%

Under this Act, the Human Resource Development Fund must be spent on:
(a) Encouraging development and growth of employeesÊ skills by designing,
developing, increasing or monitoring training amenities;
(b) Preparing financial aid through loans or subsidies to employers to train or
re-train their employees;
(c) Organising or implementing activities or programmes aimed at re-training
employees who have been or will be laid off due to downsizing;
(d) Bearing the cost of managing the Human Resource Development Council
including payment and allowances for council officers; and
(e) Bearing any administration costs for the Fund as well as the cost of
implementing the Act.

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TOPIC 2 LEGAL ENVIRONMENT 37

Apart from that, the Human Resource Development Act 2001 also allots aspects
on the functions of the Human Resource Development Council:
(a) Evaluates and determines the types or levels of training that is in line with
the industryÊs human resource needs;
(b) Increases manpower training; and
(c) Establishes the conditions for loans or financial aid.

Visit http://www.hrdf.com.my to obtain information on the roles of Human


Resource Development (Ltd).

EXERCISE 2.6
1. Describe the purposes of the Human Resource Development
Fund under the Human Resource Development Act 2003.
2. State the functions of the Human Resource Development Council
as set under the Human Resource Development Act 2003.

2.7 EMPLOYEES PROVIDENT FUND ACT 1991


(AMENDMENT 2006)
The Employees Provident Fund (EPF), also known as Kumpulan Wang
Simpanan Pekerja (KWSP), is a government organisation in charge of social
security or retirement planning for legally employed workers in Malaysia.

All employers must register their employees with the Employees Provident Fund
immediately upon employment.

The Employees Provident Fund (EPF) aims to encourage employee savings


for the purpose of retirement.

Figure 2.5 shows the EPF contribution rate.

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38 TOPIC 2 LEGAL ENVIRONMENT

Figure 2.5: EPF contribution rate


The contribution rate allocated under this Act is based on the following:

(a) A worker aged less than 60 years. Full contribution is 24% (13% employers,
11% employee) for employee paid RM 5,000 and below. 23% (12%
employees and 11%) for employee paid exceeding RM 5,000 a month.

(b) A worker aged 60 and above up to 75 years. Contribution rate is 50% of


statutory contribution of workers aged under 60 years in the amount of
wages.

Effective 1 January 2007, the contributorÊs account is divided into two types
Account 1 and Account 2. All contributions are divided into the two accounts
according to fixed percentages, namely, 70 percent into Account 1 and 30 percent
into Account 2.

These accounts are created for different purposes and different types of
withdrawals are applicable to each account:
(a) Account 1
The savings here are for the purposes of retirement and cannot be fully
withdrawn before the age of 55 or passed away, or loses his capacity and
intends to leave Malaysia permanently.
(b) Account 2
The savings in this account are meant to help you to make early
preparations for a comfortable retirement. Withdrawals are allowed for the
purposes of:
(i) Attaining the age of 50 years;
(ii) Owning a house or making the downpayment for your first house;
(iii) Settling the balance of your housing loan for your first house;
(iv) Financing education for yourself and that of your children; and
(v) Medical expenses for yourself and that of your children.

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TOPIC 2 LEGAL ENVIRONMENT 39

ACTIVITY 2.5

Visit http://www.kwsp.gov.my and find information on these


questions:
1. How much can be withdrawn from Account 2 for the purpose
of paying for a house?
2. What actions can be taken by an employee if the management
does not make any EPF contribution?

EXERCISE 2.7

According to the Employees Provident Fund Act 1991, membersÊ


accounts are divided into two different accounts with different
percentages. State the percentages from the total contribution allocated
to each account and explain the purposes of each account.

2.8 WORKMEN’S COMPENSATION ACT 1952

This Act aims to compensate employees who are injured or contract illnesses
caused by their work.

In the early stages, this Act covered all manual workers in the private sector, and
non-manual workers in the private sector with a salary of not more than RM500 a
month. In 1977, the scope of the Act was extended to include non-manual workers
in the public sector with a salary of not more than RM400 a month.

The next amendment was made in 1993 where it gave protection to all foreign
workers in the private sector, whereas all local workers in the private sector were
covered under the EmployeesÊ Social Security Act 1969. However, in 1996, this
Act was amended so that it only gives protection to non-manual workers in the
public sector with a salary of not more than RM400, while foreign workers are
protected under the Foreign Workers Compensation Scheme 1952.

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40 TOPIC 2 LEGAL ENVIRONMENT

EXERCISE 2.8
Fill in the Blanks
To test your knowledge of the legal environment in human resource
management, answer the questions below:
1. Halim has worked with CBA Company for four years.
Therefore, the number of annual leave he is eligible to under
the Employment Act 1955 is ___________ days.
2. Employers are prohibited to ask or demand an employee to
work more than ___________ hours a week.

Multiple Choice Questions

1. Below are items contained in the Employment Act 1955


EXCEPT ___________.
A. Hours of work
B. Annual leave
C. Procedure of settling dissatisfaction
D. Payment of fee
2. Below are statements of hours of work alloted for an employee
under the Work Act 1955 EXCEPT _____________.
A. Working not more than 8 hours in a day
B. Employees must be given a rest period of at least 45 minutes
C. Working not more than 5 hours without given a rest
D. Working not more than 48 hours in a week
3. MembersÊ accounts are divided into two accounts under the
Employees Provident Fund Act 1991. Account 1 can be
withdrawn when the member _____________.
A. Is settling a loan
B. Is purchasing a house
C. Is handicapped and can no longer work
D. Is settling medical expenses
4. The purpose of establishing the Human Resource Development
Fund is to _______________.
A. Develop employeesÊ skills through training
B. Prepare start-up business loans for employers
C. Implement financial crisis reinstallation activities or
projects for an organisation
D. Pay all organisation expenses to acquire business from its
competitions

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TOPIC 2 LEGAL ENVIRONMENT 41

5. Which of these is NOT TRUE regarding female employees under


the Employment Act 1955?
A. Female employees have the right to 60 days of consecutive
maternity leave.
B. Female employees are not allowed to work between 10pm
and 5am.
C. Female employees are only allowed to perform light jobs that
do not include handling machineries.
D. Female employees are eligible to maternity allowance if they
inform the management four months before the due date.
6. Below are the functions of the Human Resource Development
Council EXCEPT:
A. Deciding on the conditions in giving aid and financial loans.
B. Increasing manpower training.
C. Evaluating and determining the types of training that are
suitable for industrial needs.
D. Helping an organisation solve employeesÊ disciplinary
problems.

Essay Questions

1. Amin has worked in Syarikat Teguh for five years. He was


admitted to the hospital for 60 days due to a road accident. How
many days of standard medical leave can he take after the accident
in that particular year?
2. State four public holidays that have been set and be made
compulsory in the calendar year.
3. What are the types of leave conditioned in the Employment Act
1955?
4. Are all employers and employees required to contribute to the
Social Security Organisation (SOCSO)? Explain.
5. Elaborate briefly on the types of scheme introduced under the
EmployeesÊ Social Security Act 1969.

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42 TOPIC 2 LEGAL ENVIRONMENT

Overall, it is clear that legal systems do influence work relations formed


between employers and employees.
The Industrial Relations Act 1967, which has been discussed in this topic,
should be able to give you a more comprehensive picture about the
importance of having a systematic and organised human resource
management system.
This can ensure a harmonious working relationship between employers and
employees.
In addition, this can help an organisation reach competitive advantage in the
local as well as the global market.

Contract of service Maternity coverage


EmployeesÊ Social Security Act 1969 Normal hours of work
Employer-employee relations Occupational Safety and Health Act
(OSHA) 1994
Employment Act 1955
Payment of wages
Human Resource Development Act
1992 Recruitment of women
Industrial Relations Act 1967 Trade Unions Act 1959
Leave WorkmenÊs Compensation Act 1952

Copyright © Open University Malaysia (OUM)


Topic Job Analysis
and Design
3
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Describe the steps involved in job analysis;
2. Explain the key issues in job description and specification;
3. Discuss the relationship between job requirements and human
resource management functions; and
4. Examine the factors that need to be taken into account when
designing a job.

INTRODUCTION
Job analysis and job design are two important elements that form the foundation
for effective human resource planning. Job analysis determines the requirements
in a job. Job design helps employees achieve organisation objectives and at the
same time gives satisfaction to employees performing their jobs.

The main purpose for an organisation to conduct job analysis is to improve its
performance and productivity. It is necessary to identify the skills, knowledge,
experience and other requirements necessary to do a job. Job analysis helps
organisations to fulfil the legal needs and regulations set by the government.
Usually, the human resource department is responsible for conducting job
analysis.

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44 TOPIC 3 JOB ANALYSIS AND DESIGN

3.1 JOB ANALYSIS

Job analysis is the process of obtaining information about a particular job by


determining the responsibilities, duties, skills and experiences of the
prospective employee.

Job analysis should be executed by following a systematic approach as shown in


Figure 3.1.

Figure 3.1: The six important steps to job analysis


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing

The outcome of the analysis is used to develop job description and specification.
Before carrying out a job analysis, the requirements for a particular job must be
determined.Questions such as the following should be asked so that a more
accurate job requirement can be determined:
(a) What kind of work will be done by the employee?

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TOPIC 3 JOB ANALYSIS AND DESIGN 45

(b) How is the employee going to perform the job?


(c) Why is the employee be performing the job?

Figure 3.2 briefly explains how a job analysis can be used to produce job
description and specification.

Figure 3.2: Job analysis, job description and job specification


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing

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46 TOPIC 3 JOB ANALYSIS AND DESIGN

(a) Job Analysis


It is important for HR department to analyse, reanalyse and document
information about a job. It is used during the hiring process and also for
training and performance appraisal.

Job analysis is thus, necessary and it is a procedure or method that examine


the skills, knowledge, experience and other requirement necessary to do a
job well.

The outcomes of the job analysis will be the job description and the job
specification.

(b) Job Description


It is a document that outlines a job. According to Maimunah (2008) a
typical caption is as follows:
(i) Job title, location and grading;
(ii) Relationships – organisational hierarchy;
(iii) Brief statements on the purpose of the job;
(iv) List of duties and responsibilities;
(v) Terms and conditions of employment to be given to the job-holder;
and
(vi) Negative aspects of the job.

(c) Job Specification


Sometimes it is known as person description. A document that explains
how an individual fits into a job. It also assists the HR personnel to recruit a
qualified candidate for a position.

According to Maimunah (2008), job specification should include the


following:
(i) Knowledge, skills and abilities required to do the job;
(ii) Educational qualifications and work experiences required;
(iii) Physical requirements of the job, if any;
(iv) Personality requirements, where relevant; and
(v) Career path.

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TOPIC 3 JOB ANALYSIS AND DESIGN 47

Next, refer to Figure 3.3 for the job analysis process.

Figure 3.3: Job analysis process


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing

Before we engage in further discussion on job analysis, we must first understand


some terms that are closely related to job analysis. The terms are shown in Table
3.1.

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48 TOPIC 3 JOB ANALYSIS AND DESIGN

Table 3.1: Basic Job Terms

Term Description
Job A number of activities and duties that are inter-related.
Position Different duties and responsibilities performed by an
employee.
Job group A group of different jobs with similar characteristics.
Duties A group of job elements coordinated and combined to produce
results.
Element The smallest unit of a job or task.
Job specification Statement on the knowledge, skills and capabilities needed by
an employee to perform a job.
Job description Statement on the duties, obligations and responsibilities
needed to perform a job.

ACTIVITY 3.1
Working with a group of three or four students, collect at least three
different job descriptions from organisations of your choice. Compare
the descriptions, highlight similarities and differences.

3.1.1 Job Analysis Approach


We can use various methods to obtain data or information on a job. These
methods can be categorised as qualitative or quantitative methods.
(a) Qualitative Methods
The following are some of the qualitative methods often used:
(i) Interview
A job analyst will question employees, supervisors and managers
individually regarding the work that is being analysed.
(ii) Survey
A job analyst will distribute to every employee a questionnaire on the
work that is being analysed. Each employee must fill up the
questionnaire. The data gathered is on employeesÊ duties and
responsibilities, work goals, suitability of workplace, requirements to
perform work (skills, education, experience, physical and mental
needs), equipment and materials needed, and requirements on
employeesÊ health and safety.

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TOPIC 3 JOB ANALYSIS AND DESIGN 49

(iii) Observation
A job analyst can obtain information on jobs by observing employees
of particular positions while they are performing their tasks.
Observation is based on standard work activities. The result of the
observation will be recorded in an observation form.
(iv) Journal and Record
The employer will be requested by the analyst to record all activities
in a journal throughout the employeeÊs work cycle. Usually, the notes
are made in 30 minutes or one hour intervals for each cycle or work
shift, and the time frame is usually between two and four weeks.

Apart from the methods above, there are other methods or approaches in
data collecting that are quantitative in nature.

(b) Quantitative Methods


Among the popular quantitative approaches in job analyses are as follows:
(i) Functional Job Analysis (FJA)

FJA is a quantitative approach to job analysis. It utilises the


inventory of a jobÊs activities or functions.

FJA assumes that every job involves the execution of a specific


employeeÊs functions, i.e. functions related to data, humans and
things.

Each function has a difficulty level that has been relatively set. The
total value of difficulty level will determine a jobÊs content and help to
prepare the job description and specification. Table 3.2 shows an
example of a FJA application.

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50 TOPIC 3 JOB ANALYSIS AND DESIGN

Table 3.2: Sample of a Functional Job Analysis Application

Level of Difficulty of EmployeesÊ Functions


Data Humans Things
0 Synthesising 0 Mentoring 0 Starting
1 Coordinating 1 Negotiating 1 Working efficiently and
2 Analysing 2 Giving instructions and thoroughly
3 Arranging 3 Supervising 2 Operating controlling
4 Calculating 4 Diverting attention 3 Steering operating
5 Copying 5 Persuading 4 Manipulating
6 Comparing 6 Talking in signs 5 Attending
7 Servicing 6 Feeding off bearing
8 Receiving orders helping 7 Handling

Source: Adapted from Revised Handbook for Analysing Jobs,


Washington DC: US Gov. Printing Office, 1991

Based on the example presented in Table 3.2, if a clerk needs to copy


data, talk to customers and lift things, the difficulty levels of his or her
functions are 5, 6 and 7, respectively. This means that the total
difficulty level for the clerk is 18.

If the difficulty levels for an assistant psychiatrist in a hospital in


terms of handling data, humans and things are 1, 7 and 5,
respectively, then, the total level of difficulty is 13.

The lower the score of the difficulty level, the higher the difficulty
level function. Therefore, jobs that have the same score are grouped
together and paid the same salary rate.
(ii) Position Analysis Questionnaire (PAQ)

PAQ is a quantitative survey method that covers 194 items on


employee oriented duties.

This technique uses a scale of 0 to 5 to determine the degree of work


duties or elements that need to be carried out in a job. The 194 items
are classified in six groups, i.e:
Information input
Information input refers to the way employees acquire
information on a job.

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TOPIC 3 JOB ANALYSIS AND DESIGN 51

Mental process
Mental process refers to the process of reasoning, decision making
and planning applied to perform a job.
Work result
Work result refers to the types of equipment and physical
activities utilised to perform a job.
Relationship with others
Relationship with others refers to the types of relationship
expected in order to perform a job.
Work contexts
Work contexts refer to the physical and social contexts where the
job is performed.
Other work characteristics
Other work characteristics refer to activities, occurrences or other
characteristics aside from the five characteristics listed above.

The score from respondentsÊ answers will be analysed by a computer


and the result will be used to determine the characteristics of a job.

(iii) Critical Incident Method


Through this method, important work duties are identified to
determine the success of a job. Information on critical duties can be
obtained through interviews with employees and managers or
through written reports by the position holder. Data obtained will be
analysed. The result is a clearer or more understandable report on the
important tasks in a job.
(iv) Computer Job Analysis
Human resource information system helps a lot in the job analysis
process. Now, there are many software designed specifically to
analyse jobs and come up with job descriptions and specifications
based on the analysis. Managers and employees have to only choose
statements on duties related to the job being analysed to determine
the importance level of the duties.

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52 TOPIC 3 JOB ANALYSIS AND DESIGN

EXERCISE 3.1
TRUE (T) or FALSE (F) Statements
1. Job analysis is the process of obtaining information on a job
by determining the obligations, duties or activities of the job.
2. The responsibility of carrying out a job analysis is the main
responsibility of a line manager.
3. The usual methods of gathering information for a job analysis
are interviews, questionnaires, observations and journals.
4. The functional job analysis approach is an inventory of a jobÊs
various functions and work activities.
5. The main objective of the critical incident method approach
when performing a job analysis is to identify the 194 items in
the position analysis questionnaire list.

Visit http://www.job-analysis.net and get information on the approaches in a


job analysis (apart from those already mentioned).

3.1.2 Job Description and Specification


Data on a job obtained from a job analysis will be used to develop the job
description and specification.
(a) Job Description

A job description is a written description of a job and it covers the


duties that need to be performed.

Most job descriptions contain at least three parts, namely, position, work
introduction and work duties and obligations. Table 3.3 presents the
important areas of a job description.

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TOPIC 3 JOB ANALYSIS AND DESIGN 53

Table 3.3: The Important Parts of a Job Description

Job Description
Description
Term
Position Name Represents the duties and level of the post in an organisation.
Psychologically, the position name can represent a jobÊs status.
The position name should also explain the duties that need to be
performed in a job.

Work Differentiates a job from another job.


Introduction
Items that need to be included in a work introduction include
work location in an organisation, to whom the position holder
should report, and when was the last time the job description
was revised.
Duties or A statement on the job obligations and duties is often arranged
Obligations according to its significance.
A job statement should show the weight or value of a task in a
particular job. Often, the total time utilised to perform a task
will become the main weight.
A job statement covers responsibilities in performing duties and
results that should be achieved. It also covers the equipment or
tools needed by employees to perform the job.
The management must ensure that job duties and obligations do
not go against laws and regulations.

A job description is important to employees because it helps them to learn


their duties and obligations in a particular job and reminds them of the
result they must achieve.

On the managementÊs side, a job description becomes a base to reduce any


misunderstanding between employers and employees in the job
requirements. It is also a basis for the management to take corrective actions
when a task or obligation is not performed well.

(b) Job Specification


A job specification is a certain eligibility needed to perform tasks and fulfil
the responsibilities of a job. A job specification usually consists of two
things, i.e.:

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54 TOPIC 3 JOB ANALYSIS AND DESIGN

(i) Skill requirements in performing a job. This includes education or


experiences, specialised training, personal characteristics or abilities
and manipulative abilities.
(ii) Physical requirements in performing a job. Physical requirements
include requirements to walk, stand up, reach, lift or speak while
performing a job. Physical requirements also take into consideration
an employeeÊs endurance towards the physical environment of the
workplace and the hazards that need to be faced.

ACTIVITY 3.2
Based on your experience in the workplace, what are the problems
that may be faced by the management and employees in the
process of preparing a job description report?

3.1.3 Uses of a Job Analysis


The result of the job analysis process helps the human resource manager to carry
out human resource management functions (refer to Figure 3.2). These functions
are recruitment, selection, training and development, performance evaluation
and compensation management.
(a) Recruitment
The recruiter must have knowledge of the job specification before hiring an
employee to fill the post.
(b) Selection
The manager and supervisor will use the job description and job
specification to select and orientate the employees.
(c) Training and development
Training equips employees with the knowledge, skills and abilities
necessary to perform their tasks.
(d) Performance evaluation
The requirements contained in a job description can be used as the criteria
to evaluate the post holderÊs performance.
(e) Compensation management
The management must consider requirements in terms of the employeeÊs
skills, efforts and responsibilities, as well as workplace environment and
hazards in determining the payment rate for workers so that it is equal to
the work performed.

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TOPIC 3 JOB ANALYSIS AND DESIGN 55

EXERCISE 3.2

TRUE (T) or FALSE (F) Statements

1. In preparing a job description report, the selection of a job title


is important in determining the employeeÊs status.
2. When writing a job description report, it is logical to use terms
that are loose, unclear and comprehensive.
3. When there is a gap between knowledge, skills and abilities and
the requirements needed to fulfil the job description and
specification, then the position holder must be given training.
4. The requirements in a job description can be used as the criteria
to evaluate the position holderÊs performance. It is known as job
evaluation.
5. In determining the payment rate of a job, the relative value of
the job does not hold much importance.

3.2 JOB DESIGN


Before you proceed with the discussion on job design, make sure you are not
confused between job design and job analysis.

A job analysis involves a study on a job that is being performed by an employee.


A job design is an expansion of the job analysis aiming at improving a job
through people and technology, so that the organisationÊs efficiency and job
satisfaction can be achieved. A job design involves job structuring, including job
enlargement, reengineering and job enrichment.

Job design involves the emerging of five factors (Bohlander, 2001):


(a) Organisational objectives;
(b) Matters relating to behaviour;
(c) Matters relating to industrial engineering;
(d) Ergonomic matters; and
(e) Employee contribution.

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56 TOPIC 3 JOB ANALYSIS AND DESIGN

3.2.1 Behavioural Matters


There are two approaches that influence employee behaviour when performing a
job. They are job enrichment and job characteristics.
(a) Job Enrichment
Job enrichment is to stimulate a job by increasing meaningful tasks and
obligations to give more satisfaction to employees.

Job enrichment for employees can be done through these methods:


(i) Increasing the difficulty level and the responsibilities of a job;
(ii) Giving employees opportunities to maintain authority and
empowerment of their work;
(iii) Conducting a one-on-one work performance report with the employee;
(iv) Increasing new tasks that require training and development; and
(v) Assigning particular tasks individually so that employees become experts.

Job enrichment is only effective for certain jobs. There are employees who
are unhappy when their job descriptions are changed, but there are also
others who see it as a challenge and something stimulating.
(b) Job Characteristics
A job characteristics model states that there are three psychological states
where an employee shows an improvement in his or her work performance,
internal motivation, decrease in absenteeism and turnover.

The three psychological circumstances are:


(i) Feeling a sense of meaningfulness towards the work performed;
(ii) Feeling responsible for work results; and
(iii) Knowing or understanding the work that has been done.

If there is a decrease in one of the three psychological circumstances, it will


affect the internal motivation of an employee.

According to Hackman and Oldham (1976), there are five job characteristics
that influence these three psychological circumstances. They are skill
variety, task identity, task significance, autonomy and feedback.
(i) Skill Variety
Explains the range of skills and activities necessary to complete the
job. The more an employee is challenged to use a wide variety of
skills, the more satisfying the job is likely to be.

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TOPIC 3 JOB ANALYSIS AND DESIGN 57

(ii) Task Identity


Measures the degree to which a person can complete an activity or job
in full. Employees who are able to take an activity from start to finish
are usually more satisfied.
(iii) Task Significance
Focuses on the impact and influence of a job. Jobs are more satisfying
if employees believe that they make a difference, and are adding real
value to colleagues, the organisation, or the larger community.
(iv) Autonomy
Describes the amount of individual choice and discretion involved in
a job. More autonomy leads to more satisfaction.
(v) Feedback
Measures the amount of information an employee receives about his
or her performance, and the extent to which he or she can see the
impact of the work. The more that people are told about their
performance, the more interested they will be in doing a good job.

Figure 3.4 shows Hackman and OldhamÊs job characteristics model.

Figure 3.4: Hackman and OldhamÊs job characteristics model


Source: Adapted from Hackman & Oldham (1976). Motivation through the design of
work: Test of a theory
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58 TOPIC 3 JOB ANALYSIS AND DESIGN

ACTIVITY 3.3
In your opinion, what will happen if an employeeÊs duties and
responsibilities are increased but he or she is not psychologically
ready to accept the job enrichment?

3.2.2 Industrial Engineering Matters

Industrial engineering is a field that is closely related to analysing work


methods and determining the standard work duration. It involves a study on
the work process cycle and determines the work elements that need to be
changed, merged, rearranged or eliminated so that the work duration needed
to complete the work process cycle can be lessened.

Through industrial engineering, the standard work duration for each work
element is merged and matched by taking into account employeeÊs skills and
efforts when performing the particular job. The time duration on matters that
interrupt employees when working is also considered. Therefore, the total time
that has been changed is considered the standard time to perform a work cycle.

Industrial engineering involves a disciplined and objective approach. However,


employeesÊ behavioural matters must be considered. This is because a job design
that is only seen from the industrial engineeringÊs point of view as being efficient
and organised may not be psychologically suitable for the employee.

ACTIVITY 3.4

Think about the industrial engineeringÊs strengths and weaknesses in


terms of work process and employees. Based on your working
environment, list the strengths and weaknesses of industrial
engineering.

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TOPIC 3 JOB ANALYSIS AND DESIGN 59

3.2.3 Ergonomic Matters

Ergonomics is a disciplinary approach in designing equipment with a system


that can be used easily and effectively by employees.

The overall system is suited to the characteristics that are present in humans.
Factors such as job types, work environment, machines, equipment and
processes must be suitable for the employees that are performing the particular
job. Briefly, we try to fit machine to man, and not fit the man to the machine.

In other words, ergonomics tries to lessen negative impacts such as carelessness,


negligence and other weaknesses that can cause defects to products and damages to
the equipment. Most importantly, it is to avoid employee injuries and accidents as
well as fatalities when performing work. See Figure 3.5 for an example.

In designing equipment, the employeesÊ physical abilities as well as their reaction


towards stimulation must be considered. An employeeÊs ability to react by way
of seeing, hearing, touching and discovering equipment is important. Apart from
being appropriate for the workplace, the equipment or machine must be suitable
for employees, specifically female employees.

Figure 3.5: Sample of Ergonomics Checklist at a ClerkÊs Work Station


Source: Adapted from Bohlander, Snell & Sherman. (2004). Managing human resources
(13th ed.). Ohio: South-western College Publishing

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60 TOPIC 3 JOB ANALYSIS AND DESIGN

ACTIVITY 3.5
In this developing era, females are able to perform tasks that were formerly
monopolised by men. However, there are parties who feel that jobs such as
labourers are only suitable for men. Give your views. If you agree, do you
think you are discriminating against female employees?

EXERCISE 3.3

TRUE (T) or FALSE (F) Statements

1. There are two methods in job design, namely, job enrichment


and job characteristics. Both methods combine employee
behavioural needs when they are performing their jobs.
2. Richard HackmanÊs and Greg OldhamÊs job characteristics
model suggests that there are three employee psychological
circumstances that will improve work performance and
internal motivation, and decrease employee non-attendance
and dismissal.
3. The result of industrial engineering scientific management is a
work method analysis to determine a standard work time.
4. Ergonomics is about designing equipment that considers the
operatorÊs mental ability to operate the equipment, as well as
react through sight, hearing and touch towards the
information from the equipment.

3.2.4 Job Design to Increase Employee Contributions


All techniques used to increase employee contributions in an organisation have
two similarities, namely, to increase cooperation and standardisation among
group members.

Research shows that working in a group promotes a sense of responsibility


towards achieving organisational goals. It also increases employeesÊ acceptance
towards decisions made, and encourages a cooperative approach in performing
tasks in the workplace.

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TOPIC 3 JOB ANALYSIS AND DESIGN 61

Among the cooperation techniques that increase employeesÊ involvement in the


organisation are employee involvement groups and employee teams.
(a) Employee Involvement Groups
An employee involvement group is a group of employees that often meet to
solve problems or to give suggestions for the process of organisation
improvement. Each group may consist of five to ten employees and each
employee has similar or related duties or tasks in the organisation. In
general, employee involvement groups give suggestions to the
management, and the management decides whether or not to execute the
suggestion. If the suggestion is accepted, the result will be measured and
the group members will be rewarded for their contribution.

An employee involvement group usually meets four or five hours a month


and is chaired by a head. The head has no power but only acts as a
facilitator.

Figure 3.6 shows the employee involvement group process.

Figure 3.6: Employee involvement group process

(b) Employee Teams


An employee team is a technique where work functions are delegated to
groups and not to individuals. Members of a group are given the freedom
to use their own intelligence in managing working in a team and
individually. Each team member is responsible for improving the work
environment in the organisation. The team also assumes that each member
is responsible for the performance of their group. The management sees each
group as a unit that reacts to solve problems related to the organisation.

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62 TOPIC 3 JOB ANALYSIS AND DESIGN

Employee teams can operate in different forms or structures, and each


structure has its own strategy.
(i) Cross-functional Teams
A cross-functional team is a team that consists of multiple expertise
and is established to achieve a specific objective. Membership in the
cross-functional team is upon appointment and not voluntary.
(ii) Project Teams
A project team is a team that is established to design a new product or
service. Membership is upon appointment by the management based
on the ability of the employee to contribute to the achievement of a
project. The team will be disbanded when all tasks are completed.
(iii) Self-directed Teams
A self-directed team consists of those who are trained to perform tasks
related to the work unit. Group members opt for the majorityÊs
agreement in carrying out each of their obligations, such as problem
solving and liaising with customers from inside or outside the
organisation.
(iv) Task Force Teams
A task force team is a team that is established by the management to
solve major problems immediately. This team is responsible for
developing a long-term plan in the solving of major problems,
including carrying out the solutions.
(v) Process-improvement Teams
A process-improvement team comprises employees who are
experienced in various departments or functions. They are in charge
of improving quality, reducing wastage, or increasing productivity in
the processes that involve all related departments or functions. Team
members are usually appointed by the management.
(vi) Virtual Teams
A virtual team is a team where its members are far away from each
other and communicate through computers and other communication
technology.

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TOPIC 3 JOB ANALYSIS AND DESIGN 63

Employee teams will change the way the management and employees
communicate with each other. The manager faces problems in acting as a
head whereby traditionally managers have always acted as supervisors. The
manager will feel threatened by the empowerment given to employee teams,
which indirectly lessens the managementÊs power.

On the other hand, employees face problems in adapting to the new


supervisory role. To prevent these problems, members in employee teams
have to be trained throughout the four stages of team formation. These
stages are: formation, conflict, standards, and execution. The complete
training includes important skills in:
Team leadership.
Formation of the mission or objective.
Chairing a meeting.
Team decision making.
Conflict resolutions.
Effective communication.
Awareness of team diversity.

SELF-CHECK 3.1
What are the similar characteristics present in the techniques to
increase employee contribution in an organisation?

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64 TOPIC 3 JOB ANALYSIS AND DESIGN

3.2.5 Suitability of Work Timetable


The suitability of work timetable is not actually a part of job design. This is
because employeesÊ duties and responsibilities are not changed. However, the
suitability of work timetable will change employeesÊ normal working time.

Among the usual work timetable options are compressed workweek, flexi time,
job sharing, and telecommuting.
(a) Compressed Workweek
In compressed workweek, the total work days a week are reduced but the
total work hours a day are increased. This maintains the total work hours
per week.
(b) Flexi Time
Flexi time enables employees to choose the start and end of work time that
is suitable for them, as long as the total work time per day or per week is
maintained. However, it is compulsory for all employees to be at the
workplace at a certain period of time, such as between 10am and 3.30pm.
(c) Job Sharing
Job sharing refers to two temporary workers performing one job which is
supposedly manned by one full-time employee. They acquire a fee equal to
the total number of hours they work.
(d) Telecommuting
Telecommuting is the utilisation of micro computers, networks, and other
communication technologies such as facsimile machines when working at
home, whereby these tasks were previously done in the office or at the
workplace.

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TOPIC 3 JOB ANALYSIS AND DESIGN 65

EXERCISE 3.4
TRUE (T) or FALSE (F) Statements
1. Cooperation and standardisation techniques are among the
techniques in job design that aim at increasing group or
employee productivity.
2. Permanent groups that consist of five to ten employees who
perform the same task and often meet to identify, analyse, and
propose solutions for problems are known as task force teams.
3. Employee teams can operate in different organisational
structures, each with a specific strategy and goal.
4. Flexi time allows employees to choose their own start and
end of work time as long as they work for a certain total
number of hours per day or per week.
5. Telecommuting utilises micro computers, networks and
different communication technologies such as facsimile
machines to work at home, instead of doing it at the workplace.

Match the concepts to the suitable statements


(a) Job (d) Job design
(b) Job analysis (e) Job specification
(c) Job description (f) Position

1. A statement on the need for oneÊs knowledge, skills and


abilities in order to perform a job.
2. Extension and expansion of job analysis that improve a job,
and is related to job structure to increase organisation
efficiency and an employeeÊs job satisfaction.
3. Different tasks and responsibilities carried out by an
employee.
4. The process to obtain information on a particular job by
determining the obligations, tasks or activities in the
particular job.
5. A group of related activities and tasks.
6. A statement on the tasks, obligations and responsibilities of a
particular job.

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66 TOPIC 3 JOB ANALYSIS AND DESIGN

Multiple Choice Questions

1. A job specification determines the qualification needed for an


applicant. It plays an important role in _______________.
A. Recruitment functions
B. The functions of a job analysis
C. A job characteristics model
D. Selection function

2. Human resource management uses the data from the job analysis
to develop ____________________.
A. An attitude and behaviour survey
B. A job description and specification
C. A job analysis function and ergonomic issues
D. Employee agreement and workersÊ union

3. In a job description, the area that gives information on the location


of a certain job and to whom the work result should be reported is
known as __________________.
A. Task identity
B. Skill variety
C. Position title
D. Job specification

4. Below are the characteristics present in the job characteristics


model EXCEPT _____________________.
A. Skill variety
B. Task identity
C. Task significance
D. Group decision making

5. Those involved in the employee involvement groups must receive


training in identifying problems, analysing problems and
identifying various decision-making tools such as
__________________.
A. Planned or unplanned decisions
B. Quality groups and self-managed teams
C. Centralised and decentralised power
D. Statistical analysis and cause and effect diagrams

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TOPIC 3 JOB ANALYSIS AND DESIGN 67

6. On behalf of the employers, flexi time is really helpful in


_________________.
A. Forecasting employee dismissal rate
B. Recruiting and retaining employees
C. Developing job sharing
D. Developing a flexible timetable that is easy to follow

Essay Questions

1. Imagine that you are a manager in the service department. How


does the employee requirement, which has been formerly
documented, help in managing your unit?
2. Clarify how industrial engineering and ergonomics can relate to
their own advantages, and at the same time suit each other in
designing a certain job.

Job analysis and job design play an important role in the development of an
organisation.
In relation to that, organisations give specific importance to both aspects.
Through job analysis, job description and specification are developed. A
wrong analysis will produce an inaccurate description and specification.
This in turn gives a bad effect to the organisationÊs performance.

Ergonomics Job description


Functional job analysis (FJA) Job design
Industrial engineering Job specification
Job analysis Position analysis questionnaire
(PAQ)
Job characteristics model

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Topic Planning and
Employee
4 Recruitment

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Identify the advantages of combining human resource planning
with the organisation's strategic planning;
2. Describe basic approaches to human resource planning;
3. Discuss strengths and weaknesses of employee recruitment from
within an organisation; and
4. Examine the source of the external recruitment process.

INTRODUCTION
Organisations compete with one another based on the skills and abilities of their
manpower. Therefore, manpower or human resource planning becomes very
important so that present and future employees will be a competitive workforce.

Organisations need to be careful when recruiting, selecting, developing and


maintaining their employees. To fulfil the requirements when performing human
resource management functions, effective human resource planning must be
carried out.

In this topic, we will discuss two processes of human resource management,


namely, human resource planning and recruitment. Human resource planning is

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 69

the basis for staffing in an organisation, whereas recruitment initiates the action
process in fulfilling whatever has been planned by the organisation.

4.1 HUMAN RESOURCE PLANNING

Human resource planning is a process of forecasting and preparing human


movement into, within and out of an organisation.

The aim of human resource planning is to utilise human resources effectively so


that the organisationÊs goals can be achieved. Human resource planning also
ensures that the organisation has the correct total and type of employees.

4.1.1 Importance of Human Resource Planning


The importance of human resource planning can be seen from different
perspectives as shown in Figure 4.1.

Figure 4.1: The importance of human resource planning

(a) Recruitment
Changes in the employee environment and composition require the
manager to be more involved in human resource planning. The manager
must plan a more effective recruitment method so that the aim to hire
capable employees will be achieved.

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70 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

(b) Reducing non-visible costs


Human resource requirements that are effectively planned will reduce an
organisationÊs losses. For example, a job vacancy that is immediately filled
will not disrupt the organisationÊs operations; the quality of products or
services will be maintained and the organisationÊs losses can be avoided.

(c) Employee career planning and development


Any weaknesses in human resource planning will give a negative effect to
an employeeÊs career, as the opportunities to further himself or herself in a
job and position may be limited.

(d) Effectiveness of human resource management programmes


Human resource planning is the basis for the standardisation of human
resource management functions. Take this scenario for example. An
employee from Section B has resigned, but an employee is being hired to
work in Section A even though Section A does not need a new employee.
This shows that the human resource management functions are not
performed effectively.

SELF-CHECK 4.1

Through human resource planning, an organisation plans its


employeesÊ movement into, within and out of the organisation. If you
have your own company, will human resource planning be important
to your organisation? Explain.

4.1.2 Human Resource Planning and Strategic


Planning
For the purpose of future organisational planning, a human resource manager
must combine human resource planning with the organisationÊs strategic
planning. There are three methods on how human resource planning and
strategic planning can be related.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 71

Figure 4.2 shows these methods.

Figure 4.2: Relationship between human resource planning and strategic planning

(a) Relating the Strategising and Implementation Process

Strategic planning enables an organisation to determine its main


objectives and develop a comprehensive plan to achieve the objectives.

Human resource planning is related to strategic planning at the beginning


and final stages. At the beginning, human resource planning is the input in
the strategising process. Human resource planning will address what can
be done. At the final stage, strategic planning and human resource planning
are related in terms of their implementation. When the strategies are set, the
management must decide on the division of source, including matters
involving structure, process and human resources.

The combination of human resource planning and strategic planning is


effective when both plans assist each other. In this matter, the top
management must understand that decisions made in strategic planning
will affect human resource planning, and vice versa. The human resource
manager is seen as part of the management team in the organisationÊs
strategic planning.

Figure 4.3 shows the relationship between the human resource planning
process and the strategic planning process.

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72 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

Figure 4.3: The relationship between the human resource planning process and the
strategic planning process

ACTIVITY 4.1
Based on Figure 4.3, between strategic planning and human
resource planning, which should come first? Discuss with your
coursemates.

(b) Determines the Types of Human Resources Present in the Organisation


The strategies planned can be related to human resources in terms of an
employeeÊs basic efficiency. These employees can be divided into four
categories based on their skills and the strategic values given to them by the
organisation. Refer to Figure 4.4 to know how an organisation determines
the types of employees.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 73

Figure 4.4: Determining types of employees in an organisation


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

(i) Employees with Core Knowledge


This refers to employees with special skills and high strategic values.
An organisation needs to give a high commitment to these employees
by giving them training and opportunities to develop. Examples of
employees with core knowledge are accountants and computer
programmers.

(ii) Employees with Traditional Tasks


This refers to employees who have skills which are not unique.
Usually, an organisation does not give much training and
opportunities for these employees to develop career wise. Examples of
these employees are salespeople and drivers.

(iii) Contract Labourers


This refers to employees who are readily available and with limited
tasks, such as clerks and furniture restorers.

(iv) Affiliates
Affiliates have unique skills but are not related to the organisationÊs
basic strategies. An organisation tries to promote a good relationship
with their affiliates and invests in the exchange of information and
knowledge. Examples of affiliates are lawyers, consultants and lab
researchers.

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74 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

(c) Ensures the Suitability and Flexibility of the Human Resource Planning
Practices
Another way of relating human resource planning and strategic planning is
by suiting the policies, programmes and practices of human resource
planning to the organisationÊs strategic requirements.

Human resource planning policies and practices must achieve two types of
adaptation, i.e. external adaptability and internal adaptability.
(i) External adaptability focuses on the relationship between business
objectives and the main human resource efforts. For example, to
achieve a low operational cost, the human resource planning policies
and practices must support the direction of low operational costs.
(ii) Internal adaptability is a human resource planning practice that is
suited between one another to produce a symbiosis relationship. For
example, job design and training focus on the same behavioural
target, such as efficiency and creativity in work.

When changes take place in the working environment, human resource


planning must be flexible and able to withstand the changes. This will
increase an organisationÊs ability to act and change in the efforts to
maintain the organisationÊs competitive advantage. Flexibility can be
achieved in two ways, i.e. coordination flexibility and source flexibility.
(i) Coordination flexibility happens through a swift resource change to
fulfil new or changed requirements. For example, through human
resource planning, the manager can predict economic trends and
competitorsÊ pace.
(ii) Source flexibility happens when employees are able to perform many
different tasks in many different ways. For example, an employee can
work as a team, or switch tasks, and is flexible in nature, in terms of
job responsibilities.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 75

EXERCISE 4.1
TRUE (T) or FALSE (F) Statements

1. Knowledgeable employees often get more attention from the


management in terms of commitment and training
opportunities to increase their knowledge and skills.
2. Apart from visible costs and non-visible costs, ineffective
human resource planning can cause employees to face
problems in planning their careers in the organisation.
3. Generally, contract labourers and temporary workers have a
lower strategic value of skills and knowledge compared to
knowledgeable employees and full-time employees.
4. A human resource manager must become a part of the
planning committee of an organisation.
5. Human resource planning is related to an organisationÊs
strategies when an organisation is performing strategic
analysis, strategic formation and strategic implementation.

4.1.3 Human Resource Planning Process


Through human resource planning, an organisation can forecast and prepare for
human movement into, within and out of the organisation. Therefore, the steps
involved in human resource planning are:
Environmental scanning;
Predicting manpower/human resource needs;
Predicting manpower/human resource supply; and
Balancing human resource supply and requirement.

(a) Environmental Scanning


Environmental scanning systematically detects the external forces that
influence the organisation. The external forces or factors often scanned are:
(i) Economic factors, including local and global economy.
(ii) Competitive trends, including processes, services and new
innovations.

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76 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

(iii) Technological changes, including robotic technology and office


automation.
(iv) Political and legal issues, including laws and administration.
(v) Social matters, including childcare and education
(vi) Demographic trends, including age, composition and literates.

Aside from scanning the external environment, internal scanning is also


carried out. A cultural audit is the scanning of the organisation's culture
and work life quality in an organisation.
(b) Predicting Employee Needs
Based on the human resource planning model as shown in Figure 4.5, there
are two types of approach to predict employee needs in an organisation.
The approaches are quantitative approach and qualitative approach.

Figure 4.5: Human resource planning model


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

(i) Quantitative Approach


Quantitative approach involves the use of statistical and mathematical
techniques. This approach is often used by professional planners. One
of the examples of the quantitative method is trend analysis.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 77

Trend analysis is a quantitative approach to predict labour needs


based on an index. For example, sales result (refer to Table 4.1).

Table 4.1: Predicting Human Resource Needs with the Trend Analysis Method

Labour Human
Business Factors
Productivity Resource Needs
Year (Sales in RM
(Sales/ (Number of
Â000)
Employees) Employees)
1995 2351 14.33 164
1996 2613 11.12 235
1997 2935 08.34 352
1998 3306 10.02 330
1999 3613 11.12 325
2000 3748 11.12 337
2001 3880 12.52 310
2002* 4095 12.52 327
2003* 4283 12.52 342
2004* 4446 12.52 355

* forecasted
figures

Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human
resources (15th ed.). Ohio: South-western College Publishing

In Table 4.1, the business factor that is taken into account in predicting
human resource needs is the total annual sales for each year. Labour
productivity is obtained by calculating the average number of sales of
an employee in the financial year. The total number of employees can
be predicted by dividing the value of business factor with labour
productivity.

Apart from total sales, other business factors that can be used to
predict human resource needs are interest rates, Gross National
Income and income expenditure.

Other quantitative methods that can be used to predict human


resource needs are regression analysis, ratio analysis and timeline
analysis.

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78 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

ACTIVITY 4.2
Refer to Table 4.1. If the sales result in 2005 was RM4,546,000 and
the labour productivity maintained as in 2004, what would be the
human resource needs in 2005?

(ii) Qualitative Approach


A qualitative approach does not involve much statistics but takes into
consideration employees' interests, abilities and aspirations in
fulfilling future staffing requirements. In this method, the human
resource manager predicts employee needs through considerations.
Among the qualitative methods often used are management
forecasting and the Delphi Technique.
Management forecasting is opinions, considerations or proposals
from supervisors, department managers, experts or those with
knowledge in human resource requirements for the organisation
in the future.
The Delphi Technique is a technique of obtaining and
summarising proposals or considerations from chosen experts on
employee needs in an organisation. This technique reduces
biasness as the final prediction is a combination of expertsÊ
predictions.

ACTIVITY 4.3
Look at the human resource planning in your workplace. Are the
management predictions and Delphi Technique used? If yes, give
an example on how the planning is implemented.

(c) Predicting Employee Supply


After an organisation predicts employee needs, it has to determine whether
the number and types of current employees will be sufficient for the future.
This process involves detecting the level of current and future supply,
whether inside or outside the organisation.

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There are various methods to detect and predict the total number of
internal employees. Among these methods are:
(i) Staffing Schedule
A staffing schedule gives a graphic display on all jobs in an
organisation, including existing number of employees involved in the
jobs. It also contains employees' needs for the future.
(ii) Markov Analysis
This analysis detects the pattern of employee movement through
various types of jobs. It shows the percentage and actual figure of
employees who still remain in a particular job, and employees who
are promoted, demoted, transferred or removed from the
organisation. Through the Markov Analysis, an employee movement
matrix can be developed and the supply of internal human resources
can be predicted. For example, refer to Table 4.2.

Table 4.2: Example of the Use of Markov Analysis to Predict Internal Human Resource
Supply
(a) Transition Probability Matrix
Year 2003 (expected)
Categories
A1 A2 B1 B2 Out
and job levels
Year A1 .60 .10 .20 .00 .10
2002 A2 .05 .60 .00 .00 .35
B1 .05 .00 .60 .05 .30
B2 .00 .00 .00 .80 .20

(b) Predicting Supply


Year 2003 (expected)
Categories Current
A1 A2 B1 B2 Out
and job levels workforce
Year A1 100 60 10 20 0 10
2002 A2 20 1 12 0 0 7
B1 200 10 0 120 10 60
B2 15 0 0 0 12 3
Predicted supply 71 22 140 22

Based on Table 4.2, suppose A1 is salesperson, A2 is sales manager, B1 is


customer service agent, and B2 is customer service manager.

The percentage data in part a (transition probability matrix) for all


categories and job levels were obtained based on previous yearsÊ
calculations. Refer to the salesperson level (A1). The percentage is derived

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80 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

from the total number of employees that are maintained in level A1 divided
by the total number of employees in that level from the previous year.
Then, the total number of promotions to A2 in the current year is divided
by the total number of employees in level A1 from the previous year. The
same goes for the total number of employees that have moved to B1,
promoted to B2, and was removed from the organisation. The total of all
percentages must add up to 1 (or 100%). For example, at level A1= 0.60 +
0.10 + 0.20 + 0.00 + 0.10 = 1.00.

In part b (predicting supply), in the year 2002, the total number of salespeople
(A1) is 100. It is expected that in 2003, 60 people will remain as salespeople (A1),
10 people will be promoted to sales manager (A2), 20 people will be moved to
the position of customer service agent (B1), there will not be any promotion to
customer service manager (B2), and 10 people will be removed from the
company. In the year 2003, the company is expected to supply 71 salespeople, 22
sales managers, 140 customer service agents and 22 customer service managers.

ACTIVITY 4.4
Refer to Table 4.2. Say in 2002, the number of customer service
agents (B1) was 280. How many of them would be promoted to
customer service managers?

(i) Skill Inventory


Skill inventory consists of employeesÊ personal files that contain
information on education, experience, interests, skills and others. Skill
inventory enables the manager to promptly match the suitable
positions with employeesÊ backgrounds.
(ii) Replacement Chart
A replacement chart consists of a list of current position holders, and
those who have the probability to replace a position, should the
position be vacant. This chart gives information on the employeesÊ or
the managerÊs current performance and the probability of a
promotion.
(iii) Succession Planning
Succession planning identifies, develops and detects important
individuals for executive positions.

When an organisation experiences a shortage of internal sources for promotion,


or for new positions at the beginning or lower level, the manager must look at
external work source or labour supply from outside the organisation.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 81

There are a few external factors that influence the labour market. Among
them are demographic changes, economy, manpower level of education,
requirements for certain skills, population movement and government
policies. The unemployment rate at the national and state levels often
becomes the benchmark to detect the labour force or employee supply.

(d) Balancing Human Resource Supply and Requirement


Through human resource planning, an organisation balances between
employee need and supply. The demands towards employees are based on
trend forecasting in an organisationÊs business activities.

An offer involves determining where and how potential employees can be


found in order to fill expected vacancies. Matters become difficult if a
particular job needs specific training, and this will require more thorough
planning.

If there is a job vacancy, whether aiming at replacing an employee who has


resigned or due to the existence of a new position, an organisation must
employ a new worker. The organisation can recruit a full-time or part-time
employee, depending on its requirements.

An organisation can also re-hire employees who have resigned if the


organisation feels that it is appropriate. For short-term and temporary
actions, the organisation can encourage its employees to work overtime in
order to fulfil the organisationÊs current requirements.

When an organisation experiences a surplus of manpower, there are a few


actions that can be taken to reduce the existing number of employees, such as:
(i) Limiting the intake of new employees, unless really necessary.
(ii) Replacement of employees who have resigned or retired, or died, will
not be exercised.
(iii) Employees can be asked to share a job or task, demoted, advised to
retire, terminated from service or laid off if really necessary.
However, all actions by the organisation must follow existing regulations
and laws.

SELF-CHECK 4.2
Based on the human resource planning definition in subtopic 4.1
and your experiences in the workplace, what are the steps involved
in human resource planning?

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82 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

EXERCISE 4.2

TRUE (T) or FALSE (F) Statements

1. Various organisational factors, including competitive


strategy, technology, structure and productivity, can
influence the organisationÊs requirements towards its
employees.
2. When human resource planning shows a surplus of
workers, an organisation can use termination, job sharing,
dismissal, demotion methods, or rely on force so that
employees resign in order to achieve a balance in the
number of employees to the organisationÊs actual needs.
3. The qualitative technique of forecasting human resources
generally uses sophisticated analytical models.
4. The Delphi Technique is very suitable for an organisation
that is having staffing problems due to sudden
technological changes.
5. The unemployment rate at the national and state levels can
become the benchmark in identifying external human
resource supply.

4.2 RECRUITMENT

Recruitment is the process of identifying and encouraging potential


applicants in filling existing or future job vacancies in an organisation.
(Bohlander, Snell and Sherman, 2009)

In the recruitment process, effort is put into informing applicants about the
qualification requirements in performing a job, as well as job opportunities that
are offered by an organisation to its workers.

Recruitment that will be made, whether internally or externally, depends on the


supply of existing personnel, the organisationÊs human resource policy and
important matters involved in a particular job.

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4.2.1 Internal Recruitment


Internal candidates who are most qualified have to be identified so that no issues
will arise regarding regulations and laws, and that the organisationÊs needs and
employeesÊ aspirations can be fulfilled.

The effectiveness of internal sources can be further strengthened by giving the


opportunity to employees who feel that they are qualified to apply for the
position offered. Internal candidates who are suitable can be detected through
the human resource information system and job posting and bidding.

(a) Human Resource Information System (HRIS)


Information technology enables an organisation to create a database that
contains records and qualifications of each of its employees. A manager can
obtain information about candidates and identify those who have potential
to fill the position offered.

The existing data can also be used to forecast employeesÊ career path and
predict when and where the opportunity for promotion will be announced.
However, the data has to be updated and there has to be a systematic
method to update the data.

(b) Job Vacancy Advertisement and Recruiting


Job advertisement and vacancy mean that the management announces the
existence of a job vacancy while at the same time retains the name list of
employees who are trying for a better position. The announcement can be
made via the bulletin board, the organisationÊs bulletin, special handouts,
public address, and other appropriate methods. Sometimes announcements
can also be made through computer systems such as e-mails.

Job vacancy advertisement methods can be seen as beneficial when


employees are confident regarding the fairness of the system. It is more
effective when these methods are seen as part of the career development
programme for employees.

Among the advantages of recruiting from within the organisation are as


follows:
(i) Most organisations give priorities to existing employees to fill in
vacant positions which are higher than their current positions. The
offer to fill in a certain position or job is considered as promotion.
Through this, organisations can get back the returns from recruitment,
selection, training and development that have been initiated to their
employees.
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84 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

(ii) A promotion in an organisation can act as a reward for an employeeÊs


performance. The result is an increase in employee morale and
motivation.
(iii) By recruiting the existing employees in an organisation, costs related
to orientation and training can be reduced. This is because employees
are already familiar to the organisationÊs work environment.
(iv) In certain situations, internal recruitment can save employees from
being terminated as well as upgrade their working experience
through transfers.
(v) The performance records of employees who are offered a new job are
more reliable when compared to that of a new employee who is hired
from outside the organisation.

However, recruiting employees from within the organisation has its


weaknesses and limitations, as follows:
(i) Job requirements cannot be matched by existing employees, especially
for those higher ranking positions.
(ii) Organisations do not have the opportunity to acquire the knowledge
and expertise of employees who have been trained by other
organisations.
(iii) It is difficult for the organisation to encourage free flow of new ideas
among existing employees, as well as tackle their existing negative
attitudes.
(iv) The organisation has to face the risk of employee cloning, i.e.
employees who maintain repetitive work behaviour and attitude.

4.2.2 External Recruitment


There are many sources and places where an organisation can recruit employees
from the outside. However, the source of recruiting professional and skilful
employees such as accountants is not the same as the source of recruiting skilled
employees such as a flour mixer operator in a bread factory.

Among the sources of external recruitment are:

(a) Advertising
Advertising is the most popular source of attracting applicants. The
advertising mediums that are often used by organisations are newspapers,
radio and television commercials, posters, billboards and business journals.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 85

The types of advertisements used by the organisation depend on the type of


job vacancy that needs to be filled, and the type of the labour market. It also
depends on the cost that the organisation is willing to bear.

(b) Internal Application


Organisations often receive applications from internal candidates without
having to advertise. However, the percentage of internal applicants is low.
Even though the percentage is low, organisations cannot ignore self
applicants as they might prove to be good employees at a later date.

(c) Proposed by Staff


Existing staff can suggest candidates who are qualified. Organisations may
encourage them to continue the effort of searching for the right candidate
by giving a bonus for each successful employment. The risk of this sort of
employment is nepotism, which is the tendency to propose oneÊs own
family member.

(d) Executive Search Firms


This source assists employers in searching for a suitable employee to fill the
job offered. The fee rate is normally 30% to 40% of the annual salary of the
position that needs to be filled. For senior executive positions, payment is
usually made by the organisation engaging the particular executive search
firm.

(e) Higher Learning Institutions (Public and Private)


Through institutions, the potential candidates are young, and formally
trained but they have less experience.

(f) Professional Organisations


Usually, professional organisations help its members get jobs as this is one
of the benefits of joining such organisations.

(g) Public Employment Agencies


Public employment agencies such as the Labour Department help job
applicants to look for jobs which are suited to their qualifications.

(h) Private Employment Agencies


Normally, private employment agencies charge a certain fixed rate to help
applicants look for jobs. The fee may be paid by the job seeker or potential
employer.

(i) Agencies Providing Temporary Will


Normally, these types of agencies provide temporary workers to employers
who require temporary workers such as letter dispatchers.

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(j) Employee Leasing


In employee leasing, an employee who has been retrenched or dismissed by
an organisation is hired by another company that offers employee leasing
services to interested companies.

(k) Internet Recruitment


The Internet is a source of recruitment that is increasingly popular.
Applicants can surf websites to register online.

(l) EmployeesÊ Union


The employeesÊ union is a good source to obtain employees for certain
positions in the supporting level.

Sometimes, it can be difficult for organisations to determine the effectiveness of


their sources in detecting the suitable candidates at a minimum cost. However,
there are a few things that can be done by a manager to overcome the problems.

Some of the steps that can be taken to increase the effectiveness of external
recruitment are:

(a) Calculating Result Ratio


Result ratio is the percentage of applicants from one source that are
qualified to go to the next level from the selection process. The result ratio
will show the most effective recruitment source.

An example of how to calculate recruitment cost is as shown below:

SC/H= (AC+AF+RB+NC)/H

Whereby:

SC/H = source cost for every intake of recruiter


AC = advertising cost
AF = agency fee
RB = recommenderÊs bonus
NC = non-cost intake
H = total number of employee intakes

(b) Training Organisation Recruiters


In a big organisation, the recruitment process will be performed by
professional human resource staff. In a small organisation, this process is
carried out by the human resource manager, unit manager or supervisor.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 87

The recruiter can influence a candidate whether to accept or reject a job


offer. Therefore, the recruiter must be trained so that he or she is able to
attract more qualified applicants.

(c) Realistic Job Previews (RJP)


Through RJP, a candidate is provided with information on all the job
aspects, be it positive or negative. Those who practise RJP believe that
applicants who are given explanation on their jobs will stay on longer and
be more successful in their jobs.

External recruitment has a few advantages. Among them are as follows:

(a) When an employee is promoted or resigns from an organisation, his or her


position must be filled. If his or her successor is chosen from within the
organisation, then it is easier for the organisation to assess his or her
capability. Further, it will motivate the staff to stay longer in the company.
Attracting external applicants will have the advantage of getting talented or
high performing workers that are not easily available.

(b) External recruitment is done for the purpose of injecting new influence into
an organisation so that the existing work culture can be stimulated.

However, in implementing the external recruitment process, the position of the


labour market, be it tight or loose, and a candidateÊs preparedness to transfer
must be considered. The labour market is an area where candidates can be
recruited. To attract the interest of applicants, the organisation must identify the
types of jobs and their suitability to the applicants.

ACTIVITY 4.5
From research, it is found that employees hired through referrals and
self applications stay on longer in an organisation and show better
performance compared to employees hired through normal methods,
such as advertising. Based on your work experience, do you agree?
Discuss.

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88 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

EXERCISE 4.3

TRUE (T) or FALSE (F) Statements

1. Employees need not be informed about promotion policies as


they do not influence employee motivation.
2. It is usual for competing companies such as those in high
technology field to try and get secrets from their competitors
by persuading their competitorsÊ employees to work for them.
3. It is better to avoid using employee referrals as a recruitment
source as the applicantÊs quality may be questioned.
4. The result ratio helps an organisation to identify which
recruitment source is least effective in producing qualified
candidates.
5. The person who should perform recruitment depends on the
size of the organisation. For a big company, a professional
human resource officer will be chosen and trained to find new
employees.

Match the concepts to the suitable statements.

1. Predicting manpower needs based (a) Human resource planning


on the organisationÊs index.

2. An area where applicants can be (b) Labour market


recruited.
3. The processes of forecasting and (c) Realistic job preview
preparing employee movement
into, within and out of the
organisation.
4. Informing applicants on all matters (d) Trend analysis
pertaining to the job, including
positive and negative matters.

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TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT 89

Multiple Choice Questions

1. There is a relationship between the successes of recruitment through


advertising and _______________.
A. The accuracy and total nature of the advertisement
B. The simplicity of the advertisement
C. The positive characteristics of the advertisement
D. The coverage of the advertisement
2. Human resource planning and strategic planning are related
through:
A. Relating both human resource planning and strategic planning
processes.
B. Determining the types of employees that exist in the
organisation.
C. Ensuring the suitability and flexibility of human resource
planning in an organisation's strategy.
D. All of the above.
3. Through human resource planning, an organisation strives to
balance between requirements and human resource supply. Human
resource requirements are based on ___________.
A. Where candidates can be obtained
B. How candidates can be obtained
C. When applicants can be employed
D. Trend forecasting in business activities
4. Methods that enable an organisation to identify qualified internal
candidates include all these, EXCEPT ______________.
A. Announcement of job vacancy
B. Re-hiring employees that have been retrenched.
C. Computerised record system
D. Word of mouth

Essay Question

1. Differentiate between quantitative approach and qualitative


approach in the forecast of human resource needs.

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90 TOPIC 4 PLANNING AND EMPLOYEE RECRUITMENT

In planning an organisationÊs future, the top management and strategic


planner must realise that strategic planning decisions will affect human
resource planning, and vice versa.
Human resource planning can be reactive and proactive towards an
organisationÊs human resource needs.
Human resource planning is a systematic process involving the forecasting
process of human resource needs, implementation of human resource supply
analysis, and balancing between existing supplies and the actual needs of
human resource.
In implementing recruitment functions, the management finds that internal
recruitment offers a lot of advantages to the organisation and also its
employees.
Through internal recruitment, the management is able to reimburse all
expenditures invested in employees during employee training and
development.
For the employees, it is seen as an encouragement to further improve
themselves in the company. However, internal recruitment can cause
employee cloning.
External recruitment has to be carried out when there are no internal
candidates eligible to fill a vacancy.
Recruiting employees outside of the organisation can help the organisation
acquire new ideas.
The recruitment sources used by an organisation depend on the types of jobs
and the labour market.

External recruitment Internal recruitment


Human resource planning Strategic planning

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Topic Selection
5
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. State the objectives of an employee selection process;
2. Identify the types of information sources that can be used in the
selection process;
3. Describe the types of employment tests;
4. Discuss the approaches in carrying out job interviews; and
5. Examine the strategies of achieving results in selection.

INTRODUCTION
We are often exposed to news on deviation, misuse of power and sexual
harassment in the workplace. Therefore, the selection of suitable candidates is
very important to ensure the success of an organisation.

If in recruitment, an organisation tries to obtain as many applicants for a


position; in selection, the number of candidates is reduced by selecting the most
eligible candidates.

The main purpose of selection is to maximise the accuracy of selecting qualified


employees and to avoid not taking qualified employees. Even though the human
resource department is responsible in carrying out the selection process, the
decision to hire a candidate is usually done by the departmentÊs manager.

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92 TOPIC 5 SELECTION

5.1 SELECTION PROCESS


What do you understand about the selection process?

Selection is a process of selecting individuals who possess suitable


qualifications to fill an existing or future job vacancy.

The selection process is an ongoing process and involves a few steps. Among the
steps in the selection processes are as follows:
(a) Completing the application form.
(b) Preliminary interview at the human resource department.
(c) Employment test (cognitive aptitude test, achievement test).
(d) Investigating the candidateÊs background.
(e) Preliminary selection at the human resource department.
(f) Team/supervisor interview.
(g) Medical check-up/drug test.
(h) Recruitment result.

From the steps above, we can see that an organisation uses various ways to
obtain information about applicants. Among the methods used are application
forms, interviews, employment tests, medical check-up and background checks
on applicants/candidates.

ACTIVITY 5.1
In your opinion, why are some applicants exempted from certain
steps in the selection process while other applicants have to go
through the whole selection process?

Visit www.hr-guide.com/selection.htm to obtain information on how the


selection process is carried out and how information on employees is obtained.

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TOPIC 5 SELECTION 93

5.2 INFORMATION RELIABILITY AND


VALIDITY
Information on job applicants and candidates must be accurate, reliable and
valid. This is to ensure the selection purpose, which is to hire employees who are
really eligible and to avoid not hiring those who are eligible, can be fulfilled.

5.2.1 Information Reliability

Reliability means the level where an interview, test and other selection
procedures show consistent data every time, even when using other
methods of measurement.

Reliability, thus, means how far a selection tool is able to give consistent data.
Table 5.1 and Table 5.2 are examples of stable and consistent reliabilities.

Table 5.1: Reliability as Stability over Time

A. High Reliability
Applicant Test score Re-test score
Ahmad 90 93
Chin 65 62
Rama 110 105
Kuntum 80 78
B. Low Reliability
Applicant Test score Re-test score
Ahmad 90 72
Chin 65 88
Rama 110 67
Kuntum 80 111

Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

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94 TOPIC 5 SELECTION

Table 5.2: Reliability as Consistency

A. High Reliability
Applicant Evaluator 1 Evaluator 2 Evaluator 3

Ahmad 9 8 8
Chin 5 6 5
Rama 4 5 5
Kuntum 8 8 8

B. Low Reliability
Applicant Evaluator 1 Evaluator 2 Evaluator 3

Ahmad 9 5 6
Chin 5 9 4
Rama 4 2 7
Kuntum 8 4 2

Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

5.2.2 Information Validity

Validity means the level where a selection test or procedure is able to


measure a personÊs characteristics.

There are three types of information validity, which are:


(a) Criterion-related validity;
(b) Content validity; and
(c) Construct validity.

Figure 5.1 shows how a test score is validated by applying the criteria evaluation
(one type of information validity).

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TOPIC 5 SELECTION 95

Figure 5.1: Valid test and invalid test


Source: Adapted from Bohlander, Snell and Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

(a) Criterion-related Validity


Criterion-related validity is the level where selection tools which are chosen
are able to forecast or have a correlation with the main elements of work
behaviour (Bohlander, Snell and Sherman, 2004). The performance from a
certain test will be compared to the actual production records, supervisorÊs
evaluation, result from training, and different success measurements which
are suitable to a particular job. For example, the criteria for a job in the
production sector are quality and product quantity, whereas the criterion
for a salespersonÊs job is total sales.

Criterion-related validity can be divided into two types:

(i) Concurrent Validity


Concurrent validity means how far a test score or other forecasted
information matches the criteria data obtained from existing
employees. For example, a supervisor carries out a work evaluation
on a few clerks by giving them aptitude tests on clerical matters. Test
scores will be compared to the supervisorÊs evaluation to see whether
or not a relationship exists between the test scores and the
supervisorÊs evaluation.

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96 TOPIC 5 SELECTION

(ii) Predictive Validity


Predictive validity means how far the score of a test done by an
applicant before he or she was hired matches the data obtained from
the applicant or the employee after they are hired, after a certain
period.

Cross validation can be done to strengthen the validity of a test. Cross


validation strengthens the validation of a particular validity result by
running a test on a different sample from the same population.

(b) Content Validity


Content validity measures how far a selection tool, such as a type of test, is
able to sample knowledge and skills which are needed to perform a certain
job. The higher the relationship between the test contents and the actual
work requirements, the higher the content validity. For example, a test to
become a kindergarten teacher should not contain activities on solving
accounts problems.

(c) Construct Validity


Construct validity measures how far a selection tool is able to measure
construct or potential employeesÊ characteristics theoretically. Construct
examples are intelligence, an understanding in mechanical matters and
anxiety.

ACTIVITY 5.2
Refer to Table 5.2. How does Table 5.2 relate the three validity
concepts?

5.3 SELECTION METHODS


Through selection methods, we will discuss how to:
(a) Obtain information about applicants and potential job candidates;
(b) Test candidates for the purpose of identifying those who are most qualified
for a particular job;
(c) Obtain information through effective interviews; and
(d) Decide on determining qualified candidates for the job offer.

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TOPIC 5 SELECTION 97

5.3.1 Information Sources


When you apply for a job, do you have to fill in your personal information? What
are the methods used at that time?

There are a few methods which are trusted and valid in order to obtain
information about candidates. Figure 5.2 shows a few techniques of obtaining
information in the selection process and its effectiveness.

Figure 5.2: The effectiveness of selection methods

The following are some types of information sources usually used by an


organisation to obtain information about a job candidate:

(a) Application Form


An application form provides information as to whether an applicant has
experience and educational background, and other matters related to the
job. Information from the application form will be made the basis, by the
interviewer, for questions about the applicantÊs background and checks on
references provided by the applicant. Among the items included in an
application form are date of application, educational background,
experience, criminal records, nationality and disabilities.

(b) Biographical Information Blank (BIB)


Through the BIB, questions asked are more on family life, interests or
hobbies, club membership and experience in sales and investments.
Therefore, the BIB is able to give a general description of the applicantÊs
behaviour.

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98 TOPIC 5 SELECTION

(c) Investigating CandidateÊs Background


When an interviewer feels that a candidate has potential, some of the
information obtained from previous employers or other information given
by the candidate will be investigated. Among the methods are:
(i) Calling the previous managers;
(ii) Writing a letter to get information;
(iii) Obtaining a written permission from the candidate so that the
interviewer can get information from previous employers; and
(iv) Going through the credit report to look at the applicantÊs or
candidateÊs financial position.

(d) Polygraph Test


A polygraph test is an equipment to detect lies. It measures changes in
breathing rate, blood pressure and an individualÊs pulse when the person is
being questioned. Questions asked often include matters involving drug
abuse, theft or criminal offences that are not detected by others.

(e) Honesty and Integrity Tests


Honesty and integrity tests are usually used by an organisation where its
employees have access to money and sales items. Questions often asked
relate to values and attitudes towards issues such as theft and punishment
for thieves. A total analysis will become an assumption of work
performance and disciplinary problems.

(f) Graphology
Graphology refers to a system that analyses handwriting. Through a
candidateÊs handwriting, a graphologist makes an assumption of the nature
of his or her intelligence, energy level, organisational abilities and emotions.

ACTIVITY 5.3

For which job should a candidate be tested by using graphology?

(g) Health Examination


A health examination is done to ensure that the applicantÊs health level
fulfils the job requirements.

(h) Drug Test


A drug test aims at ensuring future employees are free from hazardous
drugs. The sampling method is usually implemented.

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EXERCISE 5.1
TRUE (T) or FALSE (F) Statements
1. The selection procedure does not have to be validated before it is used.
2. The more related the contents of a selection tool with the actual
work sample, the higher the value of content validity.
3. Construct validity is a level where a certain selection tool is able to
measure characteristics or constructs theoretically.
4. Most organisations require application forms to be filled because
application forms provide fast and systematic information about
the applicants.
5. To filter and select applicants as well as predict their performance,
organisations have to go through applicantsÊ information through
their source of reference.

5.3.2 Employment Test


Another method of obtaining information about candidates is through
employment tests. Some organisations employ consultants to perform
employment tests. An employment test is an objective and standard way to
measure knowledge, skills, abilities and other candidatesÊ characteristics.

Employment tests can be categorised into two, which are:


Aptitude test
An aptitude test measures an individualÊs capacity or ability in learning and
mastering new skills.
Achievement test
An achievement test measures what an individual knows or is able to do at
this frame of time.

Among the types of employment tests are:


(a) Cognitive Aptitude Test
A test that measures an individualÊs mental abilities such as aptitude,
fluency, calculating ability, reasoning ability, thinking and drawing
conclusions. The test is believed to be able to represent an individualÊs
general intelligence.

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(b) Job Knowledge Test


A test to measure an individualÊs knowledge and understanding of a job.
(c) Work Sample Test
A test that requires applicants to perform tasks that are part of the duties
for the position applied. For example, a test on reading maps for traffic
officer candidates, and judgement and decision making tests for an
administrative officer candidate.
(d) Personality and Interest Inventory
A test to measure an individualÊs disposition and temperament.

There are five dimensions that reflect an individualÊs personality, i.e.:


(i) Extroversion
Extroversion projects the external characteristics, i.e. at a level where
an individual talks a lot, is sociable, active, aggressive and cheerful.
(ii) Agreeableness
Agreeableness is a level where an individual can be trusted, is warm,
generous, able to compromise, honest, cooperative and able to discuss.
(iii) Conscientiousness
A level where an individual can be depended on, is rule abiding and
perseveres in carrying out duties.
(iv) Emotional Stability
Emotional stability is a level where an individual feels secure, is calm,
independent and autonomous.
(v) Open to Experience
This involves being open to new experiences, i.e. an individualÊs level
of intelligence, philosophy, in-depth understanding, creativity, artistic
abilities and curiosity.

ACTIVITY 5.4
In the personality and interest inventory, there are five personality
dimensions. Which one reflects your personality, and based on
your personality, what type of job would be suitable for you?

(e) Physical Ability Test


This test aims at examining an individualÊs physical abilities in performing
a task in a particular job. Risky jobs such as those of a fireman and lorry
driver need physical strength and endurance. This limits applications from
women and those who are handicapped.

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ACTIVITY 5.5
Classify these job tests according to their categories (aptitude test
or achievement test).

Type of test Category


Cognitive Ability Test
Job Knowledge Test
Work Sample Test
Personality and Interest Test
Physical Ability Test

5.3.3 Job Interview


Information about candidates can be obtained through a job interview.

An interview, traditionally, is the main tool for most organisations to gather


information about candidates. Even though many researchers are still sceptical
about its validity, this method remains the main choice when conducting a
selection process. This is because:
An interview is easy to carry out, especially when the number of applicants is
small.
Apart from aiming to gather information, it also aims to get to know the
candidate better.
Recruiters believe and are confident that it enables them to judge the
candidates.
In a job interview, there are three important factors that one should be aware of:
Types of interview;
The variables that influence an interview; and
Guidelines for the interviewer.

(a) Types of Job Interview


There are several types of job interviews such as:
(i) Non-directive Interview
During a non-directive interview, an applicant has the freedom to
give his or her opinion. The interviewer tries not to influence any
opinions offered by the candidate. Usually, the interviewer will ask

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102 TOPIC 5 SELECTION

general questions such as the candidateÊs experiences in his or her


previous company.
(ii) Structured Interview
This type of interview contains a set of standard questions together
with pre-determined answers. The questions are based on a job
analysis that has been carried out beforehand. Information from a
structured interview is able to reduce unfairness in the perspective of
the law.
(iii) Situational Interview
Through this interview, the applicant is given a situation or an event
to which he or she needs to respond. The feedback given will be
evaluated based on standardised answers. This type of interview is a
part of structured interview.
(iv) Behavioural Interview
Through this interview, applicants will be asked their response in
dealing with specific circumstances. For example, from an applicantÊs
previous experience, what were the actions taken against employees
who practise truancy. This approach is based on the critical incident
method of the job analysis.
(v) Panel Interview
Through panel interview, a group of interviewers will question and
observe the candidate. The number of interviewers is between three
and five people. The interviewers will compare their observations and
reach a consensus concerning the candidate. This method has a high
level of validity.
(vi) Computer Interview
Through this interview, candidates are required to answer multiple
choice questions (from 75 to 125 questions) that are related to the job.
The answers given will be compared to an answer profile developed
from previous candidatesÊ answers. A computer interview is usually
used as an additional interview for a common or conventional
interview.
(b) Variables in a Job Interview
An interview process is influenced by the interviewer, the applicant and the
interview context. Figure 5.3 shows these variables and the processes
involved in a job interview.

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TOPIC 5 SELECTION 103

Figure 5.3: Variables in a job interview


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

(c) Guidelines for the Interviewer

ACTIVITY 5.6

Bias can occur during an interview process. The interviewer is


often influenced by negative information about the candidate. In
your opinion, what should be done by interviewers to prevent this
from happening?

A job interviewer can influence candidates on whether to accept or reject a


job offer. Therefore, an organisation must be careful in choosing
interviewers. An interviewer needs to have attributes such as humbleness,
objectivity, maturity and composure. Communication skills are also
needed. The interviewer should not talk too much, be excessive in giving
opinions and show bias.

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Some of the guidelines that can be observed by interviewers are as follows:


(i) Set Interview Plans
Go through the purpose of the interview and determine the subjects
and questions that will be asked. Get related information.
(ii) Determine and Maintain Rapport
This can be done by welcoming the candidate, explaining the
interview purpose and showing interest in the candidate.
(iii) Be a Good Listener
Try to understand what the candidate means.
(iv) Pay Attention to Body Language
Observe the candidateÊs facial reactions, movement of head and
hands, body positions and other movements that can indicate his or
her attitude and feelings. However, an interviewer must be careful
with his or her own body language too.
(v) Give Information Properly and Sincerely
Answer the candidateÊs questions properly and sincerely. Provide a
clear picture of the job offered.
(vi) Use Questions Effectively
Avoid from questioning a candidate while he or she is still answering
a question. Give opportunities to the candidate to guess what must be
answered.
(vii) Separate Facts from Opinions
During an interview session, the interviewer needs to note down
facts. The interviewerÊs conclusion can then be compared with those
of the other interviewers.
(viii) Identify between Bias and Stereotypes
Most often, bias happens during an interview when the interviewer
easily accepts candidates who are compatible with him or her.
Stereotyping also happens during interviews. A candidate is often
judged based on race and appearance.
(ix) Control Interview Direction
Follow what has been planned. Give opportunities for candidates to
speak. However, the interviewer needs to monitor the situation so
that the objective of the interview can be achieved.
(x) Standardise Questions
Ask the same questions to all candidates that are interviewed for the
same position. This can increase reliability and avoid discrimination.

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EXERCISE 5.2

TRUE (T) or FALSE (F) Statements

1. Even though it has good potential, a physical ability test can


give a negative effect to women and handicapped applicants.
2. An achievement test requires applicants to carry out tasks
that are part of the actual work.
3. In using a non-directive interview approach, the interviewer
listens attentively and does not interrupt candidates or
change topics suddenly.
4. A panel interview is a situation where three to five
interviewers interview a group of future employees at the
same time.

5.3.4 Reaching Selection Decision


When the necessary information is obtained, the process to determine the
candidate to be offered the job is done. At this level, there are three important
things to be observed, i.e.:
Simplify a candidateÊs information;
Decision strategy; and
Final decision.

This level is important as it involves cost. Therefore, there has to be an


information checklist on the candidates, as well as strategy options in selecting a
candidate.
(a) Simplifying Candidate Information
The management is usually interested to know what can be done and what
will be done by a candidate in his or her job. The management must take
these two factors into account when evaluating candidates. Factors of what
candidates are able to do include knowledge, skills and ability to gain new
knowledge and skills. Factors of what candidates will do include
motivation, interest and other personality traits (refer to Figure 5.4).

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106 TOPIC 5 SELECTION

Figure 5.4: „Able to do‰ and „will do‰ factors


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

An employee who has the ability to do something but has no interest to do


it is better than an employee who has interest but not the ability. It is easier
to measure what an applicant is able to do rather than what he or she will
do. Test scores can be used as a tool to measure a candidateÊs abilities. The
result of the interview can be a basis to assume what the candidate will be
able to do in future.
(b) Decision Strategy
The decision strategy used in hiring personnel differs according to the
different job categories. For example, the strategy used to hire a manager is
different from the strategy used to hire a clerk.

Some factors need to be observed by the management before any decision


on staff intake is made. They are as follows:
(i) Is the hiring of a particular individual based on his or her ability, or is
it based on the organisationÊs needs?
(ii) What is the starting fee for the individual that is offered a particular job?
(iii) Is selection based on the candidateÊs suitability for the job, or does it
take into account the candidateÊs career opportunities in the
organisation?
(iv) How far would those who are less qualified be put under
consideration?
(v) Will an individual who is more than qualified for the post be
considered and offered the job?
(vi) What are the effects of a candidateÊs intake on the regulations and
employee diversity in an organisation?

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The management must also determine the types of approach to be


implemented in deciding to hire an individual for a particular job. The
approach can be clinical approach or statistical approach.
(i) Clinical Approach
Through clinical approach, those involved in the selection process will
go through all data on the candidates again. Decision will be made
based on the interviewersÊ understanding of a particular job, and their
observations of the individuals who are successful in that particular
job. The clinical approach is subjective in nature but is often practised
in most organisations.
(ii) Statistical Approach
The statistical approach is more objective in nature and is better
compared to the clinical approach. The data obtained about the
candidates will be considered in detail and the forecaster will be
identified statistically.

There are a few models in the statistical approach. They are as follows:
Compensatory model
Through the compensatory model, the high score that a candidate
obtains in one particular part of a test will be able to assist a lower score
obtained in another part.
Multiple cut-off model
Through the multiple cut-off model, a candidate must reach a particular
level or a minimum score for all selection dimensions.
Multiple hurdle model
Through the multiple hurdle model, candidates who obtain high scores
in the entry test will be allowed to go to the next stage. This can save
cost if the selection cost is high.

The number of sufficient candidates is important so that the selection


process runs smoothly. If the number of candidates for a particular position
is not enough, the selection method can be questioned. There may be
circumstances where an unqualified candidate is hired as the organisation
does not have other choices.

A selection ratio is able to illustrate the effectiveness of a selection process.


A selection ratio is the number of applicants hired compared to the number
of applicants who applied (Mondy. Noe and Premeaux, 2002).

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108 TOPIC 5 SELECTION

ACTIVITY 5.7

Figure 5.5: Test score distribution with hypothetical cutoff

Based on Figure 5.5, candidates from Quadrants 1 and 2 will be hired


to work. What will the effect be if the acceptance cutoff is moved to
the left to increase the number of eligible candidates when the
number of manpower is still insufficient?

(c) Final Decision


After going through the pre-selection process, a candidate who is qualified
will be referred to sections or units where there are vacancies to be filled
up. The manager or supervisor in these sections or units will interview the
candidate and decide whether or not he or she can fill the vacancy. The
human resource department is responsible for delivering the result of the
candidateÊs application, as well as providing work details of the job if the
candidate is offered the job.

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TOPIC 5 SELECTION 109

EXERCISE 5.3
Fill in the Blanks
(a) Selection (c) Aptitude test
(b) Multiple hurdle model (d) Validity

1. _______________ The process of selecting a qualified


individual to fill a vacancy at present and in the future.
2. _______________ A continuous strategy whereby only
applicants who obtain the highest scores in the preliminary
test are allowed to proceed to the next test.
3. _______________ Measures an individualÊs ability to learn or
acquire new skills.
4. _______________ How far a test or selection procedure
measures a personÊs characteristics.

Multiple Choice Questions


1. Generally, the selection procedure is the responsibility of the
human resource department. However, the decision to hire
someone to work in a unit or section is made by
__________________.
A. Operations personnel
B. The department manager
C. The staff manager
D. A management consultant
2. To save cost, _________________ is performed as a final step
in the selection process.
A. An interview
B. A background check
C. A job test
D. A medical check up
3. A tool to measure mental abilities such as intelligence,
eloquence, ability to calculate and ability to rationalise is the
__________________.
A. Personality test
B. Achievement test
C. Cognitive test
D. Evaluation centre

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110 TOPIC 5 SELECTION

4. Even though every step in the selection process is important, the


most critical is the decision to _________________.
A. Accept or reject candidates
B. Implement a job test
C. Use application forms
D. Check references

Essay Question

1. What is meant by the term „criterion‰ as it is used in selecting


personnel? List some examples of criteria used for jobs that you
know of.

The selection process is supposed to give reliable and valid information about
an applicant. An interview is one of the methods used to obtain information
about an applicant.
The interview method can be used together with application form,
biographical information blanks, references, background check, cognitive test
and job sample test.
A job test is more objective than an interview and is able to give a wider
behaviour sample.
Each type of test has a specific purpose, such as the work knowledge and
work sample tests which are designed to determine whether a person
requires training or not.
A variety of methods can be used in the interview process. An interview can
be performed structurally or non-structurally, as well as on a one-on-one
basis or with a panel.
In the process of deciding whether a candidate will be offered a post, factors
that are taken into account are what the candidate can do, and what he or she
will be able to do. The recruitment section may use a clinical or statistical
approach.

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TOPIC 5 SELECTION 111

Biographical Information Blank (BIB) Reliability


Employment test Validity
Graphalogy

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Topic Performance
6 Evaluation

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Explain the roles of performance evaluation;
2. Describe the processes of performance evaluation;
3. Discuss the main sources to evaluate employee performance;
4. Compare the main methods to evaluate employee performance; and
5. Examine the effective performance evaluation system
characteristics.

INTRODUCTION
The previous topics focused more on how an organisation can attract and
develop productive, flexible and motivated human resources. This topic will
focus on the aspects of maintaining human resource productivity in an
organisation. Although, initially, all supervisors or managers will observe their
employeesÊ work behaviour, and evaluate their performance at the end of the
year, they must also focus on the non-cost value increase to the organisation. The
unconcerned attitude of supervisors and managers is a challenge to the human
resource department to develop supervisors and managers who are able to
motivate employees to improve their performance. Supervisors and employeesÊ
acceptance of and commitment to performance improvement are critical in order
to determine the productivity increase in the organisation. Due to this problem,
performance evaluation is seen as a complicated activity but is important to the
organisationÊs competitiveness in the market.

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TOPIC 6 PERFORMANCE EVALUATION 113

6.1 DEFINITION OF PERFORMANCE


EVALUATION
Before we start our discussion on the performance evaluation system, we need to
know what is meant by performance and performance evaluation. Harvey (1996)
defined performance as carrying out a task with the result of being able to reach
the job goals or certain activities throughout the duration given. Bernardin (1998)
stated that performance is a record on results shown based on work functions or
certain activities throughout the duration allocated.

Performance evaluation is a formal system that examines and evaluates


employee performance periodically (Mondy, 1999). It is also a process that
measures employee performance whereby employee performance is the degree
to which an employee completes all the work requirements given. Cardy (1994)
defined performance evaluation as a process of identifying, observing,
measuring and developing employee performance in an organisation. Therefore,
performance evaluation not only functions as a tool to measure performance but
also as a tool to develop employees.

Many terms can be used to refer to performance evaluation. Some of the more
often used are performance rating, performance study and merit rating.

SELF-CHECK 6.1

What is performance evaluation?

6.2 PURPOSE AND USES OF PERFORMANCE


EVALUATION
Performance evaluation basically aims to increase employee and organisation
productivity effectively but specifically, the roles played by performance
evaluation are much more than that. According to Ivancevich (2001), among the
roles played by performance evaluation are:

(a) Development
Determines which employees need training. This will enhance employee-
supervisor relationship and encourage the supervisor to contribute to the
reinforcement process of employee behaviour.

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114 TOPIC 6 PERFORMANCE EVALUATION

(b) Motivation
Encourages attempts, develops responsibilities and propels efforts towards
improving performance.

(c) Human Resource Planning


Functions as a valuable input to human resource planning activities.

(d) Communication
Acts as a basis for discussion between the supervisor and employees
regarding work matters through daily interaction.

(e) Compliance to Regulations


Acts as a valid foundation for promotions, transfers, rewards and employee
terminations.

(f) Human Resource Management Research


Verifies methods or techniques used in human resource management
activities. For example, during the selection activity, improving or selecting
the effective selection test.

Apart from general and specific purposes listed above, performance evaluation
can also be used for administrative and employee development purposes
(Bohlander, 2001). From the administrative aspect, performance evaluation is an
input that can be used in human resource management activities while the
development aspect focuses on feedback of employeesÊ strengths and
weaknesses, and stresses on performance improvement. Among the uses of
performance evaluation for administrative and development purposes are as
follows:

(a) Administrative Purposes


(i) Salary administration
(ii) Promotion
(iii) Decision to terminate or transfer employees
(iv) Reinforce authority structure
(v) Human resource planning
(vi) Documentation on human resource decisions

(b) Development Purposes


(i) Performance feedback
(ii) Identify the strengths and weaknesses of employeesÊ performance
(iii) Acknowledge employeeÊs outstanding performance

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TOPIC 6 PERFORMANCE EVALUATION 115

(iv) Identify training needs


(v) Determine employee development programmes

ACTIVITY 6.1
Based on your experience, has performance evaluation helped in
your career? Explain.

6.3 MAIN CAUSES OF PERFORMANCE


EVALUATION FAILURE
Basically, the performance evaluation process is seen as a simple process whereby a
supervisor or manager only needs to observe the work performance of their staff
and give feedback on their performance from time to time. In reality, this process is
not that simple. The supervisor or manager as well as the staff often have different
opinions on performance evaluation. Some of the factors that lead to the failure of
the performance evaluation process, according to Bohlander, (2001), are:
(a) The supervisor or manager does not have sufficient information about
employeesÊ real work performance.
(b) The standard of measuring performance is not clear.
(c) The supervisor or manager does not have the skills to evaluate employee
performance.
(d) The supervisor or manager is not prepared to evaluate employee
performance, as he or she does not want to be seen as a judge who is giving
out an unfair sentence.
(e) Employees do not receive constant performance feedback.
(f) The supervisor or manager is not sincere during the performance
evaluation process.
(g) Performance evaluation is not focused on employee development.
(h) The supervisor or manager uses language that is unclear to the employees
during the performance evaluation process.
(i) Employees feel that the organisation does not allocate sufficient resources
for performance rewards.

These factors can influence the effectiveness of the performance evaluation


process and create a gap in the relationship between supervisor and staff.
Performance evaluation activities are often annual activities and focus more on

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116 TOPIC 6 PERFORMANCE EVALUATION

employeesÊ annual salary movement. The disagreement that exists and the
misunderstanding of performance evaluation have caused the performance
evaluation process to fail. Therefore, support from the top management is
important in order for performance evaluation to succeed so that the
organisation will be able to compete in the market.

SELF-CHECK 6.1

How far is the precision of an employeeÊs performance evaluation?

EXERCISE 6.1

1. What is meant by performance evaluation?


2. State the uses of performance evaluation from the
administrative aspect.
3. State five reasons why the performance evaluation process
fails to be implemented successfully.

6.4 PERFORMANCE EVALUATION PROCESS


Figure 6.1 shows the steps involved in the performance evaluation process:
Identifying performance evaluation objectives.
Developing performance standards.
Monitoring employee work performance.
Evaluating performance.
Discussing evaluation with employees.

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TOPIC 6 PERFORMANCE EVALUATION 117

Figure 6.1: Performance evaluation process


Source: Adapted from Mondy, Noe & Premeaux. (2002). Human resource management
(7th ed.). New Jersey: Prentice Hall International.

(a) Identifying Performance Evaluation Objectives


The performance evaluation process begins by developing performance
evaluation objectives. The development of objectives must be related to the
organisationÊs objectives so that there will be work performance increase
shown by employees. For example, some organisationsÊ philosophy is to
focus on employee development aspects while other organisations focus on
the administrative aspects such as salary standardisation.

(b) Developing Performance Standards


After the performance evaluation objectives are set, a standard performance
will be developed. The purpose is to make the comparison between real
work performance and the organisationÊs expected work performance
easier. Basically, performance standards must be developed based on a
particular workÊs requirements and these requirements result from the job
analysis. A good performance standard is able to translate an organisationÊs
strategic objectives to a particular work. Figure 6.2 shows the four
important elements that must be present when developing performance
standards.

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118 TOPIC 6 PERFORMANCE EVALUATION

Figure 6.2: Performance standard development


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

(i) Strategic Relevance


The standards that are developed must be related to the
organisationÊs strategic objectives. Indirectly, the organisationÊs
strategic objectives need to be translated into the performance
standards. For example, 95% of customer complaints must be solved
on the same day. With this in mind, employees who are in contact
with the customers must take into account this strategic objective
when developing their standards.

(ii) Criteria Contamination


Criteria contamination happens when factors that are out of the
employeesÊ control influence their performance. For example, a typist
needs a computer to type and produce quality output. If the
organisation only has a typewriter, then the quality produced may not
be as good as the output quality produced by a computer. Therefore,
the computer becomes a factor that contaminates the typistÊs
performance.

(iii) Reliability
Reliability refers to the consistency of the standards that are
developed. Consistency means how far an employee is able to
maintain a level of performance in a particular timeline. For example,
the evaluation comparison done by two managers on an employee,

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TOPIC 6 PERFORMANCE EVALUATION 119

for a promotion, will determine the reliability of the employeeÊs


performance.

(iv) Criterion Deficiency


The development of performance standards must take into account all
the responsibilities of the employee. If the standard that is developed
only takes one aspect of the job, then criterion deficiency occurs. For
example, a salespersonÊs performance evaluation is only measured
through his or her sales volume without taking into account another
important criterion, i.e. customer satisfaction.

(c) Monitor Work Performance


After developing performance standards, the next step is to monitor the
employeesÊ work performance so that the performance demonstrated is in
line with the standards set. If the real performance shown by employees
deviates far from the set standards, then the standards developed must be
re-analysed to ensure that they are clear, attainable, measurable and state
the time period to be carried out. An unclear standard must be altered so
that employees are able to carry out their duties effectively.

(d) Evaluating Performance


Usually, at the end of the year, employee performance will be evaluated to
ensure that the organisationÊs strategic objectives are achieved. The real
performance shown by employees will be compared to the standards that
have been developed.

(e) Discussion on Performance


Employees and managers will review the employeesÊ performance together
based on set standards. A performance discussion will determine how far
the employee is able to achieve the organisationÊs strategic objectives,
identify the problems that obstructed the achievement and find alternatives
to solve the problems. This discussion will also include developing
objectives for the next year.

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120 TOPIC 6 PERFORMANCE EVALUATION

ACTIVITY 6.2

State whether you agree or disagree on the following issues


regarding performance evaluation, and give a solid reason for
your answers.
1. Performance evaluation is the managementÊs technique to
control employee behaviour.
(a) Agree
(b) Disagree
2. Performance evaluation creates employee groups who are
individualistic and selfish.
(a) Agree
(b) Disagree
3. Performance evaluation helps employees to improve their
performance.
(a) Agree
(b) Disagree

EXERCISE 6.2
1. State the main elements in developing an effective
performance standard.
2. Explain the key steps involved in the performance
evaluation process.

6.5 RESPONSIBILITY OF EVALUATING


Usually, the manager of a department or unit will be responsible for the
evaluation of his or her employeesÊ work performance. The work difficulties
today have caused some managers to be unable to monitor or evaluate their
employeesÊ work performance. If a department or unit has a small number of
employees, then there is a possibility that only one manager is needed to evaluate
his or her employeesÊ performance. However, for a department or unit that has a
large number of employees, the responsibility to evaluate can be assigned to
other sources such as colleagues, self evaluation, customers and subordinates.

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TOPIC 6 PERFORMANCE EVALUATION 121

(a) Immediate Supervisor


This traditional method stresses that performance evaluation must be done
by an employeeÊs immediate supervisor. A supervisor is the most eligible
person to observe and evaluate his or her employeesÊ work performance,
and he or she is also responsible for the management of the unit or
department. Since the immediate supervisor will evaluate the employees, it
goes without saying that the training and development aspects of the
employees become important elements that should be focused on.

If seen from a negative perspective, the immediate supervisor may stress on


certain performance aspects and ignore other performance aspects. For
example, he or she may only stress on the quantity aspect and ignore the
quality aspect.

(b) Self Evaluation


If an employee understands the objectives that must be achieved and is
involved in the development of performance standards, then he or she is
qualified to evaluate himself or herself. This is because the employee knows
what has to be done and how to carry out the task effectively. Moreover, an
employeeÊs involvement in the performance evaluation process is critical so
that an increase in productivity is possible.

From the negative perspective, an employee is more keen to illustrate his or


her strengths and try to cover up his or her weaknesses. With this in mind,
self-evaluation is more suitable to be used for self-development and not as a
basis for promotion or salary increments.

(c) Subordinates
The most suitable people to evaluate a manager are his or her subordinates.
This method is effective because the subordinates are the best source to
observe the effectiveness of the manager. Moreover, the subordinates are
always in contact with the manager. This type of evaluation is more for the
managerÊs self-development so that he or she is able to rectify his/her
weaknesses. The negative aspect of this evaluation is that the subordinate
may either give a good evaluation of his or her manager if they have a good
working relationship, or evaluate the manager poorly if they are at odds
with each other.

(d) Peers
Peers can be an effective evaluation approach as peers often interact and are
able to identify their colleaguesÊ strengths and weaknesses. Peer evaluation
can also give an accurate and valid input.

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122 TOPIC 6 PERFORMANCE EVALUATION

However, peer evaluation will also create problems if it is used as a basis to


give favours or seek revenge. For example, employee A often helps
employee B carry out his duties. Therefore, when the time comes for
evaluation, employee B will give high marks to employee A in return for all
the assistance that was given.

(e) Customer Evaluation


Customer satisfaction determines the success of an organisation. Based on
this idea, most organisations feel that they should obtain their employeesÊ
performance input from customers. Basically, there are two types of
customers, namely, internal and external customers. Internal customers are
employees from a certain department who depend on the output or other
employeesÊ work results for their input. For example, output that is
produced by employee A from Department A is an input for employee B
from Department B. In this case, employee B is the customer of employee A.
External customers are outside people who use the products or services
produced by an organisation.

(f) 360-degree Evaluation


Apart from the sources stated above, an organisation may also use the 360-
degree evaluation method to assess their employees. This approach is very
popular and is an alternative to the traditional method as the organisation
gets complete information about employeesÊ performance. This is important
to increase the organisationÊs competitiveness in the market. Basically, the
360-degree method uses a combination of various evaluation sources as
stated above. Usually, an organisation uses this method for the purpose of
employeesÊ development only. The restrictions of this method are that it is
expensive and takes a long time as it involves many parties in the
evaluation process.

SELF-CHECK 6.2

Who is involved in an employeeÊs performance evaluation?

EXERCISE 6.3

Explain briefly the sources involved in evaluating employee


performance.

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TOPIC 6 PERFORMANCE EVALUATION 123

Visit http://www.work911.com/performance/particles/stupman.htm for


information on the ten negative things a manager does in his or her employeeÊs
performance evaluation.

6.6 PERFORMANCE EVALUATION METHOD


There are a few methods or approaches that can be used to evaluate employee
performance. The selection of certain methods depends on the purpose of the
performance evaluation system of an organisation. If emphasis is placed on
promotions, trainings and rewards based on merit, then a method like rating
scale is more appropriate. In fact, a combination of a few methods is more
appropriate to develop employee performance and help them produce a more
effective performance. There are three main methods that can be used by an
organisation, i.e.:
(a) Trait
(b) Behaviour
(c) Result

6.6.1 Trait Methods


Trait is designed to measure how far an employee is able to acquire certain
characteristics such as creativity, innovation, leadership and dependency that are
seen as important in carrying out oneÊs work. Among the methods categorised in
the trait method are:
(a) Graphic Rating Scale
The graphic rating scale focuses on employee evaluation that is based on a
scale or on certain characteristics that have been developed, and employees
will be evaluated on how far they have acquired each skill in that particular
scale. The graphic rating scale is as shown in Figure 6.3. This method is easy
to use as the evaluation and measurement characteristics are given.

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124 TOPIC 6 PERFORMANCE EVALUATION

Please tick ( “) at the appropriate space


Below Average
(Needs Average Excellent
Poor Good
Evaluation improvement as (Fulfils (Exceeds
(Does not meet (Often exceeds
Factor requirements requirements requirements
requirements) requirements)
are often not consistently) consistently)
met)
Work Quantity
Work Quality
Commitment
to Work
Initiative
Cooperation

SUITABILITY OF PROMOTION

Capable and able for promotion according to circumstances

Given priority for promotion due to high capabilities and abilities

Not suitable for promotion due to few capabilities and abilities

Figure 6.3: Graphic rating scale


Source: Adapted from Mondy, Noe & Premeaux. (2002). Human resource management
(7th ed.). New Jersey: Prentice Hall International, Inc.

(b) Essay
This method is the easiest method because supervisors only have to write
statements depicting employeesÊ performances. Supervisors will talk about
the strengths and weaknesses of employeesÊ behaviours and give
recommendations to improve on the weaknesses. Even though this method
is easy, it takes a long time, and is too subjective as the supervisor needs to
illustrate employeesÊ overall yearly performance.

(c) Forced-choice Method


This approach needs the appraiser to choose a few statements which are
provided to differentiate between good and bad performances. Figure 6.4
shows the statements which have to be chosen by appraisers. These
statements are developed by experts in the human resource field and
appraisers need to determine the statements which depict the effectiveness
of work behaviour demonstrated. Neutral statements are sometimes
included in the choices. Appraisers not only choose statements which
depict employeesÊ work behaviour but also arrange the statements from
good to poor.

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TOPIC 6 PERFORMANCE EVALUATION 125

Rate these statements from 1 to 4 to illustrate the


employeeÊs work behaviour.

1 Good
4 Not good

EmployeeÊs Name: __________________________

_____ Difficult to accept change


_____ Understands explanations quickly
_____ Seldom wastes time
_____ Easily approachable for interaction
_____ Becomes the leader in group activities
_____ A hardworking employee
_____ Always meets deadline
_____ Produces low quality output
_____ An employee committed to his/her tasks

Figure 6.4: Forced-choice method


Source: Adapted from Ivancevich. (2006). Human resource management (10th ed.).
Boston: McGraw-Hill Irwin.

ACTIVITY 6.3

Do you agree that rewards need to be stressed during the


performance evaluation process? State the reasons for your
answer.

6.6.2 Behavioural Methods


This method focuses on behaviour aspects based on a scale that illustrates certain
behavioural descriptions. These descriptions enable appraisers to identify
employee performance based on certain behaviours from weak to excellent. Some
of the methods included in the behaviour method are:

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126 TOPIC 6 PERFORMANCE EVALUATION

(a) Critical Incident Method


The critical incident method technique needs the appraiser to keep records
or log books on employeesÊ behaviour. The supervisor needs to observe the
employeesÊ critical behaviour all year long and record them in the log book.
When an action demonstrated by an employee affects the effectiveness of
the department, the supervisor has to record that particular behaviour, be it
positive or negative. Indirectly, the supervisor has to record workersÊ
behaviour seen as critical and which can influence the departmentÊs
effectiveness.

During the evaluation period, the supervisor will use the records together
with other information to evaluate employeesÊ performance. The advantage
of this method is that it illustrates the employeesÊ overall real performance
whereas the disadvantage of this method is that the supervisor has to
observe the critical work behaviour of all of his or her employees. If there
are too many employees in the supervisorÊs department, the observation
will require a long time. Examples of the critical incident method which are
positive and negative in nature are as follows:

(i) First critical incident


4 January 2002: Ali patiently listened to a complaint from his
customer, answered each of the customerÊs questions, took back the
product and refunded the customer. Ali was very polite to the
customer, prompt and showed interest in listening to the customerÊs
problems.

(ii) Second critical incident


20 April 2002: Today was a very busy day due to product inventory.
Even though it was a hectic day, Ali went to the canteen for 15
minutes. Throughout the time he was at the canteen, the store
manager called him three times asking about the inventory in the
store.

(b) Behavioural Checklist and Weighted Checklist


These are easy approaches to utilise as these checklists are statements
describing characteristics of work behaviour. The supervisor only has to
mark the statements which describe the work behaviour demonstrated by
the employees. If the statements given do not show employeesÊ work
behaviour, then the supervisor need not mark the allocated space.

Supervisors can also weigh each work behaviour demonstrated. Then, each
mark is totalled. An example of the weighted checklist is as shown in
Figure 6.5.

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TOPIC 6 PERFORMANCE EVALUATION 127

Weight
_____ Makes decisions quickly 10.0
_____ Understands explanations fast 8.7
_____ Seldom wastes time 6.5
_____ Always meets deadline 8.8

Figure 6.5: Weighted checklist

(c) Behaviourally Anchored Rating Scale (BARS)


This technique is based on critical incidents. Evaluation is done based on a
scale of 1 to 9, for example, and each scale has a description of certain
behaviour, be it positive or negative. An example of the use of this
technique for a teacherÊs evaluation is as shown in Figure 6.6.

Figure 6.6: Behaviourally Anchored Rating Scale (BARS)

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128 TOPIC 6 PERFORMANCE EVALUATION

(d) Behaviour Observation Scale (BOS)


This technique is also based on critical incident just like BARS which
identifies a few behaviour dimensions critical in a certain job. The obvious
difference between BARS and BOS is that BOS focuses more on the
frequency of a particular behaviour throughout the year. An example of
BOS is as shown in Figure 6.7.

Examples of items for site supervisor

1. Preparing an accurate cost report


Never done 12345 Often done

2. Supervising project employees effectively


Never done 12345 Often done

3. Always on site when employees are in trouble


Never done 12345 Often done

4. Preparing a good and fair duty roster


Never done 12345 Often done

5. Able to solve problems quickly without procrastination


Never done 12345 Often done

Figure 6.7: Behaviour Observation Scale (BOS)


Source: Adapted from Ivancevich. (2001). Human resource management (8th ed.). Boston:
McGraw-Hill Irwin.

6.6.3 Result Methods


Aside from behaviour and trait methods, an organisation can also utilise the
result method to evaluate their employeesÊ performance. This method enables
supervisors to evaluate the results achieved by employees. Therefore, it is more
quantitative in nature, objective and empowerment can be present. This in turn
will lessen bias. This technique also stresses that employees be responsible for all
results achieved. There are two techniques which can be categorised in this
group, i.e.:

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TOPIC 6 PERFORMANCE EVALUATION 129

(a) Productivity Measures


There are many measurement techniques to evaluate the performance of an
employee. A salesperson will be measured through his or her sales volume
(in unit and ringgit) whereas a production operatorÊs performance will be
measured through output produced and the volume of scrap found. In fact,
each measurement is directly related to the achievement shown by an
employee. Indirectly, the performance achieved by an employee is related
to the organisationÊs strategic objectives and employee objectives.

Even though this measurement technique seems easy, it may be influenced


by „criteria pollution‰ because performance result may be tainted by factors
which are out of the employeeÊs control. For example, a production
operator may not achieve his or her target as the raw materials needed are
insufficient.

In addition, measurement based on result may be short term and


employees may ignore the organisationÊs long-term strategy objectives.
Aside from that, factors such as cooperation, initiative and suitability in
teams are important in achieving set targets. Therefore, to achieve an
effective evaluation, result and process have to be taken into account in the
evaluation.

(b) Management by Objectives (MBO)


This technique can be used as an alternative to prevent problems in the
productivity measurement technique. MBO stresses that each employee
form his or her performance objective at the beginning of the year through
discussions with the supervisor. The objectives act as a standard which will
be used to evaluate the employeeÊs performance at the end of the year.

Figure 6.8 shows the performance evaluation cycle based on the MBO
method. After the setting of objectives is agreed upon by the supervisor and
employee, duties are carried out and the supervisor needs to observe the
employeeÊs work behaviour. An interim study has to be carried out, usually
in the middle of the year, to make sure the objectives formed are suitable
and achievable.

If the objectives are not clear and difficult to achieve, the supervisor and
employee will formulate other objectives which are more realistic and
achievable. At the end of the year, performance will be evaluated based on
the set objectives. After that, the organisationÊs performance will be
reviewed based on the overall employee performance. If the performance
shows no improvement, then the organisationÊs goals need to be studied
and changed in order to be more realistic.

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130 TOPIC 6 PERFORMANCE EVALUATION

Figure 6.8: Management by Objectives (MBO)


Source: Adapted from Bohlander, Snell & Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

EXERCISE 6.4

Explain briefly the three main methods which can be used in


evaluating employee performance.

6.7 ERRORS IN PERFORMANCE EVALUATION


In the effort to increase effectiveness in the performance evaluation system, there
are various errors which will emerge due to human errors. In theory,
performance evaluation seems easy but in reality, performance evaluation is not
as easy as it is thought to be because appraisers are often exposed to the errors
which occur during the performance evaluation process. Some of the errors or
mistakes which occur during evaluation are:

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TOPIC 6 PERFORMANCE EVALUATION 131

(a) Halo Effect


This effect happens when an appraiser conducts a total evaluation based on
only one aspect of performance. For example, an appraiser who places
importance on the quantity aspect will give a high value to an employee
without considering other aspects such as communication, involvement
and quality. In other words, an appraiser sees the employee as being
efficient in all his or her work aspects when he or she is able to meet the
quantity required by the organisation.

(b) Central Tendency


Central tendency happens when an appraiser awards the same evaluation
to all evaluated employees. The appraiser is inclined to give an average
evaluation to all employees with the excuses of maintaining good working
relationship with everyone so that friction does not occur.

(c) Recency Error


The recency error is one of the problems in the performance evaluation
process. An appraiser often focuses on work performance that is close to the
evaluation period as it is difficult to remember work performance in the
beginning of the year.

(d) Contrast Error


This error happens when a manager compares an employeeÊs performance
with another colleague who has already been evaluated, and not based on
set standards. For example, employee A is seen as innovative and
participates actively in his or her work; when employee CÊs turn for
evaluation comes up, his or her performance will be compared to employee
AÊs performance, and not based on the set standards.

(e) Leniency/Strictness Error


Leniency error is an error made by an appraiser when he or she gives a
high rating to the employee being evaluated because the appraiser does not
have the heart to give a low rating. Strictness error happens when an
appraiser awards a low rating to the employee being evaluated because he
or she feels that none of the employees deserve a high rating.

(f) Similar-to-me Error


This error happens when an appraiser gives a high rating because the
employee who is being evaluated has similar personal characteristics with
the appraiser. For example, an appraiser awards a high mark to the
employee because they both like to drink tea.

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132 TOPIC 6 PERFORMANCE EVALUATION

In order to ensure a manager or supervisor does not make the same mistakes, he
or she has to be given training on how to evaluate their employees effectively
and fairly, as well as focusing only on the employeesÊ work performance. This
training aims to increase the appraiserÊs skills in observing and giving feedback
to employees. Employees also need to give support by giving information which
is needed by the appraiser in order to ensure that the evaluation is done justly.

SELF-CHECK 6.3
What are the factors which cause errors in performance
evaluation?

ACTIVITY 6.4

State whether you agree or disagree on the following issues


regarding performance evaluation and give one reason for your
answer.

1. The performance evaluation process should be conducted as


often as possible so that employees know about their
strengths and weaknesses.
(a) Agree
(b) Disagree
2. All employees need to be informed about their performance
evaluation marks.
(a) Agree
(b) Disagree

EXERCISE 6.5

Explain briefly the mistakes or errors which are often made by


appraisers when they evaluate their employees.

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TOPIC 6 PERFORMANCE EVALUATION 133

6.8 PERFORMANCE INTERVIEW


A performance interview is an important process in the performance evaluation
system as appraisers need to give effective feedback about the employeesÊ
performance achievement. Apart from that, appraisers also need to ensure that
employee performance improvement occurs. Managers or supervisors need to
conduct formal performance interviews at the end of each year even though they
face a lot of problems in evaluating their employeesÊ work performance.

The success of a performance interview depends on how the manager or


supervisor continuously interacts with the employees, focuses on responsibilities
in the development of employees and receives support from the top
management. Stone (1998) stated that performance interviews are conducted for
the purposes of:
(a) Studying employeesÊ work responsibilities together;
(b) Evaluating employee performance together;
(c) Exploring the alternatives together in ensuring that performance
improvement happens; and
(d) Studying the short-term and long-term objectives together.

An effective interview has to be planned and structured well in order for the
supervisor and employees to view the interview as a problem-solving session
and not as a „fault finding‰ session (Mondy, 1999). A supervisor has to ensure
that these three elements are considered when planning a performance interview,
i.e. the discussion must:
(a) Be based on the employeesÊ performance and not their personality.
(b) Help employees set work objectives and career development plan.
(c) Give suggestions and help to achieve objectives which have been set as well
as gain support from top management.

Apart from that, Stone (1998) stated that an effective performance interview
needs to consider these three factors:
(a) A supervisor needs to possess information about employeesÊ performance
and work.
(b) A supervisor needs to give support and assistance to employees at all times.
(c) A supervisor needs to involve employees during performance discussions.

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134 TOPIC 6 PERFORMANCE EVALUATION

Before the performance interview session, the supervisor needs to inform


employees about the date of interviews so that employees are given the
opportunity to re-examine their job description, analyse any problems faced and
compare their real performance with the set standards.

The supervisor needs to collect information about employees whose work


performance is being evaluated, study the job description of every employee to
ensure they are still correct, read the performance report to identify matters that
need to be focused on, compare their real performance with the set performance
standards, list matters that need to be discussed and ensure that the time
allocated is sufficient as well as no disturbance occurs during the interview
process.

The supervisor must realise that there are differences among individuals. The
supervisor must also know how to criticise an employeeÊs weakness and praise
when necessary so that there is no dissatisfaction between the supervisor and
employee. By this, a fair and transparent performance evaluation can be
presented to the employee who is being evaluated. Performance improvement
can then occur after the interview session.

The performance evaluation process does not end after the performance
interview session. In fact, a supervisor needs to ensure that all the alternatives
which were proposed are carried out effectively and monitor employeesÊ
performance from time to time by giving feedback.

ACTIVITY 6.5
Visit http://www.performance-appraisal.com/intro.htm for
information on four performance evaluation methods which are listed.
Then, visit http://www.opm.gov/perform/articles/pdf8.htm and
elaborate on the methods used in evaluating group performance.

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TOPIC 6 PERFORMANCE EVALUATION 135

EXERCISE 6.6
Multiple Choice Questions
1. All the following are administrative roles in evaluating
performance EXCEPT:
A. Compensation
B. Termination
C. Career planning
D. Promotion

2. An appraiser will give an average rating for all dimensions that


are being evaluated so that all employees will not be
dissatisfied. By this, the appraiser has committed the mistake of
__________________.
A. Attribution
B. Leniency error
C. Recency error
D. Central tendency

3. Which one of the following are steps in the performance


evaluation process?
A. Job analysis, set standards, evaluate performance,
reassessment performance.
B. Set objectives and standards, monitor performance,
evaluate performance, performance discussion
C. Set standards, job analysis, performance evaluation,
reassessment evaluation.
D. Performance evaluation, set objectives, job analysis, set
standards, reassessment performance.

4. The criteria that must be present in an effective performance


evaluation system are as follows EXCEPT:
A. A clear objective
B. Monitor performance
C. Performance interview
D. End-of-the-year checking system

5. The performance evaluation method which lists descriptive


statements on a particular work behaviour is
__________________.
A. Rating scale
B. Checklist
C. Forced choice
D. Critical incident

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136 TOPIC 6 PERFORMANCE EVALUATION

Essay Questions

1. Discuss the six roles played by performance evaluation.

2. Explain these terms:


(a) Strategic relevance
(b) Criteria contamination
(c) Criteria deficiency

3. Explain the preparations needed to be made by supervisors


BEFORE the performance interview process.

Performance evaluation is a critical activity in human resource management


as it is important in increasing organisationÊs competitiveness.
In short, performance evaluation is a process to evaluate work performance
at a particular duration, in order to determine that the level of achievement is
based on the organisationÊs strategic objectives.
What is important here is that the developed performance evaluation system
is able to motivate employees to improve their performance, thus increasing
the organisationÊs productivity.
By this, an effective performance evaluation system is able to ensure that all
parties, be it management or employees, are able to be benefited from it.
At the same time, this will help to strengthen the position of and ease human
resource management. Furthermore, it helps to achieve objectives and
organisational goals.

Behaviour Observation Scale (BOS) Performance evaluation


Behaviourally Archored Raring Scale Result
(BARS)
Trait
Management by Objectives (MBO)

Copyright © Open University Malaysia (OUM)


Topic Compensation
7 Administration

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Explain the types of rewards which exist in the compensation
administration system;
2. Describe the compensation administration objectives;
3. Discuss the factors which influence wage setting; and
4. Assess the issues related to compensation administration.

INTRODUCTION
Compensation administration is one of the most important functions in human
resource management. Even though it is the most difficult and challenging
activity, it helps strengthen the culture and the important values of an
organisation. Policies and practices in an organisation which emphasise on
rewards based on results are able to strengthen employeesÊ behaviour so that
they are more dedicated to increasing their productivity (Stone, 1998). Indirectly,
compensation administration is an important tool to increase employee
motivation in improving work performance so that the organisationÊs strategic
objectives are achieved. Compensation administration policies should not only be
able to motivate employees, but they should also attract and retain competitive
employees. Therefore, employees expect that the compensation system of an
organisation is just and fair in providing a reward system that is at par with the
skills and performance demonstrated.

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138 TOPIC 7 COMPENSATION ADMINISTRATION

7.1 DEFINITION OF COMPENSATION


Compensation is the total of all rewards provided to employees in return for
their services (Mondy, 1999). Ivancevich (2001) defines compensation as all forms
of financial rewards and benefits as well as clear and apparent services which are
accepted by employees as part of work relations. There are two components in
compensation administration, which are fixed component and variable
component. A fixed component is in the form of basic salary whereas a variable
component is the payment based on performance such as bonus or profit sharing
and benefits such as health insurance and annual leave.

7.2 TYPES OF COMPENSATION


Nankervis (1999) stated that employees will focus on a few compensation factors
such as those shown below:
(a) Is my salary equivalent to the performance I demonstrate?
(b) How is my wage compared to other employees in this organisation?
(c) How is my wage rate compared to the market fee rate?
(d) How can I increase my wage rate?
(e) What are the incentives and benefits which I will be able to receive?

Based on the employee expectations listed above, compensation administration


programmes not only motivate employees, but at the same time save labour cost
effectively. Even though wages is the main factor why an individual works, non-
monetary rewards are also important as a source to motivate employees to work
with more dedication in order to increase their performance. Indirectly, two
types of rewards need to be included in an organisationÊs compensation
administration programme, as shown in Figure 7.1.

Rewards offered to employees can be in the form of monetary or non-monetary


rewards.

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TOPIC 7 COMPENSATION ADMINISTRATION 139

Figure 7.1: Types of rewards


Source: Adapted from Stone, R.S. (1998). Human resource management (3rd ed.).
Brisbane: John Wiley, Sons Australia.

Monetary rewards can be in the form of cash such as wages, salary, commission
and bonus; or benefits such as insurance, annual leave, medical leave and flexible
working hours.

Non-monetary rewards, on the other hand, can be the satisfaction the employee feels
as a result of his or her position or from the work environment mentioned (Mondy,
1999).

Direct monetary rewards are in the form of cash, such as wages, salary,
commission and bonus, whereas indirect monetary rewards are in the form of
benefits and others.

Non-monetary rewards from the work aspects are interesting jobs, challenging
job responsibilities, acknowledgement and career development.

Non-monetary rewards from the work environment aspects are good policies
and practices, competent supervisors, congenial colleagues and a safe and
healthy work environment.

Visit http://www.hr-guide.com/compensation.htm for additional information


on compensation administration.

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140 TOPIC 7 COMPENSATION ADMINISTRATION

7.3 STRATEGIC COMPENSATION PLANNING


Strategic compensation administration is one way of offering a compensation
package to employees to increase their motivation and at the same time align
their efforts so that they are in line with the organisationÊs objectives,
philosophies and culture. A compensation administration policy is one way of
supporting strategic compensation administration. The compensation
administration policy designed has to:
(a) Focus on business objectives and strategies;
(b) Attract and retain competent, motivated and qualified employees;
(c) Encompass organisational reward principles and philosophies;
(d) Prepare wage allocation outline;
(e) Strengthen work values and culture desired by the organisation; and
(f) Relate to all employees.

Each compensation administration policy formed has to benefit both the


organisation and its employees. According to Stone (1998), compensation
administration objectives are as follows:

(a) Organisation
(i) Attract and retain quality and the desired employee participation.
(ii) Motivate employees to improve their work performance in the effort
to achieve the organisationÊs strategic objectives.
(iii) Strengthen the main values and culture desired by the organisation.
(iv) Encourage and strengthen work behaviour as desired by the
organisation.
(v) Ensure that compensation is maintained at a competitive level.
(vi) Control compensational cost.
(vii) Ensure optimum returns on each ringgit spent.
(viii) Abide by legal requirements.

(b) Employee
(i) Prepare fair and just rewards.
(ii) Give out rewards equivalent to the performance as demonstrated.

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TOPIC 7 COMPENSATION ADMINISTRATION 141

(iii) Prepare a flexible wage structure based on performance, promotion,


transfer and changes in the environment.
(iv) Reassessing compensation structure by taking into account the effect
of equity.

The development of compensation policy has to be consistent with the


organisationÊs strategic objectives and it involves four phases as shown in Figure
7.2 which are:
(a) Corporate mission;
(b) Business strategies;
(c) Human resource strategies; and
(d) Compensation administration strategies.

The compensation administration strategy explains the organisationÊs


compensation goals and states rewards which will be given by the organisation
based on human resource strategies, business strategies and corporate mission.
Corporate mission, business strategies and the compensation administration
strategy are directed to the formation of the compensation administration strategy.

Figure 7.2: The relationship between organisation objectives and compensation


administration strategies
Source: Adapted from Nankervis, Compton & McCarthy. (1999). Strategic human
resource management (7th ed.). New Jersey: Prentice Hall International.

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142 TOPIC 7 COMPENSATION ADMINISTRATION

ACTIVITY 7.1
State your view on whether you agree or disagree on the following
issues and give a valid reason for your answer.
1. All employees are eligible for annual salary increment
without taking into account their performance.
(a) Agree
(b) Disagree
2. An unattractive salary and benefit package decreases
employee motivation to excel in their work.
(a) Agree
(b) Disagree

EXERCISE 7.1

Explain two types of compensation which can be offered by an


organisation to its employees.

7.4 FACTORS THAT INFLUENCE WAGE RATE


Nankervis (1999) stated that external and internal factors influence the wage rate
developed by an organisation. These factors are as shown in Figure 7.3, which
include the legal environment, market surveys, work values, compensation
administration strategies and personal factors.

Figure 7.3: Factors which influence payment rate

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TOPIC 7 COMPENSATION ADMINISTRATION 143

(a) Legal Environment


The compensation policy in every organisation has to be aligned with the legal
labour requirements in a country. Among the issues related to wage rate are:
(i) Minimum wage rate;
(ii) Fixed wage component; and
(iii) Variable wage component.

For example, in Malaysia, a Salary Reformation System Guideline has been


designed to increase efficiency and productivity which in turn will assure
the nationÊs competitiveness and increase employeesÊ quality of life
(Ministry of Human Resources, 2002).

(b) Market Survey


Organisations have to conduct environmental scanning in the labour
market to review the relationship between demand and qualified
manpower supply. Besides, organisations have to take note of other
information before a certain salary policy is set. The information includes:
(i) The differences between local wage rate and city and suburban wage rate;
(ii) The different wage rates for works from the same work groups;
(iii) The different wage rates in the same industry; and
(iv) The economic environment including inflation, unemployment,
manpower participation level, increase in education status, lack of
specific skills and others.

(c) Work Values


Each organisation has its own benchmark in recognising and rewarding
employee's performance. Incentives can be in various forms which act as
motivation factor.

In this competitive environment, work values or sometomes known as job


worth are mostly grounded on market value or job evaluation programme.
However, using total value basis is more objective for the organisation.
Among the work values that need to be focused on by an organisation are
as follows:
(i) The latest knowledge and experience;
(ii) Complex tasks can be solved easily;
(iii) Problem solving is a path towards excellent work performance;

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144 TOPIC 7 COMPENSATION ADMINISTRATION

(iv) Responsibilities in managing resources are important so that all


employees are equipped with sufficient sources to carry out their
work effectively;
(v) Use people skills to interact effectively; and
(vi) Working effects towards organisation.

(d) Compensation Administration Strategies


Compensation administration strategies are formed as a way to achieve
organisational strategic objectives. The development of these strategies has
to be focused on a few questions such as:
(i) The purpose of giving the rewards to employees the relationship
between rewards and results achieved by the organisation;
(ii) The employerÊs ability to give rewards to employees;
(iii) The types of employee desired by employers;
(iv) A combination of rewards that employers want to offer to employees
fixed cost such as basic salary and variable cost such as incentive
programmes and bonuses;
(v) The frequency of salary structure revision; and
(vi) Wage management has to be scattered or centralised.

(e) Individual Factors


Other factors that need to be considered are factors involving individual
performance which are as important in creating more motivated employees
to carry out work exceptionally. A few factors that have to be thought of are:
(i) Individual contribution towards the organisation;
(ii) Real performance compared to forecasted performance;
(iii) Skill development or competency; and
(iv) Individual power or collective negotiation in looking out for
employee welfare.

ACTIVITY 7.2

How can legal factors influence wage rate in our country?

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TOPIC 7 COMPENSATION ADMINISTRATION 145

7.5 COMPENSATION ADMINISTRATION


COMPONENTS
There are three important components in setting the salary system as follows:
(a) Internal equity;
(b) External equity; and
(c) Individual equity.

Figure 7.4 shows the steps in setting the salary system. The steps in each level are
related to one another.

Figure 7.4: Steps in setting a salary system


Source: Adapted from Gomez-Mejia, Balkin & Cardy. (2001). Managing human resources
(3rd ed.). New Jersey: Prentice Hall.

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146 TOPIC 7 COMPENSATION ADMINISTRATION

7.5.1 Achieving Internal Equity: Job Evaluation


The element in this first process is job evaluation to determine the relative value
of a certain job. The goal of job evaluation is to achieve internal equity during the
salary system formation. Job evaluation is a systematic method to determine the
relative value of a certain job compared to other jobs to ensure different jobs are
given a different wage rate (Stone, 1998). Job evaluation focuses on the „high‰ or
„low‰ of a certain job based on a few pre-determined work factors. Information
on job evaluation is set as a basis for the formation of a fair salary system.

Theoretically, job evaluation utilises information in job analysis to categorise jobs


according to a relative value hierarchy of a specific job compared to other jobs
(DeCenzo, 1999). For example, the post of an account manager needs more skills
and responsibilities as compared to an account trainee post. By this, the account
managerÊs salary will be higher than the account traineeÊs salary. Job evaluation
conducted focuses on three main questions, which are:
(a) What does the employee know?
(b) What can the employee do?
(c) What are the results shown by the employee?

There are four steps involved in determining internal equity, which are:

(a) Step 1: Carrying Out Job Analysis


The purpose of a job analysis is to gather information about tasks,
obligations and responsibilities of a particular job. Through the information
obtained, job descriptions and specifications are formed to identify the
activities that need to be carried out by the person holding the post.

(b) Step 2: Relative Value of a Specific Job


The next step is to determine the relative value of a specific job before
arranging it according to its importance. In evaluating a specific job, a few
basic elements are utilised to determine its relative value, as follows:
(i) Skills;
(ii) Responsibilities;
(iii) Efforts; and
(iv) Work environment

(c) Step 3: Arranging Jobs According to Hierarchy


After determining the relative value of a specific job, the next step is to
prepare a list of jobs according to their importance to the organisation,

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TOPIC 7 COMPENSATION ADMINISTRATION 147

starting from high to low. The job hierarchy is arranged according to types
of task in the same group. For example, the position of a secretary, senior
clerk, clerk, typist, receptionist and computer operator can be categorised
into one group, which is clerical position.

(d) Step 4: Classifying Jobs According to Grades


The final step in the job evaluation component is categorising jobs
according to pre-determined grades. Table 7.1 illustrates four basic
methods of categorising jobs and determining the relative value of a
specific job. The four methods used to evaluate jobs are as follows:
Job arrangement;
Job classification;
Score system; and
Factor comparison.

Table 7.1: Job Evaluation Method

Comparison Scope
Comparison Basis
Qualitative Method Quantitative Method

Job Arrangement Factor Comparison


Job vs Job
Method Method

Job Classification
Job vs Scale Score System
Method

Source: Nankervis, Compton & McCarthy (1999). Strategic human resources management
(3rd ed.). Australia: Nelsom-Thompson Learning.

(i) Job Arrangement Method


This is a simple qualitative method to evaluate jobs by listing tasks
and responsibilities of a particular job according to the importance of
the job, from high to low (DeCenzo, 1999). A job comparison will be
evaluated based on importance or difficulty of performing a particular
job. Even though this method is easy, one of the restrictions faced is
difficulty in accurately arranging jobs if there are many types of jobs
in a particular organisation.

Furthermore, there is no standard and consistent evaluation to explain


the importance of a particular job compared to another job whose
duties and responsibilities are similar. An example of the job
arrangement method is shown in Table 7.2.

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148 TOPIC 7 COMPENSATION ADMINISTRATION

Table 7.2: Example of Job Arrangement

Order Job

1 General Manager
2 Marketing Manager
3 Operations Manager
4 Accounts Manager
5 Engineer
6 Accountant
7 Sales representative
8 Supervisor

Source: Adapted from Stone, R. S. (1998). Human resources management (3rd ed.).
Brisbane: John Wiley & Sons Australia.

(ii) Job Classification Method


This is a simple method where each job is categorised into a particular
group or grade. The first step is the formation of the group or grade
which is determined by job factors such as knowledge, experience,
responsibilities, skills and abilities. The next step is to create a job
description that can be benchmarked for each grade or group. After
that, the relative value of a particular job will be determined by
comparing the job with the benchmark description to determine
whether they are categorised under the same grade or group.

The most prominent restriction for this method is the difficulty to


write an accurate grade classification description and to categorise a
particular job which can be included in many grades which have been
created (DeCenzo, 1999).

(iii) Score System Method


This quantitative method involves evaluation based on main job
factors such as education level, skills, knowledge, efforts and
responsibilities, and the scores which are allocated for each mentioned
factor. The next step is to divide the main factors into sub factors.
Each sub factor will be given a specific score to determine the relative
value of a particular job. For example, the education level factor such
as the one shown in Figure 7.5 has been graded with identified scores.

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TOPIC 7 COMPENSATION ADMINISTRATION 149

Figure 7.5: Score system method


Source: Adapted from Stone, R. S. (1998). Human resources management (3rd ed.).
Brisbane: John Wiley & Sons Australia.

(iv) Factor Comparison Method


This is a quantitative method where a few jobs that are already well-
known in the market are benchmarked or set as a standard when
compared to other jobs which will be evaluated (DeCenzo, 1999). Jobs
which are benchmarked have to have these characteristics:
The importance of a particular job to employees and the
organisation;
The job requirements differ from other jobs;
The job chosen has a relatively stable work content; and
Utilised in salary research to determine the wage rate.

A few criteria for comparison will be pre-determined such as mental


requirements, skills, physical abilities, responsibilities and work environment.
For example, Table 7.3 shows that an electricianÊs post is benchmarked against
other jobs which are categorised under the same group.

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150 TOPIC 7 COMPENSATION ADMINISTRATION

Table 7.3: Factor Comparison Method

The restriction in the factor comparison method is the difficulty in using the pre-
determined criteria to compare all jobs against the chosen benchmark.

Selection Method
Each job evaluation method has its strengths and weaknesses. According to Stone
(1998), since there is no one method that can be said as being the best, human
resource managers have to evaluate a few factors prior to selecting. These factors are:

(a) OrganisationÊs strategic objectives


The method chosen has to be in line with the organisationÊs strategic
objectives.

(b) Organisation size


A small organisation will utilise a simple method such as job classification
whereas a large organisation will utilise an expensive method such as factor
comparison or score system.

(c) Organisation resources


Organisations need to consider cost and time to carry out a job evaluation.
Organisations are able to request their own employees or use the services of
a consultant to conduct a job evaluation.

(d) Information on the use of specific methods


Information obtained about a specific method utilised by an organisation.

(e) Corporate culture


The selection of job evaluation has to be in line with the existing corporate
culture so that it is conducted effectively. For example, a small organisation
need not choose a complex method utilised by most large organisations.
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TOPIC 7 COMPENSATION ADMINISTRATION 151

(f) Employee behaviour


A job evaluation method chosen has to be informed to all employees so that
it can be accepted by them and the chosen method is perceived as just and
fair.

Visit http://www.hr-guide.com/ for the definition of job evaluation and the four
importance of the job evaluation process. Next, visit http://www.job-
analysis.net/ for the four steps involved in the job analysis process.

7.5.2 Achieving External Equity: Market Survey


The purpose of a market survey is to identify the wage range for each grade
formed. The steps involved in a market survey are benchmarking and the
establishment of wage policy.

(a) Step 1: Benchmark or Key Job


Benchmark or key job is utilised to connect job evaluation which has been
conducted to market wage. Basically, the comparison of identified key jobs
in a payment grade is done inter-organisationally to determine the relative
job value according to other employeesÊ opinions. Next, the organisation
determines the wage rate of other jobs in the same grade and categorises
the jobs in the same wage range with key jobs of the same grade.

For example, an account clerkÊs post such as in Figure 7.6 is identified as a


key job. Posts such as general clerk, assistant secretary and senior data
process operator are categorised under the same grade as the account clerk.
Next, the wage range for other posts in the same grade will be determined
based on the relative position value as compared to the account clerkÊs
position. Indirectly, this step is similar to the factor comparison method as
stated in the job evaluation.

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152 TOPIC 7 COMPENSATION ADMINISTRATION

Figure 7.6: Benchmark rate structure

(b) Step 2: Establishment of Payment Structure


Information from the market survey will show the wage differences which
are apparent from one to another. Therefore, organisations have to
determine the wage structure for a particular job based on the internal and
external information present.

Job evaluation prepares an internal equity that can be used as a basis to


establish wage rate. A wage structure must be developed by creating
different wage levels and this wage structure takes into account the
following components:
(i) Jobs with similar relative values will be categorised under the same
grade; and
(ii) The wage range for each grade is formed by considering market
survey information and compensation administration strategies.

The methods that can be utilised to obtain information from outside are
wage survey, wage curve and salary grade range.
(i) Wage Survey
Wage survey is a set of facts related to practices in wage structure
which are obtained from other organisations in the same labour

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TOPIC 7 COMPENSATION ADMINISTRATION 153

market. For example, organisations which are categorised in the


electronic industry cannot compare their wage structure with the one
in the education industry. A wage survey is done when an
organisation has identified the jobs which will be evaluated. Next, the
organisationÊs competitors in the same labour market will be
identified to perform the survey. Aside from information on wage
rate, the organisation can also obtain information on minimum and
maximum wage rate, overtime payment practices, holiday
allowances, work day duration and work weeks.
(ii) Wage Curve
After an organisation has obtained information on wage rate from
other organisations, it will connect the information with the result
from a specific job relative value. Information on wage rate and job
size is based on score marks and is plotted to obtain a wage curve.
The plotted graph as shown in Figure 7.7 is a wage rate survey
distribution graph. A straight line will be formed to obtain the desired
wage curve.

Figure 7.7: Wage curve


Source: Adapted from Bohlander, Snell and Sherman. (2004). Managing human resources
(13th ed.). Ohio: South-western College Publishing.

(iii) Salary Grade Range


The same job based on class, grade or score marks will be categorised
in the same group. Payment rate range will be segregated in one series
that determines the lowest and highest salary for each salary grade as
shown in Figure 7.8. Employees receive payment up to the maximum
level based on merit or service seniority.

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154 TOPIC 7 COMPENSATION ADMINISTRATION

Figure 7.8: Salary grade range


Source: Adapted from Bohlander, Snell and Sherman. (2009). Managing human resources
(15th ed.). Ohio: South-western College Publishing.

7.5.3 Achieving Individual Equity


After an organisation has structured its wage policy, the organisation has to
determine the wage rate that will be received by a particular employee based on
the salary grade range according to the position held. Normally, an employeeÊs
salary rate is determined by taking into account issues such as experience related
to his or her service and performance. For example, a clerk with no work
experience in other organisations will receive a starting pay of RM520 whereas a
clerk who has work experience in another organisation will be offered RM720.
The main objective of this step is to achieve individual equity. Individual equity
refers to the fairness in determining wage payment for employees in the same
position.

ACTIVITY 7.3
Elaborate on the components involved in the formation of a salary
system.

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TOPIC 7 COMPENSATION ADMINISTRATION 155

EXERCISE 7.2

What is meant by job evaluation? State the methods which can be


used to evaluate a particular job.

7.6 COMPENSATION ADMINISTRATION


ISSUES
An organisationÊs compensation administrative system has to consider flexible
characteristics towards developing a compensation administrative strategy
which is able to retain employees for a longer period. Payment based on
flexibility will ensure that the compensation administration system connects
employee performance and reacts to economic environment in the organisationÊs
external environment. A few issues on compensation administration which
should be highlighted to the human resource manager are as follows:

(a) The Influence of Equity on Wage Rate


According to Dessler (2000), equity factors whether internal or external are
critical factors in determining wage rate. External factors take into account
the similarities between an established wage rate and other organisationsÊ
wage rate to attract and retain capable employees. On the other hand,
internal factors stress on fair wage where an employee compares his or her
wage with the wage rate of a colleague in the organisation. In general, an
established salary grade must take into account both issues in creating
equity on the wage rate developed.

(b) Salary Acceptance Culture


The main challenge for human resource managers is to change employeesÊ
perception on salary acceptance. Basically, the rights mentality to „accept
salary as a result of being present in the workplace‰ has to shift to the
contribution mentality, which is „payment based on contribution
demonstrated‰. This paradigm shift requires human resource managers,
together with other managers and the top management, to show
commitment to change in increasing employee productivity.

(c) Wage Assurance


A strategic compensation administration is able to motivate employees to
increase their performance. Various compensation plans have to be
developed to create wage payment assurance including basic salary
assurance, service allowance or living expenses, and other financial benefits

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156 TOPIC 7 COMPENSATION ADMINISTRATION

that need to be increased from time to time such as housing allowance. The
wage rate developed also has to be revised so that an increase in basic
salary follows the increase in living costs.

ACTIVITY 7.4

Do you agree or disagree with the following statements? Give a valid


reason for your choice.

1. Do you agree that a top executive be given a high salary compared


to lower position employees and does this show a fair
organisation compensation administration system?
(a) Agree
(b) Disagree

2. Has the government enforced the minimum wage?


(a) No
(b) Yes

3. Payment based on performance is only a fantasy in an


organisation.
(a) Agree
(b) Disagree

4. Annual increment has to be based on performance demonstrated.


(a) Agree
(b) Disagree

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TOPIC 7 COMPENSATION ADMINISTRATION 157

EXERCISE 7.3
Multiple Choice Questions

1. Which one of the following is a direct monetary reward?


A. Flexible work timetable
B. Bonus
C. Insurance
D. Annual leave
2. The compensation administration policy developed has to
consider the following elements EXCEPT:
A. Focuses on organisational objectives.
B. Retains employees.
C. Connected to all employees.
D. Wage structure which does not change.
3. The steps in determining the salary system according to order
are _________________.
A. Job analysis, job evaluation, determining the basic salary,
market survey on payment practices, producing a salary
system
B. Job analysis, job relative value, job arrangement, job
grade, market survey, establishing a wage structure,
determining individual equity
C. Job evaluation, job analysis, determining individual
equity, job arrangement, market survey on payment
practices, producing a salary system
D. Job evaluation, job analysis, market survey on payment
practices, determining basic salary, producing a salary
system
4. Which one of the following is a qualitative method to evaluate
jobs?
A. Job Arrangement
B. Factor Comparison
C. Score System
D. Job Hierarchy

Essay Questions

1. Explain two key challenges faced by human resource managers


in developing an effective salary structure.
2. What is meant by compensation?

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158 TOPIC 7 COMPENSATION ADMINISTRATION

3. List examples of indirect monetary reward.


4. List the factors which need to be considered when developing
compensation administration policies.
5. State the two steps which can be used to obtain market
information before developing a wage structure.
6. What is meant by individual equity? State factors which need
to be considered in individual equity.

Compensation administration is a critical activity in managing human


resources and has to be more focused on giving consistent rewards to
encourage employee behaviour consolidation.
This will then increase employee performance and employee loyalty so that
they will remain in the company for a long time.
Therefore, the compensation administration strategy has to be flexible to
ensure a rapid response towards change and compensation administration
trends in the labour market.
Basically, the purpose of compensation administration is to gain high returns
from the investment made by the organisation for its employees, in the form
of salary.
The rewards offered have to ensure that organisation as well as employees
benefit from it.
An effective compensation administration system impact is when employees
practise a work culture that emphasises on contribution compared to
payment acceptance for being present in the workplace.

Compensation Individual equity


External equity Internal equity

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Topic Incentives and
8 Benefits

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Discuss the advantages of the incentive payment programme;
2. Compare between the individual, group and industrial incentive
programmes;
3. Explain the characteristics of an effective benefit programme; and
4. Differentiate between mandated benefits and non-mandated
benefits.

INTRODUCTION
The major factors that determine the reward payment rate of a certain job are
workload and job importance. However, wage payment that is only based on
these factors often fails to motivate employees to reach their full potential. In
other words, an equitable salary is not an assurance that employees will produce
high productivity. In this case, incentives and benefits are believed to be a major
influence that can help increase productivity, encourage employees to fully
utilise their skills and knowledge in carrying out their jobs, as well as encourage
them to work as a team.

Therefore, awarding incentives and benefits to employees is another very critical


aspect that needs to be planned and managed by the management, especially the
human resource management unit. In this topic, we will discuss both incentives
and benefits.

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160 TOPIC 8 INCENTIVES AND BENEFITS

8.1 INCENTIVES

ACTIVITY 8.1
In your opinion, should employers give incentives to their
employees? Imagine what would happen if employers did not
award any incentives to their employees.

An incentive programme is also known as a variable pay plan. The incentive


payment to employees is often seen as an additional dimension to the salary
structure or compensation as discussed in Topic 7. Let us look at the current
situation whereby salary increase in salary scheme often cannot compete with
increase in living costs. Without an interesting incentive plan, what will happen
to our employees and their overall organisation performance? We will now
explore the incentive plans offered by organisations.

8.1.1 Importance and Relevance of an Incentive Plan


Global competition and the restructure of the global economy require a business
to be more productive. Payment strategies and payment systems used previously
are already outdated, causing organisations to be unable to compete at the
international level. In addition, the traditional payment system often fails to
connect payment to performance or productivity effectively. Therefore, more and
more organisations are beginning to offer incentive plans to their employees, in
addition to the existing basic salary structure.

Among the main reasons an organisation carries out an incentive plan is so that it
focuses on „payment for performance‰ and is able to connect rewards to the
organisationÊs goals. Therefore, an employee will be more loyal and faithful to
his or her job and thus able to increase his or her overall effort and job
performance.

Apart from that, it is said that incentives can also encourage employees to work
harder in completing their tasks. Therefore, monetary incentives are offered to
employees with the hope that productivity and quality can be sustained or
improved, thus enabling an organisation to compete globally.

In addition, a competitive labour market also forces the organisation to compete


and offer various interesting incentive plans to attract and retain quality
employees in the organisation.

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TOPIC 8 INCENTIVES AND BENEFITS 161

EXERCISE 8.1

Give two reasons why the management carries out incentive plans.

8.1.2 Advantages of an Incentive Payment


Programme
Among the advantages of an incentive programme are as follows:
(a) Incentives enable an employee to focus on his or her specific job
performance target. It provides motivation to the employee, thus producing
a satisfactory result.
(b) Incentives are variable costs that can be related to result achievement,
which is encouraging the increase in output.
(c) Incentives can also be directly related to operationÊs achievement whereby
if the performance objective is met, incentives will be given. On the other
hand, if employees fail to fulfil the performance objective, no incentives will
be given.
(d) Incentives encourage employees to work as a team and increase
dependency as payment for individuals depends on a groupÊs achievement.
(e) Incentives also encourage success sharing among those involved in
achieving the performance.

8.1.3 Characteristics of an Effective Incentive Plan


To carry out a successful incentive plan, the organisation has to develop an
attractive incentive plan and convince the employees about its advantages.
Among the characteristics of an effective incentive plan are as follows:
(a) It involves employees in the development and administration of the
incentive plan, which can then increase employeesÊ acceptance;
(b) Employees can clearly notice the relationship between the incentive
payment they received with their work performance;
(c) It emphasises that incentives are received through employeesÊ efforts and
not due to rewards which all employees are eligible to enjoy;
(d) Incentive programmes are fair to all employees;

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162 TOPIC 8 INCENTIVES AND BENEFITS

(e) The standard quality or productivity used as a benchmark in awarding


incentives has to be challenging but achievable for employees; and
(f) The incentive payment formula introduced has to be simple and easily
understood by employees.

8.1.4 Incentive Plan Administration


Usually, an effective incentive plan is able to decrease direct labour cost, but for
an organisation that wants to enjoy the full benefit of the incentive plan, it needs
to be thoroughly planned and carried out carefully. An effective incentive plan
administration has to take into account these following issues:
(a) The manager is willing to give incentives based on the difference in the
performance of individuals, teams and the overall workforce.
(b) The annual budget has to be sufficient in giving rewards as well as
validating excellent performance.
(c) Indirect cost which is related to administration and the execution of the
incentive plan has to be identified. This includes the cost to develop
performance standards and additional cost for records purposes. Aside
from that, the time used in conveying the incentive plan to employees,
answering questions that arise as well as handling related complaints have
to be considered in the calculation of cost.

8.1.5 Types of Incentive Plans


There are many types of incentive plans that can be practised by an organisation
and each organisation usually has their own incentive plan. Generally, an
incentive plan can be divided into three categories:
Individual incentive plan;
Group incentive plan; and
Industrial incentive plan.

(a) Individual Incentive Plan


There are a few incentive plans that can be developed as a reward for
individual employees as a result their excellent work performance. These
include:
(i) Unit of Work
Unit of work is one of the earlier forms of incentive plans introduced.
There are two types of unit of work incentives, which are:

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TOPIC 8 INCENTIVES AND BENEFITS 163

Straight piece work


Through straight piece work, employees are given incentives
based on a certain fixed rate for each unit produced in a particular
time period besides their basic salary.

Example:
Say that an employee is being paid RM500 for making hats.
Besides, the employee is also offered an incentive of RM0.20 for
each unit produced. If the employee is able to produce 100 units of
hats in a monthÊs time, what is the reward the employee should
receive for that particular month?

Basic salary RM500


Incentive (RM0.20 x 100) 20
Total reward 520

Differential piece-rate
Through this, employees are given a higher incentive payment
rate for their overall work if their production surpasses the
standard production level which has been set by the management
as compared to the rate paid to them when they do not surpass the
standard level.

Example:
Say the standard level which has been set by the company is 1,000
units per month. The incentive payment rate for production which
surpasses the standard level is RM0.30 per unit. On the other
hand, the incentive rate for production that does not surpass the
standard level is RM0.10 per unit. If Ali and Chandra both manage
to produce 1,200 and 900 units in a particular month, how much is
the incentive that they will receive?

Incentive for Ali RM0.30 1,200 = RM360


Incentive for Chandra RM0.10 900 = RM90

(ii) Standard Hour Plan


Through this plan, the incentive rate pay is based on the standard
time set by the organisation to complete a certain task without taking
into account the actual time taken by the employee to complete the
task. If the employee is able to complete the task less than the
standard time, the employee is still paid an incentive based on the
standard time. This plan is suitable for jobs or operations that take
time or need a lot of time to be completed.
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164 TOPIC 8 INCENTIVES AND BENEFITS

Example:
The standard time set to finish a painting job is 10 hours with the
incentive payment rate of RM10.00 per-hour. If worker A used 9 hours
to complete the work, then the incentive payment that the worker will
receive is:

Standard hour (10 hours) x Incentive rate (RM10.00) = RM100

On the other hand, if worker A has used more time to complete the
task, say 20 hours, worker A will be paid an incentive of RM100 only.

(iii) Bonus
Bonus is one of the payment incentives given to the employee as an
addition to their basic salary. Bonus can be awarded based on cost
saving, increase in performance quality or criteria that are identified
by the organisation. Besides, organisations can utilise „spot bonus‰
which is bonus given „on the spot‰ in acknowledging employeesÊ
efforts or contributions which are indirectly related to the standard
performance set. For example, an employee is given „spot bonus‰ for
his or her effort in working extra hours to entertain a lot of customers.

(iv) Merit Payment


Merit payment is a salary increment programme that is based on
employeesÊ performance achievement in carrying out tasks through
the performance evaluation process. To ensure the effectiveness of the
merit payment plan, evaluation on the employee has to be done
objectively and employee performance is measured based on objective
and fair criteria.

(v) Sales Incentive


Monetary incentives are usually used by organisations to motivate
sales personnel and encourage the increase in sales in the competitive
market. The salespersonÊs salary scheme usually contains two parts
which are basic salary and commission. Commission is the total of
sales incentive which is calculated based on the percentage of total
sales garnered by a salesperson at a certain period.

Example:

Syarikat Vena offers sales commission of 2% to its salespeople based


on total sales each month. If Samy is able to achieve RM10,000 sales in
March, how much is the sales commission he will receive?

Commission: 2% RM10,000 = RM 200


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(vi) Maturity Curve


Maturity curve is also known as career curve. It is often used as a
basis in salary increment to professional employees. As shown in
Figure 8.1, the curves illustrate the annual salary rate, which is based
on experience and employeesÊ work performance.

A different curve is formed to illustrate the different performance


level and information on related annual salary increment. The curve
that shows a higher salary increment rate depicts a higher job
performance and is able to obtain a higher annual salary compared to
the curve which depicts a poor job performance.

Figure 8.1: Maturity curve

(b) Group Incentive Plan


Various group incentive plans starting to get the attention of management
as a result of total quality management practised and cost saving in
achieving competitiveness. Besides, group incentive plans are also done
when an employeeÊs individual effort is difficult to identify or when
management wants to encourage cooperation in the overall organisation.

The group incentive plan is able to encourage cooperation, teamwork


among employees and give rewards to employees for their collective
contribution towards the organisation. Among the group incentive plans are:
(i) Team Incentive Plan
The incentive plan is to award to each team member through bonus
incentive payment when the teams successfully achieve the set
performance standards. Since there are various types of teams which
can be formed such as cross functional team, process improvement
team and others, it is difficult to form one method of payment or a
standard calculation formula for team incentives. Therefore,

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166 TOPIC 8 INCENTIVES AND BENEFITS

organisations need to take the following steps in developing team


incentive schemes:
Determine team performance evaluation criteria such as the
increase in production, capabilities, quality or decrease in material
and labour cost.
Set the maximum level of total incentive that can be given. For
example, the total incentive cannot exceed 10% of the basic salary.
Set an incentive calculation formula as well as giving a clear
explanation to employees.
(ii) Profit Sharing Incentive Plan
Profit sharing incentive plan is a plan developed by organisations to
increase productivity or decrease labour cost, and to share profits
with employees. Incentives are paid according to a formula that
compares a set performance with the actual productivity of a certain
period. This incentive plan is designed to increase productivity
through the effective use of organisationsÊ resources. There are four
types of profit sharing incentive plans, which are:
Scanlon plan
This plan combines employee and management efforts to further
reduce production cost. The philosophy behind this plan is that
employees need to give opinions and suggestions to increase
productivity, and incentives will be given to the employees as a
reward for their efforts. Monetary incentives which are offered
under this plan are based on a formula which is derived from the
increase of employee productivity which is related to labour cost
saving.
Rucker plan
The Rucker plan is usually utilised for employees in the
operations section. Incentives are paid based on the relationship
between the total wage per hour which is obtained by employees
with the production value they produce. For example, an
employee will receive 1% bonus from his or her salary for each 1%
increase in the production value that he or she achieves.
Improshare
Improshare is the short form for „improved productivity through
sharing‰ which is the increase in productivity through sharing.
Bonus is paid based on overall productivity achieved by work
teams which is the number of products produced by work teams
in a certain period.

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Earning-at-risk
Earning-at-risk is an incentive plan which places risk on part of an
employeeÊs basic salary. Nevertheless, employees are given the
opportunity to obtain a higher pay if they are able to achieve the
goals set by management. The purpose of this programme is to
make the employees realise that they are facing a risk due to their
poor performance, while at the same time expecting a generous
reward.

Example:
Say the basic salary of worker A is RM1,200. RM200 from the basic
salary is being held back and put as a risk wage. If worker A is
unable to achieve the set goals, then he or she is not eligible to
receive a salary of RM1,000; but if worker A is able to achieve the
goal, he or she may be paid an additional incentive aside from his
or her basic salary of RM1,200.

(c) Organisational Incentive Plan


An organisational incentive plan is different from individual and group
incentive plan, whereby it involves all employees in the organisation. In
other words, industrial incentives give rewards to all employees based on
the organisationÊs profit in a certain period of time. The purpose of this plan
is to create a culture that encourages cooperation and teamwork among the
employees in the organisation. Among the industrial incentive plans are:

(i) Profit Sharing


Each employee in an organisation enjoys profit sharing by receiving a
certain additional sum aside from his or her basic salary, whether in
the form of cash or backdated payment. The purpose of this plan is to
give an opportunity for employees to enjoy additional income
through their contributions or efforts in helping the organisation
achieve profit growth. Among these contributions are increase in
product quality, decrease in operation cost and improvement in work
methods.

(ii) Share Ownership


Share ownership programme is one of the incentives that offer an
organisationÊs shares to its employees at a certain offered price in a
certain period. It is believed that by allowing employees to purchase
and own organisationÊs share, employeesÊ productivity can be
increased.

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168 TOPIC 8 INCENTIVES AND BENEFITS

SELF-CHECK 8.1
Try to think of the factors that may influence the development of
an incentive plan offered by an organisation.

ACTIVITY 8.2
We have discussed the three types of incentive plan, which are
individual, group incentive and industrial incentives that can be
offered by an organisation to its employees. What are the
differences between the three incentive plans?

EXERCISE 8.2
1. State the type of individual incentive plan which is used by
an organisation to give salary increment to its professional
employees based on their experience and performance.
2. Explain briefly the standard hour incentive plan.

8.2 BENEFITS
In general, most organisations provide various benefits to their employees as an
addition to their salary or as wages paid to the employees. An employee benefit
programme is a form of indirect reward with the purpose of improving work
quality and employeesÊ personal lifestyle. By this, the management hopes that
employees will be more productive and loyal to the organisation.

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8.2.1 Characteristics of an Effective Benefit


Programme
Usually, various benefits are offered by employers to their employees due to
pressure and demands from workersÊ union, or according to current trends. How
ever, how far benefits can contribute to the human resource management
programme depends on the attention given to the following matters:

(a) Forming a Specific Objective


Employee benefit programmes have to be based on a specific objective. The
objective formed by an organisation depends on many factors such as size
of the firm, location and the degree of workersÊ union involvement.
However, the specific objective of the benefit programme has to be in line
with the organisationÊs compensation management strategic plan.

Among the main objectives of a benefit programme are to:


(i) Increase employee satisfaction;
(ii) Fulfil employeesÊ safety and health needs;
(iii) Attract and motivate employees; and
(iv) Retain the organisationÊs competitiveness.

Aside from that, the objective of the benefit programme is to consider the
issue of cost restrictions.

(b) Allowing Input from Employees


Before introducing a new benefit programme, an organisation has to
identify the need for the benefit programme through negotiations or
discussions with employees, and carry out a survey on employeesÊ opinions.

(c) Redesigning Employee Benefits


In line with the purpose of offering this programme, employee benefit
programmes have to be updated constantly so that it is suitable for the
changes that occur in society and the environment, especially changes in
composition and employeesÊ lifestyles. These changes force the
management to offer new benefits which are able to fulfil these needs. For
example, due to the increase in the number of women employees, the type
of benefit package offered must be family-friendly to enable women
employees to play their role well in the organisation.

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170 TOPIC 8 INCENTIVES AND BENEFITS

(d) Flexible Planning


In order to fulfil the needs of different individuals, the management has to
offer more flexible benefit packages such as providing a cafeteria plan. A
cafeteria plan is a benefit programme which allows individuals to choose
the benefit which is most suited to his or her needs from a number of
benefits offered by the organisation. This prevents wastage from occurring
in the benefit package due to unsuitability of employee needs.

However, basic or main benefits are provided by the management to all of


its employees such as health insurance, medical leave, day offs and others.
Aside from the basic benefits package, employees are allowed to choose a
number of extra benefits provided by the management with a specific pre-
determined cost limit, say RM500 for each employee.

(e) Conveying Information about Benefits to Employees


Information on benefits must be spread and conveyed to employees to
ensure that they understand and are clear about each benefit provided, thus
avoiding misunderstandings and confusion about the package offered by
the employer. There are many ways to effectively convey information about
benefits to employees. Among them are:
(i) Print distribution;
(ii) Employee handbook; and
(iii) Organisation bulletin and others.

Besides, the human resource management can use this opportunity to


answer any uncertainty about benefit programmes which arise during the
orientation programme, training programme and others.

ACTIVITY 8.3

Explain why an organisation chooses to offer the cafeteria benefit


plan to its employees.

EXERCISE 8.3
List five characteristics of an effective benefit programme.

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8.2.2 Types of Benefit Programme


Most organisations offer various benefit packages to their employees. Part of the
benefit package provided by an employer is based on the voluntary concept
rather than force. However, there are also benefits which are compulsory or need
to be provided by the management due to legal requirements. In other words,
there are two types of benefit programmes, which are:
Mandated benefits programme; and
Non-mandated benefits programme.

(a) Mandated Benefits Programme


Mandated benefits programme is a benefit set by the labour system. It is the
most minimum allotment on employee rights and has to be provided by
employers. Among the mandated benefits include:

(i) Payment for Time Off

Weekend time off


Employees have the right to enjoy one day leave each week as
allocated under section 59(1) Employment Act, 1955.

Public holiday
According to section 60D(1) Employment Act, 1955, employees are
eligible for 10 days of public holiday in a year and will still be paid
the basic salary rate. The 10 days allocated need to include the
following four days:
Independence day
Birthday of the Yang di-Pertuan Agong
Birthdays of Sultans or Yang di-Pertua Negeri or Federal
Territory day
Labour day

Annual Leave
Under Section 60E of the Employment Act (1955), an employee is
eligible to enjoy a number of minimum annual leave according to
his or her service period as shown in Table 8.1:

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172 TOPIC 8 INCENTIVES AND BENEFITS

Table 8.1: Annual Leave Based on Service Period

Service Period Annual Leave


Less than 2 years 8 days
2 years or more, but less than 5 years 12 days
5 years or more 16 days

Sick Leave
Under Section 60F of Employment Act (1955), an employee is
eligible to enjoy a number of minimum medical leave according to
his or her service period as shown in Table 8.2:

Table 8.2: Sick Leave Based on Service Period

Service Period Sick Leave


Less than 2 years 14 days
2 years or more, but less than 5 years 18 days
5 years or more 22 days

(ii) Maternity Leave Protection


Under Section 37 of Employment Act (1955), every female employee is
entitled to at least 60 days of maternity leave each time she gives birth.
Moreover, she will also enjoy maternity allowance for five living off
springs.

(iii) Contribution to the Employee Provident Fund (EPF)


As allocated under the EPF Act, 1991, both the employee and the
employer have to contribute to the employeeÊs account in the EPF.
This is to encourage employee saving for their retirement.

(iv) Social Safety Scheme (SOCSO)


This scheme is allocated under the EmployeesÊ Social Safety Act, 1969
and is managed by the Social Safety Scheme (SOCSO). The purpose of
this scheme is to provide protection to employees in case of any
disasters, injuries and death during work. There are two types of
protection scheme which are Work Disaster Insurance Scheme and
Accidents Pension Scheme. Both employer and employee are charged
a certain contribution based on the employeeÊs salary as shown in
Table 8.3.

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TOPIC 8 INCENTIVES AND BENEFITS 173

Table 8.3: Social Safety Scheme Contribution Rate

Contribution based on EmployeeÊs


Salary
Employer Worker
Work Disaster Insurance Scheme 1.25% -
Accidents Pension Scheme 0.5% 0.5%

(b) Non-mandated Benefits Programme


Non-mandated benefits are benefits offered by employers to employees
voluntarily and without force. Usually, non-mandated benefits are offered
for the purpose of attracting new employees with potential and talent from
outside the organisation as well as to increase employeesÊ satisfaction and
motivate them. Among the non-mandated benefits that are usually
provided by employers to the employees are:

(i) Insurance Scheme


A collective insurance scheme for employees is one of the benefits
which are usually provided by employers. It usually includes life
insurance, which assures benefit payment on death to the employeeÊs
next of kin, or protects employees in the event of accidents or injuries.
Premium insurance cost is borne by employers and employees are
usually allowed to make additional purchase at their own expense.

(ii) Healthcare
This is a benefit package that has gained serious attention from
employers since healthcare cost is becoming very high. In addition,
employees nowadays emphasise more on healthcare as compared to
employees before. The benefit package usually consists of medical
expenses, surgery and oral expenses.

(iii) Employee Aid Programme


This programme is designed to help employees handle various
problems that might affect their work performance. Among the
services offered under this programme include advice, treatment
related to drug and alcohol as well as emotional disorder.

(iv) Children Day Care Centre


The increase of female employees as well as dual income families has
forced employers to provide another amenity in the workplace that is
more family-friendly which is the child day care centre. The
preparation cost for this centre is either borne entirely by the

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174 TOPIC 8 INCENTIVES AND BENEFITS

employers or employers only provide the amenity and employees


utilising the amenity have to pay for the operation cost.

(v) Food Service


Food service is provided for employeesÊ convenience as well as to
encourage employees to always be in the workplace vicinity. The food
provided is either sold at cost price or lower than cost, which is due to
employer subsidy.

(vi) Transportation Service


Transportation to and from the workplace is provided by the
employer. This not only lessens traffic in the firmÊs parking space, but
is also said to decrease fatigue and absenteeism.

(vii) Education Amenities


Most organisations offer scholarships or study loans to employees
who are interested to further their studies in specific fields. This is in
line with the organisationÊs effort to create knowledgeable employees
and to encourage a continuous learning culture.

(viii) Loan Amenities


There are also organisations which offer financial loan amenities to
their employees without charging any interest or by charging a much
lower interest rate compared to financial institutions outside of the
organisation. The financial loan is for the purpose of purchasing
houses and vehicles.

SELF-CHECK 8.2
What is the importance of benefits to an employee? What are the
forms of benefits that are usually given by employers to their
employees?

ACTIVITY 8.4
What are the differences between mandated benefits and non-
mandated benefits?

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TOPIC 8 INCENTIVES AND BENEFITS 175

EXERCISE 8.4

TRUE (T) or FALSE (F) Statements

1. The Rucker Plan is a type of incentive plan which gives


rewards to employees for useful ideas or suggestions given
by employees to improve productivity.
2. To ensure the effectiveness of an incentive plan, an employee
has to see the relationship between the incentive payment
which they receive with their work performance.
3. Employees are given a fixed rate for each unit produced
under the fixed rate work unit.
4. Incentive payment under the Scanlon Plan is based on the
increase in an organisationÊs total product sales.

Multiple Choice Questions


1. An effective incentive system is when ___________________.
A. The standard performance is not stated clearly
B. Employees see incentives as a must
C. The manager evaluates incentives based on differences
in performance
D. Cost related to the incentive plan is difficult to
determine

2. The following are examples of individual incentive plans


EXCEPT:
A. Sales incentive
B. Bonus
C. Merit payment
D. Share ownership

3. The following are the characteristics of an effective benefit


programme EXCEPT:
A. A flexible benefit programme plan.
B. The distribution of benefits information to employees.
C. The development of a general benefit programme
objective.
D. Allowing input from employees.

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176 TOPIC 8 INCENTIVES AND BENEFITS

4. What is the type of incentive plan offered if an employee is


given a high incentive rate for all jobs produced which surpass
the standard output level?
A. Differential piece rate
B. Fixed rate unit
C. Merit payment
D. Bonus

5. The following are profit sharing incentive plans EXCEPT:


A. Earning-at-profit plan
B. Rucker plan
C. Improshare plan
D. Scanlon plan

Essay Questions

1. If an employeeÊs salary is RM500 a month, how much is the total


employer and employee contribution to SOCSO?
2. Explain the meaning of mandated benefits and provide two
examples.
3. Explain the meaning of non-mandated benefit programme.
Discuss any of the three programmes.
4. State three issues that needs to be considered in ensuring an
effective administration plan.

Incentive plan and benefits management nowadays are extremely


challenging, complex and require thorough planning to ensure the
effectiveness of both types of rewards.
A human resource manager especially needs to ensure that both incentives
and benefits are designed and implemented well in order to achieve both
rewardsÊ original goals.

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TOPIC 8 INCENTIVES AND BENEFITS 177

Group insentive plan Mandated benefits programme


Individual incentive plan Non-mandated benefits programme
Industrial incentive plan

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Topic Employee
9 Rights and
Discipline
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Explain the rights of employees and employers;
2. Discuss categories of problematic employees;
3. Compare between the hot-stove, progressive disciplinary and
positive disciplinary; and
4. Evaluate the steps that should be taken into consideration when
carrying out disciplinary action.

INTRODUCTION
If we look at the job scenario these days, we will find many employers who have
taken the steps to terminate the services of their employees as a way to reduce
the operation cost. Through mergers and restructuring, many organisations offer
voluntary separation scheme (VSS) as a means to reduce the number of
employees they already have. Nevertheless, there are also employees who have
been terminated without receiving any compensation and valid reasons. Apart
from using the economic crisis as an excuse, employers also use excuses like
indiscipline and work performance to sack employees. There are employees who
are given hard punishment for a small mistake and there are some who are not
given the chance to defend themselves after they have been accused. However,
not many are brave enough to come forward and lodge a report for they do not
know their rights as employees.

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TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE 179

Thus, in this topic, we will discuss two main issues which are rights and
discipline. Both issues relate to one another especially in increasing the quality
relationship between an employer and a worker.

9.1 UNDERSTANDING THE RIGHTS OF


EMPLOYEES AND EMPLOYER
Bohlander, Snell and Sherman (2004) defined employeesÊ rights as a guarantee
that employees will get a fair treatment from the employer throughout their
service. On the other hand, Gomez-Mejia, Balkin and Cardy (2001) classified
employeesÊ rights into three, which are employeesÊ rights as what have been
outlined by „statutes‰, the rights that are gained through the contract or
agreement and other rights as stated in Table 9.1.

Table 9.1: The Categories of EmployeesÊ Rights

Rights that are Governed by Rights Gained from a


Other Rights
„Statute‰ Contract/Agreement
Protected from Contract of service Receive ethical
discrimination Trade union treatment
A safe work Implied contracts/ Privacy (limited)
environment employment policies Freedom of speech
The right to form trade (limited)
unions

In Malaysia, there are many rights of employees that have been listed out in
various Acts such as WorkmenÊs Compensation Act 1952, Employment Act 1955,
Employees Provident Fund Act 1991, Human Resource Development Act 2001
and Occupational Safety and Health Act 1994. It is proposed that employees need
to study a little bit about the Acts related to them so that they are not easily
oppressed by employers. All of these Acts have been discussed in Topic 2.

From the aspect of the management or employer, they have the right to handle
business and to maintain the profits gained. Shareholders and the company
owner usually control their company by giving out power to the company
managers.

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180 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

According to Gomez-Mejia, Balkin and Cardy (2001), some of the management


rights are:
(a) Managing the workforce;
(b) Recruiting employees;
(c) Promotion;
(d) Placement for employees;
(e) Discipline; and
(f) Terminating employees.

However, the rights that are directly related to the employees will usually be
aligned according to the employeesÊ rights. The employerÊs rights are usually
influenced by the rights of the important teams with vested interests in making
decision at the workplace. For example, an employer has the right to decide on
the employeesÊ salary scale, but with the presence of the trade union, the
employer must pay according to what have been agreed in the contract between
the employer and the trade unions.

SELF-CHECK 9.1

List out the rights of workers and employers.

9.2 EMPLOYEES’ DISCIPLINE


Even though discipline is very important to an organisation, it is a very
challenging field in the human resource management function. The main
objective of discipline is to motivate employees to obey the standard performance
that has been set by the organisation. Discipline is also used to develop or
maintain the respect and trust between the employer and the employees.
However, if it is not well managed, it can lead to problems like decreasing
employeesÊ motivation, provoking employeesÊ anger and also creating animosity
between the employer and the employees.

Effective discipline management will not only increase the job performance of the
employees but also reduce the number of disciplinary problems in the future.
Nonetheless, any disciplinary action cannot be carried out simply. For those
employees who are undergoing the process of training or learning how to do
work, it is not reasonable for them to be suggested for disciplinary action.
Disciplinary actions also cannot be carried out on the problems which are out of
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TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE 181

the employeesÊ control like punishing the employees for not doing their work
because of lack of raw materials or shortage of electricity. In brief, discipline can
only be taken if the manager can prove that the problem which arises has been
caused by the employee himself/herself.

9.2.1 Problematic Employees and Misconduct in an


Organisation
Problematic employees are always related to their bad work performance or they
usually create a lot of problems at the workplace. According to Ivancevich (2001),
problematic employees can be classified into four main categories which are:
(a) An employee whose work is not satisfactory in terms of quality and
quantity due to lack of training, motivation and ability.
(b) An employee who has personal problems which affect the productivity and
the focus of his work. For example, family problem, alcohol and drug
addiction.
(c) An employee who breaks the laws at the workplace such as stealing the
companyÊs property and attempting to attack other employees like fighting.
(d) An employee who keeps breaking the rules and regulations of the company
and disobeying the managerÊs instruction.

The above classification makes it easier for the employer to take suitable actions
or list appropriate training programmes that can help the employees to improve
their work performance.

Due to unknown causes with problematic employees, many take the easy route
of sacking those deemed problematic.

In reality, there are many factors that can cause misconduct among the
employees such as the attitude of the employee or the interaction between the
two parties. Miner (Ivancevich, 2001) had devised a method to analyse the
deficient behaviours of employees by way of producing a checklist of suspected
causes of the problems. Among the causes are:
(a) Problems relating to the employeeÊs knowledge of the occupation
(b) Emotional problems
(c) Motivational problems
(d) Physical problems
(e) Family problems

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182 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

(f) Problems with colleagues


(g) Problems caused by the companyÊs policy
(h) Problems relating to the societyÊs value
(i) Problems in terms of occupational context (such as economic pressure)

Within an organisation, misconduct can be categorised into two, namely minor


and major misconduct. Bohlander, Snell and Sherman (2001) and Gomez-Mejia,
Balkin and Cardy (2001) state that those considered as minor misdemeanour are
incompetence, frequent tardiness, violation of rules and dress code, misuse of
company property, chitchatting during work hours and not following safety
procedures in handling working equipment.

Major misconduct meanwhile are those along the lines of intentionally violating
company codes, aggressive behaviour, sleeping during work hours, consumption
of alcohol, gambling or disturbing others, possession of drugs, sabotaging
company operations and absent with no valid reasons.

9.2.2 Procedures and Discipline


Each organisation should construct a procedure and platforms of discipline for it
would help the relevant authorities to take disciplinary actions and guarding the
rights of employees. Employers are within rights to determine the regulations in
relation to employeesÊ actions during work hours but cannot go beyond Act 1955.

This Act is the base in maintaining the efficiency of the disciplinary system and is
used to control the actions of the employees in accordance to company
regulations. Failure of the employer to penalise employees will result in frequent
misconduct in future. It would paint an image of employeesÊ misdemeanours as
being tolerable. Among the causes identified as reasons for supervisors not
punishing employeesÊ misconduct are:
(a) Supervisors not making any records on employeesÊ misconduct.
(b) Supervisors believing that their actions will not have the backing of the
upper management.
(c) Supervisors being unsure of whether the misconduct needs to be punished.
(d) Supervisors wanting to maintain consistency because employees were not
punished previously.
(e) Supervisors wanting to main a good relationship with their subordinates.

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Therefore, an effective regulation requires planning and application within an


organisation. A few aspects that need attending when making regulations
relating to discipline are:
(a) Clearly distributed to all employees and not to be taken for granted that all
of them had been informed.
(b) Need to be revised from time to time.
(c) Provide explanations on each regulation.
(d) In written form.
(e) Reasonable.
(f) Be implemented and reminded.
(g) Had been acknowledged by employees that they understood the
regulations.

ACTIVITY 9.1
In your opinion, what attributes to the rising of offences within
organisations nowadays?

EXERCISE 9.1

True (T) or False (F) Statements

1. If employees are found to have not been doing their work due
to insufficient funds, disciplinary action can be taken against
them.
2. Ahmad is frequently found out to be making mistakes when
asked to submit financial reports. Hence, it is justified to
categorise him as a problematic employee.
3. Offences can be caused by physical problems.
4. Violation of regulations and dress code can be deemed as
major offences.
5. When devising regulations relating to discipline, employers
are not advised to refer to the Employment Act 1955.

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184 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

9.2.3 Disciplinary Approaches


Employers are actually able to use any disciplinary approaches which were
considered appropriate when discovering that employees committing an offence.
For this topic, the following are the normal three approaches used by
organisations. Furthermore, we can also notice the mistakes committed by
supervisors and those who are responsible to maintain discipline.

(a) Hot Stove Approach


Certain quarters believe that the hot stove approach is more effective than
the others for it applies the concept of taking necessary precautions. This
approach has the characteristics of warning, is instant in nature, consistent
and is not personal. If analysed closely, it is similar to the Positive
Discipline Approach.

The following are explanations on the hot stove approach as stated in


Ivancevich (2001) and Carrell, Elbert and Hatfield (1995).
(i) Applies the Warning System
An effective supervisor would usually inform all employees
regarding the warning system be it in written or oral form. Since the
supervisor is closest to the employees, it is thus his or her
responsibility to remind the employees from time to time.
(ii) Instant in Nature
Immediate disciplinary action is taken as soon as an investigation is
concluded. With this, the employees will immediately understand the
correlation between the effects of their offences through the penalties
meted out upon them.
(iii) Consistency
Consistency in discipline means that each employee will be punished
if they commit an offence, and the same type of punishment will be
applied to the same type of offences for all the employees.
Implementing a consistant disciplinary action is not an easy task
because it involves personal issues. It cannot be denied that supervisors
can fail to notice offences made by favoured employees.
(iv) Non Personal Manner
Disciplinary actions should not be taken in a personal manner but
more in the form of correcting certain inappropriate behaviour of
employees. This can be done by way of corrective discipline whereby
with this approach, supervisors will address employee misconduct in
a mature manner by providing a conducive environment for

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TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE 185

employees to change their ways. The emphasis should be on


corrective discipline and not for the sake of termination.
(b) Progressive Disciplinary Approach
This approach treats disciplinary problems in phases whereby the
punishment will be more severe should the same offence be committed
again. Unlike the hot stove approach, progressive discipline allows
employees the opportunity to change their behaviour before facing
punishments such as termination. This approach indirectly motivates
employees to improve their conduct on a voluntary basis.
(i) Verbal Warning
For employees who have committed their first offences, warnings are
given verbally by their supervisors. The supervisor will then warn
that the punishment will be more severe should the same offence be
repeated in future.
(ii) Formal Warning
Should the employee commit the same offence, a formal warning by
way of a letter of warning will be given. The offence will be
documented in their files and the employee will once more be told
that a stricter punishment will be taken should it occur again.
(iii) Suspension without Pay
Should the employee still fail to adhere to the instructions, he or she
will be suspended from work without pay. At this stage, the
employee will be given a final warning and should they fail to
address the problem, termination is the most likely punishment.
(iv) Termination
Termination is the last resort to be taken should the employee still
unable to follow the instructions as given.

Figure 9.1: Progressive discipline approach


Source: Mathis, Robert L. & Jackson, John H. (2000). Human resource management. (9th
ed.). Ohio: South-Western Thomson Learning.

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186 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

(c) Positive Disciplinary Approach


In most cases, disciplinary actions will not motivate employees to change
their attitude. In fact, they merely serve to educate the employees to be
afraid and keep a distance from the supervisor instead of receiving the
punishments. To avoid such complications, employees would resort to
fraudulence instead of correcting their mistakes. Therefore, many
organisations choose to convert progressive discipline to positive discipline.
The latter approach is built upon the promise that offences are able to be
rectified and do not require any sorts of punishment. Hence, despite the
two approaches sharing the same processes, positive discipline replaces
punishments with that of counselling sessions between supervisor and
employee.

Counselling sessions are used to raise employeesÊ awareness of their


offences besides trying to find ways to overcome this problem. However,
just like the progressive discipline approach, the positive discipline
approach is use to terminate the services of employees who had committed
major offences.

According to Gomez-Mejia, Balkin and Cardy (2001) and Mathis and


Jackson (2000), there are four steps in this approach.
(i) Counselling
Counselling can be used as part of the disciplinary process for it
allows the manager or supervisor an opportunity to identify
employeesÊ problems and also a solution to the problem. The objective
of counselling is to enable the employee to understand the rules and
regulations of the company or organisation. At the first meeting of
this stage, both parties are expected to discuss the problems at hand
and to find the appropriate solution.
(ii) Written Documentation
Should the employees fail to improve their performance or repeat the
same offence, both parties are expected to meet once more and discuss
the reason(s) why the solution did not materialise. Another solution is
expected to be found at this stage and a contract will be made
whereby the causes and solutions are documented with the
concurrence of both parties.
(iii) Final Warning
When employees still fail to adhere to the written agreement as
previously agreed upon, they will be called and be given a final
warning. At this instance, the manager or supervisor will stress the
importance to improve the quality of work or to address the mistakes
made. The implication of failure to comply to the warning is also

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being stressed upon. Certain organisation would consider offering a


dayÊs off with pay to give the employee time to ponder whether to
continue to work in this organisation or otherwise.
(iv) Termination
Failure to improve oneÊs work performance or a repetition of the same
offence will result in the termination of the employee.

One of the positive aspects of this approach is that it focuses on problem


solving. Employees prefer to be treated with respect and usually they are
more receptive to change after counselling sessions as a compared to
progressive discipline approach. In certain cases, counselling sessions are
able to create a more productive work environment between employer and
employee. Employees are also active participants of the process; hence, it
helps in absolving the employers from being blamed for unfair dismissal.

However, to carry out this approach requires huge financial cost in training
managers and supervisors to be effective counsellors. Furthermore, the
counselling sessions involve a longer period of time and in stages. This
deters the employers and supervisors from applying this approach.

(d) Incorrect Disciplinary Approaches


Whether it is intentional or not, certain managers do err in their disciplinary
actions. This may happen due to inexperience in handling such matters or
were just unaware of making an error. According to Carrell, Elbert and
Hatfield (1995), there are six types of errors that are commonly committed
by managers when taking disciplinary actions.
(i) Punitive Discipline
Punitive discipline is also referred as negative discipline. This usually
involves threatening and blackmailing employees. This type of error
was commonly practised during the early 20th century but is now
rarely used as many employees are protected by the trade unions.
Besides, employers are more aware of the need for positive employer-
employee relationship.
(ii) Negative Feedback
Certain supervisors only present negative feedback when the
employees are unable to display good performance. Feedback should
be both, positive and negative. Praises need to be given when
employees perform well and exhort is necessary when employees
commit an offence.

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(iii) Late Determent


It might be deemed that late determent is actually procrastinated
discipline but in this context, supervisors normally would allow the
problem to worsen and actions will only be taken when it has reached
a critical stage. The problem might only be a minor misconduct at first
but become a major misconduct among employees.
(iv) Inadequate Definition
During the counselling session, the supervisor might state that the
employee concerned was „uncooperative, disloyal to organisation or
simply not functioning as a team player‰. When in discussion with the
employee, the supervisor cannot state the problem in muddled terms
that can lead to confusion and worsen the situation by way of the
employee misinterpreting the employerÊs meaning.
(v) Labelling Employees, Not Behaviour
Employees might be labelled by supervisors as lazy, irresponsible and
uncaring when they fail to perform at an acceptable level. In taking
such action, the supervisor has created two major problems.

Firstly, employees may bring that label upon themselves to the point
of becoming a self-fulfilling prophecy. Employees will be demotivated
due to the supervisorÊs lack of efficacy. Another problem is the label is
tagged to the employee itself and not to the attitude when in reality, it
is the attitude that needs to be changed.
(vi) Misplaced Responsibility
Supervisors have to be aware that at times the problems happened
because of themselves. When the responsibility to change the attitude
is in the hands of the employee, and they fail to change, they are
charged with disciplinary actions. However, we need to remember
that employees will not change their attitude if the supervisors fail to
change and this will create problems.

ACTIVITY 9.2
If you were the supervisor making the incorrect disciplinary action,
what would you do?

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9.2.4 Misconduct Outside the Organisation


When an employer learns that an employee has committed a misconduct while
off-duty, it is hard to make decisions. When the employer wants to fire the
employees, the employees might be charged with civil lawsuit due to unfair
dismissal. However, should the employer take no action and allow the act to
affect colleagues or others, they are also liable to be sued for negligence. Hence,
when such cases occur, employers need to take the necessary action cautiously.

Should the employee be arrested and jailed, employers can suspend the
employee until the investigation has completed. However, if the employee is not
jailed, the employee is entitled to continue working until the issue is solved.
Nevertheless, if the offence is assault, child abuse, rape or other instances of
similar crimes, the employee is to be suspended without pay until the case has
been settled.

According to Carrell, Elbert and Hatfield (1995), when the case is settled,
employers need to consider the following factors before taking disciplinary
action or terminating the employee.

(a) Relationship between employee and misconduct


This is probably the most critical factor. Most employers do not have valid
reasons to terminate employees outside of their work hours for offences such
as drug abuse or excessive drinking of alcohol. However, for major crimes
such as murder, employers have valid reason to terminate the employees.

(b) Period of work


If the employee has served long enough in the company and the offence
committed is only of minor nature, then a second opportunity is
appropriate. But if the same goes to a new employee, then employers can
fire the employee instantly.

(c) Interaction with the security force


For employees having frequent interactions with security forces such as
police and the army, offences committed might make them privy to
dismissal if the offences committed threaten civilians such as running
amok.

Whatever the solution, employers should make sure that the actions taken
are consistent with the actions taken previously so that the disciplinary
actions are not questionable.

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190 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

ACTIVITY 9.3
With close reference to your working experience, can you
differentiate the approaches taken at your workplace with those
learnt in this topic?

EXERCISE 9.2

True (T) or False (F) Statements

1. The progressive disciplinary approach usually involves four


stages and one of them involves the counselling session.
2. In the hot stove approach, disciplinary actions are usually
implemented instantly and consistently.
3. One of the offences normally done by supervisors is frequently
giving negative feedback towards employee.
4. For major offences such as theft, employees are usually given a
warning before facing expulsion.
5. For off-duty transgression, employers can always dismiss the
employee without having to consider factors such as the
relationship between the work and the offence, the duration of
the work and interaction with the public.

9.2.5 Alternative Disagreement Resolution Procedure


For organisations that have employeesÊ union, the procedures to maintain
employeesÊ rights are usually contained in the contract agreement. However,
organisations that do not have employeesÊ union, the Alternative Disagreement
Resolution (henceforth known as ADR) Procedure are used. Certain
organisations view the ADR as one way for employees to voice their concerns
while some view it as an effective tool to solve problems before they become too
complicated and serious. Among the methods used in the ADR are:
(a) Step-review System
This system is an examination of complaints in a step-by-step manner.
Unlike organisations with employeesÊ union, this system does not need to
appoint a third person to judge the complaints. In most step-review
systems, a president, chief executive, vice president or a human resource

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TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE 191

department director will be given the authority to judge the complaints


made. Figure 9.2 shows the process of examining complaints.

Figure 9.2: Flow of the complaints system done in stages

(b) Peer-review System


Peer-review system (also known as the complaints committee) is a system
consisting of the employeeÊs representative and the employer himself. The
numbers of representative from both parties are of equal number. They act
as jurors who would judge the evidence and justification. The board would
then take a vote on the matter. This system can be used to solve employeesÊ
complaints and problems by itself or it can be used alongside the step-
review system.
(c) Hearing Officer
Hearing officers are normally elected by the organisation but his function is
neutral in nature when judging a case. Usually, employees are the ones
who request hearing officers to judge a case. After looking into the evidence
and facts that have been presented, a judgement will be made. The result is
usually final and an agreement is forced on both the employer and
employee. As is the case with the peer-review system, it can be used by
itself or alongside the step-review.
(d) Open Policy
In open policy (which is traditional in nature), employees will look for
certain managers (or those more senior than the supervisors) who can be
trusted to forward their complaints. Normally, the director of the human
resource department will act as the final solution to judge a case.

The disadvantages of this system are:


(i) The management committee are not willing to listen to the complaints
sincerely.
(ii) Employees are also unwilling to see the relevant committee to
forward their complaints.

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192 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

(iii) There is no certainties that the decision made is consistent among all
the managers.
(iv) The management committee will usually favour the supervisors for
fear of losing authority and this policy has no credibility in the eyes of
the employees.
(e) Ombudsman System
The ombudsman system is a system that elects a group of representatives to
handle all complaints. The ombudsman will usually listen to the complaints
and mediates fair settlement between the employer and employee. Since
this system does not have the authority to pass a judgement or a solution,
cooperation and compromise between the two parties is essential.
(f) Arbitration
Arbitration is usually used to solve the problems relating to discrimination
such as sex, age, sexual harassment and even racial prejudices. This will be
specifically discussed in the next topic.

9.2.6 Termination of Contract Procedures


According to the Employment Act 1955, an employer can terminate the services
of an employee after an investigation has proven that the employee has
committed an offence. During the duration of the investigation, the employer can
suspend the employee for a duration of not more than two weeks. The
suspension however, has to see to it that the employee receives at least half of his
or her salary. Should the investigation prove that the employee is not liable, then
he or she is entitled to receive full payment of his or her salary during the
suspension.

It has to be reminded that during the investigation of the misconduct, the


employer has to document all the employeesÊ offences in detail to avoid making
the wrong decision. Among the items needing documentation are:
(a) Date, time and place of incident.
(b) Negative performance and attitudes of the employee.
(c) Effects of the offences on the performance of others.
(d) The disciplinary action to be taken and the expected change(s).
(e) The expected action to be carried out should the employee remains
unchanged.
(f) The reaction of the employee on the actions taken against him or her.
(g) Names of witnesses (if available).

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If employers intend to terminate the employees, the following are a few tips
provided by Bohlander, Snell and Sherman (2001):

(a) Dismiss employees if there are valid reasons


Employers should always understand the reason(s) for firing the employee.
The reason(s) should be in line with the regulation and practices of the
organisation.

(b) Follow the correct procedures


Determine that the termination is in line with the correct procedures,
irrespective of whether it is taken from staff manual books, supervisorsÊ
manual or internal memorandum. Before a decision of whether to fire an
employee is made, inform him or her beforehand that his or her
performance and/or the offences are unacceptable. Employees should
always be given the chance to improve themselves.

(c) Document all problems relating to employeesÊ performance


If the offence committed is not documented, the employee might use it as
an excuse for unfair dismissal.

(d) Consistency in dealing with employees


It is recommended that the employer have a documentation regarding the
causes of disciplinary act being taken against certain employees even
though they are not terminated from their posts. It is a good way to
standardise the type of punishment if other employees violate the rules
being set. If such documentation does not exist, the employee will feel
unsatisfied if the punishments received are different from another
employee who had committed a similar offence.

9.2.7 Guidelines in Implementing Fair Disciplinary


Action
The following are several guidelines that can be used in the process of
determining the kind of disciplinary action to be taken:
(a) Prioritise on Rules and Not Personal Interest
Rules must be based on consistency and reliability. Thus, effective
discipline is due to the clear guidelines and not involving any personal
interest.
(b) Respect EmployeesÊ Self-Importance
Workers have the right to know what kind of punishment they will get.
Effort must be made to avoid any embarrassment or negative work
environment in meting out the punishment.
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194 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

(c) Responsible to Provide Necessary Evidence


Documentation process should be free from any bias that will protect the
organisation from any kind of unfairness such as fabricating false evidence
to blame other people. It is essential to keep in track all positive and
negative records for further analysis.
(d) Obtain Information
The management should collect necessary evidence before framing any
charges against the person responsible.
(e) Clear Explanation on the Error Made
The employer should explain thoroughly what sort of punishment and
offences have been committed before action is taken against the person
involved.
(f) Do Not Act While You are Angry
Not many of us can act objectively and reasonably when we are angry.
Thus, the best manner to discipline employees is when we are in a peaceful
mood.
(g) Avoid Heavy Punishment
The type of punishment should be appropriate with the offence committed.
If not, the organisationÊs objective to change employeesÊ attitude cannot be
achieved.
(h) Give Warning
In some cases, employees will either be suspended or lose their job if they
have committed serious offence. However, a warning via letter or given
verbally will be set for first time and second time offences. This is important
to ensure that none of the employees will accuse the organisation for
terminating them without giving any warning.
(i) Ensure the Disciplinary Act is Just and Fair
Equality is important when carrying out certain punishment to ensure that
all employees get the same punishment for the same action. This is to
prevent any extreme punishment, inconsistency regulations, bias and other
discrimination that will result in unsatisfaction.
(j) Obtain Information from Both Parties
Allowing employees to explain and defend themselves is the reasonable
way to create a positive environment. It will help the organisation to carry
out the necessary actions effectively.
(k) Be Bold if You are True
If the management is certain that they are truthful, they should not allow
the other parties who had committed the misconduct „to go freely‰. This is
to ensure that the rules being set up by the organisation is firm and strict.

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(l) Do Not Relate Discipline to Personal Interest


Effective manager and supervisor will not penalise other people based on
revenge or any kind of personal interest. It should be carried out rationally
and not based on emotional factors that may disrupt employeesÊ respect
and loyalty.

EXERCISE 9.3

TRUE (T) or FALSE (F) Statements

1. Based on the Employment Act 1955, employees who commit


crime/error can be suspended for two months for
investigation purposes.
2. The ombudsman system is the responsible committee that is
derived from the workerÊs representative and employer in
which both parties are equal in numbers.
3. The majority of the employees are not keen on any kind of
open proclamation made by the supervisor as the authority
will be biased.
4. Normally, a supervisor responsible for carrying out
reasonable disciplinary acts obtains information from both
parties.
5. Workers who are suspended from their respective job do not
have the right to obtain their salary during the period.

Multiple Choice Questions

1. Below are several minor mistakes or errors EXCEPT:


A. Misuse companyÊs tools or equipment.
B. Record other people attendance.
C. Violating code and uniform ethics.
D. Latecomers.
2. One of the guidelines that can be followed when
implementing certain punishment is__________.
A. Giving heavy punishment
B. Focusing on personal interest rather than a set of laws
C. Giving warnings
D. Responsibility is up to the workers

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196 TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE

3. Effective law or rules must ___________.


A. Be created through documentation
B. Focus on the management only
C. Explain the reason for every punishment
D. Be analysed once in ten years

4. When carrying out an investigation on a discipline problem, all


of the following things must be recorded EXCEPT:
A. Performance and positive attitude.
B. Date, time and venue of the violation.
C. Names of witnesses.
D. Penalty being given and expected changes.

Essay Questions

1. Briefly explain the details in the hot stove process.


2. List out all the important things that should be considered when
outlining the discipline rules and set of laws.

It is the responsibility of all employees to know their rights in order for them
to know certain things that should not be done by the management and
organisation that they are working with.
In Malaysia, the employeesÊ rights are presented in various Acts such as the
Employment Act 1955, the Occupational Safety and Health Act 1994, the
WorkmenÊs Compensation Act 1952, etc.
However, the employer has the right to elect employees, promote and
discipline them, as well as terminate them from their respective post.
Other than employeesÊ and manager rights, discipline is also another
important issue in an organisation.
Unfortunately, it is not the most favourite aspect that is focused by the
employers even though it is crucial to motivate employees to follow the
existing performance pace.

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TOPIC 9 EMPLOYEE RIGHTS AND DISCIPLINE 197

Arbitration Open policy


Hearing officer Peer-review system
Hot stove approach Positive disciplinary approach
Incorrect disciplinary approach Progressive disciplinary approach
Ombudsman Step-review system

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Topic Employee
10 Relations
Dynamics
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Describe the structure and functions of trade unions in Malaysia;
2. Discuss the process of collective bargaining; and
3. Explain important industrial actions in Malaysia.

INTRODUCTION
Industrial relationship is also known as the relationship between employer and
his employees in a working field. For most of the local organisation, the rapport
or relationship that exists is based on the workersÊ welfare management.

Three important aspects in an industrial relationship are the rapport between


employer and the workers, employment laws and discipline procedure, as well
as the termination of services contract. Apart from that, the industrial relation is
also focused on the effect of the set of laws and rules on the working
environment, term and work surrounding, employerÊs right and responsibility as
well as employees and the process involved in creating the rules and term.

Generally, the industrial relation system involves three respective parties which
are the employer, workers and the government. This situation is being practised
in Malaysia even though there are a few foreign organisations that influence the
industrial relationship system such as the International Labour Organisation
(ILO). Apart from that, several other Acts are also responsible for influencing the
system as well.

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 199

For workers, the trade union is utilised as the base to highlight their rights. It is
important to know that industrial relation will not exist without the trade unions.
Thus, in the next section, we will be discussing the scenario in trade unions as
well as the procedure in handling disputes.

10.1 TRADE UNIONS SCENARIO IN MALAYSIA


The Trade Unions Act 1959 (section 2) defines trade unions as „any organisation
or a combination of employee and employer whose workplace is in Peninsular
Malaysia, Sabah or Sarawak, whether in a certain or similar employment or
industry and whether temporarily or permanently‰.

The first trade union in Malaysia was identified in the 1920s, during the
development of the agricultural and tin mining era. Even though the trade union
development in Malaysia was slightly slower compared to the Western countries,
we must understand the employeesÊ conditions at that point in time. The
majority of employees working in Malaysia at that particular time were here on a
temporary basis, as most of their family members were in China or India. Half of
their salaries would be sent home to their families and they would return to their
motherland when they had successfully saved a certain amount of money. As
they were really in need of employment, they decided not to join any trade union
which at that time was strongly opposed by employers. Interestingly, history
seems to repeat itself around the 1990s when we saw many illegal immigrants
coming to work in Malaysia.

After the 1920s, the Malaya Communist Party succeeded in encouraging


unskilled employees to form trade unions. The employees organised several
strikes in the 1930s and at that time, there were no laws related to trade union
and its activities until 1940. However, it could not be carried out because Japan
attacked Malaya. Only in 1946 did the government have a chance to intervene by
taking steps such as establishing the Trade Union Advisory Department and the
Trade Union Enactment. In this enactment, three main clauses were approved,
i.e.:
(a) All trade unions must be registered;
(b) All national trade unions formed must be in the same industry; and
(c) The trade union officers elected must have already served in the industry
for at least three years.

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200 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

These laws are designed to prevent the Communist Party from intervening in the
trade union, to limit the unionÊs size and power as well as to control their
movement by making it compulsory for them to register with the newly elected
trade union Registry officer. As a result, there were more than 100 trade unions
that were revoked and cancelled at that time. Currently, the number of trade
union has shown an increase. In 1998 alone, 531 trade unions were registered as
compared to only 386 unions in 1984.

ACTIVITY 10.1

Based on the statistics from the Workers Union Affairs


Department, there were 592 workersÊ unions in Malaysia up to
December 2001 that represented the private sector, the government,
and local statutory bodies and employers. Why were these unions
established?

10.1.1 Purpose of Employees Participating in Trade


Union
Some employees join a trade union because they realised that if they fight for
their rights for better work conditions individually, they may fail. But by joining
a trade union and acting as a group, employers may consider their demands.
Moreover, a trade union will usually take steps to protect its members.
According to Bohlander, Shell and Sherman (2001), among the reasons why
employees are interested in joining a trade union include:
(a) To protect their rights;
(b) To increase their negotiation power;
(c) To increase status;
(d) To socialise;
(e) To increase employee welfare;
(f) Peer pressure; and
(g) Unsatisfied with the current conditions such as workplace condition,
policies, wages and others.

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 201

SELF-CHECK 10.1
Do you know why employees choose to become members of a
trade union?

10.2 STRUCTURE AND FUNCTIONS OF TRADE


UNIONS IN MALAYSIA

10.2.1 Functions of Trade Union


Many are of the opinion that trade union is an outdated concept and do not see it
as necessary nowadays. They feel that employees who join trade union are not
showing loyalty to the organisation.

Some employers feel that trade unions disrupt the decision making and
processes of management in the organisation, thus contributing to the
organisationÊs inability to reach the set objectives. Whatever reasons given,
employers need to accept the fact that employees will continue to join a trade
union as they are more aware of its functions. Some of the functions of a trade
union are:
(a) Encouraging industrial relations, and improving work conditions,
economic status, and social or increasing productivity;
(b) Outlining the relationship between employees among employees or
employers among employers;
(c) Becoming representatives in industrial disputes;
(d) Managing issues related to disputes; and
(e) Encouraging, organising and funding strikes or „lockouts‰ in any trade or
industry as well as allocating resources or other benefits to members during
strikes or „lockouts‰.

ACTIVITY 10.2

In your opinion, do we need to establish a trade union?

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202 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

10.2.2 Establishment of Trade Union


Do you know the terms and conditions required to establish a trade union?

A trade union can be established if there are seven or more employees working
in the similar trade, occupation, or industry, and employees must either all be in
the private sector or all of them are in the public sector. For those who plan to
establish a trade union, they must first send their registration application to the
Director General of Trade Union in order to get an approval to operate legally in
the period of one month. If the period is insufficient, they can request from the
Director General of Trade Union (DGTU) that the period be extended to six
months.

The application form that needs to be sent must be enclosed with a fee and a
printed copy of the rules and regulations for the union that is being established.
The application also has to have details such as the union's name as well as its
address, the names, addresses and positions of all its members, and the name,
age, address and position of the elected union officer.

In processing the application form, the DGTU has the authority to reject any
trade union registration which in his or her opinion may be used for illegal
purposes. Registration is usually rejected if the managing director finds that:
(a) Some of the establishmentÊs objectives are illegal;
(b) A part of the trade unionÊs regulations clashes with the Trade Union Act;
(c) The name of the trade union that is being established may bring problems
in the future, or is similar to another existing union, or the name given is
found to be suspicious; or
(d) The trade union that is being established will be used for illegal purposes.

If there are two or more registered trade unions and they represent a group of
employees in the same trade, occupation, industry or workplace, the DGTU has
the authority to revoke any unions that have a small number of members or
order the union to not register the membership of the employee involved.

10.2.3 Becoming a Member of a Trade Union


According to Maimunah (2000), all employees aged 16 and above have the right
to join a suitable trade union such as those representing employees in their trade
or industry sectors and covers employees whether in Peninsular Malaysia, or in
Sabah and Sarawak (but not a combination of these territories). However, those

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 203

aged between 16 and 21 years old have a limited opportunity in some trade
union activities such as competing in the election for the post of union executive
or participating in a strike until they reach the age of 18.

Employees in the public sector can only become a member of the trade union that
is formed by employees within the same occupation, department, or ministry.
However, management level staff in public service who are interested in joining
trade unions have to obtain permission from the Government Chief Secretary.
However, the police, the army and prison officers are not allowed to join any
trade union.

SELF-CHECK 10.2

Who is allowed to become a member of a trade union?

10.2.4 Trade Unions Fund


When employees are accepted as trade union members, they have to pay a
registration fee and a monthly fee of between RM3.00 and RM8.00. The money
collected will be used for purposes such as those set in the Trade Union Acts
(section 50) and regulations that have been outlined by the trade union.
According to the Act, trade union fund can only be used for purposes such as:
(a) Expenses related to the trade union employeesÊ salary;
(b) Expenses related to the office;
(c) Expenses related to solving trade disputes;
(d) Compensation for members during trade disputes such as strike allowance;
(e) Allowance for members and their family due to death, ailment, accident
and unemployment;
(f) Expenses related to reports and news printing; and
(g) Expenses related to the management of social, sports, education and
welfare activities of its members.

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204 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

10.2.5 Types of Trade Unions


In Malaysia, trade unions can be divided into two categories, namely, trade
union for employees in the private sector and trade union for employees in the
public sector. For employees in the private sector, there are two types of union,
which are, national and district trade union as well as company union.

(a) Trade union for Employees in the Private Sector

(i) National and District Trade Union


Employees who become members in this trade union are those from
different companies but in the same industry or employees in the
same trade or occupation. According to Maimunah (2000), most main
industries have national trade union.

For example:
National Union for Plantation Workers (NUPW) 75,000
members.
National Union for Teaching Professionals (NUTP) 30,000
members.
National Union for Bank Employees (NUBE) 20,000 members.
National Union for Telecom Employees (NUTE) 19,000
members.
Transportation Trade Union (TWU) 8,000 members.

Some trade unions have members who are limited to one district only.
For example, employees in Sabah and Sarawak are not allowed to join
unions in Peninsular Malaysia. In addition, there are trade unions that
only enrol members from certain areas such as the Perak Textile and
Garment Industry Trade Union which limits the intake of members to
employees from the Perak state only (Maimunah, 2000).

Visit http://www.nutp.org/ to obtain information on the services


offered by the National Union for Teaching Professionals to its
members.

(ii) In-house Union


An in-house union is a union established by employees working
under one employer. This indicates that employees from different
occupations can join this type of union as long as their employers are
the same.
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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 205

Even though the national trade union is against the establishment of


this type of unions, employers and the government on the other hand
encourage them. If employers find out that their employees are
planning to join a national trade union, they will take immediate
actions to encourage employees to establish a in-house trade union.
This is because they, the employers, are aware of the weaknesses of
this type of trade union.

According to Latiff Sher Mohamed (Maimunah, 1999), there are


several weaknesses in relation to in-house union, i.e.:
Limited membership and focusing on employees in one company
only resulted in making this type of union not very strong;
The union leader is easily exploited by their employer because
selection is made by union members whose numbers are limited;
Limited financial resources makes it difficult to carry out union
based activities;
Union leaders are worried about becoming victims in terms of
promotion, retrenchment, transfer and distribution of
responsibilities which are set by their employers; and
Unable to provide many benefits to its members due to the limited
number of members.

Even though this type of union is opposed by the national and district
unions, in-house unions have shown an increase and are predicted to
keep on increasing in the future. Some of the examples of trade unions
that have existed for more than 20 years are the Cold Storage
Employees National Trade Union and Rothmans Employees Trade
Union.

Visit http://www.mtuc.org.my/ to get information on the functions


and objectives of the establishment of the Malaysian Trade Union
Congress.

(b) Trade Union for Employees in the Public Sector


As we know, the public sector consists of public services, statutory bodies
and local authorities. Public servants are only allowed to establish a union
if they are in the same ministry, department or occupation. Issues relating
to wages and other terms of services are normally discussed at the national
level between government authorities and CUEPACS.

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206 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

There are 221 trade unions in the public sector in 1997 and this figure
includes several of MalaysiaÊs biggest unions such as the Malayan Union
for Teaching Professionals, Malayan Nursing Union, and Malayan
Technical Service Union as well as smaller unions such as the Dentistry
Technician Union with 242 members and the Pulau Pinang Port Senior
Commissioner Officers Union with a total number of 116 members.
Recently, the number of union members seemed to have decreased and this
is not caused by loss of interest but due to the governmentÊs privatisation
policy which has caused bigger unions to become private sector unions.

(c) EmployersÊ Association


Besides employees having their own trade unions, employers, on the other
hand, tried to build a network by establishing an employerÊs association
from similar organisations to fight for their rights and welfare. With this
network or association, employers are more prepared and able to react to
the demands of the trade union. The employer association also plays the
role of balancing the employee market condition and the reward offers or
salary as well as being involved in matters regarding decision making or
discussions with the central or state government or agencies representing
the government.

Through this network or association, employers can share techniques and


strategies to handle demands from employeesÊ trade unions. A few
techniques often used by employers in controlling the influence and
demands from trade unions are to offer rewards and wages as well as
competitive service benefits, to invest in developing a cooperative
workforce or human resources, to increase communications flow, to create
more opportunities for employee involvement in decision making and also
to increase employeesÊ commitment to the organisation. The following are
examples of large employerÊs associations:
(i) Malayan Commercial Banks Association (MCBA).
(ii) Malayan Agricultural Producers Association (MAPA).
(iii) Electrical Industry EmployersÊ Association (EIEA).
(iv) Engineering Machinery EmployersÊ Association (EMEA).

Visit http://www.mtuc.org.my/ for information on the functions and


objectives of the establishment of the International Labour Organisation.

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 207

EXERCISE 10.1
TRUE (T) or FALSE (F) Statements

1. One of the reasons why employees join trade unions is that


they want to increase their status.

2. The Transportation Workers Union (TWU) is an example of a


company union.

3. The employerÊs association also acts in helping employees fight


for their rights and welfare.

4. The trade union fund can be used for purposes such as reports
and news printing, compensation to members during trade
disputes and also for office related expenses.

5. A union registration is normally rejected if the Workers Union


Managing Director finds that the name of the union that is
being established may pose some problems in future.

10.3 COLLECTIVE BARGAINING

ACTIVITY 10.3

In your opinion, who determines the wages and benefits for each
employee or work group in an organisation?

The decision on wages and benefits can be made either one-way or two-way. In
both public and private sectors which do not have trade unions, decision is made
one-way which is set by employers. But in the private sectors that have trade
union, the collective bargaining process is used by both employers and trade
union in determining wage and other work terms.

Collective bargaining can be defined as a method to determine work terms and


conditions as well as to control work relations through the negotiation process
between employers and employees in the hope of achieving an agreement
(Salamon, 1998).

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208 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

For employees, collective bargaining can be seen as a good method for them to
increase wages and benefits as well as to reduce the total working hours. Even
though the main objective of collective bargaining is to agree upon the accepted
work contract by both employees and employers, trade union has two other
objectives, which are to protect employeesÊ rights through allocation
development which will monitor the use of power or any actions which are
unfair towards employees and secondly to enable employees to be involved in
the decision making on matters which involve them.

10.3.1 Collective Bargaining Process


The bargaining process can only be practised in the private sector because in the
public sector, wages and all conditions will be decided by the employer. Besides
that, it is important to remember that the bargaining process cannot be carried
out if the employer does not recognise the trade union formed.

Only when the recognition is received, then the employees can only use the
union to voice out any dissatisfaction or to solve any disputes. In other words,
this can be seen as a policy for trade unions to improve any employee service
terms with employers. For employees who are not members of a trade union,
they will not be discriminated because the trade union not only negotiates for its
members but for all employees in the company.

In many cases, the bargaining process carried out is between employers and
trade unions. However, for employers who have their own associations such as
banks, the bargaining process carried out is between the employerÊs association
and the trade union. This is to ensure that all benefits are standardised for all
employees in that industry and also to reduce the number of employees who like
to job hop from one company to another. All bargaining processes carried out are
controlled by the Industrial Relations Act 1967.

The bargaining process begins when one of the parties, whether the employer or
the trade union, recommends a set of proposals for mutual agreement and
requests for negotiation to begin. The response on whether the invitation to
negotiate is accepted or not has to be sent within 14 days. If the employer refuses
to begin the process, a trade dispute will occur. However, it is important to
remember that employers who have recognised the establishment of the trade
union have to be involved in this process.

The number of meetings that needs to be held depends on the relationship


between them and the number of disagreements. Normally, in their first meeting,
both parties will discuss issues pertaining to the disagreements. If there are any
matters left out and not discussed, they will be tabled in the next meeting. But if
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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 209

an agreement is still not achieved, the matter will be reported to the Industrial
Relations Department and if necessary, they will be trialed by the Industrial Court.

If an agreement is reached between the employer and trade union, the next
process is to bind the mutual agreement as a valid contract. For this, it needs to
be done in writing and signed by both parties involved.

The validity date of the agreement must also be stated and normally it does not
exceed three years. After the period ends, a new bargaining process has to be
carried out. Meanwhile, all agreements reached have to be sent to the Industrial
Court within one month from the date they were signed. The court will then
examine the agreement made to ensure that it follows the legal requirements
before accepting it as a valid contract.

ACTIVITY 10.4
Visit http://202.190.197.23:8080/documents/10179/58539/2012-07-
27%20Relevant%20Acts%20The%20Industrial%20Relations%20Act
%201967_v3.pdf and list ten important parts included in the
Industrial Relations Act.

10.3.2 Industrial Actions


Even though cooperation and understanding during negotiations are encouraged
between employers and trade union, there are still some instances when disputes
happen. When this occurs, the industrial relations system usually has ways to
solve the dispute. However, there are also times when the parties involved
would rather use direct methods by pressuring the other party to bow to its
demands. In Malaysia, the law has allocated two ways that can be used by
employees, namely picket and strike, while the employers can employ the lock-
out method.

(a) Picket/Protest
According to Maimunah (2000), employees who are members of trade
unions and have trade disputes with their employers can hold a picket in or
near their workplace in the condition that:
(i) They do not obstruct the entrance and exit doors;
(ii) They do not threaten anyone; and
(iii) Their activities are carried out peacefully.

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210 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

Employees protest for the purpose of giving publicity about the dispute to
employees who are not directly involved and to the public. By protesting
peacefully, they hope to convince their employers to approve of their
claims. Picketing is a great tactic if employers are conscious of the
organisationÊs public image.

(b) Strikes
In Malaysia, strikes are only allowed for employees from registered trade
unions if trade disputes are still unsolved. Political strikes and sympathy
strikes are prohibited. Before employees go on a strike, those involved in
the dispute must first have a secret ballot to determine the percentage of
those who agree and disagree to the strike.

A strike is only allowed if the voting result shows two-thirds of the


employees agree to it. The voting result must be sent to the DGTU who has
the power to order the trade union not to have a strike if it is found that
certain necessary procedures are not followed.

A strike is only valid to be held after seven days, which is after the calm
period. During the calm period, validity confirmation can be done to enable
the parties involved to change their minds as well as to give an opportunity
for the government to intervene.

Apart from that, it must be reminded that the result of the ballot is only
valid for 90 days. Therefore, a strike must be organised within the 90-day
period from the voting date and if not, voting must be done again.

For employees in essential services such as banking, transportation,


electrical, postal, public health and supply and distribution of fuel, they too
must follow procedures as stated above, apart from giving notice of their
wishes to go on strike. Employers will then have to inform this to the
DGTU. After referring to the Industrial Relations Act 1967, illegal strikes
will be identified and the Ministry of Human Resources has the power to
prevent it. A strike is considered illegal if:
(i) It is on questions pertaining to the recognition of a trade union;
(ii) It is on matters contained in the collective agreement which have been
given cognisance by the industrial court;
(iii) It is on management matters related to hiring of employees, transfer,
promotion, employee termination and employee job distribution; and
(iv) The trade disputes have been referred to the industrial court for
arbitration.

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 211

As stated, the Ministry of Human Resources has the power to prevent a


strike and enforce the use of other procedures in solving disputes.

(c) Lock-out
Lock-out is a way for employers to force employees to accept their
demands. Through this, employers will not allow employees to work until
the dispute between them is solved. This includes taking actions such as
closing the workplace, stopping work or refusing to give wage to any
employee until they agree to the work conditions imposed. Similar to a
strike, the requirements to a lock-out are also subject to the law.

ACTIVITY 10.5

In your opinion, should pickets, strikes and lock-outs be carried


out? State your reasons.

10.3.3 Dispute Solving Procedures


When disputes occur, employers and employees are not advised to picket, riot or
implement lock-out, because it in a way can affect the nationÊs economy and
other public specialties. Due to that, the Industrial Relations Act 1967 has
underlined several procedures to solve the arguments.

(a) Direct Negotiation


In direct negotiation, only the trade union and employers will be involved
in the process of solving the arguments. Usually, they will sit together in a
calm and respectful manner. In such cases, the DGTU cannot force both
sides to make peace if the direct negotiation is a failure.

(b) Conciliation
When the process of solving the arguments through direct negotiation is a
failure, employers and trade union can report the matter to DGTU. He will
suggest them to hold a meeting of peace to solve the arguments. It is a
process whereby the Industrial Relations Department will help to solve the
arguments between both sides (Maimunah, 2000).

(c) Mediation
This method has similarity with arbitration but the mediator who is being
appointed is not from the government or Industrial Relations Department.
The mediator is the outsider who is appointed and agreed by both sides.

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212 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

(d) Arbitration
Arbitration is used after the previous three methods have been a failure.
Similar to the method of using mediation, the arbitration method uses the
third party which is the Industrial Court. Under the Industrial Relations Act
1967, the Industrial Court is empowered to solve trade disputes.

The functions of the Industrial Court are:


(i) To hear and hand down decisions or awards in industrial disputes
referred to it by the Minister or directly by the parties; and
(ii) To grand cognisance to the collective agreements which have been
jointly deposited by the employers/trade union of employers and
trade union of employees.

The decision which is made by the Industrial Court cannot be altered unless
there is a matter related to law.

EXERCISE 10.2

TRUE (T) or FALSE (F) Statements

1. A strike is valid to be conducted only after three days, which


is after the calm period.

2. Employers can implement lock-out to force the employees to


fulfil their demands.

3. Arbitration is usually used after the three methods direct


negotiation, negotiation and the use of medium are a
failure.

4. The process of collective bargaining can be conducted


although the employers do not establish the workersÊ union.

5. Collective agreement can be a verified contract if it is done


orally while being witnessed by representatives from the
workersÊ union and the employers.

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TOPIC 10 EMPLOYEE RELATIONS DYNAMICS 213

Multiple Choice Questions

1. All of the following statements are the roles of the Ministry of


Human Resources in the industrial relationship system EXCEPT:
A. To protect the employeesÊ affairs including security, health
and employeesÊ right.
B. To improve the employer-employee relationship through a
stable and harmonious industrial relationship system.
C. To equip unemployed individuals with basic industrial skills
and enhance the level of labourÊs skills.
D. To help in minimising human resources in states using human
resource planning.

2. Among the following procedures, which is the procedure that


DOES NOT involve third party?
A. Direct negotiation
B. Negotiation
C. Mediation
D. Arbitration

3. Who is eligible to join trade unions?


A. Workers from different jobs, departments or ministries.
B. Workers who are at the age of 18.
C. Police, soldiers and prison officers.
D. Management workers in civil services who have obtained
approval from the head of department.
4. The following are the examples of in-house union EXCEPT the:
A. Malayan Technical Services Union
B. National Union of Telekom Employees
C. Rothman Trade Union of Employees
D. Malayan Commercial Banking Association

Essay Questions

1. Explain why some of the registrations of union are rejected by the


Director General of Trade Union (DGTU)?

2. Why are some strikes prohibited? Discuss.

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214 TOPIC 10 EMPLOYEE RELATIONS DYNAMICS

In this section, we have discussed the aspects of industrial relations and trade
union.
Thus, we should have understood what is industrial relationship and trade
union, why employees should join trade union, the roles, terms and
conditions of the formation, who can be the member, how and the purpose of
the unionÊs fund as well as the types of union available in Malaysia.

Arbitration Mediation
Collective bargaining Negotiation
Conciliation Picket
Direct negotiation Strikes
Industrial actions Trade unions
Lock-out

Copyright © Open University Malaysia (OUM)


Topic Employee
11 Safety and
Health
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Compare and contrast the concepts of security and health;
2. Examine the types of security and health towards danger in the
workplace; and
3. Discuss the security and work health Acts and the purpose of the
formation of those Acts.

INTRODUCTION
According to the International Labour Organisation (ILO), it is estimated that
more than 1.2 million workers do not enjoy their right to work in a secure and
safe environment because of accidents and diseases which are related to their
jobs. Based on the statistics gained from the ILO at the 16th APOSHO
Convention in Mauritius (April 2000), it was found that:
(a) Employers from all over the world suffered because of more than 250
million accidents every year;
(b) More than 160 million employees suffered illnesses as a result of exposure
to dangerous chemicals at the workplace;
(c) More than 1.2 million deaths happened every year because of accidents and
diseases related to jobs and the total is higher than the total caused by road
accidents every year from all over the world;
(d) More than 10 million employers suffered due to injuries and diseases
resulting in permanent disabilities and the loss of the source of income.

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216 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

As compared to developed countries, death rates in most developing countries


are around five to six times higher. In Malaysia, on the other hand, much effort is
being made to reduce workplace accident rates such as implementing the
Occupational Safety and Health Act 1994 and forming enforcement agents such
as the Department of Occupational Safety and Health and the National Institute
of Occupational Safety and Health (NIOSH) as well as conducting programmes
to create awareness among employees and employers of the importance of
creating a safe and healthy work environment.

11.1 UNDERSTANDING THE CONCEPTS OF


OCCUPATIONAL SAFETY AND HEALTH

ACTIVITY 11.1

We always hear the words „safety and health‰ but what do they
mean if applied in our workplace?

Occupational safety and health at the workplace means:

Safety:
An issue that has to do with protecting workers from injuries or accidents while
they are working. Injuries related to job include wound, fracture, sprain and
amputation caused by work accidents or caused by exposure that involves an
incident in the workplace (Bernardin and Russel, 1998).

Health:
A condition that gives protection to workers from emotional disturbance and any
types of physical illness caused by their job. Disease caused by work, such as
exposure to occupational surrounding factors, can bring all types of unusual
circumstances or disturbance. This condition includes chronic acute illness such
as stress, burnout, heart problem and death which may be caused by breathing
and absorbing or being exposed directly to toxics or harmful means (Bernardin
and Russel, 1998).

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 217

11.2 LAWS RELATED TO OCCUPATIONAL


SAFETY AND HEALTH
Government intervention in the issue of industry safety started since early 1878
with the appointment of the first „pemeriksa dandang‰. The first law related to
safety formed in 1892 was Steam Boiler Enactment (Maimunah, 1999).

When Malaysia was in the process of becoming an industrialised country in the


1960s, one Act was introduced to oversee the safety and health of work. It was
the Factories and Machinery Act 1967. Another Act, the Occupational Safety and
Health Act, was introduced in 1994 when it was found the previous had its
weaknesses. Our discussion here will be on these two Acts.

ACTIVITY 11.2
Why are laws related to safety and health of workers important?
What would happen to workers if there were no laws like this in
our country?

11.2.1 The Factories and Machinery Act 1967


For over 30 years, the Factories and Machinery Act 1967 played its role to
overcome safety and health issues in this country. The Factories and Machinery
Act emphasised on safety in factories and its enforcement was under the control
of the Department of Factory and Machinery (now known as the Department of
Occupational Safety and Health). Among the provisions in this Act included the
following:
(a) The power was given to the Department of Factory and Machinery, or the
appointed examiner to ensure safe construction and design of factories and
well-conditioned machines and to ensure safe usage including providing
appropriate training to workers;
(b) Emphasising on the aspects of workers' welfare by ensuring employers
provide health facilities and comfortable workplace;
(c) Providing safety tools such as fire extinguisher and first aid box; and
(d) Explaining the procedure to report accidents in the workplace.

Even though this Act had been used for a long time in Malaysia, it received a lot
of criticisms regarding the effectiveness of its provisions and implementation.
Among the criticisms were that it:

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218 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

(a) Only protected workers who worked in factories and this only accounted to
about 25 to 30% of the entire workforce in Malaysia;
(b) Had a limited scope;
(c) Failed to take note of technology development; and
(d) Emphasised on the responsibilities to overcome issues related with safety
and health from the government side and not involving employers and
employees.

ACTIVITY 11.3

1. The construction sector was the sector that reported the highest
amount of accidents in 1998, that is, 38,718 (43.8%) compared to
other sectors such as commerce (14.7%), services (10.4%) and the
shipping sector (4.6%). In your opinion, why did the construction
sector contribute to the increasing number of accidents in 1998?

2. Visit http://www.dosh.gov.my/index.php?option=com_content
&view=article&id=531&Itemid=360&lang and list six important
parts in the Factories and Machinery Act 1967.

11.2.2 Occupational Safety and Health Act 1994


The Occupational Safety and Health Act 1994 was approved by the Parliament in
1993 and announced on 24 February 1994. It was established to overcome
weaknesses in the Factories and Machinery Act 1967 but not replacing it. With
this Act recorded in writing, about seven million workers in all industries and
sectors are protected except for those in the armies and those working in the
shipping industries which are dominated by the Merchant Shipping Ordinance.

The following industries are protected by this Act, namely, the manufacturing
sector; mining and quarry; construction, agriculture, forestry and fishery; utilities
such as electric, gas, water and sanitary services; transportation, storage and
communication; retail trading; hotel and restaurant; financial, insurance,
property and business services; public services and authority statute.

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 219

The main aim of this Act is to increase awareness and to promote safety and
health culture among all workers in Malaysia. The objectives of this Act are:
(a) To ensure the safety, health and welfare of workers in the workplace.
(b) To protect other individuals, apart from workers, in the workplace who are
exposed to risks from the work activities.
(c) To encourage a conducive work environment that meets the physiological
and physical needs of the workers.
(d) To ensure that the organisation maintain or fix the standards of safety and
health by implementing rules and industry practices that have been
approved and in accordance with the provisions of the Act.

Some of the provisions in this Act include the needs of forming the National
Council for Occupational Safety and Health and provisions that set the duties of
the employer and the self-employed, designer, manufacturer, supplier and
workers.

Visit http://www.dosh.gov.my/index.php?option=com_content&view=article&
id=531&Itemid=360&lang=en and find the four main aims of setting the
Occupational Safety and Health Act 1994.

(a) National Council for Occupational Safety and Health


The National Council for Occupational Safety and Health is an advisory
body which comprises 12 to 15 members appointed by the Ministry of
Human Resources. Just like other bodies involved in occupational
relationship, this council comprises three parties:
(i) Three members from the organisation that represent the employer;
(ii) Three members from the organisation that represent the workers;
(iii) Three members or more from the ministry or department responsible
for occupational safety and health; and
(iv) Three or more members from the organisation or professional bodies
related to occupational safety and health and at least one of them
must be a woman.

Members of the council are required to carry out investigations when


requested by the Minister of Human Resources, submit reports and give
their suggestions on any cases related to occupational safety and health.
The yearly report has be submitted to the Human Resources Minister on 30
June each year.

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220 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

In sum, council members need to meet from time to time to discuss and
make suggestions on issues related to:
(i) Changes that are relevant to the Occupational Safety and Health Act;
(ii) Ways to improve administration and enforce the Act;
(iii) Ways to foster cooperation between employers and employees
regarding the safety, health and welfare of employees in the
workplace;
(iv) Safety, health and welfare problems encountered by women,
handicapped persons and other groups in society;
(v) Formulating suitable methods to control the use of chemicals in the
workplace;
(vi) Analysing statistics regarding deaths and accidents;
(vii) Resources for health facilities in the workplace;
(viii) Ways to encourage forming codes of practice in relation to the safety,
health and welfare of employees; and
(ix) Reviving plans and facilities to assist individuals injured while
working.

Visit http://www.dosh.gov.my/index.php?option=com_content&view
=article&id=531&Itemid=360&lang=en for information about the
functions of the National Council and Occupational Safety and Health at .

(b) General Duty of the Employer and Self-employed


It is the responsibilities of all employers and those who are self-employed
to ensure the safety, health and welfare of themselves, their employees and
other people in the vicinity during work hours. To achieve that aim,
employers need to provide a safe occupational surrounding which does not
threaten employeesÊ health. According to the Act, employers are
responsible for the following:
(i) Managing and maintaining the plant to ensure a safe work system
without any risk hazard;
(ii) Making sure the usage or operational handling, storage and
transportation of materials are safe without any health risk;
(iii) Providing sufficient information, instruction, training and supervision
to ensure safety and health in the workplace;
(iv) Maintaining safety at the workplace without risking health including
entry and exit to the facilities; and

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 221

(v) Maintaining the workplace areas so that they are safe without risking
health by providing sufficient facilities for employeesÊ welfare.

Any employer who fails to follow these instructions will be fined not more
than RM50,000 or jailed for not more than two years or both.

Apart from that, employers are also responsible for formulating policies on
occupational safety and health in written form and informing all workers
about them. These policies are looked into frequently to ensure that they
are suitable for current conditions. However, there are a few weaknesses in
the Occupational Safety and Health Act 1994. It does not set out what is
important in the occupational safety and health policy and it also does not
state by which manner the policy need to be conveyed to the workers. This
may cause the organisation to be unable to carry out these responsibilities
properly.

For employers who have more than 40 employees, they need to form an
Occupational Safety and Health Committee in their own organisation. The
functions of the committee is to help implement a safe and healthy
environment in the workplace, explore the effectiveness of the
programmes, give suggestions on any changes in order to improve the
situation and carry out inspections once every three months.

Visit http://www.dosh.gov.my/index.php?option=com_content&view
=article&id=531&Itemid=360&lang=en for information about the four
duties of each worker and punishment if the duties are not carried out.

ACTIVITY 11.4

In your opinion, why do many accidents still occur in the


workplace even though various precautions have been taken such
as the enactment of Acts and laws related to workersÊ safety and
health?

(c) General Duty of the Designer, Manufacturer and Supplier


The responsibility to ensure employeesÊ safety and health also relies on the
designer, manufacturer and supplier of the plant, machinery, equipment
and materials used while working. Therefore, the Occupational Safety and
Health Act 1994 has required all designers, manufacturers and suppliers to:
(i) Ensure that the plant or materials are safe without any risks to health
when being used;

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222 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

(ii) Arrange or carry out appropriate tests and examinations on the plant
or materials;
(iii) Provide sufficient information regarding the use of the plant or
materials so that it is safe without any risks to health if used properly;
(iv) Carry out research to prevent or minimise risks to safety or health that
might exist from the design of the plant; and
(v) Ensure the plant that has been built is safe for use.

Failure to obey these rules can cause the designer, manufacturer and
supplier to be fined not more than RM20,000 or jailed not more than two
years or both.

(d) General Duty of Workers


Besides employers, designers, manufacturers and suppliers, you as an
employee are also responsible for ensuring your own safety and health.
There is no use for employers to provide various safety tools at the
workplace if they are not used. To make sure that everyone take the
responsibility to maintain safety and health in the workplace, the
Occupational Safety and Health Act 1994 has highlighted a few instructions
which need to be followed by employees:
(i) Give appropriate concentration while working to ensure the safety of
themselves as well as others;
(ii) Cooperate with employers or other persons who are given roles under
the Act and its regulations;
(iii) Wear or use tools or protection clothes; and
(iv) Obey any order on occupational safety and health measurement
enlisted in the Act or its regulations.

Employees who fail to obey these rules will be fined not more than
RM1,000 or jailed not more than three months or both.

Thus far, there are six regulations that have been established under the
Occupational Safety and Health Act 1994:
(i) Occupational Safety and Health (Control of Industrial Major Accident
Hazards) Regulations 1996;
(ii) Occupational Safety and Health (Safety and Health Committee)
Regulations 1996;
(iii) Occupational Safety and Health (Classification, Packaging and
Labelling of HazardousÊ Chemicals) Regulations 1997;

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 223

(iv) Occupational Safety and Health (Safety and Health Officer) 1997;
(v) Occupational Safety and Health (Use and Standards of Exposure of
Chemicals Hazardous to Health) Regulations 2000; and
(vi) Occupational Safety and Health (Notification of Accident Dangerous
Occurance, Occupational Poisoning and Occupational Disease)
Regulations 2004.

Visit http://www.agc.gov.my/Akta/Vol.%2011/Act%20514.pdf for


additional information about the Occupational Safety and Health Act 1994
and the objectives of the Act.

EXERCISE 11.1
TRUE (T) or FALSE (F) Statements

1. The Occupational Safety and Health Act 1994 was established to


replace the Factories and Machinery Act 1967.
2. One of the objectives of the Occupational Safety and Health Act
1994 is to encourage a work environment that is suitable for the
physiological and psychological needs of workers.
3. One of the criticisms received about the Factories and
Machinery Act 1967 was that it only protected those who work
in farms.
4. One of the roles of the committee members of the National
Council for Occupational Safety and Health is to improve the
administration and implementation of the Act.
5. Employers that have more than 50 workers are required to
establish an Occupational Safety and Health Committee.

11.3 SAFETY AND HEALTH AT WORK

ACTIVITY 11.5

List a few types and causes of accidents in your workplace.

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224 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

Have you ever had a headache as a result of staring at the computer screen for
too long? Or have you seen your friend injured because he was crushed by heavy
things? All of these are examples of accidents that can happen while we work,
according to Aini Hayati (Faizuniah, et al., 2002)

Safety towards danger is an occupational aspect that has the potential to cause
injuries (such as sudden loss of sight, loss of fingers or hands, fall from a
building) or death to workers at a fast rate. Usually, safety towards danger is
related to tools or machines that are not safe to be used, unsafe work
environments, and exposure to dangerous chemicals.

Health towards danger refers to occupational aspects that can give negative
effects to employeesÊ health gradually. Continuous stress caused by workloads,
becoming deaf because of exposure to noisy work environment, having chest
pain and the eyes becoming blur because of exposure to chemicals are among
some of the examples of emotional and physical illnesses caused by work.

Next, we will look at a few safety and health categories regarding the danger in
workplace such as accidents in the workplace, the danger of chemicals, air
quality in the building, video screen terminal and repetitive injuries.

11.3.1 Accidents in the Workplace


In September 1996, the government launched the „Towards a Safe and Healthy
Working Culture‰ campaign to increase awareness among employers, employees
and societies regarding safety in the workplace. Even though the rate of accidents
in the workplace has decreased since 1997, the amount is still quite worrying.

ACTIVITY 11.6

Visit http://www.perkeso.gov.my/ for information on the


following:
1. The objective of the establishment of PERKESO.
2. The sector with the highest rate of accidents in 2001.
3. The amount of compensation paid by Perkeso in 2001.

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Generally, accidents in the workplace can be caused by the characteristics of the


work, the workers themselves, employers and the environment as listed in Table
11.1.

Table 11.1: Causes of Accidents in the Workplace


Cause Example
Occupation Damaged machines unable to work properly.
Obsolete unable to work properly.
Dangerous occupation for example, working at an
underground tunnel, exposed to dangerous chemicals.
Workers Not focusing on their work.
Playful.
Drink alcohol or take drugs.
Mistake or miscalculation when analysing moving objects.
Lack of experience.
Too confident because they have experience.
Poor sight and hearing.
Inexperienced in handling tools no training.
Breaking safety instructions such as not wearing goggles.
Age: too young (clumsy) or too old (careless or incompetent).
Have personal problems cannot give full attention to work.
Environment Exposure to high temperature, electrical equipment and
chemicals.
Environment that is too noisy.
Exposed to smoke and dust.
Infection.
Employer Poor supervision.
Did not provide safety tools or gadgets for employees.
Did not give training to employees on how to use safety tools.
Safety rules and policy not implemented strictly.
Source: Adapted from Faizuniah Panggil et al., (2002). Pengurusan sumber manusia.
Malaysia: McGraw-Hill, pg. 148.

These problems can be overcome if every person plays their own roles. The
objective to ensure zero accident cannot be achieved if workers did not make use
of safety gadgets provided by the employer or the employer did not take any
action even though the employees had lodged complaints regarding the damage
of the safety gadgets provided.

Table 11.2 shows a few examples of roles that can be played by the employer,
employees, trade unions and the Occupational Safety and Health Committee in
minimising accidents in the workplace.

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226 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

Table 11.2: The Role of the Responsible Agent to Decrease Accidents in the Workplace

Responsible
Role
Agent

Formulate a health and safety policy.


Apply all the rules and procedures that have been laid down.
Hold immediate investigation once an accident has occurred.
Provide private safety equipment such as helmets, gloves and so on.
Hold safety campaigns from time to time.
Make sure the work environment is safe.
Maintain a safe work system.
Create a procedure for reporting and investigating accidents.
Form and hold safety practices.
Select efficient workers.
Employer Establish an incentive system. Employees or departments who
can avoid accidents will be rewarded.
Provide clothes and safety equipment.
Establish a non-workplace such as a „dangerous area‰.
Provide a clear warning such as „CAUTION‰ and „NON-
SMOKING ZONE‰.
Provide leave and appropriate rest to workers who need extra rest.
Get input regarding the problems from the workers.
Get feedback from employees after an accident had happened.

Obey all the rules and procedures regarding safety.


Cooperate with the employer (self regulation).
Employee Form a „safety at workplace‰ attitude.
Immediately report if the machines or tools are damaged.
Do not use any damaged tools that can endanger the employeesÊ
safety.
Can voice out the rights of employees to the management. If all
Trade this while the effort is more on increasing incentives, then the
Unions focus now should be on the safety and health of the employees.
Involved as a workersÊ representative in the Health and Safety
Committee.

Health and The Occupational Safety and Health Act 1994, Section 30 (a) states
Safety that it is compulsory for a company which has 40 or more employees
Committee to form a health and safety work committee. This committee is to
study all the steps to ensure the safety of workers at the workplace.

Source: Adapted from Faizuniah Panggil et al., (2002). Pengurusan sumber manusia.
Malaysia: McGraw Hill.

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11.3.2 The Risk of Chemical Substances


Why do many of us not realise the danger we put ourselves in when we are
exposed to chemical substances on a regular basis?

The negative effect from the chemicals will not immediately be visible. The effect
will be visible when the disease has become chronic. Refer to Table 11.3 to
understand how serious the effect can be on some people.

Table 11.3: Ten Types of Danger in the Workplace

Potential Risk The Disease


Arsenic Lung cancer, lymphoma
Asbestos White lung disease, lung cancer and other
organ cancer

Benzene Leukaemia, aplastic anaemia


Bichloromethylether (BCME) Lung cancer
Coal dust Black lung disease
Emission from coke oven Lung and kidney cancer
Cotton dust Brown lung disease, bronchitis and emfisema

Lead Kidney disease, anaemia, malfunction of the


main system and abnormality

Radiation Thyroid cancer, lung and bone cancer,


leukaemia, effect on productivity (miscarriage
or genetic damage)
Vinyl Cloride Lung and brain cancer

Sources: Adapted from Byars, L. L. & Rue, L. W.(2000). Human resource management
(6th ed.). Boston: McGraw-Hill.

In Malaysia, the government has awareness of the risks posed by certain


chemical substances. They have provided an order in the Occupational Safety
and Health Act 1994 which prohibits the use of material like Benzene, Benzidine,
Krosodilit, Carbon Disulfide, white phosphorous and any other chemical
substances that are dangerous to safety in the workplace. This Act has been
enforced effective from 2 August 1999.

Other than that, the Occupational Safety and Health Act 1994 also contains the
rules to classify, package and label chemical substances and determine the use
and exposure of dangerous chemical substances.

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228 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

Find out more information about the Occupational Safety and Health Act (The
Prohibition of Chemical) 1999 at http://www.dosh.gov.my/index.php?
option=com_content&view=article&id=531&Itemid=360&lang=en. Are you
exposed to these restricted materials?

11.3.3 Air Quality in the Building

ACTIVITY 11.7
Is the air in your work area good? If not, what are the factors that
contribute to air quality in your workplace?

In order to save energy, the techniques in construction of commercial buildings


have been changed to increase the effect of heating power, air and air
conditioned system. These include decreasing the flowing out of the air by
closing entire windows and any hole in the building. As a result, many workers
experience the „sick building syndrome‰ or lack of fresh air. Those who have this
syndrome will feel itchiness on the eyes, ears, throat and skin (Bohlander, Snell,
Sherman, 2004).

Moreover, workers in closed buildings are easily exposed to air pollution due to
bad air flowing system. According to research by the National Institute of
Occupational Safety and Health in the United States, air pollution in the building
is due to cigarette smoke and emission from office equipment such as ozone,
hydrocarbon from computers, photocopy machines, laser printers and fax
machines. Dust from carpets, papers and wood are among the contributors too
(O Connell and Motavalli, 1995 and Bohlander, Snell and Sherman, 2004).

To overcome the lack of fresh air in the building, the American Lung Association
has provided four recommendations: remove cigarette smoke with good air
flowing, prevent workers from smoking in air conditioned rooms, supervise the
air flowing system frequently and remove the sources of pollution from the
building (Bohlander, Snell and Sherman, 2004).

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11.3.4 Video Terminal Appearance

ACTIVITY 11.8
Is it safe to use computers in our daily work? In your opinion, what is
the problem caused by using the computer for a long time?

In order to keep up with the current technological development, organisations


make full use of computers in their daily work. However, the widely usage of
computers is a cause for worry among employees due to the danger of the
computer monitor. Usage of computers for a long period can create the following
problems:
(a) Vision problems such as weakening of the vision, eye strain, and itchy eyes.
(b) Radiation such as forming of cataracts in the eyes and pregnancy problems
such as miscarriage and abnormality due to high exposure to radiation
(video terminal display).
(c) Muscle pain (back, neck and shoulders)
(d) Work stress due to pressure, bad posture, noise, lack of practice, workload
and routine.

Dr James Sheddy (Bohlander, Snell and Sherman, 2004) gave some advice to
minimise the negative effect of the computer:
(a) Put the computer screen between four and nine inches from the userÊs eye
vision level.
(b) Put the monitor in line with the vision.
(c) Sit on an adjustable chair, adjust the height according to the preferences of
the user and use a copyholder to attach to the computer or desk.
(d) Use suitable screen light which is not harmful to the eyes.
(e) Use screen-shades to decrease the light from the window to the screen.

11.3.5 Injuries of Frequent Movement


Repetitive motion injuries or cumulative trauma disorder are usually
experienced by workers who work using repeating actions such as finger and
hand movement. They include butchers, fish cutters, chefs, textile workers, violin
players, stewards and stewardesses.

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230 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

One of the injuries is the carpal tunnel. The carpal tunnel refers to the hand bone
known as the carpal. These bones form a tunnel full of flexible tendons
(Ivancevich, 2001). According to research by NIOSH, the carpal tunnel syndrome
is related to the industrial sectors involved in cutting, forming, sewing and
cleaning.

One of the ways to avoid the injuries is by providing a good work environment
in line with the physical needs of the workers or known as ergonomics. This
word originated from Greek which is divided into „ergon‰ or work and „omics‰
which means „management of something‰ (Mathis and Jackson, 2000).The job of
the ergonomist is to study the aspects of work physiology, psychology and
engineering such as fatigue, lighting, equipment and control.

The importance of ergonomic study:


(a) The employer can use the result of the study to provide a conducive work
environment such as providing chairs, shoes, desks and any other suitable
equipment to the employees according to their size and height.
(b) The employer can adjust the room temperature, lighting and level of noise
so that they do not affect the employees' performance.
(c) Focus on personal space. Small or packed space will lead to stress and
cause health problems to the workers.

EXERCISE 11.2
TRUE (T) or FALSE (F) Statement

1. One of the causes of accident at the workplace is machine


failure.
2. Continuous stress felt by employees is one of the examples
of workersÊ safety.
3. The producing sector is the highest achiever in accidents.
4. The effect of chemical substances is visible immediately.
5. The carpal tunnel syndrome is formed by continuous
injuries and cumulative trauma injuries.

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11.4 ISSUES RELATED TO SAFETY AND HEALTH


After understanding the occupational safety and health hazards in the
workplace, we are going to look at some of the issues related to occupational
safety and health.

11.4.1 Violence and Dangerous Work Environment


There are a few types of violence at the workplace. Examples of moderate
violence in the workplace are vandalism, sabotaging, fighting, violating company
rules, quarrelling with the customer, workmate or supervisor and theft. Cases of
rape, murder, running amok, burning and attacking are examples of serious
violence in the workplace.

Security guards or those who are involved in money exchange and valuable assets
such as bank tellers and cashiers are exposed to violence. Other than that, those
who work until late at night or in isolated places are also exposed to this type of
risk.

Other than visible threatening risks, workers also have to face hidden threats
such as bullying by other workmates which may progress to a more serious stage
such as murder.

One example of hidden violence is sexual harassment. The reported cases of


sexual harassment in Malaysia are low because not many of the victims come
forward to report their cases. However, this does not mean that it is not serious.

Some steps can be taken to overcome violence at the workplace such as vetting
the workersÊ applications, and forming a basic procedure related to safety at the
workplace. It includes prohibiting bringing in any weapons and banning any
practices that can be a threat to the work environment.

11.4.2 Work Stress


Stress can be classified into three types: neustress, distress and eustress or
positive pressure. (Schafer, 2000)
(a) Neustress is neutral pressure where it does not bring any benefit or harm.
(b) Distress happens when there is too much stimulation or little stimulation
such as over worrying, and becoming sad and angry easily.

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232 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

(c) Eustress or positive stress refers to the moderate level of worry that will
work as a drive to do something.

Although stress has proven to increase the productivity and creativity of


workers, negative stress or distress is one of the examples of occupational illness
that can lead to physical injuries, heart disease, bone aching, asthma and gastric
problems; the main source of workersÊ disability (French, 1994).

The factors that cause stress are (Faizuniah, et al., 2002):


(a) Unsettled conflicts;
(b) High expectations set by the leaders or managers;
(c) Disturbance by other workers;
(d) Too many responsibilities;
(e) Great competition among the employees;
(f) Short time span to complete tasks;
(g) Failure to control the sources (financial);
(h) Lack of control in the job and role conflicts; and
(i) Great efforts made but only managed to achieve unrealistic goals.

A few steps can be taken to reduce the negative effects of pressure. They are as
follows:
(a) Have a good relationship among the employees;
(b) Openly voice out your feeling or problem to the supervisor or workmates;
(c) Get ready to face any changes in the future;
(d) Do not perform something that is beyond your ability;
(e) Put a realistic deadline which is easy to reach;
(f) Quick action in solving problems before it becomes worse; and
(g) Stop for a while or rest before proceeding the work to avoid boredom.

SELF-CHECK 11.1

Have you ever felt stressed? What are the factors leading to stress?

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11.4.3 HIV/AIDS in the Workplace


What would your reaction be if you found out that your workmate was HIV
positive? Are you going to stay away from him or her because you are afraid to
get infected or will you accept him or her as usual? If you were an employer,
what would your reaction be? Would you fire the individual or help him or her
deal with it?

Whatever action you take, the important question is: do you understand what
HIV/AIDS is and its implications on workers, the job and the surrounding?

AIDS is a condition where the bodyÊs immune system becomes weak or


destroyed and the patient cannot fight the infected disease. According to
statistics received from the Ministry of Health, after the first cases were reported
in 1986 till the end of December, 2008, 84,630 Malaysian citizens had tested
positive for HIV, resulting in a total of 11,234 deaths. That figure increases every
year.

Most of the AIDS patients like to isolate themselves from the society because of
embarrassment and fear of being discriminated by family and society. What is
important is that they do not want to lose their jobs. This is because awareness of
this disease among employers is still low. According to research by the
Department of Safety and Health (DOSH) carried out in 154 factories, most of the
employers stated that:
(a) HIV/AIDS would not have a great impact on the business, productivity,
expenses, health care and absence in the workplace.
(b) HIV/AIDS still has not affected the work field.
(c) HIV/AIDS was only infected by non-expert workers and low educated
employees.
(d) HIV/AIDS was not an organisationÊs issue but the countryÊs issue.

Although there is no specific provision in the Occupational Health and Safety Act
1994 with regard to AIDS, Section 15(1) stated, „It can be assured that the
employer is responsible to take care of the workersÊ welfare from any HIV
infection and at the same time responsible to take care of them no matter what
health condition they are in.‰

Unfortunately, the worries and misconceptions of the employer and the


employee towards the patient of HIV/AIDS have obstructed the effort to create a
safe work environment. Geotsch (1996) has suggested three solutions to help the
employers in handling the problem.

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234 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

(a) Through Education


The educational programme can be organised by professionals in
occupational safety and health with support by the employer to increase the
awareness of AIDS to all the employees. The programme explains the
disease, the risk and how it can infect others and this can help the
employees to increase their awareness of this disease and how to handle it
in the future.

(b) Formulating AIDS Related Policy


Although AIDS has proven to be giving negative effects to the work
environment, steps taken to overcome this issue are minimal. While
discussing how American companies handle this problem, Minetos (1998)
found that only 5% from all the employers have the written corporate
policy related to AIDS. Malaysia should also take this matter seriously.

(c) Protecting the Employees from AIDS


Employees who are involved in handling blood or any body fluid are likely
to be exposed to the danger of AIDS infection. So, they have to be given
enough training before allowed to work. Besides, the employer should
provide enough equipment and tools to prevent the employees from being
exposed to injuries.

Visit http://www.dosh.gov.my/index.php?option=com_content&view
=article&id=531&Itemid=360&lang=en for information about the steps to
protect workers from AIDS.

11.5 FROM THE SAFE AND HEALTHY WORK


ENVIRONMENT
A safe and healthy work environment is important to an organisation. It
increases the employeesÊ productivity, and gives a positive effect to the
organisation especially in terms of reducing the cost related to accidents and the
compensation needed to be paid by the company. To have a safe and healthy
work environment, a few steps can be taken such as requesting the workers to
help in organising the Safety and Health programme.

11.5.1 Employee Aid Programme


One of the ways the employer can overcome the issue of occupational safety and
health environment is by creating the Employee Aid Programme or EAP.
According to Gloria Cunningham in French (1998), the EAP was accepted and

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 235

understood as the programme that provides direct services to workers who have
many personal problems or problems related to work.

With this programme, employees who have problems such as alcoholic and drug
addictions, stress, human relationship problem (usually between the worker and
the supervisor), family and marriage problem, and financial problem will be
given counselling.

The EAP also provides services like career counselling, education regarding
AIDS and health, counselling on mental stress, counselling for employees who
are going to be retired and those to be terminated. (Mathis and Jackson, 2000).

11.5.2 Safety Programmes


A safe work environment can be created by the employer through careful safety
planning. Although, most of the programmes held by the organisation focus on
the aspect of accident, the main objective is to make sure the employees always
take priority of their safety while working.

Generally, the Human Resource Department is responsible for conducting safety


programmes. However, the success of this programme depends on the
commitment by the managers and top management. Besides, the employees
factor whereby they focus on the the importance of safety while working also
contributes to the success. The Human Resource Department only works as the
programme administrator, supervises the safety record and cooperates with the
managers and supervisors in order to ensure the success of the programme.

In promoting a safe work culture, there are many things an employer can do,
such as:
(a) Creating the work as interesting as possible. Uninteresting work will make
the workers feel bored, tired easily which will lead to accidents.
(b) Forming a safety committee that includes the representatives from the
employees and the employer. The responsibility of this committee is to
check, supervise the working, investigate the accident and underline a few
recommendations to overcome the problem.
(c) Displaying the safety statistics such as the monthly report on the notice
board or in the monthly bulletin for the workers to remind the employees
of the importance of safety at the workplace.
(d) Using the notice board in the organisation to promote safe work culture.

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(e) Encouraging workers/employees and supervisor in practising safe work


culture. The employer needs to recognise every positive action taken by the
workers in maintaining a safe way of working by providing rewards.
(f) Organising meetings and safety trainings from time to time.

Gomez-Mejia, Balkin and Cardy (2001) supports this matter as they believe that
an effective safety programme usually possesses the following characteristics:
(a) Form a safety committee which comprises every department in the
organisation. Employees are encouraged to take part in decision making
regarding safety issues and the employer needs to consider ideas
contributed by the employees in order to improve the safety in the
workplace;
(b) Convey safety messages to employees through different media such as
lectures, films, posters and brochures;
(c) Train the supervisors on how to convey safety messages to employees and
manners of handling safety tools so that supervisors can provide training to
their subordinates;
(d) Use incentives, rewards and positive reinforcement to encourage the
employees to practise working safety. The employer should offer rewards
to those employees who provide feedback or to those who can give
suggestions regarding safety. Besides, employees who maintain a good
safety record should be rewarded;
(e) Enforcing safety rules. For employees who break or do not follow safety
rules, action can be taken against them;
(f) Deploy the Safety Director or the Safety Committee to investigate and
recognise places in the workplace that are not safe and find out why
accidents can happen and try to find solutions to overcome these problems.

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ACTIVITY 11.9
Visit http://www.dosh.gov.my/index.php?option=com_content
&view=article&id=531&Itemid=360&lang=en and explain the aims
and objectives of the establishment for each of the following
sector/department:
1. Department of Safety and Industry
2. Department of Health and Industry
3. Department of coordination and planning
4. Department of serious danger
5. Department of administration

11.5.3 Health Programme

ACTIVITY 11.10

In your opinion, why does a good health programme need to be held


in an organisation?

Certain organisations are so concerned about their employeesÊ health that they
organise various programmes such as exercises, healthy diet campaigns, football
tournaments, netball, badminton and so on, monitor weight problems and avoid
things that are harmful to health. This kind of organisation will provide facilities
such as gymnasium and aerobic classes. For organisations that wish to organise
health programmes, they can start their programme with the following:
(a) Organise health assessment sessions for high risk employees;
(b) Identify illnesses that incur large medical expenses;
(c) Include family members and those who had retired into the health
programme;
(d) Seek advice from food technologists regarding healthy ways of eating;
(e) Prohibit smoking in the workplace;

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238 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

(f) Obtain discount prices from health clubs to encourage employees to join
and enjoy the facilities; and
(g) Start a health bulletin.

EXERCISE 11.3

TRUE (T) or FALSE (F) Statements

1. Burnout is one of the service illnesses that is closely related to


HIV/AIDS.
2. Sexual harassment and bullying are two examples of
concealed threat in the workplace.
3. According to research done by DOSH, employers in Malaysia
have a high awareness of the HIV/AIDS issue.
4. One of the problems tackled by the workers aid programme is
financial problem.
5. Displaying the figure of accidents at the workplace can help
employers to promote the culture of working safely.

Multiple Choice Questions

1. The Occupational Safety and Health Act 1994 obligates the


establishment of a Committee of Safety and Health if there
are:
A. 50 workers or more
B. 40 worker or more
C. 75 workers or more
D. 100 workers or more

2. A condition caused by injury to the wrist is known as:


A. Carpal tunnel syndrome
B. Repetitive stress injury
C. Cumulative trauma disorder
D. All of the above are true

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TOPIC 11 EMPLOYEE SAFETY AND HEALTH 239

3. Which of the following is NOT the workersÊ responsibility


towards safety and health?
A. The workers need to obey all standards set by the
Occupational Safety and Health Act
B. The employees need to report any dangerous situation
C. The employees need to obey all safety and health rules set
by employers
D. The employees need to use their discretion when handling
safety tools.

4. _________ can be defined as things related to protect workers


from injuries or accidents caused by work.
A. Health
B. Trauma
C. Safety
D. Disability

5. __________ Syndrome can be caused by cigarette smoke and


emissions from office equipment such as ozone and hydrocarbon
produced by computers, photocopy machines, laser printers and
fax machines and also dust from carpet, paper and wood.
A. Carpal Tunnel
B. Sick building
C. Ergonomics
D. Burnout

Essay Questions

1. If you were given the responsibility to promote safe work


culture in the workplace, what would be the steps for you to
take?
2. As an employer, give five ways to reduce accident rate in the
workplace.

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240 TOPIC 11 EMPLOYEE SAFETY AND HEALTH

The safety and health problems in the workplace is everybodyÊs problem.


Therefore, everyone has to be responsible to ensure that the workplace is safe
and free from any illness.
In this topic, we have discussed the various aspects of safety and health such
as the reasons the Occupational Safety and Health Act 1994 exists, the
responsibilities of the employer, the self-employed, workers, designers,
manufacturers and suppliers in producing a safe and healthy workplace, etc.
It is hoped that with this discussion, it can enhance your understanding of the
importance of working in a safe environment without any health-threatening
risk.

Carpal Tunnel Neustress


Distress Occupational accidents
Ergonomics Occupational safety and health
Eustress Safety
Health Work stress

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Answers
TOPIC 1: INTRODUCTION TO HUMAN RESOURCE
MANAGEMENT

Exercise 1.1
1. Human resource management consists of philosophies, policies,
programmes, practices and decisions related to employee management in
an organisation.

2.
Human Resource Management Personnel Management

Handles macro issues Handles micro issues

Planned and long term Ad-hoc and short term

Proactive Reactive

Employee needs are assessed Employee needs are assessed


through organisationÊs perspective through the employeesÊ perspective

Report to the Chief Executive Officer Report to the line manager

Plays a role in decision making No role in decision making

Acts as a change catalyst Maintains the status quo

Facilitates an organisationÊs positive Does not take into account the


culture effects of culture

Exercise 1.2
Five roles of human resource management are:
Planner
Facilitator
Coordinator

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242 ANSWERS

Auditor
Mediator

Refer to the explanation in subtopic 1.2.

Exercise 1.3
Multiple Choice Questions
1. D
2. A
3. D
4. C
5. C

Essay Questions
1. Globalisation
Challenges in technology
Managing change
Human resource development
Market reaction
Cost reduction
Economic climate
Legal system
(Any six of the above)

2. Part-time job
Work sharing
Maternity leave
Flexible working hours
Child nursing leave
Telecommunication services
(Any four of the above)

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ANSWERS 243

3. Prepare suitable amenities and programmes in order to fulfil women


employee requirements; these include nurseries, flexible working hours and
child nursing leave.

4. Employees nowadays value lifestyle satisfaction which can be achieved by


balancing between challenges and rewards rather than the relationship
between work and lifestyle. Apart from that, employees are also more
attracted to interesting jobs, and the opportunities to develop themselves
through the tasks offered to them. This change has prompted human
resource management to come up with ways on how to manage and
motivate employees. Consequently, the roles of human resource
management are becoming more complex as opposed to previous situations
whereby employees are only concerned about the economic values of their
jobs to support their families.

5.
Helping the organisation achieve its targets.
Fully utilising the skills and ability of the workforce.
Providing the organisation with trained and motivated employees.
Increasing employeesÊ job satisfaction.
Developing and maintaining the quality of employee work
environment.
Delivering human resource management policy to every employee.
Helping to maintain social responsibility and ethical conducts.
Managing changes to benefit employees and the organisation.
(Any five of the above)

TOPIC 2: LEGAL ENVIRONMENT

Exercise 2.1
1. The payment fee cannot be later than the seventh day after the last day of
payment period.

2. 6 weeks

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244 ANSWERS

3. 60 days

4. No. The Employment Act 1955 prohibits employers from setting conditions
on how employees spend their fee.

Exercise 2.2
1. After receiving the application, the management must take these actions
within 21 days:
Give recognition; or
Reject the application and present the reasons in writing; or
Apply to the Director General to verify employeesÊ membership in the
union and to give a written notice to the workersÊ union.

2. 14 days

Exercise 2.3
1. True
2. True
3. False
4. False

Exercise 2.4
1. Among the objectives of this Act are to:
Ensure the safety, health and welfare of employees at the workplace;
Protect others that are present at the workplace from any accidents that
might be triggered by workersÊ activities;
Ensure that the work environment is conducive; and
Enable related legalities be replaced in stages by industrial rules and
regulations which are approved and practised by all in order to
maintain and increase the standard of safety and health at the
workplace.

2. 40 employees or more who are working in the workplace or who are


ordered by the general manager.

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ANSWERS 245

Exercise 2.5
1. RM2,000
2. 0.5% of the employeeÊs salary

Exercise 2.6
1. Under this Act, the Human Resource Development Fund must be spent on:
Encouraging development and growth of employeesÊ skills by
designing, developing, increasing or monitoring training amenities;
Preparing financial aid through loans or subsidies to employers to train
or re-train their employees;
Organising or implementing activities or programmes aimed at re-
training employees who have been or will be laid off due to
downsizing;
Bearing the cost of managing the Human Resource Development
Council including payment and allowances for council officers; and
Bearing any administration costs for the Fund as well as the cost of
implementing the Act.

2. The functions of the Human Resource Development Council are:


Evaluating and determining the types or levels of training that is in line
with the industryÊs human resource needs;
Increasing manpower training; and
Establishing the conditions for loans or financial aid.

Exercise 2.7
Effective 1 January 2007, the contributorÊs account is divided into two types
Account 1 and Account 2. All contributions are divided into the two accounts
according to fixed percentages, namely, 70 percent into Account 1 and 30 percent
into Account 2.

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246 ANSWERS

These accounts are created for different purposes and different types of
withdrawals are applicable to each account:
(a) Account 1
The savings here are for the purposes of retirement and cannot be fully
withdrawn before the age of 55 or passed away, or loses his capacity and
intends to leave Malaysia permanently.
(b) Account 2
The savings in this account are meant to help you to make early
preparations for a comfortable retirement. Withdrawals are allowed for the
purposes of:
(i) Attaining the age of 50 years;
(ii) Owning a house or making the downpayment for your first house;
(iii) Settling the balance of your housing loan for your first house;
(iv) Financing education for yourself and that of your children; and
(v) Medical expenses for yourself and that of your children.

Exercise 2.8
Fill in the Blanks
1. 12 days

2. 48 hours

Multiple Choice Questions


1. C
2. B
3. C
4. A
5. C
6. D

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ANSWERS 247

Essay Questions
1. Amin is not entitled to normal medical leave because he has used up all the
sick leave which has been given to him.

2. National Day
Birthday of the Yang di-Pertuan Agong
Birthdays of the Sultan and Yang di-Pertuan Negeri or Federal Territory
Day
Labour Day

3. Weekly leave
Medical leave
Annual leave
Public holidays

4. No. Only employees with a salary of not more than RM3,000.

5. There are two protection schemes, which are:

(a) The Employment Injury Insurance Scheme


This scheme protects employees from disasters at work including
industrial accidents, accidents that occur during business related
travels, and service illnesses, which are illnesses caused by
employment. Under this scheme, only employers are required to
make monthly contributions to every employee with the rate of 1.25%
of their monthly salaries.

(b) The Invalidity


This scheme gives a 24-hour protection to employees against
accidents or fatalities without considering the cause. The management
must contribute 0.5% of the employeeÊs salary, and the employee
must also contribute 0.5% of his or her salary.

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248 ANSWERS

TOPIC 3: JOB ANALYSIS AND DESIGN

Exercise 3.1
1. True
2. False
3. True
4. True
5. False

Exercise 3.2
1. True
2. False
3. True
4. False
5. False

Exercise 3.3
1. True
2. True
3. True
4. False

Exercise 3.4
True (T) or False (F) Statement
1. True
2. False
3. True
4. True
5. True

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ANSWERS 249

Match the concepts to the suitable statements.


1. E
2. D
3. F
4. B
5. A
6. C

Multiple Choice Questions


1. A
2. B
3. A
4. D
5. D
6. B

Essay Questions
1. Job requirements that are formally written help managers in almost every
aspect of employee management.

By understanding job requirements, managers can select, orientate and


train employees to further succeed in their tasks.

An accurate job requirement has to follow rules and regulations and be


related to the job. Thus, managers have a valid reason in making decisions
while evaluating employees in the performance evaluation process.

2. Industrial engineering involves the process of analysing and designing jobs


based on a specific work cycle and standard working hours. An industrial
engineer may design a specific job to increase efficiency and simplify ways
but ignore the human factors.

Ergonomics, on the other hand, focuses on human characteristics suitability


with the job requirements. Ergonomics may provide a job that may not be
viewed as efficient from the aspect of industrial engineering standard, but
can increase human needs and employeesÊ job satisfaction.

When both parties cooperate, their disciplines can be combined to achieve


efficiency and job satisfaction.

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250 ANSWERS

TOPIC 4: PLANNING AND EMPLOYEE RECRUITMENT

Exercise 4.1
1. True
2. True
3. True
4. True
5. True

Exercise 4.2
1. True
2. True
3. False
4. True
5. True

Exercise 4.3
True (T) or False (F) Statements
1. False
2. True
3. False
4. False
5. True

Match the concepts to the suitable statements.


1. D
2. B
3. A
4. C

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ANSWERS 251

Multiple Choice Questions


1. A
2. D
3. D
4. D

Essay Questions

1. A quantitative approach is a top-to-bottom approach that fulfils


management needs.
The approach ia used by experts who are trained in statistical and
mathematical techniques.
Related to balancing demand and supply of human resources to fulfil
the organisationÊs objectives.
A qualitative approach or a behaviour-oriented approach is bottom-to-top
approach that fulfilsÊ employeesÊ needs.
An approach that utilises forecasting skills or those who are experts in
counselling and development techniques, and treat employees as
individuals.
Focuses on performance evaluation, promotion, career and job
management development.
Attempts to balance interest, ability and individual aspirations with the
organisationÊs needs.

TOPIC 5: SELECTION

Exercise 5.1
1. False
2. True
3. True
4. True
5. False

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252 ANSWERS

Exercise 5.2
1. True
2. False
3. True
4. False

Exercise 5.3
Fill in the Blanks
1. A
2. B
3. C
4. D

Multiple Choice Questions


1. B
2. D
3. C
4. A

Essay Question
1. „Criterion‰ refers to the level of which the selection tools chosen and able to
forecast or correlate with the main elements in work behaviour.

Examples are: in sales job will be sales figures and in production job will be
the quality, quantity of output.

TOPIC 6: PERFORMANCE EVALUATION

Exercise 6.1
1. Performance evaluation is the process of identifying, observing, measuring
and developing employeesÊ performance in an organisation or any
definitions such as those provided in subtopic 6.1.

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ANSWERS 253

2. Six uses of performance evaluation from the administration aspect:


Salary administration
Promotion
Decision to terminate or transfer employees
Validating authority structure
Human resource planning
Documentation related to human resource decisions

3. Five reasons why the performance evaluation process fails to be executed


effectively are:
The supervisor or manager does not have sufficient information about
employeesÊ real work performance.
The standard of measuring performance is not clear.
The supervisor or manager does not have the skills to evaluate
employee performance.
The supervisor or manager is not prepared to evaluate employee
performance, as he or she does not want to be seen as a judge who is
giving out an unfair sentence.
Employees do not receive constant performance feedback.
The supervisor or manager is not sincere during the performance
evaluation process.
Performance evaluation is not focused on employee development.
The supervisor or manager uses language that is unclear to the
employees during the performance evaluation process.
Employees feel that the organisation does not allocate sufficient
resources for performance rewards.
(Choose any five of the above)

Exercise 6.2
1. The four key elements in creating a performance standard are:
(a) Strategic Relevance: The standard developed must be related to the
organisationÊs strategic objectives.

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254 ANSWERS

(b) Criteria Contamination: This happens when uncontrollable external


factors affect an employeeÊs performance.
(c) Reliability: This refers to the consistency of a standard created, which
is how far an employee is able to sustain a specific performance level
in a particular period.
(d) Criteria Deficiency: The development of a performance standard has
to consider all of an employeeÊs responsibilities. If the standard
developed only considers one aspect of a jobÊs responsibilities, criteria
deficiency occurs.

2. The five steps in the performance evaluation process are:


(a) Identifying performance evaluation objectives
The performance evaluation process begins by developing
performance evaluation objectives. The development of objectives
must be related to the organisationÊs objectives so that there will be
work performance increase shown by employees. For example, some
organisationsÊ philosophy is to focus on employee development
aspects while other organisations focus on the administrative aspects
such as salary standardisation.
(b) Developing performance standards
After the performance evaluation objectives are set, a standard
performance will be developed. The purpose is to make the
comparison between real work performance and the organisationÊs
expected work performance easier. Basically, performance standards
must be developed based on a particular workÊs requirements and
these requirements result from the job analysis. A good performance
standard is able to translate an organisationÊs strategic objectives to a
particular work. Strategic relevance, criteria contamination, reliability
and criterion deficiency are the four important elements that must be
present when developing performance standards.
(c) Monitor work performance
After developing performance standards, the next step is to monitor
the employeesÊ work performance so that the performance
demonstrated is in line with the standards set. If the real performance
shown by employees deviates far from the set standards, then the
standards developed must be re-analysed to ensure that they are
clear, attainable, measurable and states the time period to be carried
out. An unclear standard must be altered so that employees are able
to carry out their duties effectively.

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ANSWERS 255

(d) Evaluating performance


Usually, at the end of the year, employee performance will be
evaluated to ensure that the organisationÊs strategic objectives are
achieved. The real performance shown by employees will be
compared to the standards that have been developed.
(e) Discussion on performance
Employees and managers will review the employeesÊ performance
together based on set standards. A performance discussion will
determine how far the employee is able to achieve the organisationÊs
strategic objectives, identify the problems that obstructed the
achievement and find alternatives to solve the problems. This
discussion will also include developing objectives for the next year.

Exercise 6.3
The six sources to evaluate employeesÊ performance are:
(a) Immediate supervisor: A traditional method which stresses that
performance evaluation must be done by an employeeÊs immediate
supervisor. A supervisor is the most eligible person to observe and evaluate
his or her employeesÊ work performance, and he or she is also responsible
for the management of the unit or department.
(b) Self evaluation: If an employee understands the objectives that must be
achieved and is involved in the development of performance standards,
then he or she is qualified to evaluate himself or herself. This is because the
employee knows what has to be done and how to carry out the task
effectively.
(c) Subordinates: The most suitable people to evaluate a manager are his or her
subordinates. This method is effective because the subordinates are the best
source to observe the effectiveness of the manager. Moreover, the
subordinates are always in contact with the manager. This type of
evaluation is more for the managerÊs self-development so that he or she is
able to work on their weaknesses.
(d) Peers: Peers can be an effective evaluation approach as peers often interact
and are able to identify their colleaguesÊ strengths and weaknesses. Peer
evaluation can also give an accurate and valid input. However, peer
evaluation will also create problems if it is used as a basis to give favours or
seek revenge.

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256 ANSWERS

(e) Customer evaluation: Customer satisfaction determines the successfulness


of an organisation. Based on this idea, most organisations feel that they
should obtain their employeesÊ performance input from customers.
Basically, there are two types of customers, namely, internal and external
customers. Internal customers are employees from a certain department
who depend on the output or other employeesÊ work results for their input.
External customers are people who use the products or services produced
by an organisation.
(f) 360-degree evaluation: Apart from the sources stated above, an
organisation may also use the 360-degree evaluation method to assess their
employees. This approach is very popular and is an alternative to the
traditional method as the organisation gets complete information about
employeesÊ performance. Usually, an organisation uses this method for the
purpose of employee development only.

Exercise 6.4
Three main methods to evaluate employeeÊs performance are:
(a) Trait Method: Trait is designed to measure how far an employee is able to
acquire certain characteristics such as creativity, innovation, leadership and
dependency that are seen as important in carrying out oneÊs work. Some of
the methods that fall under this category are the graphic rating scale, essay
method and the forced choice scale.
(b) Behaviour Method: This method focuses on behaviour aspects based on a
scale that illustrates certain behavioural descriptions. These descriptions
enable appraisers to identify employee performance based on certain
behaviours from weak to excellent. Some of the methods that fall under this
group are critical incident method, behavioural checklist and weighted
checklist, behaviourally anchored rating scale and behaviour observation
scale.
(c) Result Method: This method enables supervisors to evaluate the results
achieved by employees. Therefore, it is more quantitative in nature,
objective and empowerment can be present. This in turn will lessen bias.
This technique also stresses that employees be responsible for all results
achieved. There are two types of techniques that can be categorised in this
group, namely, productivity measures and management by objectives.

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ANSWERS 257

Exercise 6.5
Three common mistakes made by the evaluator are:
(a) Halo Effect: This effect happens when an appraiser conducts a total
evaluation based on only one aspect of performance. An appraiser sees the
employee as being efficient in all his or her work aspects when he or she is
able to meet the quantity required by the organisation.
(b) Central Tendency: Central tendency happens when an appraiser awards
the same evaluation to all evaluated employees. The appraiser is inclined to
give an average evaluation to all employees with the reason of maintaining
good working relationship with everyone so that friction does not occur.
(c) Recency Error: An appraiser often focuses on work performance that is
close to the evaluation period as it is difficult to remember work
performance in the beginning of the year.
(d) Contrast Error: This error happens when a manager compares an
employeeÊs performance with another colleague who has already been
evaluated, and not based on set standards.
(e) Leniency/Strictness Error: Leniency error is an error made by an appraiser
when he or she gives a high value to the employee being evaluated because
the appraiser does not have the heart to give a low rating. Strictness error
happens when an appraiser awards a low rating to the employee being
evaluated because he or she feels that none of the employees deserve a high
rating.
(f) Similar-to-me Error: This error happens when an appraiser gives a high
rating because the employee who is being evaluated has similar personal
characteristics with the appraiser.

Exercise 6.6
Multiple Choice Questions
1. C
2. D
3. B
4. D
5. B

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258 ANSWERS

Essay Questions
1. Six roles of performance evaluation:
(a) Development: Determines which employees need training. This will
enhance employee-supervisor relationship and encourage the
supervisor to contribute to the reinforcement process of employee
behaviour.
(b) Motivation: Encourages attempts, develops responsibilities and
propels efforts towards improving performance.
(c) Human Resource Planning: Functions as a valuable input to human
resource planning activities.
(d) Communication: Acts as a basis for discussion between the supervisor
and employees regarding work matters through daily interaction.
(e) Law Abiding: Acts as a valid foundation for promotions, transfers,
rewards and employee terminations.
(f) Human Resource Management Research: Verify methods or
techniques used in human resource management activities. For
example, during the selection activity, improving or selecting the
effective selection test.

2. Meaning of terms:
(a) Strategic Relevance: The standard developed must be related to the
organisationÊs strategic objectives
(b) Criteria Contamination: Criteria contamination happens when there
are uncontrollable external factors which affect employeesÊ
performance.
(c) Criteria Deficiency: The development of a performance standard has
to consider all of an employeeÊs responsibilities. If the standard
developed only considers one aspect of a jobÊs responsibilities, criteria
deficiency occurs.

3. Preparations that need to be done by a manager before the process of


performance interview:
(a) The supervisor needs to inform employees about the interview date
so that employees are given the opportunity to re-examine their job
description, analyse any problems faced and compare their real
performance with the set standards.

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ANSWERS 259

(b) The supervisor needs to collect information on employees whose


work performance is being evaluated, study the job description of
every employee to ensure they are still correct, read the performance
report to identify matters that need to be focused on, compare their
real performance with the set performance standards, list matters that
need to be discussed and ensure the time allocated is sufficient as well
as no disturbance occurs during the interview process.

TOPIC 7: COMPENSATION ADMINISTRATION

Exercise 7.1
Two types of compensation that can be offered by the organisation to its employees:
(a) Monetary Rewards
A direct monetary reward is in the form of cash, salary, commission and
bonus
An indirect monetary reward is in the form of benefits such as
insurance, annual leave, medical leave, flexible working hours and
others.
(b) Non-monetary Rewards
Non-monetary rewards from the work aspects are interesting job scopes,
challenging work responsibilities, acknowledgement and career
development.
Non-monetary rewards from the work environment aspects are good
policies and practices, competent supervisors, congenial colleagues and a
safe and healthy work environment.

Exercise 7.2
The goal of work evaluation is to achieve internal equity during the salary
system formation. Work evaluation is a systematic method to determine the
relative value of a certain job compared to other jobs to ensure different jobs are
given a different wage rate.

Four methods to evaluate jobs are:


Job arrangement;
Job classification;

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260 ANSWERS

Score system; and


Factor comparison.

Exercise 7.3
Multiple Choice Questions
1. B
2. D
3. B
4. A

Essay Questions

1. The two challenges that need to be faced by the human resource manager in
developing an effective salary structure are:
(a) The influence of equity on wage rate - External factors take into
account the similarities between an established wage rate and other
organisationsÊ wage rate to attract and retain capable employees. On
the other hand, internal factors stress on fair wage where an employee
compares his or her wage with the wage rate of a colleague in the
organisation.
(b) Wage assurance - Various compensation plans have to be developed
to create wage payment assurance including basic salary assurance,
service allowance or living expenses, and other financial benefits that
need to be increased from time to time such as housing allowance.
The wage rate developed also has to be revised so that an increase in
basic salary follows the increase in living costs.

2. Compensation is all forms of financial and benefits as well as clear and


apparent services which are accepted by employees as part of work
relations.

3. Five examples of monetary reward:


Annual leave
Medical benefits
Education aid
Pension

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ANSWERS 261

Insurance
or others as shown in Table 7.1

4. Factors that need to be considered when developing compensation


administration policies are:
Focus on business objectives and strategies
Attract and retain competent, motivated and qualified employees
Encompass organisational reward principles and philosophies
Prepare wage allocation outline
Strengthen the values and culture desired by the organisation
Communicated to all employees

5. Two steps in obtaining market information are:


Benchmark or key job Benchmark or key job is utilised to connect job
evaluation which has been conducted to market fee. Basically, the
comparison of identified key jobs in a payment grade is done inter-
organisationally to determine the relative job value according to other
employeesÊ opinions.
Establishment of payment structure can be done through wage
survey, wage curve and salary grade range.

6. Individual equity refers to the fairness in determining wage payment for


employees in the same position. Individual equity takes into account issues
such as experience, seniority of service and their performance.

TOPIC 8: INCENTIVES AND BENEFITS

Exercise 8.1
Two reasons the management carries out incentive plans are:
(a) It is able to increase or maintain the productivity level or employeesÊ work
quality.
(b) It is able to relate rewards to the organisationÊs goals.

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262 ANSWERS

Exercise 8.2
1. Maturity curve

2. Through this plan, the incentive rate paid is based on the standard time set
by the organisation to complete a certain task without taking into account
the actual time taken by the employee to complete the task. If the employee
is able to complete the task less than the standard time, the employee is still
paid an incentive based on the standard time. This plan is suitable for jobs
or operations that take time or need a lot of time to be completed.

Exercise 8.3
The five characteristic of an effective benefit programme are:
Forming a specific objective;
Allowing input from employees;
Re-designing employee benefits;
Flexible planning; and
Conveying information about benefits to employees.

Exercise 8.4
True (T) or False (F) Statement
1. False
2. True
3. True
4. False

Multiple Choice Questions


1. C
2. D
3. C
4. A
5. A

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ANSWERS 263

Essay Questions
1. Employer RM8.75
Employee RM2.50

2. A mandated benefit programme is a benefit set by the labour system. It is


the most minimum allotment on employee rights and has to be provided by
employers. Among the mandated benefits include: (Choose any two of the
following)
Payment for time off;
Maternity leave protection;
Contribution to the employee provident fund (epf); and
Social safety scheme (SOCSO).

3. Non-mandated benefits are benefits offered by employers to employees


voluntarily and without force. (Choose any three of the following):
Insurance Scheme
Healthcare
Employee Aid Programme
Children Day Care Centre
Food Service
Transportation Service
Education Amenities
Loan Amenities

4. The advantage of an incentive plan are:


Incentives enable an employee to focus on his or her specific job
performance target. It provides motivation to the employee thus
producing a satisfactory result.
Incentives are variable costs that can be related to result achievement
which is encouraging the increase in output.
Incentives can also be directly related to operationÊs achievement
whereby if the performance objective is met, incentives will be given.
On the other hand, if employees fail to fulfill the performance objective,
no incentives will be given.

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264 ANSWERS

Incentives encourage employees to work as a team and increase


dependency as payment for individuals depends on a groupÊs
achievement.
Incentives also encourage success sharing among those involved in
achieving the performance.

The steps that need to be taken for an effective plan administration are:
The manager is willing to give incentives based on the difference in the
performance of individuals, teams and the overall workforce.
The annual budget has to be sufficient in giving rewards as well as
validating excellent performance.
Indirect cost which is related to administration and the execution of the
incentive plan have to be identified. This includes the cost to develop
performance standards and additional cost for records purposes. Aside
from that, the time used in conveying the incentive plan to employees,
answering questions that arise as well as handling related complaints
have to be considered in the calculation of cost.

TOPIC 9: EMPLOYEE RIGHTS AND DISCIPLINE

Exercise 9.1
1. False
2. True
3. True
4. False
5. False

Exercise 9.2
1. False
2. True
3. True
4. False
5. False

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ANSWERS 265

Exercise 9.3
True (T) or False (F) Statements
1. False
2. False
3. True
4. True
5. False

Multiple Choices Questions


1. B
2. C
3. C
4. A

Essay Questions

1. The hot stove method characteristics are such as utilising the warning
system, having an immediate attitude, and being done consistently and not
privately. Through this method, the workers are usually being informed
about the types of punishment that they will receive if they make mistakes
before each problem arises. If the workers are found guilty, punishment
will be immediately carried out so that the worker or other workers can see
the relationship of cause and effect from the mistakes make. In this method,
the implementation of punishment is also being done consistently where
workers who make the same mistake will receive the same punishment.
Next, this method is not personal, meaning the discipline action taken is not
aimed at the workers but more at finding solutions to unpleasant behaviour
problems.

2. A few things that need attention when planning discipline rules include:
Distributed to all workers and cannot assume that they know it;
Needed to be investigated again from time to time;
Explain reasons for each rule;
Done in written form;
Logical;

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266 ANSWERS

Implemented and given warnings;


Get the workersÊ signatures to make sure they have read and
understood the rules set.

TOPIC 10: EMPLOYEE RELATIONS DYNAMICS

Exercise 10.1
1. True
2. False
3. False
4. True
5. True

Exercise 10.2
True (T) or False (F) Statements
1. False
2. True
3. True
4. False
5. False

Multiple Choices Questions


1. D
2. A
3. B
4. C

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ANSWERS 267

Essay Questions
1. Registrations are usually rejected if the Chief of Pengarah Kesatuan Sekerja
finds:
There are objectives of the establishment against the law;
A part of constitution of working association against the Trade Unions
Act
The name of the working organisation that wants to be established will
give problems in future or is almost the same as other established
organisation or the given name is suspicious; or
The working organisation that wants to be established will be used for
reasons against the law.

2. A protest is considered illegal if:


It is about issues questioning the acknowledgement of a working
society or organisation;
It is about issues in mutual agreement received by the Industrial Court;
It is about management rights related to employment of workers,
promotions, termination of worker, and allocation of work for workers;
and
After trade disputes being referred to the Industrial Court to be judged.

TOPIC 11: EMPLOYEE SAFETY AND HEALTH

Exercise 11.1
1. False
2. True
3. False
4. True
5. True

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268 ANSWERS

Exercise 11.2
1. True
2. False
3. True
4. False
5. True

Exercise 11.3
True (T) or False (F) Statements
1. False
2. True
3. False
4. True
5. True

Multiple Choices Questions


1. B
2. A
3. D
4. C
5. B

Essay Questions
1. A few steps that can be taken include:
Making the work interesting;
Create a safety committee enrolled by representative workers and the
management side;
Display safety statistics;
Use information boards in the organisation for promoting the culture of
working safely;

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ANSWERS 269

Encourage workers and supervisors to practise the culture of working


safely; and
Conduct meetings and safety trainings from time to time.

2. The following are the ways that employers can use to reduce the rate of
accidents in workplace:
Create a safety and health policy;
Implement all rules and procedures that have been set;
Investigate immediately when accidents happen;
Provide protection tools such as helmets, gloves and so on;
Organise awareness campaigns to reduce accidents from time to time;
Make sure that workplace surroundings are always safe;
Organise a safe work system;
Establish a procedure of reporting and investigating accidents;
Create and provide safety training;
Choose proficient workers;
Incentive system. Workers or departments who can avoid accidents in
the workplace would be rewarded;
Cooperate with government examiners;
Provide safety uniforms and safety tools;
Establish work areas and non-work areas such as dangerous areas;
Provide clear warning signboards such as „smoking is prohibited‰,
„restricted area‰, „be careful‰;
Give ample holiday and rest to workers who need more rest compared
to others;
Get input from workers about their problems; and
Get feedback from workers every time an accident occurs.

(Choose any five of the above)

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270 REFERENCES

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