Unit 1 HRM: Prepared By: Pruthvirajsinh N Rathod 1

HUMAN RESOURCE MANAGEMENT SYBBA 3
Unit 1 HRM
 INTRODUCTION
Human Resource Management (HRM) is a relatively new approach to managing

people in any organisation. People are considered the key resource in this
approach. it is concerned with the people dimension in management of an
organisation. Since an organisation is a body of people, their acquisition,
development of skills, motivation for higher levels of attainments, as well as
ensuring maintenance of their level of commitment are all significant activities.
 DEFINITION OF HRM
According to Flippo, ‘Personnel Management, or say, human resources

management is the planning, organizing, directing and controlling of the
procurement, development,
According to Flippo, ‘Personnel Management, or say, human resources

management is the planning, organizing, directing and controlling of the
procurement, development, compensation, integration, maintenance, and
separation of human resources to the end that individual, organisational and
social objectives are accomplished”.
Human Resource Management is a process, which consists of four main

activities, namely, acquisition, development, motivation, as well as maintenance
of human resources.
 NATURE OF HUMAN RESOURCE MANAGEMENT
1. Inherent Part of Management : Human resource management is inherent in

the process of management. This function is performed by all the managers
throughout the organisation rather that by the personnel department only.
2. Pervasive Function : Human Resource Management is a pervasive function of

management. It is performed by all managers at various levels in the organisation.
It is not a responsibility that a manager can leave completely to someone else.
Prepared By : Pruthvirajsinh N Rathod 1
3. Basic to all Functional Areas : Human Resource Management permeates all the
functional area of management such as production management, financial
management, and marketing management. That is every manager from top to
bottom, working in any department has to perform the personnel functions.
4. People Centered : Human Resource Management is people centered and is

relevant in all types of organisations. It is concerned with all categories of
personnel from top to the bottom of the organisation.
5. Personnel Activities or Functions : Human Resource Management involves

several functions concerned with the management of people at work. It includes
manpower planning, employment, placement, training, appraisal and
compensation of employees.
6. Continuous Process : Human Resource Management is not a ‗one shot‘

function. It must be performed continuously if the organisational objectives are to
be achieved smoothly.
7. Based on Human Relations : Human Resource Management is concerned with

the motivation of human resources in the organisation. The human beings can‘t
be dealt with like physical factors of production. Every person has different needs,
perceptions and expectations. The managers should give due attention to these
factors.
 IMPORTANCE OF HUMAN RESOURCE MANAGEMENT
Human Resource Management has a place of great importance. According

to Peter F. Drucker, ―The proper or improper use of the different factors of
production depend on the wishes of the human resources. Hence, besides other
resources human resources need more development.
Human resources can increase cooperation but it needs proper and

efficient management to guide it‖. Importance of personnel management is in
reality the importance of labour functions of personnel department which are

indispensable to the management activity itself. Because of the following reasons

human resource management holds a place of importance.
1. It helps management in the preparation adoption and continuing evolution of

personnel programmes and policies.
2. It supplies skilled workers through scientific selection process.
3. It ensures maximum benefit out of the expenditure on training and development

and appreciates the human assets.
4. It prepares workers according to the changing needs of industry and

environment.
5. It motivates workers and upgrades them so as to enable them to accomplish the

organisation goals.
6. Through innovation and experimentation in the fields of personnel, it helps in

reducing casts and helps in increasing productivity.
7. It contributes a lot in restoring the industrial harmony and healthy employer-

employee relations.
8. It establishes mechanism for the administration of personnel services that are

delegated to the personnel department.
Thus, the role of human resource management is very important in an

organisation and it should not be undermined especially in large scale enterprises.
It is the key to the whole organisation and related to all other activities of the
management i.e., marketing, production, finance etc.
 FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.
The main functions of human resource management are classified into two
categories: (a) Managerial Functions and (b) Operative Functions

(A) Managerial Functions Following are the managerial functions of Human

Resources Management.
1. Planning : The planning function of human resource department pertains to

the steps taken in determining in advance personnel requirements, personnel
programmes, policies etc. After determining how many and what type of people
are required, a personnel manager has to devise ways and means to motivate
them.
2. Organisation : Under organisation, the human resource manager has to

organise the operative functions by designing structure of relationship among
jobs, personnel and physical factors in such a way so as to have maximum
contribution towards organisational objectives.
3. Directing : Directing is concerned with initiation of organised action and

stimulating the people to work. The personnel manager directs the activities of
people of the organisation to get its function performed properly. A personnel
manager guides and motivates the staff of the organisation to follow the path laid
down in advance.
4. Controlling : It provides basic data for establishing standards, makes job

analysis and performance appraisal, etc. All these techniques assist in effective
control of the qualities, time and efforts of workers.
(b) Operative Functions : The following are the Operative Functions of Human
Resource Management
1. Procurement of Personnel : It is concerned with the obtaining of the proper

kind and number of personnel necessary to accomplish organisation goals. It deals
specifically with such subjects as the determination of manpower requirements,
their recruitment, selecting, placement and orientation, etc.
2. Development of Personnel : Development has to do with the increase through

training, skill that is necessary for proper job performance. In this process various
techniques of training are used to develop the employees. Framing a sound

promotion policy, determination of the basis of promotion and making

performance appraisal are the elements of personnel development function.
3. Compensation to Personnel : Compensation means determination of adequate

and equitable remuneration of personnel for their contribution to organisation
objectives. To determine the monetary compensation for various jobs is one of
the most difficult and important function of the personnel management.
4. Maintaining Good Industrial Relation : Human Resource Management covers a

wide field. It is intended to reduce strifies, promote industrial peace, provide fair
deal to workers and establish industrial democracy. It the personnel manager is
unable to make harmonious relations between management and labour industrial
unrest will take place and millions of man-days will be lost.
5. Record Keeping : In record-keeping the personnel manager collects and

maintains information concerned with the staff of the organisation. It is essential
for every organisation because it assists the management in decision making such
as in promotions.
6. Personnel Planning and Evaluation : Under this system different type of

activities are evaluated such as evaluation of performance, personnel policy of an
organisation and its practices, personnel audit, morale, survey and performance
appraisal, etc.
 ROLE OF HRM
1. Advisory Role: HRM advises management on the solutions to any problems

affecting people, personnel policies and procedures.
a. Personnel Policies: Organization Structure, Social Responsibility,

Employment Terms & Conditions, Compensation, Career & Promotion, Training &
Development and Industrial Relations.
b. Personnel Procedures: Relating to manpower planning procedures,

recruitment and selection procedures, and employment procedures, training
procedures, management development procedures, performance appraisal
procedures, compensation procedures, industrial relations procedures and health

and safety procedures.
2. Functional Role: The personnel function interprets and helps to communicate

personnel policies. It provides guidance to managers, which will ensure that
agreed policies are implemented.
3. Service Role: Personnel function provides services that need to be carried out
by full time specialists. These services constitute the main activities carried out by
personnel departments and involve the implementation of the policies and
procedures described above.
 ROLE OF HR MANAGERS (TODAY)
1. Humanitarian Role: Reminding moral and ethical obligations to employees
2. Counselor: Consultations to employees about marital, health, mental, physical

and career problems.
3. Mediator: Playing the role of a peacemaker during disputes, conflicts between

individuals and groups and management.
4. Spokesman: To represent of the company because he has better overall

picture of his company’s operations.
5. Problem Solver: Solving problems of overall human resource management and

long-term organizational planning.
6. Change Agent: Introducing and implementing institutional changes and

installing organizational development programs
7. Management of Manpower Resources: Broadly concerned with leadership

both in the group and individual relationships and labor-management relations.
 ROLE OF HR MANAGERS (FUTURE)
1. Protection and enhancement of human and non-human resources

2. Finding the best way of using people to accomplish organizational goals
3. Improve organizational performance
4. Integration of techniques of information technology with the human resources
5. Utilizing behavioral scientists in the best way for his people
6. Meeting challenges of increasing organizational effectiveness
7. Managing diverse workforce
 COMPETENCIES OF HR MANAGER
1. Communicator: One of the quality of a good communicator is to have good

listening skills. Employees come to HR managers on various issues. Listening to
employees with full attention is one of good quality of a successful HR Manager.
2. Presenter: Presentations skills are important quality of successful HR Managers

as they handle several trainings and present the information to management.
3. Innovation: Not every issue has a same or easy or ready solution. Successful HR
Managers think out of the box and deliver the best solution to their employees
and the organization.
4. Approachable: HR handles various aspects of employees. Successful HR Managers

have an open door policy and are approachable to their employees.
5. Time Management and Self Discipline: Successful HR Managers are good at

managing their time. They plan their day not just to complete their day-to-day
activities but also cater time for sudden issues.
6. Delegator: It’s not possible to do all the work by one person. And this is
understood by successful HR Managers. HR Managers delegate work to their
team members so that they get learned and grow as a professional.

7. Decision maker: Successful HR Managers are strategic planners and take

decisions which are apt and considering all the facts. They are not afraid to make
the hard decisions for the benefit of the organization.
8. Business Acumen: Successful HR managers possess good knowledge and

understanding of the financial, accounting, marketing and operational functions
of an organization.
9. Trust Advisor: Successful HR Managers advice employees by creating an

environment of trust. Successful HR Managers build trust through straight
forward communications and interactions.
10.Motivator: Every employee has different goals and objectives to achieve.

Successful HR Managers are committed to motivate. Successful HR Managers
know and understand what motivates employees and strive to give it to them.
11.Leader: A leader is one who visualizes big picture, focus on people, progress and
achievements, does the right thing and encouraging a rewarding culture. And this
is what the successful HR Managers possess.
12.Metric Oriented: Successful HR Managers have a flair for metrics as these are
useful in improvising various process in the organization.
o PERSONNEL POLICIES:
According to Dale Yoder ‘a policy is pre-determined selected course— established

as a guide towards accepted goals and objectives’.
A personnel policy should have two types of objectives viz., general objectives and
specific objectives. General objectives express top management’s philosophy of
human resources whereas specific objectives refer to specific activities like
staffing, training, wages and, motivation.

o Objectives:
1. Optimum Use of Human Resources: Every organisation tries to make use of the
available human resources to the best of their capabilities. Right men should be
selected for the right jobs.
2. Training Of Everyone: The other main object of personnel policies is to train

and develop everyone so as to make them competent for doing their job. Only a
trained worker can do his job efficiently.
3. Sound Industrial Relations: Personnel policies aim at creating sound industrial

relations and tend to establish conditions for mutual confidence and
understanding.
4. Payment of Fair Wages: Personnel policies must aim at ensuring the employees
that they will be given fair wages for the work done by them.
5. Security of Employment: One of the objectives of personnel policies is to

provide security of employment to the workers. Such policies provide an efficient
consultative service which aims at creating mutual faith among those who work in
the enterprise.
6. Respecting Human Dignity: Personnel policies ensure fair treatment to all

irrespective of caste, colour and creed and aim at respecting the human dignity.
Workers are offered good and healthy working conditions.
o Principles of personnel policies:
According to Scot and others “carefully defined personnel policies serve as a

stabilising influence to prevent the waste of energy in following programmes not
in harmony with the company objectives”.
1. Principle of Right Placement:
There is a common saying that there should be square pegs for the square holes
and round pegs for the round holes. Only those persons should be selected who

are physically and mentally fit for the job so that they can become our ‘asset’ in
the future.
2. Principle of Development:
All workers should be given the opportunity to develop so that their monetary
position as well as their social status is enhanced. Workers tend to be more
sincere and hard working when they are aware of the chances of promotion in the
organisation.
3. Principle of Participation:
This principle states that we should consider the organisation a co- ordinated
team. If workers participate in the formulation of policies, a large number of
problems which arise due to misunderstanding can be avoided.
4. Principle of Mutual Interest:
The workers should feel that interest of management is common with the
workers. This will provide motivation to the workers to put in hard work which
will entitle them to earn higher wages and non-monetary benefits.
5. Principle of Good Working Conditions:
Workers should be given better tools, good working conditions, and adequate
wages and there should be impartial appraisal of their work.
6. Principle of Flexibility:
A personnel policy must be such that it can be changed with the change in
circumstances. Technological changes are taking place at a very fast speed in the
industries and for that reason a constant review of such policies is necessary.
In a nutshell, personnel policies should contain the principle of justice as well as

equity and must be fair to all employees.

o Contents of Personnel Policy:
The following matters are covered in the personnel policies followed in India:
1. Recruitment or hiring of employees.
2. Manpower planning and development.
3. Training programmes.
4. Absenteeism.
5. Hours of work.
6. Conditions of employment.
7. Overtime.
8. Lay-off, termination of services and welfare.
9. Wage policy, motivation and incentives.
10. Recognition of trade union, collective bargaining and workers participation in

management.
11. Promotion, demotion and transfer.
Personnel policies are formulated by the personnel manager but the top
management is ultimately responsible for giving sanction to such policies.
Workers should be informed about such policies either in group meetings or
through the booklets.
o HUMAN RESOURCE ACCOUNTING:
o Meaning:
Human resources are considered as important assets and are different from the
physical assets. Physical assets do not have feelings and emotions, whereas

human assets are subjected to various types of feelings and emotions. In the
same way, unlike physical assets human assets never gets depreciated.
Therefore, the valuations of human resources along with other assets are also
required in order to find out the total cost of an organization. In 1960s, Rensis
Likert along with other social researchers made an attempt to define the concept
of human resource accounting (HRA).
o Definition:
The American Association of Accountants (AAA) defines HRA as follows: ‘HRA is a

process of identifying and measuring data about human resources and
communicating this information to interested parties’.
According to Stephen Knauf, ‘ HRA is the measurement and quantification of

human organizational inputs such as recruiting, training, experience and
commitment’.
o Need for HRA:
The need for human asset valuation arose as a result of growing concern for
human relations management in the industry.
1. Under conventional accounting, no information is made available about the

human resources employed in an organization, and without people the financial
and physical resources cannot be operationally effective.
2. The expenses related to the human organization are charged to current

revenue instead of being treated as investments, to be amortized over a period of
time, with the result that magnitude of net income is significantly distorted. This
makes the assessment of firm and inter-firm comparison difficult.
3. The productivity and profitability of a firm largely depends on the contribution

of human assets. Two firms having identical physical assets and operating in the
same market may have different returns due to differences in human assets. If

the value of human assets is ignored, the total valuation of the firm becomes
difficult.
4. If the value of human resources is not duly reported in profit and loss account
and balance sheet, the important act of management on human assets cannot be
perceived.
o Objectives of HRA:
1. Providing cost value information about acquiring, developing, allocating and

maintaining human resources.
2. Enabling management to monitor the use of human resources.
3. Finding depreciation or appreciation among human resources.
4. Assisting in developing effective management practices.
5. Increasing managerial awareness of the value of human resources.
6. For better human resource planning.
7. For better decisions about people, based on improved information system.
8. Assisting in effective utilization of manpower.
o Methods of Valuation of Human Resources:
There are certain methods advocated for valuation of human resources. These
methods include historical method, replacement cost method, present value
method, opportunity cost method and standard cost method. All methods have
certain benefits as well as limitations.
o Benefits of HRA:
1. The system of HRA discloses the value of human resources, which helps in
proper interpretation of return on capital employed.

2. Managerial decision-making can be improved with the help of HRA.
3. The implementation of human resource accounting clearly identifies human

resources as valuable assets, which helps in preventing misuse of human
resources by the superiors as well as the management.
4. It helps in efficient utilization of human resources and understanding the evil

effects of labour unrest on the quality of human resources.
5. This system can increase productivity because the human talent, devotion, and
skills are considered valuable assets, which can boost the morale of the
employees.
6. It can assist the management for implementing best methods of wages and
salary administration.
o Limitations of HRA:
1. There are no standardized procedures developed so far. So, firms are providing
only as additional information.
3. Under conventional accounting, certain standards are accepted commonly,

which is not possible under this method.
4. All the methods of accounting for human assets are based on certain
assumptions, which can go wrong at any time. For example, it is assumed that all
workers continue to work with the same organization till retirement, which is far
from possible.
5. It is believed that human resources do not suffer depreciation, and in fact they
always appreciate, which can also prove otherwise in certain firms.
6. The lifespan of human resources cannot be estimated. So, the valuation seems
to be unrealistic.

o CHANGING ENVIRONMENT OF HUMAN RESOURCE MANAGEMENT (HRM)
The five factors involved in the changing environment of HRM are as follows: 1.
Work force Diversity 2. Economic and Technological Change 3. Globalization 4.
Organisational Restructuring 5. Changing Nature of Work.
Business environment is changing environment and so is HR environment. The

changing environment of HRM includes work force diversity, economic and
technological change, globalisation, organisational restructuring, changes in the
nature of jobs and work and so on.
1. Work force Diversity:
Diversity has been defined as any attribute that humans are likely to use to tell
themselves, that person is different from me and, thus, includes such factors as
race, sex, age, values, and cultural norms’. The Indian work force is characterized
by such diversity that is deepening and spreading day by day.
It is likely to be more diverse as women, minority- group members, and older

workers flood the work force. With the increasing number of women entering the
work force due to a combination of factors like women’s emancipation, economic
needs, greater equality of sexes, education and so on, additional pressures of
managing a different set of problems at the work place have arisen. As such, the
number of women is on increase in all walks of life i.e., teachers, lawyers, doctors,
engineers, accountants, pilots, parliamentarians and so on.
However, increasing number of women in the work force has been necessitating
the implementation of more flexible work scheduling, child care facilities,
maternity and now paternity leave also and transfer to location of husband’s
place of posting.
Also, as the work force ages, employers will have to grapple with greater health
care costs and higher pension contributions. On the whole, the increased diversity
of work force will place tremendous demands on the HR management function.

2. Economic and Technological Change:
Along with time, several economic and technological changes have occurred that
have altered employment and occupational pattern. In India too, there is a
perceptible shift in occupational structure from agriculture to industry to services.
The New Economic Policy, 1991 has led to liberalization and globalization giving
genesis to multinational organisations with their multicultural dimensions having
certain implications for HRM. The implications of globalization for HRM are
discussed subsequently.
Technology has become the hallmark of the modem organisations. As such,

modem organisations have become the technology-driven organisations. So to
say, men are replaced by machinery. Manufacturing technology, for example, has
changed to automation and robotisation.
Manufacturing advances like these will eliminate many blue-collar jobs, replacing
them with fewer but more highly skilled jobs. Similar changes are taking place in
office automation, where personal computers, word processing, and
management information system (MIS) continue to change the nature of office
work.
3. Globalization:
The New Economic Policy, 1991 has, among other things, globalised the Indian
economy. There has been a growing tendency among business firms to extend
their sales or manufacturing to new markets aboard. The rate of globalization in
the past few years in India has been nothing short of phenomenal.
Globalization increases competition in the international business. Firms that

formerly competed only with local firms, now have to compete with foreign
firms/competitors. Thus, the world has become a global market where
competition is a two-way street.
Globalization has given genesis to the multinational corporations (MNCs). The

MNCs are characterised by their cultural diversities, intensified competition,
variations in business practices and so on. As an international business expert

puts it, ‘the bottom line is that the growing integration of the world economy into
a single, huge market place is increasing the intensity of competition in a wide
range of manufacturing and service industries.
4. Organisational Restructuring:
Organisational restructuring is used to make the organisation competitive. From

this point of view, mergers and acquisitions of firms have become common forms
of restructuring to ensure organisational competitiveness. The mega-mergers in
the banking, telecommunications and petroleum companies have been very
visible in our country. Downsizing is yet another form of organisational
restructuring.
As a part of the organisational changes, many organisations have “rightsized”

themselves by various ways like eliminating layers of managers, closing facilities,
merging with other organisations, or out placing workers. There has been a
practice to flatten organisations by removing several layers of management and
to improve productivity, quality, and service while also reducing costs. Whatever
be the form of restructuring, jobs are redesigned and people affected.
One of the challenges that HRM faces with organisational restructuring is dealing
with the human consequences of change. For example, the human cost
associated with downsizing has been much debated and discussed in the popular
press. As such, HRM needs to focus on the changed scenario uniquely and that is
not so simple. Thus, management of HR activities has become crucial for HR
managers.
5. Changing Nature of Work:
Along with changes in technology and globalization, the nature of jobs and work
has also changed. For example, technological changes like introduction of fax
machines, information technology, and personal computers have allowed
companies to relocate operations to locations with lower wages. There is also a
trend toward increased use of temporary or part-time workers in organisations.

One most significant change in the nature of work is that it has changed from
manual to mental/ knowledge work. In this context, the management expert
Peter Drucker’s views are worth citing. He said that the typical business will soon
bear little resemblance to the typical manufacturing company of 30 years ago.
The typical business will be knowledge-based, an organisation composed largely

of specialists who direct and discipline their own performance through organized
feedback from colleagues, customers, and headquarter. For this reason, it will be
what he calls an information-based organization.
As a result, the organizations are giving and will give growing emphasis on their
human capital i.e., the knowledge, education, training, skills, and expertise of
employees, the expense of physical capital like equipment, machinery and
physical plants This growing emphasis on education and human capital has,
among other things, changed the nature of economy as service-oriented
economy.
In the changed economic scenario, jobs demand a certain level of expertise that is
far beyond that required of most workers 20 or 30 years ago. This means that
companies are relying more on employee’s creativity and skills, i.e., employee’s
brain power

UNIT – 2
ACQUISITION OF HUMAN RESOURCE
o HUMAN RESOURCE PLANNING
o INTRODUCTION :
Human Resource Planning is concerned with the planning the future

manpower requirements is the organisation. HR manager ensures that the
company has the right type of people in the right number at the right time and
place, who are trained and motivated to do the right kind of work at the right
time. Obviously, human resource planning primarily makes appropriate
projections for future manpower needs of the organisation envisages plan for
developing the manpower to suit the changing needs of the organisation from
time to time, and foresees how to monitor and evaluate the future performance.
o Definitions
Coleman has defined Human Resource Planning as ―the process of

determining manpower requirements and the means for meeting those
requirements in order to carry out the integrated plan of the organisation.
According to Geisler, “Manpower planning (HRP) is the process – including

forecasting, developing, implementing and controlling, by which a firm ensures
that it has the right number of people and right kind of people, at the right place,
at the right time, doing things for which they are economically most suitable”.
o Features of HRP
i. HRP is a process which includes various aspects through which an organization

tries to ensure that right people, at right place and at right time are available.
ii. It involves determination of future needs of manpower in the light of

organizational planning and structure. Determination of manpower needs in
advance, facilitates managements to take up necessary actions.

iii. It does take into account the manpower availability at a future point in the
organization. Therefore, it indicates what actions can be taken to make existing
manpower suitable for future managerial positions and how the gap between
needed and available manpower can be fulfilled.
o Objectives of HR Planning
1. ensure optimum use of human resources currently employed;
2. avoid balances in the distribution and allocation of human resources;
3. assess or forecast future skill requirements of the organisation‘s overall
objectives
4. provide control measure to ensure availability of necessary resources when
required
5. control the cost aspect of human resources
6. formulate transfer and promotion policies.
o Significance of HRP
HRP is of primary nature and it precedes all other HRM functions. Without HRP no
other function can be undertaken in any meaningful way. HRP contributes in the
following ways in managing resources in an organization.
1. Defining Future Personnel Need : Planning defines future personnel need and
this becomes basis of recruiting and developing personnel. In its absence there is
likelihood of mismatch between personnel needed and personnel available.
2. Coping with Changes : In the Indian and international business arena fast
changes are taking place. Liberalization of economy has brought vast changes in
India. At the international level there is growing global competition.
3. Providing Base for Developing Talents : Jobs are becoming more and more
knowledge oriented. This has resulted into changed profile of manpower.
Therefore an organization must be ready to face such an eventuality by taking
proper HRP.

4. High Cost of Investment in HR ; The cost of acquiring, developing and retaining

personnel is increasing much faster than the average rate of inflation. This
increasing cost may be taken care of by proper HRP which provides the way for
effective utilization of such talents.
5. Creating Involvement of Top Management in HRM : Systematic HRP forces top

management of an organization to participate actively in total HRM functions, an
area that has been neglected by most of the companies until recently.
o STEPS IN HUMAN RESOURCE PLANNING :
Human resource planning refers to a process by which companies ensure

that they have the right number and kinds of people at the right place, at the right
time; capable of performing different jobs efficiently. Planning the use of human
resources is an important function in every organization.
1. Analysis of Organisational Plans and Objectives : Human resource planning is a

part of overall plan of organisation. Plans concerning technology, production,
marketing, finance, expansion and diversification give an idea about the volume
of future work activity. Each plan can further be analysed into sub-plans and
detailed programmes. It is also necessary to decide the time horizon for which
human resource plans are to be prepared.
2. Forecasting Demand for Human Resources : Human resource planning starts

with the estimation of the number and type of personnel required at different
levels and in different departments. The main steps involved in HRP process are
(a) to determine and to identify present and prospective needs of human
resource, (b) to discover and recruit the required number of persons. (c) to select
the right number and type from the available people. (d) to hire and place in the
positions for which they are qualified, (e) to provide information to the selected
people about the nature of work assigned to them,
3. Forecasting Supply of Human Resources : One of the important areas of

human resources planning is to deal with allocation of persons to different
departments depending upon the work-load and requirements of the

departments. While allocating manpower to different departments, care has to

be taken to consider appointments based on promotions and transfers. Allocation
of human resource should be so planned that available manpower is put to full
use to ensure smooth functioning of all departments.
4. Estimating Manpower Gaps : Net human resource requirements or manpower

gaps can be identified by comparing demand and supply forecasts. Such
comparison will reveal either deficit or surplus of human resources in future.
Deficits suggest the number of persons to be recruited from outside whereas
surplus implies redundant to be redeployed or terminated. Similarly, gaps may
occur in terms of knowledge, skills and aptitudes. Employees deficient in
qualifications can be trained whereas employees with higher skills may be given
more enriched jobs.
5. Matching Demand and Supply : It is one of the objectives of human resource

planning to assess the demand for and supply of human resources and match
both to know shortages and surpluses on both the side in kind and in number.
This will enable the human resource department to know overstaffing or
understaffing. Once the manpower gaps are identified, plans are prepared to
bridge these gaps. Plans to meet the surplus manpower may be redeployment in
other departments and retrenchment in consultation, with the trade unions.
People may be persuaded to quit through voluntarily retirement. Deficit can be
met through recruitment, selection, transfer, promotion, and training plans.
Realistic plans for the procurement and development of manpower should be
made after considering the macro and micro environment which affect the
manpower objectives of the organisation.
o JOB ANALYSIS
o INTRODUCTION
Job Analysis is a procedure by which pertinent information is obtained about a

job, i.e., it is a detailed and systematic study of information relating to the
operation and responsibilities of a specific job. An authority has defined job
analysis as ―the process of determining, by observation and study, and reporting
pertinent information relating to the nature of a specific job... ―It is the

determination of the tasks which comprise the job and of the skills, knowledge,
abilities and responsibilities required of the worker for a successful performance
and which differentiate one job from all others‖.
o Information provided by Job Analysis
1. Job Identification : Its title, including its code number;
2. Significant Characteristics of a Job : It location, physical setting, supervision,

union jurisdiction, hazards and discomforts;
3. What the Typical Worker Does : Specific operation and tasks that make up an
assignment, their relative timing and importance, their simplicity, routine or
complexity, the responsibility or safety of others for property, funds, confidence
and trust;
4. Which Materials and Equipment a Worker Uses : Metals, plastics, grains,

yarns, milling machines, punch presses and micrometers;
5. How a Job is Performed : Nature of operation - lifting, handling, cleaning,

washing, feeding, removing, drilling, driving, setting-up and many others;
6. Required Personal Attributes : Experience, training, apprenticeship, physical

strength, co-ordination or dexterity, physical demands, mental capabilities,
aptitudes, social skills;
7. Job Relationship : Experience required, opportunities for advancement,

patterns of promotions, essential co-operation, direction, or leadership from and
for a job.
o Methods of Job Analysis
1. Personal Observation : The materials and equipment used, the working

conditions and probable hazards, and an understanding of what the work involves
are the facts which should be known by an analyst.

2. Sending out of Questionnaires : This method is usually employed by

engineering consultants. Properly drafted questionnaires are sent out to job-
holders for completion and are returned to supervisors.
3. Maintenance of Long Records : The employee maintains a daily record of

duties he performs, marking the time at which each task is started and finished.
But this system is incomplete, for it does not give us any desirable data on
supervisor relationship, the equipment used, and working conditions. Moreover,
it is time-consuming.
4. Personal Interviews may be held by the analyst with the employees, and
answers to relevant questions may be recorded. But the method is time-
consuming and costly.
o Purposes and Uses of Job Analysis
1. Organisation and Manpower Planning : It is helpful in organisational planning

for it defines labour needs in concrete terms and coordinates the activities of the
work force, and clearly divides duties and responsibilities.
2. Recruitment and Selection : By indicating the specific requirements of each job

(i.e., the skills and knowledge), it provides a realistic basis for hiring, training,
placement, transfer and promotion of personnel.
3. Wage and Salary Administration : By indicating the qualifications required for

doing specified jobs and the risks and hazards involved in its performance, it helps
in salary and wage administration. Job analysis is used as a foundation for job
evaluation.
4. Job Re-engineering : Job analysis provides information which enables us to

change jobs in order to permit their being manned by personnel with specific
characteristics and qualifications.
5. Employee Training and Management Development : Job analysis provides the

necessary information to the management of training and development

programmes. It helps it to determine the content and subject-matter of in-

training courses.
6. Performance Appraisal : It helps in establishing clear-cut standards which may

be compared with the actual contribution of each individual.
7. Health and Safety : It provides an opportunity for indentifying hazardous

conditions and unhealthy environmental factors so that corrective measures may
be taken to minimise and avoid the possibility of accidents.
 JOB DESCRIPTION
Job description is a written record of the duties, responsibilities and

requirements of a particular job. It is concerned with the job itself and not with
the work. It is a statement describing the job in such terms as its title, location,
duties, working conditions and hazards.
In other words, it tells us what is to be done and how it is to be done and

why. It is a standard of function, in that it defines the appropriate and authorised
contents of a job.
Job description helps top executives, especially when they jointly discuss
one another‘s responsibilities. Overlapping or confusion can then be pointed out
questions can be raised about the major thrust of each position, and problems of
structure can be identified. A job description becomes a vehicle for organisational
change and‘ improvement.
A job description contains the following:
1. Job identification, which includes the job title, alternative title, department,
division, plant and code number of the job. The job title identifies and designates
the job properly. The department division, etc. indicate the name of the
department where it is situated-whether it is the maintenance department,
mechanical shop etc. The location gives the name of the place.

2. Job Summary serves two important purposes. First it provides a short

definition which is useful as an additional identification information when a job
title is not adequate. Second, it serves as a summary to orient the reader toward
an understanding ‗of detailed information which follows. It gives the reader a
―quick capsule explanation‖ of the content of a job usually in one or two
sentences.
3. Job duties give us a comprehensive listing or the duties together with some
indication of the frequency of occurrence or percentage of time devoted to each
major duty. It is regarded as the heart of a job.
4. Relation to other jobs : This helps us to locate the job in the organisation by
indicating the job immediately below or above it in the job hierarchy. It also gives
us an idea of the vertical relationships of work flow and procedures.
5. Supervision : Under it is given the number of persons to be supervised along

with their job titles, and the extent of supervision involved – general,
intermediate or close supervision.
6. Working conditions usually give us information about the environment in

which a job holder must work. These include cold, heat, dust, wetness, moisture,
fumes, odour, oily conditions, etc. obtaining inside the organisation. Information
about jobs can be had from : (i) Observation of employees while on work; (ii)
Study of specially maintained diaries; (iii) A review of Critical incidents; and, (iv)
Discussions with departmental heads and outside experts or consultants.
 JOB SPECIFICATION
Job Specification is a standard of personnel and designates the qualities

required for an acceptable performance. It is a written record of the requirements
sought in an individual worker for a given job. In other words, it refers to a
summary of the personal characteristics required for a job. It is a statement of the
minimum acceptable human qualities necessary for the proper performance of a
job.

Job specifications translate the job description into terms of the human
qualifications which are required for a successful performance of a job. They are
intended to serve as a guide in hiring and job evaluation. As a guide in hiring, they
deal with such characteristics as are available in an application bank, with testing,
interviews, and checking of references.
 RECRUITMENT AND SELECTION
o Introduction :
Recruitment, selection, placement, induction, training and development are all

the core functions of HRD. Once it is determined what types of jobs in how many
numbers are to be filled up with the qualifications fixed, the next step is for
search of qualified people. Hiring of people involves these broad groups of
activities but not mutually exclusive viz., recruitment, selection and placement.
Recruitment is the first step in the process of filling a vacancy. Recruitment is

the generating of applications or applicants for specific positions to be filled up in
the organization. It is a process of searching for and obtaining applicants for jobs
so that the right people in right number can be selected.
According to Dale Yoder, “Recruitment is a process to discover the source

of manpower to meet the requirements of staffing schedule and to employ
effective measures for attracting that manpower in adequate numbers to
facilitate effective selection of an efficient working force.”
According to Bergmann and Taylor, “Recruitment is the process of locating,

identifying, and attracting capable applicants.”
o Factors Affecting Recruitment
Internal factors
1. Size: The organizational size is an influencing factor. Larger organizations find

recruitment less problematic than smaller size units.

2. Policy: The policy of recruitment by the organization, whether recruitment is

from internal source (from own employees) or from external sources also
affect the recruitment process. Generally, recruiting through internal sourcing
is preferred in view of cost consideration, familiarity and in easily finding the
most suitable one.
3. Image: Image of the organization is another internal factor influencing

recruitment. Managerial actions like good public relations, rendering public
services like building roads, public parks, hospitals and schools help to earn a
good image or goodwill for the organization.
4. Image of jobs: Better remuneration and working conditions are considered as

the characteristics of good image of a job. Besides, promotion and career
development programmes of the organization also attract potential
candidates.
External factors
1. Demographic factors: Demographic factors such as sex, age, literacy,

economic status etc, have influence on recruitment process.
2. Labour markets: Labour market conditions, that is, supply labour is of

particular importance in affecting recruitment process. If the demand for a
specific skill requirements is high relative to its supply, recruiting employees
will involve more efforts. On the contrary, if supply is more than demand for
particular skill, recruitment will be relatively easier.
3. Unemployment situation: The rate of unemployment is yet another external

factor having its influence on the recruitment process. When the
unemployment rate in a given area is high, the recruitment process tends to
be simpler.
4. Labour laws: There are several labour laws and regulations passed by the
central and state Governments that govern different types of employment.
These cover, working conditions, compensation, retirement benefits and

safety and health of employees in industrial undertakings. Child Labour

(Prohibition and Regulation) Act, 1986,
o Sources of Recruitment
Internal Sources
Present Employees : Promotions and transfers from among the present

employees can be a good source of recruitment. Promotion implies upgrading of
an employee to a higher position carrying higher status, pay and responsibilities.
Former Employees : Former employees are another source of applicants for

vacancies to be filled up in the organization. Retired or retrenched employees
may be interested to come back to the company to work on a part-time basis.
Some former employees, who left the organization for any reason, may again be
interested to come back to work.
Employee Referrals ; The existing employees refer their family members, friends
and relatives to the company as potential candidates for the vacancies to be filled
up most effective methods of recruiting people in the organization because
employees refer to those potential candidates who meet the company
requirement by their previous experience.
Previous Applicants ; Those who applied previously and whose applications

though found good were not selected for one reason or other may be considered
at this point of time. Unsolicited applications may also be considered.
External Sources
Employment Exchanges : After India’s independence, National Employment

Service was established to bring employees and job seekers together.
Employment exchanges are particularly useful in recruiting blue-collar, white
collar and technical workers.
Employment Agencies : In addition to the government agencies, there are a

number of private employment agencies who register candidates for employment

and furnish a list of suitable candidates from their data bank as and when sought
by prospective employers. The main function of these agencies is to invite
applications and short list the suitable candidates
Advertisement : Advertisement is perhaps the most widely used method for

generating many applications. This is because its reach is very high. This method
of recruitment can be used for jobs like clerical, technical and managerial.
Professional Associations : Very often recruitment for certain professional and

technical positions is made through professional associations. Institute of
Engineers, Indian Medical Association, All India Management Association etc.,
provide placement services for their members.
Campus Recruitment : This is another source of recruitment. This is gaining

popularity in India. The advantages are:
i. Most of the eligible candidates are available at one place.
ii. The interviews are arranged in a short notice.
iii. The teaching faculty can also be consulted.
iv. Gives opportunity to sell the organization to a large students’ body who would
be graduating subsequently.
 Recruitment Process
1. Recruitment Planning :Planning involves drafting a comprehensive job
specification for the vacant positions outlining their major and minor
responsibilities; the skills, experience and qualifications needed ; grade and level
of pay ; starting data ; whether temporary or permanent; and mention of special
conditions, if any, to the jobs to be filled.
2. Strategy development : The next step involved is to devise a suitable strategy for
recruiting the candidates in the organization. The strategic consideration would
include the type of recruitment method, the geographical area to be considered
for the search, source of recruitment and sequence of activities for recruitment.

3. Searching : Searching involves deciding internal or external sources. Sometimes

both internal and external may be decided.
4. Screening : Screening is the next step. Job specification is invaluable in this
regard. Screening is done on the basis of qualification, knowledge, skills, abilities,
interest and experience mentioned in job specification.
5. Evaluation and control : Evaluation and control in recruitment is needed as
considerable cost is involved in the process. This includes
a. Salary of the recruiters

b. Cost of time spent for preparing job analysis, advertisement etc.,
c. Administrative expenses
d. Cost of outsourcing or overtime while vacancies remain unfilled and
e. Cost incurred in recruiting unsuitable candidates.
 SELECTION
Selection starts where recruitment ends. Selection is hiring the best
candidates from the pool of applications. It refers to the process of offering jobs
to one or more applicants from the applications received through recruitment.
Selection is the process of picking the suitable candidates from the pool of job
applications to fill various jobs in the organization.
According to Yodder, “selection is the process by which candidates for

employment are divided into class - those who will be offered employment and
those who will not.”
According to Stone, “Selection is the process of differentiating between

applicants in order to identify (and hire) those with a greater likelihood of success
in a job.”
o Selection process
1. Preliminary Interview : After screening the applications, preliminary interview
will be conducted. The purpose of preliminary interview is to eliminate unsuitable
or unqua lified candidates from the selection process. In screening unqualified
candidates are eliminated on the basis of information given in the application

form, whereas preliminary interview rejects misfits for reasons, which did not
appear in the application forms.
2. Application Blanks : This is a method for getting information from a

prospective candidate. This serves as a personal record of the candidate bearing
personal history profile, detailed personal activities, skills and accomplishments.
Almost all organizations require job seekers to fill up the application. Usual
contents are as follows:
i. Biographical information – Age, father’s name, sex, nationality, height, marital

status.
ii. Educational information - Name of the institutions where the candidate
studied – marks – Divisions – Distinctions.
iii. Work Experience – previous experience – nature of job – salary – duration –
reason for quitting.
iv. Salary – last drawn salary – minimum salary acceptable.
v. Extra-curricular information – NSS – NCC – hobbies etc.
vi. References – Name and address.
3. Selection Tests : Individuals differ in many respects including job related
abilities and skills. In order to select a right person for the job, individual
differences in abilities and skills are to be adequately and accurately measured for
comparison.
In simple words, test is a systematic procedure for sampling human behaviour.
Types of tests : 1) Ability tests and 2) Personality tests.

Advantages of Testing
1. The merits of testing for selection are many.
2. Such tests predict future performance of personnel and for transfer, promotion
etc.
3. It is a method of diagnoses of the situation and behaviour.
4. Cost effective - as test administered to a group saves time and cost.
5. Uncovers qualifications and talents, which cannot be detected from application
blanks and interviews.
6. Tests serve as unbiased tools of selection process.
4. Selection Interview : The next step in the selection process is ‘employment

interview.’ Interview is the widely used selection method. It is a face-to-face
interaction between interviewer and the interviewee. If handled properly, it can
be a powerful technique in having accurate information of the interview
otherwise not available.
Objectives of Interview
1. Verifies the information obtained through application form and tests.
2. Helps to obtain additional information from the applicant otherwise not
available.
3. Gives the candidate necessary facts and information about the job and the
organization.
4. Helps to establish mutual understanding between the company and the
candidate and build the company’s image.
Types of Interview
A. Preliminary Interview :
B. Patterned Interview :
C. Depth Interview :
D. Stress Interview :
5. Reference Checks : In the selection process, the next step is verifying

information or obtaining additional information through reference. The applicant
is asked to give the names of one or two referees who know him personally.
Previous employers, University Professors, neighbours and friends are usually
referees. However, references are treated as a mere formality and are hardly
used to influence the selection decisions.
6. Physical Examination : The last tool used in the selection process is physical
examination. The main purpose of conducting physical or medical examination is
to have proper matching of job requirement with the physical ability of the
candidate. Among various objectives of physical test, the major ones are, to
detect if the individual is carrying any infectious diseases, to identify health
defects of an individual undertaking certain works determined to his or her health

and to protect companies from employees filing compensation claim for injuries
and accidents caused by pre-existing ailments.
7. Final Selection : Final selection follows the above procedures outlined. Selected
candidates would be sent with appointment orders. Additional names than
required vacancies may be kept in the waiting list.
 PLACEMENT : Placement involves assigning a specific job to each one of the

selected candidates. However, placement is not simple as it looks. It involves
striking a balance between the requirements of a job and the qualifications of a
candidate. Pigors and Myers has defined placement as, “the determination of the
job to which an accepted candidate is to be assigned, and his assignment to that
job. It is a matching of what the supervisor has reason to think he can do with the
job demands and what he offers in the form of pay rolls, companionship” with
others, promotional possibilities etc. The importance of placement is that it
reduces employee turnover, absenteeism, accidents and dissatisfactions.
 INDUCTION : Induction is introducing the new employee to work surrounding

and people already working there. In other words, induction is the process of
receiving and welcoming an employee when he first joins a company, and giving
him basic information he needs to settle down quickly and happily and start work.
According to R.P. Billimoria, “induction is a technique by which a new employee is
rehabilitated into the changed surroundings and introduced to the practices,
policies and purposes of the organizations.”
Objectives of Induction
1. To reduce the initial anxiety which all new entrants feel, when they join a new
job in a new organization.
2. To familiarize the new employees with the job, people, work-place, work
environment and the organization.
3. To facilitate outsider – insider transition in an integrated manner.
4. To reduce the cultural shock faced in the new organization and
5. To reduce exploitation by the unscrupulous co-workers.

UNIT - 3
TRAINING AND DEVELOPMENT
 Introduction
Personnel Development could be described as the sum total of the results of the
positive changes taking place in the knowledge, skills, attitudes, relationships and
physical well being of the employees of an organization. It involves a process of
helping employees of an organization in the acquisition of new qualities and
refinement of existing characteristics that might be required in their present
functions or towards performing roles expected in the future.
 Definition :
According to Edwin B. Flippo, ―Training is the act of increasing the knowledge

and skills of an employee for doing a particular job‖.
 Meaning :
Training is also referred to as a process by which any person designated to be a

trainer imparts new knowledge, sharpens and strengthens skills and redefines
attitudes. Training involves more than just teaching people how to use tools or
complete assigned tasks.
Good training seeks to make people understand what they feel about themselves,
about their work and their contribution to the well-being of those they serve. The
basic objective of training is to establish match between employees and their
jobs. This is achieved by helping them to bridge gaps between expected and
actual performance levels.
Training has to help to prevent obsolescence of employees by updating their

competencies. Thus, a firm is like an educational institution and continuous
learning becomes an integral part of its vivacity.

 Objectives of Training
The primary objective of training is to prepare employees – both new and old, for
promotions to positions which require added skill and knowledge.
1. To impart to new entrants the basic knowledge and skill they need for an
intelligent performance of definite tasks
2. To assist employees to function more effectively in their present positions by

exposing them to the latest concepts, information and techniques and developing
the skills, they will need in their particular fields
3. To build up a second line of competent officers and prepare them to occupy more
responsible positions;
4. To broaden the minds of senior managers by providing them with opportunities

for an inter-change of experiences within and outtside with a view to correcting
the narrowness of the outlook that may arise from over-specialisation;
5. To impart customer education for the purpose of meeting the training needs of
Corporations which deal mainly with the public.
In a nutshell, the objectives of training are ―to bridge the gap between existing
performance ability and desired performance.‖ Since training is a continuous
process and not a oneshot affair, and since it consumes time and entails much
expenditure, it is necessary that a training programme or policy should be
prepared with great thought and care, for it should serve the purposes of the
establishment as well as the needs of employees.
 Need And Importance Of Training
1. Increasing Productivity : Instruction can help employees increase their level of

performance on their present job assignment. Increased human performance
often directly leads to increased operational productivity and increased company
profit

2. Improving Quality : Better informed workers are less likely to make operational
mistakes. Quality increases may be in relationship to a company product or
service, or in reference to the intangible organisational employment atmosphere.
3. Helping a Company Fulfil its Future Personnel Needs : Organisations that have
a good internal educational programme will have to make less drastic manpower
changes and adjustments in the event of sudden personnel alternations.
4. Improving Organisational Climate : An endless chain of positive reactions

results from a well-planned training programme. Production and product quality
may improve; financial incentives may then be increased, internal promotions
become stressed, less supervisory pressures ensue and base pay rate increases
result.
5. Improving Health and Safety: Proper training can help prevent industrial
accidents. A safer work environment leads, to more stable mental attitudes on
the part of employees. Managerial mental state would also improve if supervisors
now that they can better themselves through company-designed development
programmes.
6. Obsolescence Prevention : Training and development programmes foster the

initiative and creativity of employees and help to prevent manpower
obsolescence, which may be due to age, temperament or motivation, or the
inability of a person to adapt himself to technological changes.
7. Personal Growth : Employees on a personal basis gain individually from their

exposure to educational experiences.‖ Again, ―Management development
programmes seem to give participants a wider awareness, an enlarged skin, an
enlightened altruistic philosophy, and make enhanced personal growth possible.‖
 Evaluation of Training Facilities :
1. Determining the need and Priorities for Training : The very first step in
designing a training programme is to determine the organisation‘s need for such
programme. It is from need assessment that the entire training process will flow.

It is very important that the organisation does accurately determine its need, the
training process will be in apropriately undertaken.
2. Translating needs into Objectives and Establishing Training Goals : Once the
training needs have determined, the next important step is to translate the skills
needed into specific training objectives or desired outcomes of training
objectives. These training objectives or goals are then used to determine the
specific courses that will be offered. Training objectives should include such
matters as specific skills to be taught, the number of people to be trained and
from which units, and the period within which such training should take place.
3. Selecting Trainees : Selecting individuals or groups for training is a very

complex decision for the firm and the individuals chosen. From the firm‘s
perspective, providing the right training to the right people can help to create and
maintain a well-trained and stable work force. To impart training for individuals
with limited performance partial or lack of interest is simply a waste of time,
effort, and money.
4. Making the Curriculum and Choosing Training Methods After -deeming

training objectives and translating into specific course areas, the trainees are
identified and evaluated, management will be in a position to decide the overall
curriculum, i.e., the arrangement of courses to be offered. The curriculum is a sort
of grand plan of what training is to be presented and with what frequency.
However, a part which must be added to this grand plan is the matter of training
methods. Will the training be on the job, off the job, prior to employment, or
prior to a formal assignment ? Will it be done by lecture computer assisted, or
carried out by some other method ? Will it be long-term or short-term ?
5. Preparation of training budget Preparing a training budget will be an

interactive process with the other steps in formulating a training program. Budget
constraints may limit the human resource manager's alternatives and must,
therefore, considered during all phases of the development process. Costs that
must be included in the training budget are : staff planning time, trainees' wages,

trainers' salary, and expenses such as cost of training materials, travels,

accommodations, and meals.
6. Selecting trainers and providing training to trainers. An effective training

programme can be developed only when effective trainers are available. Firms
have the option of using staff trainers or of seeking contract trainers outside, or of
having both. After their selection, they must be provided with the information
regarding the persons who are to be trained. The trainers should be engaged after
careful evalutlon of their suitability and effectiveness so as to ensure quality
training.
7. Using selected training technique. To conduct the training is a significant

aspect of training process. Under this step, the trainers speaks, demonstrate, and
illustrates in order to put over the new knowledge, skills, and operations. Besides,
he suggests the trainee to be at ease, without any stress and strain, and explains
to him the necessity of the training programme and creation of trainee's personal
interest in training. All key points should be covered and emphasised. Audio-
visual aids should be used to demonstrate and illustrate.
8. Performance or learning tryout As the training continues, it, is important that

the progress of trainees should be monitored. This may be accomplished by
periodic skill or knowledge tests or periodic assessments by the personnel
department. The trainee may be asked to do the job several times. His mistakes, if
any, are corrected and complicated steps should be explained again. As soon as
the trainee demonstrates that he can do the job rightly, he is put at his own job
and the training is said to be over.
9. Evaluation system of training programme. In order to generate adequate

feedback, some key purposes of conducting this evaluation are : (i) Determining
whether a programme meets its objectives or goals. (ii) Identify strengths and
weaknesses in the training process. (iii) Calculate the cost-benefit ratio of a
programme. (iv) Determine who benefited the most from a programme and why

 METHODS OF TRAINING
On-the-Job Training Methods : This type of training is imparted on the job and at
the work place where the employee is expected to perform his duties. It enables
the worker to get training under the same working conditions and environment
and with the same materials, machines and equipments that he will be using
ultimately after completing the training. This follows the most effective methods
of training the operative personnel and generally used in most of the individual
undertaking.
1. On Specific Job : On the job training methods is used to provide training for a
specific job such a electrician moror mechanic pluming etc.
(a) Experience : This is the oldest method of on-the-job training. Learning by

experience cannot and should not be eliminated as a method of development,
though as a sole approach, it is a wasteful, time consuming and inefficient. In
some cases, this method bas proved to be very efficient though it should be
followed by other training methods to make it more meaningful.
(b) Coaching : On-the-Job coaching by the superior is an important and potentially

effective approach is superior. The technique involves direct personnel instruction
and guidance, usually with extensive demonstration.
2. Job Rotation : The major objective of job rotation training is the broadening of
the background of trainee in the organisation. If trainee is rotated periodically
from one job to another job, he acquires a general background. The main
advantages are : it provides a general background to the trainee, training take
place in actual situation, competition can be stimulated among the rotating
trainees, and it stimulates a more co-operative attitude by exposing a man to
other fellow problem and view-points.
3. Special Projects : This is a very flexible training device. The trainee may be
asked to perform special assignment, thereby he learns the work procedure.
Sometime a task-force is created consisting of a number of trainees representing
different functions in the organisation.

4. Apprenticeship : Under this method, the trainee is placed under a qualified

supervisor or instructor for a long period of time depending upon the job and skill
required. Wages paid to the trainee are much less than those paid to qualified
workers. This type of training is suitable in profession, trades, crafts and technical
areas like fitter, turner, electrician, welders, carpenters etc.
5. Vestibule Training : Under this method, actual work conditions are created in a
class room or a workshop. The machines, materials and tools under this method is
same as those used in actual performance in the factory. This method gives more
importance to learning process rather than production.
6. Multiple Management : Multiple management emphasizes the use of

committies to increase the flow of ideas from less experience managers and to
train them for positions of greater responsibility. The McCormick & Company of
Baltimore, U .S.A. developed the programme. The company claims that the plan
has increased employee efficiency, reduced labour turnover and absenteeism,
and enabled the company to pay higher wages than those prevailing in the area
and industry. In this method; a junior board authorized to discuss any problem
that the senior board may discuss, and its members are encouraged to put their
mind to work on the business a whole, rather than too concentrate to their
specialized areas.
Off-the-job Training Methods Following are the off the job training techniques :
1. Special Courses and Lectures : Lecturing is the most traditional form of formal
training method Special courses and lectures can be established by business
organizations in numerous ways as a part of their development programmes.
First, there are courses, which the organizations themselves establish to be taught
by members of the organizations. Some organizations have regular instructors
assigned to their training and development such as Tata and Hindustan Lever in
private sector. A second approach to special courses and lectures is for
organizations to work with universities or institutes in establishing a course or
series of course to be taught by instructors by these institutes.

2. Conferences : This is also an old method, but still a favorite training method. In
order to escape the limitations of straight lecturing many organizations have
adopted guided, discussion type of conferences in their training programmes. In
this method, the participants pools, their ideas and experience in attempting to
arrive at improved methods of dealing with the problems, which are common
subject of discussion; Conferences may include buzz sessions that divide
conferences into small groups of four or five intensive discussion. These small
groups then report back to the whole conference with their conclusions or
questions. Conference method allows the trainees to look at the problem from a
prouder angle.
3. Case Studies : This technique, which has been developed, popularized by the
Harvard Business School, U.S.A is one of the most common form of training. A
case is a written account of a trained reporter of analyst seeking to describe an
actual situation. Some causes are merely illustrative; others are detailed and
comprehensive demanding extensive and intensive analytical ability. Cases are
widely used in variety of programmes. This method increases the trainee‘s power
of observation, helping him to ask better questions and to look for broader range
of problems.
4. Brainstorming : This is the method of stimulating trainees to creative thinking

This approach developed by Alex Osborn seeks to reduce inhibiting forces by
providing for a maximum of group participation and a minimum of criticism. A
problem is posed and ideas are invited. Quantity rather quality is the primary
objective. Ideas are encouraged and criticism of any idea is discouraged. Chain
reactions from idea to idea often develop. Later these ideas are critically
examined. There is no trainer in brainstorming and it has been found that the
introduction of known ports into it will reduce the originality and practicability of
the group contribution, Brainstorming frankly favours divergence, and his fact
may be explain why brainstorming is so little used as yet in developing countries
where no solutions ought to carry the highest premium.
5. Laboratory Training : Laboratory training adds to conventional training by

providing situations in which the trains themselves experience through their own
interaction some of the conditions they are talking about. In this way, they more
or less experiment on themselves. Laboratory training is more concerned about
changing individual behaviour and attitude. There are two methods of laboratory
training: simulation and sensitivity training.
6 .Simulation : An increasing popular technique of management development is

simulation of performance. In this method, instead of taking participants into the
field, the field can be simulated in the training session itself Simulation is the
presentation of real situation of organisation in the training session. It covers
situations of varying complexities and roles for the participants. It creates a whole
field organisation, relates participants, through key roles in it, and has them deal
with specific situations of a kind they encounter in real life. There are two
common simulation methods of training : role-playing is one and business game is
the other.
7. Role-playing : Role-playing is a laboratory method, which can be used rather

easily as a supplement of conventional training methods. Its purpose is to
increase the trainee‘s skill in dealing with other people. One of its greatest use, in
connection with human relations training, but it is also used in sales training as
well. It is spontaneous acting of a realistic situation involving two or more
persons, under classroom situations. Dialogue spontaneously grows out of the
situation, as the trainees assigned to it develop it. Other trainees in the group
serve as observers or critics. Since people take rules even day, they are somewhat
experienced in the art, and with, a certain amount of imagination they can project
themselves into roles other than their own. Since a manager is regularly acting
roles in his relationship with other it is essential for him to have role awareness
and to do role thinking so that they can size up each size up each relationship and
develop the most effective interaction position.
8. Gaming : Gaming has been devised to simulate the problems of running a

company or even a particular department. It has been used for a variety of
training objectives from investment strategy, collective bargaining techniques to
the morale of clerical personnel. It has been used at all the levels, from the
executives for the production supervisors.
8. Sensitivity Training : Sensitivity training is the most controversial laboratory

training method. Many of its advocates have an almost religious zeal in their
enhancement with the training group experience. Some of its critics match this
favour in their attacks on the technique. As a result of criticism and experience, a
somewhat revised approach, often described as ‗team development‘ training. has
appeared. National Training Laboratories at Bethel U.S.A. The training groups
themselves called ‗T GROUP‘ first used it. Since then its use has been extended to
other organizations, universities and institutes. Training is essential for the
smooth, economic, timely and efficient production, work or service in any
organisation. To get work accomplished well from a worker or employee, it is a
must that he is given proper training in methods of work. Training is the organized
producer by which people learn knowledge and skill for a definite purpose
management can‘t make a choice as between ‗training‘ or ‗no training‘. On the
other hand, it is a must. The only choice lies in the method of training.
 Management Development Programme (MDP)
Management development programmes, aim systematically to identify talent,

improve skills, widen experience and help people to grow in their ability to accept
greater responsibility. The subject matter of a course for Management
Development Programme (MDP) may comprise :
1. Company or Organisation : The Management Development Programme (MDP)

relating company or organisation may contain the following sub-areas : (i)
Objective and philosophy of company; (ii) Policies, procedures and practices of an
organisation; (iii) Products and services; (iv) Organisational structure and
organisation dynamics; (v) Plant facilities; (vi) Financial aspects such as investment
planning, financial planning and control capital budgeting; (vii) Labour
management relations etc.
2. Managemetn Techniques and Principles : Under this main area the following
sub-areas may be included: (i) Organisation principles; (ii) Financing, planning and
management; (iii) Cost analysis and control; (iv) Operations research and data

processing; (v) Marketing management, Marketing research; (vi) Production

planning and control; (vii) management and administration; (viii) Decision-making.
3. Human Relations : In this constituent the below mentioned sub-areas may be

included : (i) Motivation; (ii) Understanding human behaviour; (iii) Group
dynamics; (iv) Discipline; (v) Complaints and grievances; (vi) Collective bargaining;
(vii) Counselling and suggestion scheme; (viii) Selection methods and procedures;
(ix) Attitudes, training and development; (x) Job evaluationand performance
appraisal; (xi) Labour economics; (xii) Supervisory responsibilities.
4. Technical Knowledge and Skills : Under this main area the following sub-areas
may be included: (i) Computer technology; (ii) PERT/CPM; (iii) Linear
programming; (iv) Materials handling; (v) Inventory control; (vi) Adequate
understanding of technology, products, processes.
5. Personnel Skills : It contains the following sub-areas : (i) Speaking; (ii) Report
writing; (iii) Conference leadership; (iv) Learning through listening; (v) Reading
improvement.
6. Economic, Social, and Political Environment : It contains the following sub-

areas : (i) Business; (ii) Economic system; (iii) Relations with the state; (iv)
Community relations; (v) Political systems; (vi) Legal framework of business; (vii)
Social responsibilities of the corporation and business.
Essentials of Success of Management Development Programme (MDP) : The

following are the essentials for the success of Management Development
Programme (MDP) :
1. Circulate the Materials to Participants : The following materials should be

distributed among the participants to make the programme more successful : (a)
News letter conveying information about corporate affairs; (b) Copies of talks
given by management personnel; (c) Excerpts from well-written and informative
articles; (d) Copies of minutes of meeting distributed among those who were not
present. When these materials are discussed by a group, new plans and improved
procedures will be formulated.

2. Programme should be prepared well in advance : The programme should be

prepared well in advance and should contain decisions about instructional
methods and development approaches to be used and have a provision of
expertise and the necessary support system. It should be based on the policy of
promoting a proper utilisation of trained executives, their knowledge and
techniques in the improvement of the operations of an organisation.
3. Training division should have smart and successful executives : The training
division should not be a dumping ground for people found to be unsuitable for
other jobs; it should be mannered by a group of smart and successful executives
drawn from various functional areas and disciplines. A multi-disciplinary approach
should be emphasised in training programmes rather than the purely personal
flavour that is often found in them.
4. Programme should be for all not the weak ones : A management programme
should not only be looked upon as something meant for the ―limping horses‖ in
the organisation; it should be for the ―high fliers‖ as well. In view of knowledge
explosion and the consequent threat of management obsolescence, such
programmes should be meant for everyone in an organisation and not just for the
weak ones.
5. Management Development Programme (MDP) should be based on a definite

strategy : The MDP should be based on a definite strategy, which should spell out
the type, coverage and objectives of the programme. The multitire supervisory
and management development programme should start from the first line
supervisor and go all the way up to the top management.
6. Top Management should Accept Responsibility : The top management should

accept responsibility for getting the policy of development executed. To do so, a
senior officer may be placed in-charge to initiate and implement the MDP.
7. Management Development is a “Line Job” : It is essentially a ―line job‖. It

takes place on the job and involves both the man and his boss.

8. Selection of the Right Materials : Management development starts with the

selection of the right materials for managerial ranks. It is essential to ensure that
really good material is led into the programme at the entry level.
9. Realistic Time Table is Required : There should be realistic time table in

accordance with the needs of a company. This time table should take into account
the needs for managerial personnel over a sufficiently long period and the
resources which are available and which will be required.
10. It should Fulfill the needs of the Company : Management development must
be geared to the needs of the company and the individual.
11. Developing Managers is the Responsibility of All Managers : Every manager

must accept direct responsibility for developing managers under his control on
the job, and a high priority should be given to his task. Thus, for the development
of management, it is essential for the top management to promote a culture for:
learning and gaining knowledge (ii) the quest of excellence (iii) tolerance of
mistakes (iv) striving to maintain a balance and an equity (v) the discovery of self
and others; and (vi) enabling a subordinate to become aware of his superiors‘
interest in his development and mental growth.
 Career Planning
Definitions:
A career may be defined as ‘ a sequence of jobs that constitute what a person

does for a living’.
According to Schermerborn, Hunt, and Osborn, ‘Career planning is a process of

systematically matching career goals and individual capabilities with opportunities
for their fulfillment’.
Career planning is the process of enhancing an employee’s future value.
A career plan is an individual’s choice of occupation, organization and career path.

Career planning encourages individuals to explore and gather information, which

enables them to synthesize, gain competencies, make decisions, set goals and
take action. It is a crucial phase of human resource development that helps the
employees in making strategy for work-life balance.
Features of Career Planning and Career Development:
1. It is an ongoing process.
2. It helps individuals develop skills required to fulfill different career roles.
3. To identify positive characteristics of the employees.
4. To develop awareness about each employee’s uniqueness.
5. To respect feelings of other employees.
6. To attract talented employees to the organization.
7. To train employees towards team-building skills.
8. To create healthy ways of dealing with conflicts, emotions, and stress.
Benefits of Career Planning:
1. Career planning ensures a constant supply of promotable employees.
2. It helps in improving the loyalty of employees.
3. Career planning encourages an employee’s growth and development.
4. It discourages the negative attitude of superiors who are interested in

suppressing the growth of the subordinates.
5. It ensures that senior management knows about the calibre and capacity of the
employees who can move upwards.
6. It can always create a team of employees prepared enough to meet any

contingency.

7. Career planning reduces labour turnover.
8. Every organization prepares succession planning towards which career planning

is the first step.
 Career Development
Definition:
Career development is the series of activities or the on-going/lifelong process of

developing one’s career. Career development usually refers to managing one’s
career in an intra-organizational or inter-organizational scenario. It involves
training on new skills, moving to higher job responsibilities, making a career
change within the same organization, moving to a different organization or
starting one’s own business.
Career development is directly linked to the goals and objectives set by an

individual. It starts with self-actualization and self-assessment of one’s interests
and capabilities. The interests are then matched with the available options. The
individual needs to train himself to acquire the skills needed for the option or
career path chosen by him. Finally, after acquiring the desired competency, he
has to perform to achieve the goals and targets set by him
Importance of Career Development
Every employee working in an organization is looking for a career development

which moves in the right direction. Career path taken by an employee determines
the growth. Career should be planned in a way that it moves forward. Career
development provides the framework with Skills, goals, awareness, assessment
and performance which helps an individual to move in the right direction and
achieve the goals one has in one's career.

UNIT – 4
PERFORMANCE APPRAISAL
Introduction : The performance appraisal is the process of assessing employee

performance by way of comparing present performance with already established
standards which have been already communicated to employees, subsequently
providing feedback to employees about their performance level for the purpose
of improving their performance as needed by the organisation.
Defintions :
Dale S. Beach, "Performance appraisal is systematic evaluation of the individual

with respect to his or her performance on the job and his or her potential for
development".
Heyel, "It is the process of evaluating the performance and qualifications of the
employees in terms of the requirements of the job for which he is employed, for
purposes of administration including placement, selection for promotions,
providing financial rewards and other actions which require differential treatment
among the members of a group as distinguished from actions affecting all
members equally."
Dale Yoder, ''Performance appraisal includes all formal procedures used to

evaluated personalities and contributions and potentials of group members in a
working organisation. It is a continuous process to secure information necessary
for making correct and objective decisions on employees."
“It is a systematic evaluation of an individual with respect to performance on the

job and individual’s potential for development.”
“It is formal, structured system of measuring, evaluating job related behaviors
and outcomes to discover reasons of performance and how to perform effectively
in future so that employee, organization and society all benefits.”

Meaning
Performance Appraisals is the assessment of individual’s performance in a
systematic way. It is a developmental tool used for all round development of the
employee and the organization. The performance is measured against such
factors as job knowledge, quality and quantity of output, initiative, leadership
abilities, supervision, dependability, co-operation, judgment, versatility and
health. Assessment should be confined to past as well as potential performance
also. The second definition is more focused on behaviors as a part of assessment
because behaviors do affect job results.
Objectives of Performance Appraisal
1. To maintain records in order to determine compensation packages, wage

structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on
right job.
3. To maintain and assess the potential present in a person for further growth and
development.
4. To provide a feedback to employees regarding their performance and related
status.
5. To provide a feedback to employees regarding their performance and related
status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training program
Methods:
There are numerous methods in use to appraise employee performance
depending upon the size and nature of the organizations. A common approach to
assess performance is to use a numerical or scalar rating system whereby
managers are asked to score an individual against a number of
objectives/attributes.
In some companies, employees receive assessments from their manager, peers,

subordinates, and customers, while also performing a self assessment. The most
popular methods used in the performance appraisal process can be divided in two
categories:
Traditional Trait Appraisal Methods:

1. Ranking Methods:
Ranking can be based on the followings:
(а) Straight Ranking Method:
This is one of the oldest and simplest techniques of performance appraisal. In this
method, the appraiser or evaluator ranks the employees from the best to the
poorest on the basis of their overall performance. It is very useful for a
comparative evaluation.
(b) Paired Comparison Method:

It is a better way of comparison than the straight ranking method. In this method
each employee is compared with all others on a one- to-one basis, and then
ranked.
(c) Forced Distribution Method:

It is a method of appraising employees on the basis of a predetermined
distribution scale. The evaluator is asked to rank 10% employees in the best
category, 20% in the next category, 40% in the middle category, 20% in before the
low, and 10% in the lowest brackets.
2. Graphic Rating Scale Method:

In this method, an employee’s quality and quantity of work is assessed in a
graphic scale indicating different degrees of a particular trait, i.e., behavior or
characteristics as they relate to work performance.
For example a trait like Job knowledge may be judged on the range of average,
above average, outstanding or unsatisfactory or on the basis of numbers (1,2,3,4,
5, and so on). The list of factors to be appraised is dependent upon the company
requirements.
3. Critical Incidents Methods:

In this method, the evaluator rates the employee on the basis of critical events
and how the employee behaved during those incidents. It includes both negative
and positive points. The negative point incident might be damage to machinery
because of not following safety measures.
Positive point incident may be staying beyond working hours to repair a machine.
The drawback of this method is that the supervisor has to note down the critical
incidents and the employee behavior as and when they occur.
4. Checklist Methods:
The appraiser is given a checklist of several behaviours, traits, or job
characteristics of the employees on job. The checklist contains a list of statements
on the basis of which the evaluator describes the on the job performance of the
employees. If the rater believes that employee does have a particular listed trait it
is marked as positive check, otherwise the item is left blank.
The company has a choice to choose either Weighted Checklist Method or Forced
Checklist Method.
5. Essay Appraisal Method:

It is also known as “Free Form Method”. It involves a description of the
performance in a number of broad performance criteria of an individual
employee by his superior based on the facts and often supported by examples
and evidences. A major drawback of the method is how to keep the bias of the
evaluator away.
6. Field Review Method:

In this method, a representative of the HR department or a training officer
discusses and interviews the supervisors to evaluate and rate their respective
subordinates. This method is very time consuming method. However, this method
helps to reduce the superiors’ personal bias.
At this stage it would not be out of context to mention some of the limitations
associated with trait-based methods of performance evaluation. First, the trait-

based methods are based upon traits (like integrity and consciousness) which may
not be directly related to successful job performance. An employee can change
behaviour, but not personality.
An employee who is dishonest, may stop stealing, but is likely to involve the
moment he feels the threat of being caught is gone. Second, trait-based methods
are easily influenced by ‘office politics’ and is thus, less reliable.
Modern Appraisal Methods:

These methods are described as under:
1. Management by Objectives:
The concept of ‘Management by Objectives’ (MBO) was given by Peter F. Drucker
in 1954. It can be expressed as a process whereby the employees and the
superiors come together to identify common goals – the organizational goals as
well as individual goals, the standards to be taken as the criteria for measurement
of their performance and contribution and deciding the course of action to be
followed.
Thus, the essence of MBO is participative goal setting, choosing course of actions
and decision making. Ideally, when employees themselves have been involved
with the goal setting and the choosing the course of action to achieve them, they
are more committed.

2. 360 -Degree Feedback Appraisal Method:

360-degree feedback, also known as ‘multi-rater feedback’, is the most
comprehensive appraisal where the feedback about the employees’ performance
comes from all the sources that come in contact with the employee on his job.
These sources include superiors, subordinates, peers, team members, customers,

and suppliers apart from the employee himself (see Figure 18.10), who can
provide feedback on the employee’s job performance.
Self appraisal gives a chance to the employee to look at his/her strengths and
weaknesses, his achievements, and judge his own performance (in University of
Delhi’s Master’s in International Business, faculty member is not only evaluated
by the head of department but also by students).
Subordinates (part of internal customers) evaluation gives an opportunity to rate

the employee on the parameters like communication and motivating abilities,
superior’s ability to delegate the work, leadership qualities etc.
Evaluation by peers can help to find employees’ abilities to work in a team, co-
operation and sensitivity towards others. Thus an evaluation by one and all is a
360-degree review and the feedback is considered to be one of the most credible.
Some of the organisations using this method include Wipro, Infosys, and Reliance
Industries etc.

3. Behaviourally Anchored Rating Scales:

Behaviourally Anchored Rating Scales (BARS) is a modern technique which is a
combination of the graphic rating scale and critical incidents method. It comprises
predetermined critical areas of job performance or sets of behavioral statements
describing important job performance qualities as good or bad (like the qualities
such as inter-personal relationships, adaptability and reliability, job knowledge
etc.).
The typical BARS includes seven or eight performance behaviours each one
measured by a seven-or-nine point scale. These statements are developed from
critical incidents.
In this method, an employee’s actual job behaviour is judged against the desired
behaviour through recording and comparing the behavior with BARS. Developing
and practicing BARS needs expert knowledge.
4. Assessment Centres:
Assessment centres are a contribution of German psychologists. The main feature
of assessment centres is that they process. Assessment Centres consist of many
multiples.
a. Multiple competencies to be evaluated for in a candidate.
b. Multiple observers to eliminate the subjectivity and increase objectivity

involved in the process.
c. Multiple participants: 18 – 21 in case of TMTC (Tata Management Training

Centre).
d. Multiple exercises: Exercises like role plays, case analysis, presentations, group
discussions etc.
e. Multiple simulations: These could be creative, crisis or exploitative type of

simulations.

f. Multiple observations: Each observation is observed at least twice. There are

five main ways in which evaluation is made. A group of participants takes part in a
variety of exercises observed by a team of trained assessors who evaluate each
participant against a number of predetermined, job related behaviours. Decisions
are then made by pooling.
5. Human Resource Accounting Method:

Human resources are valuable assets for every organization. Human resource
accounting method values the relative worth of these assets in the terms of
money. In this method the valuation of the employees is calculated in terms of
cost and contribution to the employers.
The cost of employees includes all the expenses incurred on them , viz., their
compensation, recruitment and selection costs, induction and training costs etc.,
whereas their contribution includes the total value added (in monetary terms).
The difference between the cost and the contribution will be the performance of
the employees. Ideally, the contribution of the employees should be greater than
the cost incurred on them.
6. Balanced Score Card:

It was developed by Robert Kaplan and David Norton in 1990s. The purpose of
balanced scorecard is to evaluate the organizational and employee performance
in performance appraisal management processes. The conventional approach
measures the performance only on a few parameters like the action processes,
results achieved or the financial measures etc.
The Balanced scorecard provides a framework of different measures to ensure

the complete and balanced view of the performance of the employees. Balanced
scorecard focuses on the measures that drive performance.
The balanced scorecard has two basic characteristics – a balanced set of measures
based on four measures (financial – profits, market share, ROI; customer –
perspective about organization loyalty to firm, acquisition of new customers;

internal business measures – infrastructure, organisational processes and

systems, human resources; and the innovation and learning perspective – ability
to learn, innovate and improve) and linking these measures to employee
performance. Senior managers are allocated rewards based on their success at
meeting or exceeding the performance measures.
 Wage and Salary
Introduction : Wage and Salary is together known as pay. While wage specifies
the worth of the job, salary specifies the worth of the person. Salary is usually
paid on a monthly basis while wage could be paid daily, weekly or fortnightly.
Wage is usually associated with manual work and comes with provisions for
overtime work, while the word salary is used to refer the remuneration for white-
collar staff, professionals and managers. Wages and salaries have also been used
interchangeably. Both wage and salary help to achieve effective employee
performance.
In the ordinary language the term wages implies 'reward' to the labourers for the
services rendered by them. It may be paid daily, weekly, fortnightly, monthly, per
hour or per unit. Services rendered by the labourer include both physical and
mental services.
Definition:
In the words of Benham. "Wages are a sum of money paid under contract by an
employer to a worker for services rendered."
According to ILO " Wages refer to that payment which is made by the employers
to the labourer for his services hired on the conditions of payment per hour, per
day, per week or per fortnight."
Wages refer to that reward which is received from the employer for the services
rendered by the labourer per week, per month, per fortnight or per unit It
includes allowances also.

1. Minimum Wage:
A minimum wage is a compensation to be paid by an employer to his workers
irrespective of his ability to pay. The Committee on Fair Wage’ has defined
minimum wage as “the wage must provide not only for the bare sustenance of
life, but for the preservation of the efficiency of the workers. For this purpose,
minimum wage must provide some measures of education, medical requirements
and amenities”.
2. Living Wage:
A living wage is one which should enable the earner to provide for himself and his
family not only the bare essentials of food, clothing and shelter but a measure of
frugal comfort including education for his children, protection against ill-health,
requirement of essential social’ needs and a measure of insurance against the
more important misfortunes, including old-age. Thus, a living wage represents a
standard of living. A living wage is fixed considering the general economic
conditions of the country.
3. Fair Wage:
Fair wage, according to the committee on Fair Wage, is the wage which is above
the minimum wage but below the living wage. The lower limit of the fair wage is
obviously the minimum wage; the upper limit is set by the capacity of the industry
to pay. The concept of fair wage is essentially linked with the capacity of the
industry to pay.
The fair wage depends on considerations of such factors as:

(i) The productivity of labour,
(ii) The prevailing rates of wages in the same or neighbouring localities,
(iii) The level of the national income and its distribution, and
(iv) The place of the industry in the economy of the country.

Factors Affecting Employee Compensation

The Compensation is the monetary and non-monetary rewards given to the
employees in return for their work done for the organization. Basically, the
compensation is in the form of salaries and wages. There are several internal and
external factors affecting employee compensation, which are discussed in detail
below.
Internal factors: The internal factors exist within the organization and influences
the pay structure of the company. These are as follows:
1. Ability to Pay: The prosperous or big companies can pay higher compensation as
compared to the competing firms whereas the smaller companies can afford to
maintain their pay scale up to the level of competing firm or sometimes even
below the industry standards.
2. Business Strategy: The organization’s strategy also influences the employee
compensation. In case the company wants the skilled workers, so as to outshine
the competitor, will offer more pay as compared to the others.Whereas, if the
company wants to go smooth and is managing with the available workers, will
give relatively less pay or equivalent to what others are paying.
3. Job Evaluation and Performance Appraisal: The job evaluation helps to have a
satisfactory differential pays for the different jobs.The performance Appraisal
helps an employee to earn extra on the basis of his performance.
4. Employee: The employee or a worker himself influences the compensation in one
of the following ways.
Performance: The better performance fetches more pay to the employee, and
thus with the increased compensation, they get motivated and perform their job
more efficiently.
External Factors: The factors that exist out of the organization but do affect the
employee compensation in one or the other way. These factors are as follows:

1. Labor Market: The demand for and supply of labor also influences the employee
compensation. The low wage is given, in case, the demand is less than the supply
of labor. On the other hand, high pay is fixed, in case, the demand is more than
the supply of labor.
2. Going Rate: The compensation is decided on the basis of the rate that is
prevailing in the industry, i.e. the amount the other firms are paying for the same
kind of work.
3. Productivity: The compensation increases with the increase in the production.
Thus, to earn more, the workers need to work on their efficiencies, that can be
improved by way of factors which are beyond their control.The introduction of
new technology, new methods, better management techniques are some of the
factors that may result in the better employee performance, thereby resulting in
the enhanced productivity.
4. Cost of Living: The cost of living index also influences the employee
compensation, in a way, that with the increase or fall in the general price level
and the consumer price index, the wage or salary is to be varied accordingly.
5. Labor Unions: The powerful labor unions influence the compensation plan of the
company. The labor unions are generally formed in the case, where the demand is
more, and the labor supply is less or are involved in the dangerous work and,
therefore, demands more money for endangering their lives.The non-unionized
companies or factories enjoy more freedom with respect to the fixation of the
compensation plan.
6. Labor laws: There are several laws passed by the Government to safeguard the
workers from the exploitation of employers.The payment of wages Act 1936,
The Minimum wages act 1948, The payment of Bonus Act 1965, Equal
Remuneration Act 1976, Payment of Gratuity Act 1972 are some of the acts
passed in the welfare of the labor, and all the employers must abide by these.
Thus, there are several internal and external factors that decide the amount of
compensation to be given to the workers for the amount of work done by them.

 Concept of job evaluation:

In simple words, job evaluation is the rating of jobs in an organisation. This is the
process of establishing the value or worth of jobs in a job hierarchy. It attempts to
compare the relative intrinsic value or worth of jobs within an organisation. Thus,
job evaluation is a comparative process.
Below are given some important definitions of job evaluation:

According to the International Labour Office (ILO) “Job evaluation is an attempt to
determine and compare the demands which the normal performance of a
particular job makes on normal workers, without taking into account the
individual abilities or performance of the workers concerned”.
Now, we may define job evaluation as a process used to establish the relative
worth of jobs in a job hierarchy. This is important to note that job evaluation is
ranking of job, not job holder. Job holders are rated through performance
appraisal. Job evaluation assumes normal performance of the job by a worker.
Thus, the process ignores individual abilities of the job holder.
Job evaluation provides basis for developing job hierarchy and fixing a pay
structure. It must be remembered that job evaluation is about relationships and
not absolutes. That is why job evaluation cannot be the sole determining factor
for deciding pay structures.
1. Provide a standard procedure for determining the relative worth of each job in
a plant.
2. Determine equitable wage differentials between different jobs in the

organisation.
3. Eliminate wage inequalities.
4. Ensure that like wages are paid to all qualified employees for like work.
5. Form a basis for fixing incentives and different bonus plans.

6. Serve as a useful reference for setting individual grievances regarding wage

rates.
7. Provide information for work organisation, employees’ selection, placement,

training and numerous other similar problems.
8. Provide a benchmark for making career planning for the employees in the
organisation.
 Methods Of Wage Payments With Their Merits And Demerits
Time Wage System:

This is the oldest method of wage payment. “Time” is made a basis for
determining wages of worker. Under this system, the wages are paid according to
the time spent by workers irrespective of his output of work done. The wage rates
are fixed for an hour, a day, week, a month or even a year (seldom used).
For example, a wage rate of Rs. 70 per day is fixed in an industrial unit. Two
workers A and B attend work for 28 and 16 days respectively. The wages as per
time wage system will be Rs. 1960 and 1120 for A and B respectively. This method
of wage payment does not give weight age to the quantity of goods produced by
the workers.
The supervisor may ensure that workers do not waste their time and the quality
of goods is also maintained. There are no hard and fast rules for fixing rates of
wages. These may be decided according to the level of the past higher positions
may be paid higher rates and vice- versa.
Wages are calculated in the method as follows:

Earnings = T x R where T stands for time spent and R is rate of pay.
Suitability:
Time wage system is suitable under following situations:
(1) When productivity of an employee cannot be measured precisely.

(2) Where quality of products is more important than the quantity produced.
(3) Where individual employees do not have any control over production.
(4) Where close supervision of work is possible.
(5) Where work delays are frequent and beyond the control of workers.
Advantages:
1. Simplicity:
The method of wage payments is very simple. The workers will not find any
difficulty in calculating the wages. The time spent by a person multiplied by the
rate will determine his wages.
2. Security:
Workers are guaranteed minimum wages for the time spent by them. There is no
link between wages and output, wages are paid irrespective of output. They are
not supposed to complete particular task for getting their wages. They are sure to
set certain wages at the end of a specified period of time spent in working.
3. Batter Quality of Products:

When workers are assured of wages on time basis, they will improve the quality
of products. If wages are related to output, then workers may think of increasing
production without bothering about quality of goods.
4. Support of Unions:
This method is acceptable to trade unions because it does not distinguish
between workers on the basis of their performance. Any method which gives
different wage rates or wages based on output is generally opposed by trade
unions.
5. Beneficial for Beginners:

Wage rate system is good for the beginners because they may not be able to
reach particular level of production on entering employment.

6. Less, Wastages:
The workers will not be in a hurry to push through production. The materials and
equipment’s will be properly handled leading to less wastage.
Limitations:
Time wage system suffers form the following drawbacks:
1. No Incentive for efficiency:
This method does not distinguish between efficient and inefficient workers. The
payment of wages is related to time and not output. Thus, the method gives no
incentive for more production.
2. Wastage of time:
Workers may waste their time because they will not be following a target of
production. Efficient workers may also follow slow workers because there is no
distinction between them. This may lead to wastage of time.
3. Low production:
Since wages are not related to output, production rate shall be low. The
responsibility for increasing production may mostly lie on supervisors. Because of
low production, overhead expenses per unit will go up, leading to higher
production cost.
4. Difficulty to determine labour cost:

Because wages are not related to output, employees find it difficult to calculate
labour cost per unit. The output will go on varying from time to time while wages
will remain almost same. Production planning and control will be difficult in the
absence of a relationship between wages and output wages and output.
5. Difficult supervision work:

Under this system, workers are not offered incentives for production. To get more
worker from them, there will be need for greater supervision. More supervision
may be required to maintain proper quality of goods also. In wage system
supervision cost goes up to a great extent.

6. Employer-employee trouble:
When all employees, irrespective of their merit are treated equally, there is likely
to be a trouble between management and workers. Those employees, who are
not satisfied with this method, may start disobeying order from their superiors.
Piece Wage System:

Under piece system of payment, wages are based on output and not on time.
There is no consideration for time taken in completing a task. A fixed rate is paid
for each unit produced, job completed or an operation performed. Workers are
not guaranteed minimum wages under this system of wage payment.
The wages to be paid to a worker can be calculated as follows:

Quantity produced = output x piece rate
The quantity produced by a worker will be multiplied by the rate per unit for
calculating wages. An equitable piece rate should be fixed for giving incentive to
the workers for producing more. Different piece rates will be determined for
separate jobs. The factors like efforts involved, conditions under which work is to
be performed, risk involved, etc. should also be taken into consideration while
fixing piece rates.
The piece rate should be reviewed from time to time. These should be linked to
price index so that workers are able to get a minimum level of real wages. Piece
rates should also be revised when competitors do so otherwise there may be a
discontentment among workers and they may opt for changing in the
unit/enterprise.
Advantages:
The piece rate system has the following advantages:
1. Wages linked to efforts:
Under piece wage system, wages are linked to the output of a worker. The higher
the output, higher will be the wages. Workers will try to put in more and more
effort for increasing output because their wages will go up.

2. Increase in production:
Production goes up when wages are paid according to piece rate system. Workers
will feel encouraged to increase output because their wages will also increase.
This system is fair to both employees and employers. Efficient workers will try to
exert maximum in order to raise their production and hence wages.
3. Better utilization of equipment/machines:

The machines and other equipment’s are put to maximum utilization. Workers
may not like to keep the machines idle. The use of machines will also be
systematic because any breakdown in these may affect the workers adversely.
Thus, better machine utilization will give better output.
4. Distinction between Efficient and Inefficient:

As in time wages system, efficient and in efficient workers are not given equal
treatment in the piece wage system. Efficient workers will get more because of
their better results. Inefficient workers on the other hand will get less because of
low production. This method provides sufficient encouragement to efficient
workers or showing better results.
5. Less supervision required:

Since payments are on the basis of output, workers will not waste time. They will
continue to work irrespective of supervision. There may be more and more
voluntary efforts on the part of workers and need for supervision is reduced to a
minimum.
6. Effective cost control:

The increase in output will result in reduction of overhead expenses per unit.
Some of the overhead expenses being fixed, increase in production will reduce
expenses per unit. Reduction in cost may benefit consumers in the form of
decrease in product price.
7. Better planning and control:

The certainty in achieving production targets will improve planning and control.
When management is sure of certain quantity of production, then it can plan

other things with more confidence, it will also ensure better control over
production because targets may be regularly reviewed from time to time. Thus,
better planning and control is possible.
Limitations:
1. No guarantee or minimum wage:
There is a direct relationship between output and wages. If a worker does not
ensure certain productions, then wages may also be uncertain. Any type of
interruption in work may reduce earnings of workers. So workers are not sure
about getting minimum wages. So this system does not provide guarantee of
minimum wages.
2. Poor quality of goods/products:

The workers will bother more about the number of units otherwise more
supervisors are appointed to keep watch on quality of products being produced.
3. Not suitable for beginners:

The beginners will not be able to produce more goods because of less experience.
They will earn much low wages as compared to experienced workers because
their rate of production will be low. Thus, this system is not suitable for beginners.
4. Deterioration in health:
Workers may try to work more than their capacity. This may adversely affect their
health. They may try to work even when they are not keeping good health, since
wages are linked with production.
5. Cause of dissatisfaction:
There may be difference in earning of various workers. Some may earn less and
others may earn more. Those who get low wages feel so jealous of others who
earn more and this becomes a cause of dissatisfaction among slow workers. Thus,
this system can see dissatisfaction among workers.

6. Opposition from unions:

Piece-rate system of paying wages is opposed by trade unions. There is an
unhealthy competition among workers for increasing their wages. It encourages
rivalry among workers and it may become a cause of disunity.
The existence of unions is endangered when some section among them feel
jealous of other. Union will never support a system where workers earn different
amounts of wages and this becomes a cause of disharmony among them. So trade
unions oppose this system.
7. Difficulty in fixing piece-rates:

The fixation of piece rates is not an easy job. If a low rate is fixed then workers
may not feel encouraged to increase their production. When a high piece-rate is
fixed then it will increase the cost of production of goods. The fixation of piece
rate may become a cause of an industrial dispute. It may be very difficult to fix a
rate acceptable to workers as well as management.
Suitability:
Piece rate system is suitable under following situations:
(1) Where production quantity is more important than the quality of the product.
(2) When the work is of repetitive nature.
(3) When the mass manufacturing system of production is followed and the work
is standardized suitable for continuous manufacturing.
(4) When it is possible to measure the production output of worker separately.
(5) When strict supervision is not required and difficult.
(6) When the production is dependent on human efforts.

Unit - 5 Employee Maintenance
INTRODUCTION
Since large number of employees spend great deal of their time in work place,
their work environment is not always good for their healthy life. Stress, Strains,
Mental and Psychological Conditions, Poor working conditions, Long hours of
work, Poor ventilation, Insanitation, Malnutrition etc spoil their health. Efficiency
in work place is possible only when an employee is healthy on the other hand
industry exposes workers to certain hazards which affect his heaith. To avoid this
safety programmes like industrial health programmes are introduced, both for
employers and employees benefit.
MEANING AND DEFINITION OF HEALTH

The W.H.O has defined health as ―a state of complete physical, mental and social
well-being and not merely the absence of disease or infirmity.‖ Industrial health
refers to a system of public health and preventive medicine which is applicable to
industrial concerns. According to the joint I.L.O/W.H.O Committee on
Organisational Health, industrial health is:
i) the prevention and maintenance of physical, mental and social well-being of
workers in all occupations
ii) prevention among workers of ill-health caused by the working conditions
iii) Protection of workers in their employment from risks resulting from factors
adverse to health, and
iv) Placing and maintenance of the worker in an occupational environment
adapted to his physical and psychological equipment.
SAFETY MEASURES
Safety measures deals with prevention of accidents and with minimizing the
resulting loss and damage to persons and property. Five basic principles must
govern the safety programme of an organisation. They are : 1. Factors resulting to
accidents have to be traced out, analysed and eliminated. 2. Identify potential
hazards, provide effective safety facilities and equipment take prompt remedial
action. 3. The top management must continuously monitor the safety
performance. 4. Management and supervision must be fully accountable for

safety performance in the work place. 5. All employees should be given thorough
training in safe methods of work and should receive continuing education and
guidance on eliminating safety hazards and on prevention of accidents There are
three E’s of safety to prevent accidents, namely, engineering, education and
enforcement of safety rules. Statutory Provisions for safety in India The
Factories Act contain specific provision for the safety of workers.
1. When any part of the machinery is in motion, it is obligatory to fence the
machinery.
2. Any examination, adjustment of any part of the machinery shall be carried out
by trained male worker wearing tight fitting clothing.
3. No adolescent shall be allowed to work on any machinery which poses danger.
4. Suitable devices for cutting off power in an emergency shall be provided
5. Prohibition of employing women and children near cotton-openers.
6. Precautions against dangerous fumes, use of portable electric lights. Explosive
or inflammable gas or dust, fire etc.
EMPLOYEE WELFARE
Employee welfare depends on overcoming personal crisis, family problems and
work place problems. Removal of these problems leads to healthy and more
productive years of service to the employees. Organisations try number of
approaches to address rising problems of the employees. One such approach is
the establishment of wellness programs. Wellness is defined as a freely chosen
lifestyle aimed at achieving and maintaining an individual‘s good health.
Employee welfare programs can bring behavioral changes in employees. More
broader and comprehensive approaches are adopted by organizations to solve
problems of employees. Job security, Voluntary participation, Accessibility,
Insurance coverage can boost the morale and efficiency of the employees.
The basic features of labor welfare measures are as follows:

 Labor welfare includes various facilities, services and amenities provided to

workers for improving their health, efficiency, economic betterment and
social status.
 Welfare measures are in addition to regular wages and other economic
benefits available to workers due to legal provisions and collective
bargainin.
 Labor welfare schemes are flexible and ever-changing. New welfare
measures are added to the existing ones from time to time.
 Welfare measures may be introduced by the employers, government,
employees or by any social or charitable agency.
 The purpose of labor welfare is to bring about the development of the
whole personality of the workers to make a better workforce.
Social security
The Social Security Administration offers a wide variety of employee benefits and
programs. These include:
 Salary
 Holidays and Leave
 Pension Plan
 Insurance Benefits
 Thrift Savings Plan
 Work Schedules
 Other Benefits
Employee Empowerment
Meaning:
Empowerment is the process of enabling or authorizing an individual to think,
behave, take action, and control work and decision-making in autonomous ways.
Empowerment has become necessary due to the following reasons:

1. Time to respond has become much shorter.
2. First-line employees must make many decisions.

3. An employee feels much more control in their life since authority is given to
individual decision-making.
4. There is great untapped potential among employees, which can be revealed

through empowerment.
Definitions:
According to Richard Kathnelson, ’empowerment is the process coming to feel
and behave as if one is in power and to feel as if they owned the firm’.
According to Bowen and Lawler, ’employee empowerment refers to the

management strategies for sharing decision-making power’.
Employee empowerment can be done by:

1. Seeking opinions from the employees.
2. Facilitating the employees to try their ideas.
3. Encouraging for sharing of resources and information.
4. Improving the communication skills of the employees.
Importance of Employee Empowerment:

1. The investment in employees can improve productivity, which can reduce the
costs.
2. Individual employees experience a feeling of self-esteem, self-efficacy and self-

confidence.
3. Employee empowerment also helps in making employees more self-reliant.
4. It allows independent decision-making by the employees.
5. Empowerment of employees helps a firm to assign different projects to hone

the competence of employees.

6. More freedom given to employees can be utilized for taking judicious decisions.
7. Assigning proper authority can improve the organizational effectiveness.
8. Independent decision-making can improve self-confidence among the

employees.
9. It can boost up the morale of the employees.
10. The overall efficiency of an organization can be multiplied due to

empowerment of the employees.
Work life balance
Work-life balance is a concept that supports the efforts of employees to split their
time and energy between work and the other important aspects of their lives.
Work-life balance is a daily effort to make time for family, friends, community
participation, spirituality, personal growth, self-care, and other personal activities,
in addition to the demands of the workplace.
Work-life balance is assisted by employerswho institute policies, procedures,

actions, and expectations that enable employees to easily pursue more balanced
lives.
The pursuit of work-life balance reduces the stress employees experience. When
they spend the majority of their days on work-related activities and feel as if they
are neglecting the other important components of their lives, stress and
unhappiness result.
Work-life balance enables employees to feel as if they are paying attention to all
the important aspects of their lives.
Because many employees experience a personal, professional, and monetary

need to achieve, work-life balance is challenging. Employers can assist employees
to experience work-life balance by offering such opportunities as flexible work

schedules, paid time off (PTO) policies, responsible time and communication
expectations, and company-sponsored family events and activities.
Managers are important to employees seeking work-life balance. Managers who

pursue work-life balance in their own lives model appropriate behavior and
support employees in their pursuit of work-life balance.
They create a work environment in which work-life balance is expected, enabled,

and supported. They retain outstanding employees to whom work-life balance is
important - like parents.
Quality of Work Life

The present era is an era of knowledge workers and the society in which we are
living has come, to be known as knowledge society. The intellectual pursuits have
taken precedence over the physical efforts.
Some knowledge workers work for more than 60 hours a week. As a result of this,
their personal hobbies and interests clash with their work. Life is a bundle that
contains all the strands together and hence the need to balance work life with
other related issues.’
Meaning:
Quality of work life (QWL) refers to the favourableness or unfavourableness of a
job environment for the people working in an organisation. The period of
scientific management which focused solely on specialisation and efficiency, has
undergone a revolutionary change.
Definition:
The QWL as strategy of Human Resource Management has assumed increasing
interest and importance. Many other terms have come to be used
interchangeably with QWL such as ‘humanisations of work’ ‘quality of working
life, ‘industrial democracy’ and ‘participative work’.
“QWL is a way of thinking about people, work and organisations, its distinctive
elements are (i) a concern about the impact of work on people as well as on
organisational effectiveness, and (ii) the idea of participation in organisational

problem-solving and decision making. ” —Nadler and Lawler
3. “The overriding purpose of QWL is to change the climate at work so that the
human-technological-organisational interface leads to a better quality of work
life.”
-Luthans

Unit 1 HRM: Prepared By: Pruthvirajsinh N Rathod 1

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HUMAN RESOURCE MANAGEMENT SYBBA 3

Human Resource Management (HRM) is a relatively new approach to managing

According to Flippo, ‘Personnel Management, or say, human resources

According to Flippo, ‘Personnel Management, or say, human resources

Human Resource Management is a process, which consists of four main

 NATURE OF HUMAN RESOURCE MANAGEMENT

1. Inherent Part of Management : Human resource management is inherent in

2. Pervasive Function : Human Resource Management is a pervasive function of

4. People Centered : Human Resource Management is people centered and is

5. Personnel Activities or Functions : Human Resource Management involves

6. Continuous Process : Human Resource Management is not a ‗one shot‘

7. Based on Human Relations : Human Resource Management is concerned with

 IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Human Resource Management has a place of great importance. According

Human resources can increase cooperation but it needs proper and

Prepared By : Pruthvirajsinh N Rathod 2

indispensable to the management activity itself. Because of the following reasons

1. It helps management in the preparation adoption and continuing evolution of

2. It supplies skilled workers through scientific selection process.

3. It ensures maximum benefit out of the expenditure on training and development

4. It prepares workers according to the changing needs of industry and

5. It motivates workers and upgrades them so as to enable them to accomplish the

6. Through innovation and experimentation in the fields of personnel, it helps in

7. It contributes a lot in restoring the industrial harmony and healthy employer-

8. It establishes mechanism for the administration of personnel services that are

Thus, the role of human resource management is very important in an

 FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.

Prepared By : Pruthvirajsinh N Rathod 3

(A) Managerial Functions Following are the managerial functions of Human

1. Planning : The planning function of human resource department pertains to

2. Organisation : Under organisation, the human resource manager has to

3. Directing : Directing is concerned with initiation of organised action and

4. Controlling : It provides basic data for establishing standards, makes job

1. Procurement of Personnel : It is concerned with the obtaining of the proper

2. Development of Personnel : Development has to do with the increase through

Prepared By : Pruthvirajsinh N Rathod 4

promotion policy, determination of the basis of promotion and making

3. Compensation to Personnel : Compensation means determination of adequate

4. Maintaining Good Industrial Relation : Human Resource Management covers a

5. Record Keeping : In record-keeping the personnel manager collects and

6. Personnel Planning and Evaluation : Under this system different type of

1. Advisory Role: HRM advises management on the solutions to any problems

a. Personnel Policies: Organization Structure, Social Responsibility,

b. Personnel Procedures: Relating to manpower planning procedures,

procedures, compensation procedures, industrial relations procedures and health

2. Functional Role: The personnel function interprets and helps to communicate

 ROLE OF HR MANAGERS (TODAY)

1. Humanitarian Role: Reminding moral and ethical obligations to employees

2. Counselor: Consultations to employees about marital, health, mental, physical

3. Mediator: Playing the role of a peacemaker during disputes, conflicts between

4. Spokesman: To represent of the company because he has better overall

5. Problem Solver: Solving problems of overall human resource management and

6. Change Agent: Introducing and implementing institutional changes and

7. Management of Manpower Resources: Broadly concerned with leadership

 ROLE OF HR MANAGERS (FUTURE)

1. Protection and enhancement of human and non-human resources

Prepared By : Pruthvirajsinh N Rathod 6

2. Finding the best way of using people to accomplish organizational goals

3. Improve organizational performance

4. Integration of techniques of information technology with the human resources

5. Utilizing behavioral scientists in the best way for his people

6. Meeting challenges of increasing organizational effectiveness

7. Managing diverse workforce