Human Resource Management HRM means to Select, Develop, Motivate and

Maintain human resources, in the organisation. It first selects the right human
resources or staff (i.e. managers and employees). It trains and develops them. It
motivates them by giving them recognition and rewards. It also provides them
with the best working conditions. HRM is directly concerned with the "people" of
the organisation. It is people oriented process. That is, it manages people at
work. Features of Human Resource Management 1. HRM as a Process HRM is a
process of four functions :- Acquisition of human resources : This function
includes Human Resource Planning, Recruitment, Selection, Placement and
Induction of staff. Development of human resources : This function includes
Training and Development and Career development. The knowledge, skills,
attitudes and social behavious of the staff are developed. Motivation of human
resources : This function includes giving recognition and rewards to the staff. it
also includes Performance Appraisal and handling the problems of staff.
Maintenance of human resources : This function includes providing the best
working conditions for employees. It also looks after the health and safety of the
staff. 2. Continuous Process HRM is not a one-time process. It is a continuous
process. It has to continuously change and adjust according to the changes in
the environment, changes in the expectations of the staff, etc. HRM has to give
continuous training and development to the staff due to changes in technology.
3. Focus on Objectives HRM gives a lot of importance to achievement of
objectives. The four main objectives HRM has to achieve are :- Individual
objectives of the staff. Group or Departmental objectives. Organisational
objectives. Societal objectives. 4. Universal Application HRM has universal
application. That is, it can be used for business as well as for other organisations
such as schools, colleges, hospital, religious organisations, etc. 5. Integrated use
of Subsystems HRM involves the integrated use of sub-systems such as Training
and Development, Career Development, Orgnisational Development,
Performance Appraisal, Potential Appraisal, etc. All these subsystems increase
the efficiency of the staff and bring success to the organisation. 6.
Multidisciplinary HRM is multidisciplinary. That is, it uses many different subjects
such as Psychology, Communication, Philosophy, Sociology, Management,
Education, etc. 7. Developes Team Spirit HRM tries to develop the team spirit of
the full organisation. Team spirit helps the staff to work together for achieving
the objectives of the organisation. Now-a-days more importance is given to team
work and not to individuals. 8. Develops Staff Potentialities HRM develops the
potentialities of the staff by giving them training and development. This will
make the staff more efficient, and it will give them more job satisfaction. 9. Key
Elements for solving problems Today, we have rapid technological, managerial,
economic and social changes. These changes bring many problems. HRM
continuously tries to solve these problems. 10. Long Term Benefits HRM brings
many long term benefits to the individuals (staff), the organisation and the
society. It gives many financial and non-financial benefits to the staff. It improves
the image and profits of the organisation. It also provides a regular supply of
good quality goods and services at reasonable prices to the society. Scope of
Human Resource Management HRM The Scope of Human Resource Management
HRM is discussed below :- 1. Human Resource Planning (HRP) HRP estimates the
manpower demand and manpower supply of the organisation. It compares the
manpower demand and manpower supply. If there is manpower surplus then it

gives voluntary retirement, lay-off, etc. to some employees. If there is manpower

shortage then it hires employees from outside, gives promotion to employees,
etc. 2. Acquisition Function Acquisition function includes Human Resource
Planning, Recruitment, Selection, Placement and Induction of employees. HRM
uses the scientific selection procedure for selecting the right man for the right
post. The "right man" is given proper placement and induction. 3. Placement
Function HRM also performs the placement function. Placement is done after
selection of employees. It means to put the right man in the right place of work.
Proper placement gives job satisfaction to the employees, and it increases their
efficiency. 4. Performance Appraisal HRM also conducts a performance appraisal.
Performance appraisal is a systematic evaluation of the employees' performance
at work. It informs the employees about their strengths and weakness. It also
advises them about how to increase their strengths and remove their
weaknesses. 5. Career Development HRM also helps the employees in planning
and developing their careers. It informs them about future promotions and how
to get these promotions. It helps them to grow and develop in the organisation.
6. Training and Development HRM also provides training and development to the
employees. Training means to increase the knowledge and skills of the employee
for doing a particular job. Training given to managers is called development. So,
training is given to employees while development is given to managers. 7.
Quality of Work Life (QWL) HRM also includes Quality of Work Life. QWL is a
technique for improving productivity and quality of work. It involves labour
management co-operation, collective bargaining and participative management.
QWL provides good working conditions, job security, good pay and other facilities
such as flexible working hours, freedom to suggest changes or improvements,
etc. OWL creates a sense of belonging. This benefits the organisation as well as
the individual employees. 8. Employees' Welfare HRM provides employee's
welfare. Welfare measures include paid holidays, medical insurance, canteen
facilities, recreation facilities, rest room, transport facilities, etc. Proper and
timely welfare facilities motivate the employees to work hard in the organisation.
9. Compensation Function Employees must be rewarded and recognised for their
performance. HRM makes proper compensation packages for the employees.
These packages motivate the employees and increase their morale. Rewards are
given to individuals, and teams. The rewards may be in the form of higher pay,
bonus, other monetary incentives, and non-monetary incentives such as a
certificate of appreciation, etc. 10. Labour Relations HRM is also includes
industrial relations. It includes union management relations, joint consultations,
negotiating, collective bargaining, grievance handling, disciplinary actions,
settlement of industrial disputes, etc. 11. Maintenance Function HRM also
performs the maintenance function. That is, protecting and promoting the health
and safety of the employees. HRM introduces health and safety measures. It also
provides other benefits such as medical aid, provident fund, pension, gratuity,
maternity benefits, accident compensation, etc., to the employees. FUNCTIONS
OF HUMAN RESOURCE MANAGEMENT The main functions of human resource
management are classified into two categories: (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. If labour management relations are
not good the moral and physical condition of the employee will suffer, and it will
be a loss to an organisation vis-a-visa nation. Hence, the personnel manager
must create harmonious relations with the help of sufficient communication
system and copartnership. 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. Job
Analysis is a process to identify and determine in detail the particular job duties
and requirements and the relative importance of these duties for a given job. Job
Analysis is a process where judgements are made about data collected on a job.
Purpose of Job Analysis 1. Determining Training Needs : Job Analysis can be used
in training/"needs assessment" to identify training content assessment tests
to measure effectiveness of training equipment to be used in delivering the
training methods of training 2. Compensation: Job Analysis can be used in
compensation to identify or determine: skill levels compensable job factors
work environment (e.g., hazards; attention; physical effort) responsibilities

(e.g., fiscal; supervisory) required level of education 3. Selection Procedures :

Job Analysis can be used in selection procedures to identify or develop job
duties that should be included in advertisements of vacant positions;
appropriate salary level for the position to help determine what salary should be
offered to a candidate; minimum requirements (education and/or experience)
for screening applicants; interview questions 4. Performance Review:Job
Analysis can be used in performance review to identify or develop: goals and
objectives performance standards evaluation criteria length of probationary
periods duties to be evaluated Process of Job Analysis Identification of Job
Analysis Purpose: Well any process is futile until its purpose is not identified and
defined. Therefore, the first step in the process is to determine its need and
desired output. Who Will Conduct Job Analysis: The second most important step
in the process of job analysis is to decide who will conduct it. Some companies
prefer getting it done by their own HR department while some hire job analysis
consultants. Job analysis consultants may prove to be extremely helpful as they
offer unbiased advice, guidelines and methods. How to Conduct the Process:
Deciding the way in which job analysis process needs to be conducted is surely
the next step. A planned approach about how to carry the whole process is
required in order to investigate a specific job. Strategic Decision Making: Now is
the time to make strategic decision. Its about deciding the extent of employee
involvement in the process, the level of details to be collected and recorded,
sources from where data is to be collected, data collection methods, the
processing of information and segregation of collected data. Training of Job
Analyst: Next is to train the job analyst about how to conduct the process and
use the selected methods for collection and recoding of job data. Preparation of
Job Analysis Process: Communicating it within the organization is the next step.
HR managers need to communicate the whole thing properly so that employees
offer their full support to the job analyst. Data Collection: Next is to collect jobrelated data including educational qualifications of employees, skills and abilities
required to perform the job, working conditions, job activities, reporting
hierarchy, required human traits, job activities, duties and responsibilities
involved and employee behaviour. Documentation, Verification and Review:
Proper documentation is done to verify the authenticity of collected data and
then review it. This is the final information that is used to describe a specific job.
Developing Job Description and Job Specification: Now is the time to segregate
the collected data in to useful information. Job Description describes the roles,
activities, duties and responsibilities of the job while job specification is a
statement of educational qualification, experience, personal traits and skills
required to perform the job. Objective of job analysis: Work simplification: - Job
analysis provides the information related to job and this data can be used to
make process or job simple. Work simplification means dividing the job into small
parts i.e. different operations in a product line or process which can improve the
production or job performance. Setting up of standards: -Standard means
minimum acceptable qualities or results or performance or rewards regarding a
particular job. Job analysis provides the information about the job and standard
of each can be established using this information Support to personnel
activities:- Job analysis provides support to various personnel activities like
recruitment, selection, training and development, wage administration,

performance appraisal etc. Job Design Job design follows job analysis i.e. it is the
next step after job analysis. It aims at outlining and organising tasks, duties and
responsibilities into a single unit of work for the achievement of certain
objectives. It also outlines the methods and relationships that are essential for
the success of a certain job. In simpler terms it refers to the what, how much,
how many and the order of the tasks for a job/s. Job design essentially involves
integrating job responsibilities or content and certain qualifications that are
required to perform the same. It outlines the job responsibilities very clearly and
also helps in attracting the right candidates to the right job. Further it also makes
the job look interesting and specialised. Benefits of Job Design The following are
the benefits of a good job design: Employee Input: A good job design enables a
good job feedback. Employees have the option to vary tasks as per their
personal and social needs, habits and circumstances in the workplace.
Employee Training: Training is an integral part of job design. Contrary to the
philosophy of leave them alone job design lays due emphasis on training
people so that are well aware of what their job demands and how it is to be done.
Work / Rest Schedules: Job design offers good work and rest schedule by clearly
defining the number of hours an individual has to spend in his/her job.
Adjustments: A good job designs allows for adjustments for physically
demanding jobs by minimising the energy spent doing the job and by aligning
the manpower requirements for the same. Approaches to Job Design Human
Approach:The human approach of job design laid emphasis on designing a job
around the people or employees and not around the organizational processes. In
other words it recognizes the need of designing jobs that are rewarding
(financially and otherwise) and interesting at the same time. Engineering
Approach: The engineering approach was devised by FW Taylors et al. They
introduced the idea of the task that gained prominence in due course of time.
According to this approach the work or task of each employee is planned by the
management a day in advance. The instructions for the same are sent to each
employee describing the tasks to e undertaken in detail. The details include
things like what, how and when of the task along with the time deadlines. The
approach is based on the application of scientific principles to job design. The
Job Characteristics Approach:The job characteristics approach was popularized
by Hackman and Oldham. According to this approach there is a direct
relationship between job satisfaction and rewards. They said that employees will
be their productive best and committed when they are rewarded appropriately
for their work. They laid down five core dimensions that can be used to describe
any job - skill variety, task identity, task significance, autonomy and feedback.
Factors Affecting Job Design 1. Proper scope of job: The scope of the job should
be proper. If the scope is narrow (less), then the job will not be challenging. It will
not give an opportunity for development. The manager will not get satisfaction
after completing an easy job. If the scope of the job is very wide, then the
manager will not be able to handle it properly. This will cause stress, frustration
and loss of control. Therefore, scope of the job must be balanced and proper. 2.
Full-time challenge of the job: The job should be so challenging that it takes up
the full-time and effort of the manager. So, the service of the manager must be
fully utilised. If not, the manager will have a lot of free time. He will use this free
time to interfere in the work of his subordinates. This will cause problems and
conflicts because subordinates do not like unnecessary interference from their

superiors. 3. Managerial skills: The skills of the manager should be considered

before designing his job. All managers do not have equal skills. So jobs should be
designed after considering the skills of the manager. So, a manager having a
high level of skill should be given very challenging jobs while a manager having a
low level of skill should be given fewer challenging jobs. Jobs must be made
flexible so that it can be changed according to the skills of the manager. 4.
Organisation's requirements: Jobs must be designed according to the
requirements of the organisation. We cannot use the same job design for all
organisations. 5. Individual likes and dislikes: People have different likes and
dislikes. Some people like to work alone while some people prefer to work in
groups. Some people want to do only planning and decision making while other
people like to implement these plans and decision. So, individual likes and
dislikes must be considered while designing the job. 6. Organisational structure:
Organisational structure also affects the job design. Individual jobs must fit into
the organisation's structure. 7. Technology: The level of technology used by the
organisation also affects the job design. An organisation having a high level of
technology will have different job designs compared to an organisation having a
low level of technology. Job enrichment means a vertical expansion of a job. It is
different from job enlargement. Job enlargement means a horizontal expansion of
a job. Job enrichment makes the job more meaningful, enjoyable and satisfying.
It gives the workers more autonomy for planning and controlling the job. It also
gives the workers more responsibility. Job enrichment gives the workers
opportunities for achievement, recognition, advancement and growth. So, the
workers are motivated to work harder. Features of Job Enrichment The
characteristics or features of job enrichment are:- Nature of Job : Job
enrichment is a vertical expansion of the job. The workers are given jobs, which
require higher-level knowledge, skills and responsibilities. Job enrichment
improves the quality of the job. Objective : The objective of Job enrichment is to
make the job more lively and challenging. So, the job is a source of motivation
for the workers. Positive Results : Job enrichment gives positive results if the
workers are highly skilled. This is because workers are given opportunities to
show initiative and innovation while doing their job. Direction and Control : Job
enrichment encourages self-discipline. It does not believe in external direction
and control. Techniques of Job Enrichment Increasing the responsibility of the
activity Providing wider scope, more sequence and increased pace of the work
Giving a natural unit of work either to an employee or group of employees
Providing the freedom of work by minimizing controls Allowing the employees
to set their own standards or targets Providing the employees the control of
information and allowing them to monitor their own performance Encouraging
employee participation in planning, innovations and creation Steps in Job
Enrichment Selecting those jobs which permit close relation between
motivation and job performance Introducing a pilot scheme basis Starting with
the assumption that these jobs can be changed Brainstorming a list of changes
that may enrich the jobs Concentration on motivational factors such as
achievement, responsibility, selfcontrol, etc. Trying to change the content of the
job rather than changing the employees from their jobs Providing adequate
training, guidance, encouragement and help Introduction of job enrichment

programmes with care Preparing the specific programme for each project and
ensuring to control the information to monitor the performance
Induction Induction is the process of receiving and welcoming employees when
they first join a company and giving them the basic information they need to
settle down quickly and happily and start work. Induction has the following aims:
to smooth the preliminary stages when everything is likely to be strange and
unfamiliar to the starter; to establish quickly a favourable attitude to the
company in the mind of the new employee so that he or she is more likely to
stay; to obtain effective output from the new employee in the shortest possible
time OBJECTIVES OF INDUCTION AND ORIENTATION To facilitate and foster the
employees social and professional orientation into the workplace To
demonstrate to the new employee the companys desire to help in his or her
acclimatization To bridge the culture gap in a diverse workforce To enable the
employee to obtain answers to his or her questions and to access relevant
information To support the employee and enable him or her to become
effective as quickly as possible To determine if the employee clearly
understands the expectations with regard to his or her tasks, roles and
responsibilities To ensure that the employee is familiar with the companys
standards and policies To familiarize the employee with the organizations
culture and values To increase the companys visibility and contribute to the
enhancement of its image Steps in the Induction and Orientation Process STEP 1:
PREPARING FOR THE INDUCTION The immediate supervisor should prepare the
contents of the orientation with the designated mentor. Together, they should
ask the following three questions in order to determine what information to
transmit to the newcomer: 1 What should be included in the orientation? 2
What are the objectives? 3 What does the new employee need to know about
his or her tasks? STEP 2: INDUCTION Reception by the department manager
(immediate supervisor) Word of welcome (presentation of the corporate mission
and challenges) Presentation of the organizations key values and expectations
(schedule, personal and organizational expectations) Presentation of the
employee manual, working conditions and organization chart Submission and
signing of required documents (employee file, group insurance, pay sheet, etc.)
Tour of the workplace with the department manager. Designation of the
workspace and tools available (computer, office supplies, etc.) Tour of the
different company departments including rest and recreation areas (employee
cafeteria etc.) Introduction to staff and the work team. STEP 3: ORIENTATION
Introduction to the mentor Presentation of mutual expectations Presentation
of the roles, responsibilities and tasks relating to the job Explanation,
observation and experimentation Presentation of work methods STEP 4:
FOLLOW-UP Evaluation by the immediate supervisor Evaluation of employee
satisfaction Mentors feedback on the integration (employee strengths, areas
requiring improvement) Identification of training requirements for the position
Management Development Programme Management/Executive development
involves making exercises in managerial manpower flows, and future inventories
of human skills, abilities and resources to match the demands of expanding and
diversifying operations of the organization, forecasting of HR balance sheet, and

programmes to even out manpower surpluses and deficits. MD has two main
tasks: the improvement of management performance and the organization of
management succession. Factors Influencing Executive Development Failure to
train the managers will lead to ineffective and inefficient managers who
negatively affect the organizations performance. In the absence of Trg. & Dev.
Avenues, the performing managers may get demotivated and frustrated in
leading the organizations. The organizational performance may be affected by
the loss of market shares, lower sales, reduced profitability, etc. The
absence/shortage of trained and skilled managers makes it important for the
organization to have appropriate retention strategies. Principles of Management
Development Encouraging growth and career development of employees as per
the philosophy of HRM Improving skills and knowledge that can be immediately
applied at work Increasing motivation and job satisfaction of managerial
personnel Creating a network of colleagues for problem solving and support
Promoting communication and planning throughout the organization and
department networks. Strategies to Support Management Development
Modeling and encouraging the desired behaviour that fits well with organizations
mission, vision, values, objectives and culture Discussing and creating a
development plan during the performance planning cycle Endorsing executives
attending classes and activities that support development plans and goals
Discussing what the executives learned in classes and support integrating new
ideas/methods to workplace issues Providing timely behavioural feedback on
performance and discussing ways to improve and develop further Providing
opportunities for executives to develop through mentoring, cross training,
internships, professional associations, committee and task force assignments,
skill assessment programmes, and university extension programmes Objectives
To provide effective managerial resources to the business at all levels now and in
the future as well as to provide opportunities for self-development and career
growth To develop a set of personal attributes which are required to understand
customers present and future needs, create innovative products and services,
mobilize energy and commitment of people and effective strategy execution and
are related to potential such as analytical skills, leadership skills, vision. To
develop managerial talent necessary for meeting present as well as future
organizational manpower needs. To attract and retain best professionals in the
organization To enable managers to develop management skills and
competencies needed to achieve excellent levels of performance in both present
and future jobs (competencies: Communication, Task effectiveness, People
oriented, Strategic and conceptual) To develop intrapreneurship and facilitate
transfer of skills and learning to other employees of the organization Level-wise
objectives of the management development A. Top Management To improve
thought processes and of ability in order to uncover and examine problems and
take decisions To broaden the outlook of the executive in regard to his role,
position and responsibilities in the organization and outside To think through
problems which may confront the organization now or in the future To
understand economic, technical and institutional forces in order to solve business
problems To acquire knowledge about the problems of human relations B.
Middle line management To establish a clear picture of executive functions and

responsibilities To bring about an awareness of the broad aspects of

management problems and appreciation of inter-departmental relations To
develop the ability to analyze problems and to take appropriate action To
inculcate knowledge of human motivation and human relationships To develop
responsible leadership Potential Appraisal The process to identify the latest
talent of people to cater to the future needs of the organization. Objectives: To
assess an individual in terms of the highest level of work the individual will be
able to handle comfortably and successfully in future without being
overstretched To identify the potential of a given employee to occupy higher
positions in the organizational hierarchy and undertake responsibilities. To
assist the organization in discharging its responsibility of selecting and
developing managers for the future to ensure its continuous growth. Aim of
Potential Appraisal Inform employees about their future prospects Help the
organization chalk out of a suitable plan Update training efforts from time to
time Advise employees about what they must do to improve their career
prospects Process of introducing potential appraisal Step I:Role Descriptions
(preparing job description) Step II:Qualities needed to perform the roles
(technical, managerial jobs and behavioural dimensions) Step III: Rating
mechanisms - Rating by others - Tests (assessment centre, business games, inbasket, role play) - Games - Past records Step IV: Organizing the system Step
V: Feedback Recruitment and Selection Selection is the process by which
managers and others use specific instruments to choose from a pool of
applicants a person or persons most likely to succeed in the job(s), given
management goals and legal requirements. Factors to be considered for
selection Physical characteristics Personal characteristics Skill & ability
Competency Temperament and character Interests Organizational and social
environment Recruitment is the generating of applicants or applications 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. Step 1 Recruitment planning - numbers, types Step 2 Strategy
development -where, how, when Step 3 Searching -internal source or external
source Step 4 Screening Step 5 Evaluation & Control Factors impacting
recruitment Economic factors Social factors Technological factors Political
factors Legal factors The Factories Act The Apprentices Act The Employment
Exchanges Act The Contract Labour Act The Child Labour Act Sources of
Recruitment Internal Sources Present employees (promotion, transfer)
Employee referrals Labour unions Former employees (retired, retrenched)
Nepotism (family owned firms) Previous applicants Job posting (hiring from
within: the organization publicises job openings on bulletin boards, electronic
media, etc.) External Sources Employment exchanges Employment
agencies Advertisement Campus recruitment Deputation Professional
associations (AIMA, IE) Labour contractors Gate recruitment Employee
leasing Word-of-mouth (information about possible vacancies) Internet
recruiting Walk-ins Raiding or Poaching (the rival firms by offering better
terms & conditions, try to attract qualified employees to join them) Methods of
Recruitment Direct method (campus recruitment) Indirect method
(advertisement, walk-ins) Third party method (employment agencies, mgt.

consultants, trade unions, labour contractors) Merits and demerits of hiring

people from within Merit: Economical: The cost of recruiting internal candidates
is minimal. No expenses are incurred on advertising. Suitable: The organization
can pick the right candidates having the requisite skills. Reliable: The
organisation has knowledge about the suitability of a candidate for a position.
Satisfying: A policy of preferring people from within offers regular promotional
avenues for employees. It motivates them to work hard and earn promotions.
Demerit: Limited choice: The organisation is forced to select candidates from a
limited pool. Inbreeding: It discourages entry of talented people, available
outside an organisation. Inefficiency: Promotions based on length of service
rather than merit, may prove to be a blessing for inefficient candidates. Bone of
contention: Recruitment from within may lead to infighting among employees
aspiring for limited, higher-level positions in an organisation. Merits and demerits
of hiring people from outside Merits Wide choice: The organisation has the
freedom to select candidates from a large pool. Injection of fresh blood: People
with special skills and knowledge could be hired to stir up the existing employees
and pave the way for innovative ways of working. Motivational force: It helps in
motivating internal employees to work hard and compete with external
candidates while seeking career growth. Long term benefits: Talented people
could join the ranks, new ideas could find meaningful expression, a competitive
atmosphere would compel people to give of their best and earn rewards, etc.
Demerits Expensive: Hiring costs could go up substantially. Time consuming:
It takes time to advertise, screen, to test and to select suitable employees.
Demotivating: Existing employees who have put in considerable service may
resist the process of filling up vacancies from outside. Uncertainty: There is no
guarantee that the organisation, ultimately, will be able to hire the services of
suitable candidates. It may end up hiring someone who does not fit and who
may not be able to adjust in the new set-up. Training Process Step 1: Needs
Assessment Step 2: Deriving Instructional Objectives Instructional objectives
provide the input for designing the training programme as well as for the
measures of success that would help assess effectiveness of the training
programme Step 3: Designing Training and Development Programme Who
participates in the programme? Who are the trainers? What methods and
techniques are to be used for training? What should be the level of training?
What learning principles are needed? Where is the programme conducted?
Learning principles (motivation, recognition of individual differences, practice
opportunities, reinforcement, feedback, goals, schedules of learning, meaning of
material, transfer of learning) Step 4: Implementation of the Training
Programme Step 5: Evaluation of the Programme Step 6: Feedback Promotion
Employee movement from current job to another (vertical movement) that is
higher in pay, responsibility and/or organization level is known as promotion.
Promotion has powerful motivational value as it compels an employee to utilize
his talents fully, and remain loyal and committed to his or her job and the
organization. Promotion brings enhanced status, better pay, increased
responsibilities and better working conditions to the promote. It is considered
good personnel policy to fill vacancies in a higher job through promotions from
within because such promotions provide an inducement and motivation to the
employees and also remove feelings of stagnation and frustration. Types of

Promotion Horizontal Promotion (When an employee is shifted in the same

category) Ex. Junior clerk to Senior clerk Vertical Promotion Dry Promotion
(When promotion is made without increase in salary) Objectives of Promotion To
recognize an employees skill and knowledge and utilize it to improve the
organizational effectiveness. To reward and motivate employees to higher
productivity. To develop competitive spirit and inculcate the zeal in the
employees to acquire skill, knowledge, etc. To promote employees satisfaction
and boost their morale To build loyalty among the employees toward
organization To promote good human relations To increase sense of
belongingness and retain skilled & talented people To attract trained,
competent and hard working people Promotion Policy: It is just like a doubleedged weapon and every organization needs to evolve and implement a suitable
promotion policy for its employees. A sound and good policy must have the
following characteristics: 1. It must provide equal opportunities for promotion
across the jobs, departments, and regions. 2. It must be applied uniformly to all
employees irrespective of their background 3. It must be fair and impartial 4. The
basis of promotion must be clearly specified and made known to the employees
5. It must be correlated with career planning. Both quick and delayed promotions
must be avoided as these ultimately adversely affect the organizational
effectiveness 6. Appropriate authority must be entrusted with the task of making
final decision. 7. The basis of promotion may be seniority or merit or both 8.
Seniority for promotion should be considered only when there are more than one
aspirant of equal merit. 9. Employees' are promoted on a non-vacancy basis after
they complete a minimum period of service and such promotions are time bound
and not based on vacancies or merit. 10. A promotion policy should establish a
well-defined promotion chart, showing who can go up to what level in the
organization. 11. A promotion should be preceded by a job analysis and
performance appraisal. 12. The promotion policy should be discussed with labour
unions, and their acceptance should be obtained in the form of an agreement.
13. When promotions are made on the basis of competence, openings for
promotion should be displayed prominently at several places to enable
interested people to apply. Transfer A transfer is a change in the job
(accompanied by a change in the place of the job) of an employee without a
change in responsibilities or remuneration (Flippo). A transfer is a change in job
assignment. It may involve a promotion or demotion or no change at all in status
and responsibility . A transfer refers to lateral movement of employees within
the same grade, from one job to another. Transfer may be initiated either by
the company or the employee. Transfer could be permanent, temporary or ad
hoc to meet emergencies Transfer decisions may be perceived as negative or
positive depending upon an individuals personal preferences, needs and
aspirations. Purposes of transfer To meet organizational requirements To
satisfy employee needs To utilize employees better To make the employee
more versatile To adjust the workforce To provide relief to overburdened
employees To reduce conflicts To punish employees Principles of Transfers
The frequency of transfers and the minimum period between transfers need to
be decided upon and made known to all the employees. The authority who
would handle transfers to be decided upon. The criteria for entertaining
transfers need to be laid down and strictly adhered to. The area of the

organization over which transfers can be made need to be defined. Transfers

should be clearly defined as permanent or temporary. The effect of the transfer
on the pay and seniority of the transferred employee may be clearly evaluated.
The performance of the employee needs to be assessed before transferring him
or her to different job. The interests of the organization are not be forgotten in
framing a policy of transfers. Demotion Employee movement that occurs when
an employee is moved from one job to another that is lower in pay, responsibility
and/or organization level is called demotion. It affects the status, pride, career
and income of the employee. Demotion Policy A clear and reasonable list of
rules should be framed, violation of which would subject an employer to
demotion. Relevant information should be clearly communicated to employees
Any violation be investigated thoroughly by a competent authority REWARD
MANAGEMENT Reward management is concerned with the strategies, policies
and processes required to ensure that the value of people and the contribution
they make to achieve organizational, departmental and team goals is recognized
and rewarded. OBJECTIVES OF REWARD MANAGEMENT Support the
organisations strategy Recruit & retain Motivate employees Internal &
external equity Strengthen psychological contract Financially sustainable
Comply with legislation Efficiently administered Aims of Reward Management
Support the achievement of the organizations strategic and short term
objectives Help to communicate the organizations values and performance
expectations Support culture management and change Drive and support
desired behaviour Encourage value-added performance Promote continuous
development Compete in the employment market Motivate all members of
the organization from the shop-floor to the board room Promote flexibility
Provide value for money Achieve fairness and equity PRINCIPLES FOR
EFFECTIVE REWARD MANAGEMENT Guiding principles for effective reward
management Align reward strategies with the business strategy Align reward
policies with the culture of the organization Value employees according to their
competence, skill and contribution Remember that reward management is
about the management of diversity not the control of uniformity Ensure that
reward processes are transparent Provide line managers with the authority and
skills needed to use rewards to achieve their goals DYNAMIC PAY In 1996,
Flannery expounded the concept of dynamic pay and suggested the nine
principles which support a successful pay strategy Align compensation with the
organizations culture, values and strategic business goals Link compensation
to the other changes Time the compensation programme to support other
change initiatives best Integrate pay with other people processes
Democratize the pay process Demystify compensation Measure results
Refine Be selective Sequence for developing reward processes Step I Analyze
Context - Analyze organization culture, structure, internal and external
environment, business plans Asses plans or need for change - Conduct diagnostic
review of present reward arrangements to determine strengths and weaknesses
Step II Define Issues - Identify issues to be addressed in the light of the
contextual analysis and diagnostic review Step III Development of Appropriate
Plan Plan development programme covered: - Areas for development - Objectives
to be achieved - Resources to be used (Internal & External Consultants, Project

Teams, Financial budget) - Cost/Benefit analysis - Timetable - Arrangements for

communication, consultation and training Step IV Develop Process Develop the
preferred alternative, involving employees and keeping them informed. Step V
Test Process Were possible and desirable, pilot test the process and modify as
required. Step VI Implementation Develop and execute implementation plan
including training. Step VII Monitoring Monitoring of implementation. Step VIII
Evaluation Evaluate impact of new process and amend as necessary.
KNOWLEDGE MANAGEMENT Blackler (1995) notes that Knowledge is
multifaceted and complex, being both situated and abstract, implicit and explicit,
distributed and individual, physical and mental, developing and static, verbal and
encoded. He categorizes forms of knowledge as: embedded in technologies,
rules and organizational procedures; encultured as collective understandings,
stories, values and beliefs; embodied into the practical activity-based
competencies and skills of key members of the organization embraced as the
conceptual understanding and cognitive skills of key members. Ten ways in
which HR can contribute to KM. 1. Help to develop an open culture in which the
values and norms emphasize the importance of sharing knowledge. 2. Promote a
climate of commitment and trust. 3. Advise on the design and development of
organizations which facilitate knowledge sharing through networks and
communities of practice (groups of people who share common concerns about
aspects of their work), and teamwork. 4. Advise on resourcing policies and
provide resourcing services which ensure that valued employees who can
contribute to knowledge creation and sharing are attracted and retained. 5.
Advise on methods of motivating people to share knowledge and rewarding
those who do so. 6. Help in the development of performance management
processes which focus on the development and sharing of knowledge. 7. Develop
processes of organizational and individual learning which will generate and assist
in disseminating knowledge. 8. Set up and organize workshops, conferences,
seminars and symposia which enable knowledge to be shared on a person-toperson basis. 9. In conjunction with IT, develop systems for capturing and, as far
as possible, codifying explicit and tacit knowledge. 10. Generally, promote the
cause of knowledge management with senior managers to encourage them to
exert leadership and support knowledge management initiatives. KM Process
Stage I: Identify stage (which competencies are critical to success) Stage II:
Collect stage (acquiring existing knowledge, skills, theories and experiences
needed to create the selected core competencies and knowledge domains) Stage
III: Select stage (continuous stream of collected and formalized knowledge and
assesses its value) Stage IV: Store stage (knowledge must be organized and
represented into different knowledge structures within a knowledge repository)
Stage V: Share stage (retrieves knowledge from the corporate memory and
makes it accessible to uses) Stage VI: Apply stage (retrieves and uses the
needed knowledge in performing tasks, solving problems, making decisions,
researching ideas and learning) SUCCESSFUL KM PROGRAMMES Information is
widely disseminated throughout the organization. Wherever it is needed, it is
accessible. Accessible at a fast rate of speed. Virtual communities of practice
share what is known in a global fashion, independent of time zones and other
geographic limitations. Business boundaries are broad, and often virtual in
nature. Collaboration to support continuous innovation and new knowledge
creation. Symptoms of KM Diffusion Challenges No internal learning

communities Lack of psychological safety Lack of workplace trust Arrogance

of people who believe they know everything, so why try? Lack of
communication within an organization made evident by continually reinventing
the same wheel Negativity and unrealistic expectations SUSTAINABILITY OF A
KM ENDEAVOR There are three fundamental processes that sustain profound
changes such as the introduction of a KM system: developing networks of
committed people improving business results enhancing personal results To
achieve sustainability, there must be a focus on learning, and learning how to
harness the learning capabilities that lead to innovation For significant change
to lead to sustainability, hierarchical control must be put aside. The emergence
and development of informal networks must be supported so that people can
share their tacit knowledge and help one another. Managers need to surrender
control. And mental models need to be examined COMPENSATION AND
REWARDS Compensation is the sum total of all forms of payments and rewards
provided to employees for performing tasks to achieve organizational objectives.
Compensation and rewards management is a complex process that includes
decisions regarding benefits and variable pay and is one of the most significant
and dynamic of HR practices. It suggests an exchange relationship between the
employee and the organization. The compensation an employee receives
determines ones standard of living and purchasing power. Employees seek to
maximize their rewards to meet their aspirations. Employees also expect to be
compensated fairly and rewarded for the effort, skills and knowledge that they
contribute towards the achievement of organizational goals. For the organization,
pay and rewards are important since these affect its profitability. Compensation
constitutes the major cost of doing business, since it determines the employee
cost. PRINCIPLES OF WAGE AND SALARY ADMINISTRATION Wage and salary
plans should be sufficiently flexible. Job evaluation must be done scientifically.
Wage and salary administration plans must always be consistent with overall
organizational plans and programmes. Wage and salary administration plans
and programmes should be in conformity with the social and economic
objectives of the country. Wage and salary administration plans and
programmes should be responsive to the changing local and national conditions.
OBJECTIVES Compensation and Reward Management Fair treatment of
employees in line with effort, skills, or competencies Attract and retain highperforming employees Motivate employees towards higher performance
Reinforce desirable employee behaviour Communicate to the employee his or
her worth to the organization Align employee efforts with achievement of
organizational objectives Enhance co-operation and collaboration among team
members Provide employee social status TYPES OF COMPENSATION Financial
(Extrinsic rewards): Direct financial compensation and rewards: These refer to
monetary payments made to employees in exchange for work. These include
(Basic salary, DA, Bonus , Incentives, Overtime payments, Variable Pay, and
Commission). Indirect financial compensation and rewards: These include
benefits such as pensions, gratuity, insurance, etc. These rewards are received
by all employees on the basis of their membership in the organization. Both
direct and indirect financial compensation are called extrinsic rewards. Nonfinancial compensation is the satisfaction that an individual derives from the job
or from the environment in which the employee works. Factors: - Challenging job

- Autonomy - Responsibility - Recognition & Praise for good performance Personal growth - Superior-subordinate relationship - Interpersonal relations Close friendships with colleagues - Quality of Work life These are also called
intrinsic rewards. Quality of Work Life Quality of work life (QWL) relates to the
overall satisfaction of employees at their work. Rising levels of education,
changing aspirations, shift in values, etc. have changed the attitude of
employees. They are now trying to extract a sense of maximum personal
fulfillment from being part of an organization. QWL is a way of thinking about
people, work and organizations. It creates a sense of fulfillment in the minds of
the employees and contributes to greater job satisfaction, improving
productivity, adaptability and overall effectiveness of an organization. Quality
of Work Life (QWL) is a philosophy, a set of principles, which holds that people
are the most important resource in the organization as they are trustworthy,
responsible and capable of making valuable contributions and they should be
treated with dignity and respect (Straw and Heckscher, 1984). QWL relates to
the overall satisfaction of employees at their work. The elements which are
relevant for an individuals quality of work life include the task, the physical work
environment, social environment within the organization, administrative system
and the relationship between life on and off the job (Cunningham and Eberle,
1990). QWL Initiatives Safe and Healthy Work Environment Promotion Re Job
Design Employee Welfare Growth and development Suggestion System
Adequate and Fair Compensation Stress Management Communication Team
Building Outcomes of QWL Individual Outcomes Motivation Commitment
Satisfaction Loyal Higher performance Organizational Outcomes Higher
profits & productivity Improved quality Satisfied/Loyal customers Less
absenteeism Increased retention Revenue growth Talent Management Talent
Management is a set of integrated organizational HR processes designed to
attract, develop, motivate, and retain productive, engaged employees. The goal
of talent management is to create a high-performance, sustainable organization
that meets its strategic and operational goals and objectives. Talent Management
Process Understanding the Requirement: It is the preparatory stage and plays a
crucial role in success of the whole process. The main objective is to determine
the requirement of talent. The main activities of this stage are developing job
description and job specifications. Sourcing the Talent: This is the second stage
of talent management process that involves targeting the best talent of the
industry. Searching for people according to the requirement is the main activity.
Attracting the Talent: it is important to attract the talented people to work with
you as the whole process revolves around this only. After all the main aim of
talent management process is to hire the best people from the industry.
Recruiting the Talent: The actual process of hiring starts from here. This is the
stage when people are invited to join the organization. Selecting the Talent:
This involves meeting with different people having same or different
qualifications and skill sets as mentioned in job description. Candidates who
qualify this round are invited to join the organization. Training and
Development: After recruiting the best people, they are trained and developed to
get the desired output. Retention: Certainly, it is the sole purpose of talent
management process. Hiring them does not serve the purpose completely.
Retention depends on various factors such as pay package, job specification,

challenges involved in a job, designation, personal development of an employee,

recognition, culture and the fit between job and talent. Promotion: No one can
work in an organization at the same designation with same job responsibilities.
Job enrichment plays an important role. Competency Mapping: Assessing
employees skills, development, ability and competency is the next step. If
required, also focus on behaviour, attitude, knowledge and future possibilities of
improvement. It gives you a brief idea if the person is fir for promoting further.
Performance Appraisal: Measuring the actual performance of an employee is
necessary to identify his or her true potential. It is to check whether the person
can be loaded with extra responsibilities or not. Career Planning: If the
individual can handle the work pressure and extra responsibilities well, the
management needs to plan his or her career so that he or she feels rewarded. It
is good to recognize their efforts to retain them for a longer period of time.
Succession Planning: Succession planning is all about who will replace whom in
near future. The employee who has given his best to the organization and has
been serving it for a very long time definitely deserves to hold the top position.
Management needs to plan about when and how succession will take place.
Exit: The process ends when an individual gets retired or is no more a part of the
organization. Characteristics of Innovative Organization Open systems focus
Acceptance of ambiguity Tolerance of the impractical Tolerance of risk
Tolerance of conflict Focus on ends Low external control INNOVATION MODEL
Model 1: The Suggestion System: Suggestion programs provide employees an
organized system through which to submit ideas and to have those ideas
considered by a panel of dispassionate reviewers, who accept or reject them
depending on pre-established criteria from management. Model 2: Continuous
Improvement Teams: Unlike suggestion programs that focus on motivating
individual contributors to come forward with their ideas, Continuous
Improvement Model systems rely on team collaboration Model 3: New Venture
Teams: The goal of the New Venture Team Model is decidedly not cost-saving
ideas, not incremental improvements, and not process innovations. Rather, the
goal is more apt to be surfacing (and funding) unconventional product, service,
or strategy ideas that have the potential to be breakthroughs. Model 4: The
Incubator Lab: the basic idea of incubators was not too different from the
skunkworks approach pioneered by Lockheed during World War II to rapidly
develop and launch new aircraft by forming small, dedicated teams separate
from the bureaucracy. Model 5: Innovation Teams: The gist of this approach is
to set up a companywide network of people with demonstrated skills in
innovation and give them very clear marching orders: Go out and find some new
ideas that have promise. EMPLOYEE ENGAGEMENT Burke (2005) considered
engagement as equivalent to direct assessment of employees satisfaction with
the organization, his job, work group and working environment. More
commonly, employee engagement has been defined as exhibiting discretionary
effort defined as extra time, brainpower and energy (TowersPerrin, 2003) for
accomplishing organizational goals. An engaged employee is believed to
display voluntary effort in solving organizational problems without being asked to
do so, a behaviour described as discretionary effort. Engaged employees and
organizations go the extra mile, and both reap mutual benefits. Gibson (2006)
has defined employee engagement as a heightened emotional connection that

an employee feels for his or her organization, that influences him or her to exert
greater discretionary effort to his or her work. High levels of employee
engagement are associated with high levels of organizational performance
(Soladati, 2007). A lack of employee engagement can lead to disloyalty and
organizational failure (Khan, 2007). The focus for HR was on improving
employee engagement, which was about creating an emotional connection
with employees so that they are passionate, committed, and long term
attachment to the organization (Tomlinson, 2010). DRIVERS OF EMPLOYEE
ENGAGEMENT Career Development Empowerment Equal Opportunities and Fair
Treatment Pay and Benefits Communication Performance Appraisal Co-Operation
Family Wellbeing Impact of Work Culture on Employee Engagement Employee
Loyalty, Employee Retention, Improved Performance, Improved Productivity,
Financial Success. PERFORMANCE MANAGEMENT A process of designing and
executing motivational strategies, interventions and drivers with an objective to
transform the raw potential of human resource into performance. A process
that consolidates goal setting, performance appraisal, and development into a
single, common system, the aim of which is to ensure that the employees
performance is supporting the companys strategic aims. PERFORMANCE
MANAGEMENT INVOLVES: Analyzing the objectives and goals for the dept. or
work unit and ensuring that they relate to the overall goals of the organization.
Analyzing the employees skills and assignments as they relate to company,
department, or unit goals. Clearly communicating performance goals and
expectations to each employee and gaining agreement on those goals and
expectations. Recognizing and acknowledging the good performance of
employees. Recognizing where performance needs to be improved and
providing employees with the necessary support to improve it. SIGNIFICANCE OF
PERFORMANCE MANAGEMENT Competitiveness Sustainable Results
Collective Development Measurable Management Integrated Motivational tool
Institutionalizing High Performance Business-Employees Performance
Managerial Equity Renewal of Competencies Challenges of Performance
Management Create a culture of excellence that motivates employees at all
levels Match organizational objectives with individual aspirations Equip people
with requisite skills to discharge their duties well Clear growth path for talented
employees Provide new challenges to rejuvenate flattening corners Empower
employees to take decisions without fear of failing Encourage teamwork and
team spirit and open communication Objectives of Performance Management
To bring about better operational or business results. To meet an individuals
development needs. To provide information useful for manpower planning by
identifying men with a potential for advancement and men with abilities not
currently being used. To provide a basis for compensation action.
PERFORMANCE APPRAISAL Performance appraisal is method of evaluating the
behaviour of employees in the workspot, normally including both the quantitative
and qualitative aspects of job performance. It is a systematic and objective way
of evaluating both work-related behaviour and potential of employees. It is the
systematic evaluation of the individual to his or her potential for development.
PA is a formal & structured system of measuring an employees job related
behaviours and outcomes to discover how and why the employee is presently

performing on the job and how the employee can perform more effectively in the
future so that the employee, organization and society all benefit. PLANNING THE
APPRAISAL Before the appraisal Establish key task areas and performance goals
Set performance goals for each key task area Get the facts Schedule each
appraisal interview in advance During the appraisal Encourage two-way
communication Discuss and agree on performance goals for the future Think
about how you can help the employee to achieve more at work Record notes of
the interview End the interview on an upbeat note After the appraisal Prepare a
formal record of the interview Monitor performance REQUISITES OF AN
EFFECTIVE APPRAISAL SYSTEM Reliability and validity Job relatedness
Standardizations Practical validity (Techniques used) Legal sanction Training
appraisers Open communication (feedback) Employee access to results Due
process (ventilation of grievances) APPROACHES TO PERFORMANCE APPRAISAL
Four basic approaches to performance appraisal. Personality-based systems:
initiative, drive, intelligence, ingenuity, creativity, loyalty and trustworthiness.
Generalized descriptive systems (Managerial qualities: organizes, plans, controls,
motivates, delegates, communicates, makes things happen) Behaviour
descriptive systems (actual behaviours required from successful employees)
Result-centred systems: (superior-subordinate interaction for identification of
performance standards) FEATURES OF PERFORMANCE APPRAISAL It is a
systematic process (involving three steps: set work standards, assess employee's
performance relative to these standards, and offer feedback to the employee) to
improve performance It tries to find out how well the employee is performing
the job and tries to establish a plan for further improvement The appraisal is
carried out periodically according to a definite plan Performance appraisal is
not a past-oriented activity Performance appraisal is not job evaluation The
focus of appraisals is on employee growth and development. It forces managers
to be coaches rather than judges. COMPONENTS OF PERFORMANCE APPRAISAL
Key Performance Areas (KPAs)/ Key Result Areas (KRAs)
Tasks/targets/objectives; attributes/qualities/traits Self appraisal Performance
analysis Performance ratings Performance review, discussion or counseling
Identification of training/development needs Ratings/assessment by appraiser
Assessment/review by reviewing authority Potential appraisal Objectives OF
PERFORMANCE APPRAISAL Compensation decisions Promotion decisions
Training and development programmes Feedback to the employee Personal
growth and development CHARACTERISTICS OF AN EFFECTIVE APPRAISAL
SYSTEM Reliability and validity Job relatedness Standardization (appraisal
forms, procedures, administration of techniques, ratings, etc.) Practical viability
(practically viable to administer, possible to implement and economical to
undertake continuously) Legal sanction Training to appraisers Open
communication METHODS OF PERFORMANCE APPRAISAL 1. Ranking method
(performance comparison) 2. Paired Comparison method (man to man ranking)
N(N-1)/2 3. Confidential Report (confidential report prepared by employees
immediate superior. It covers the strengths and weaknesses, key achievements
and failure, personality and behaviour of the employee) 4. Essay method (the
evaluator writes a short essay on the employees performance on the basis of
overall impression) 5. Forced Distribution Method (the rater is required to

distribute his/her ratings in the form of a normal frequency distribution and to

eliminate the raters bias of central tendency) 6. GRAPHIC RATING SCALE Graphic
Rating Scales (It is a numerical scale indicating different degrees of a particular
trait. The rater is given a printed form for each employee to be rated on the basis
of several characteristics relating to the personality and performance of
employees like intelligence, quality of work, quantity of work, job knowledge,
leadership ability, dependability, attitude, etc. The rater records his judgment on
the employees trait on the scale) Disadvantages: Restrictions on the range and
type of rater responses Differences in rater interpretations of scale item
meanings and scale ranges Rating form deficiencies limit effectiveness of the
appraisal Poorly designed scales that encourage rater errors 7. Checklist
Method (a list of statements that describe the characteristics and performance of
employees on the job) 8. Critical Incident Method Manager keeps written record
of highly favorable and unfavorable employee performance. These critical
incidents are identified after thorough study of the job and discussion with the
staff. Disadvantages Variations in how managers define critical incident
Time consuming and limited opportunity to observe. Most employee actions are
not observed and may change if observed. 9. Group Appraisal Method: A group
of evaluators assesses employees Group consists of the immediate supervisor
of the employee, other supervisors having close contact with the employees
work, head of the department and personnel expert. The group determines the
standards of performance for the job, measures actual performance of an
employee, analyses the causes of poor performance and offers suggestions for
improvements in future Due to multiple evaluators personal bias is minimized
It is a very time consuming process BEHAVIORALLY ANCHORED RATING SCALE
(BARS) Composed of job dimensions (specific descriptions of important job
behaviors) that anchor performance levels on the scale. Combines graphic
rating scales with critical incidents method Critical areas of job performance
and the most effective behaviour for getting results are determined in advance
The rater records the observable job behaviour of an employee and compares
these observations with BARS. Developing a BARS Identify important job
dimensions Write short statements of job behaviors Assign statements
(anchors) to job dimensions Set scales for anchors Behaviourally Anchored
Rating Scales It is a combination of the rating scale and critical incident
techniques of employee performance evaluation. The steps involved in
constructing BARS are as follows: Step 1 Identify critical incidents (both
effective and ineffective job behaviours) Step 2 Select Performance dimensions
Step 3 Reclassification of incidents by another group (reclassify the critical
incidents generated previously and assign each critical incident to the dimension
that it best describes. Incidents for which there is less than 75 per cent
agreement are discarded as being too subjective). Step 4 Assigning scale value
to the incidents (one-to-seven scale).A rating of one represents ineffective
performance while 7 indicates very effective performance. Means and S.D. are
then calculated for the scale values assigned to each incident. If S.D.s of I.5 or
less (on a 7-point scale ) are retained. Step 5 Develop the final instrument
(choose about six or seven of the incidents as the dimensions behavioural
anchors) HR Audit HR audit refers to an examination and evaluation of policies,
procedures and practices to determine the effectiveness of personnel

management. HR audit is reflecting the following: It is a periodic review to

measure the effectiveness of personnel management and to determine the steps
required for more effective use of human resources. Personnel audit involves a
formal, systematic and in-depth analysis, investigation and comparison. The
primary aim of personnel audit is to determine whether the personnel policies
and practices are consistent with organizational objectives. It also reveals how
effectively the personnel policies and programmes have been implemented. A
human resource audit evaluates the personnel activities used in an organization.
The audit may include one division or entire company. It gives feedback about :
The function of line managers. The human resource specialists. How well
managers are meeting their human resource duties. Benefits of HR Audit
Identifies the contribution of the personnel departments to the organization
Improves professional image of the personnel department Encourages greater
responsibility and professionalism among members of the personnel department
Clarifies the personnel departments duties and responsibilities Finds critical
personnel problems Scope of HR Audit Audit of Corporate Strategy: Corporate
Strategy concerns how the organization is going to gain competitive advantage.
Audit of the Human Resource Function: Audit touches on Human Resource
Information System, Staffing and Development, and Organization Control and
Evaluation. Audit of Managerial Compliance: Reviews how well managers
comply with human resource policies and procedures. Audit of Employee
Satisfaction:To learn how well employee needs are met. Audit of the Human
Resource Function 1. Human Resource Information System Human Resource
Plans : Supply and demand estimates; skill inventories; replacement charts and
summaries. Job Analysis Information : Job standards, Job descriptions, Job
specifications. Compensation Management : Wage, salary, and incentive levels;
Fringe benefit package; Employer provided services. 2. Staffing and Development
Recruiting: sources of recruits, availability of recruits, employment applications.
Selection : selection ratios, selection procedures, equal opportunity. Training
and development: orientation programme, training objectives and procedures,
learning rates. Career development: internal placement, career planning
programme, human resource development efforts. 3. Organization Control and
Evaluation Performance appraisals : standards and measures of performance,
performance appraisal techniques, evaluation interview. Labor-Management
Relations : Legal compliance, management rights, dispute resolution problems.
Human Resource Controls : employee communications, discipline procedures,
change and development procedures. Tasks of Auditors Identify who is
responsible for each activity. Determine the objectives sought by each activity.
Review the policies and procedures used to achieve these activities. Prepare a
report commending proper objectives, policies, and procedures. Develop an
action plan to correct errors in each activity. Follow up the action plan to see if
it solved the problems found through the audit. Research approaches to audits 1.
Interviews with employees and managers are one source of information about
human resource activity. Employees and managers comments help the audit
team find that need improvement. Another useful source of information is the
exit interview. Exit interview are conducted with departing employees to learn
their views of the organization. 2. Questionnaires/surveys Because interviews are

time-consuming, costly, and often to only few people, many human resource
departments use questionnaires. Through questionnaire surveys, a more
comprehensive picture of employee treatment can be developed. Questionnaire
may also lead to more candid answers than face-to-face interviews. employee
attitude about supervisors employee attitude about their jobs perceived
effectiveness of human resource department 3. Historical analysis Not all the
issues of interest to human resource audit are revealed through interviews or
questionnaires. Sometimes insight can be obtained by an analysis of historical
records, such as: Safety and health records Grievances records
Compensation studies Scrap rates Turnover and absenteeism records
Selection records Training programme record 4. External information Outside
comparisons give the audit team a perspective against which their firms
activities can be judged. Through Department of Labor, industry association,
professional association numerous statistics and report are compiled. These
organizations regularly publishes information about future employment
opportunities, employee turnover rates, work force projection, area wage and
salary survey, work force demography, accident rates, and other data that can
serve as benchmark for comparing internal information. Process of HR Audits 1)
Briefing and orientation: This is a preparatory meeting of key staff members to:
discuss particular issues considered to be significant, chart out audit procedures,
and develop plans and programme of audit. 2) Scanning material information:
This involves scrutiny of all available information pertaining to the personnel,
personnel handbooks and manuals, guides, appraisal forms, material on
recruitment, computer capabilities and all such other information considered
material. 3) Surveying employees: Surveying employees involves interview with
key managers, functional executives, top functionaries in the organisation, and
even employees representatives, if necessary. The purpose is to pinpoint issues
of concern, present strengths, anticipated needs and managerial philosophies on
human resources. 4) Conducting interviews: The direction which audit must
follow is based on issues developed through the scanning of information
gathered for the purpose. However, the audit efforts will get impetus if clarity is
obtained as to the key factors of human resource management selected for audit
and the related questions that need to be examined. 5) Synthesizing: The data
thus gathered is synthesized to present the current situation priorities staff
pattern, and issues identified. 6) Reporting: Just as the planning meetings of
briefing and orientation, the results of the audit are discussed within several
rounds with the managers and staff specialists. In the process, the issues that
get crystallized are brought to the notice of the management in a formal report.
Follow-ups are necessary after an audit to see if the action plan used to solve
problems found this the audit worked or not. THE AUDIT REPORT The audit report
is a comprehensive description of human resource activities that includes both
commendations for effective practices and recommendations for improving
practices that are less effective. Audit report often contain several sections. One
part is for line managers, another is for manager of specific human resource
function, and the final part is for the human resource manager. Report for line
managers: How line managers handle their duties such as: Interviewing
applicants Training employees Evaluating performance Motivating workers
Satisfying employee needs The report also identifies people problems. Violations
of policies and employee relations law are highlighted. Report for the HR

Specialist: The specialists who handle employment training, compensation, and

other activities also need feedback. Such feedbacks are: Unqualified workers
that need for training Qualified workers that need for development What
others company are doing Attitude of operating managers toward personnel
policies Workers pay dissatisfaction HUMAN RESOURCE PLANNING Human
Resource Planning (H RP) is a step in Human Resource Management. The process
of identifying how many people to select, at what job and at what time is called
Human Resource planning. Human Resource Planning is to get the right number
of employees with the right skills, experience, and competencies in the right jobs
at the right time and at the minimum cost. This Human Resource part of an
organization ensures that the business production requirements are met in an
efficient and effective manner. Objectives of HRP Optimum use of human
resources Forecasting of future requirements for human resources Ensuring of
adequate supply of manpower as and when required Assess surplus or shortage
Linking of HRP with organizational planning Anticipate the impact of
technology on job Needs of expansion and diversification Promote employees
in a systematic manner Estimation of the cost of human resources Coping
with changes in market conditions, technology, products & government
regulations in an effective way Process of Human Resource Planning 1. Analysis
of Organizational Plans and Objectives: Human Resource planning is a part of
overall plan of a business organisation. Plans relating to technology, production,
marketing, finance, expansion and diversification give an idea about the volume
of future work activity. Each plan can further be analyzed into sub-plans and
detailed programmes. It is also important 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 Human Resource required at different levels and in different
departments. The main steps involved 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, (f) to Promote or to transfer as per the needs and the
performance of employees (g) to denote if the employees are disinterested or
their performance is not up to the mark, (h) to terminate employees if they are
not needed or their performance is below standard. 3. Forecasting Supply of
Human Resources: One of the important functions of Human Resources planning
is to deal with allocation of persons to different departments depending upon the
work-load and requirements of the departments in future. While allocating
Human Resource to different departments, care should 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. 4. Estimating
Manpower Gaps; Net Human Resource requirements gaps can be identified by
comparing demand and supply forecasts. Such a 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 challenging jobs as a part of job

enrichment. 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 voluntarily retirement. Deficit can
be met through Human Resource planning ,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 organization.
FACTORS AFFECTING HRP Type and strategy of Organization:- The type of
organization is an important consideration because it determines the production
process involved, number and type of staff needed, and the supervisory and
managerial personnel required. Manufacturing organizations are more complex in
this respect than those that render services. Organizational Growth Cycles and
Planning:- The stage of an organizations growth can have considerable influence
on HRP. Need for planning is felt when the organization enters the growth stage.
Internal development of people also begins to receive attention in order to keep
up with the growth. Environmental Uncertainties:- HR managers rarely have the
privilege of operating in a stable and predictable environment. Political, social
and economic changes affect all organizations. Personnel planners deal with
uncertainties by carefully formulating recruitment, selection, and training and
development policies and programmes. Time Horizons:- Yet another major
factor affecting personnel planning is the time horizon. On one hand, there are
short-term plans spanning six months to one year. On the other hand, there are
long-term plans which spread over three to twenty years. In general, the greater
the uncertainty, the shorter the plans time horizon and vice versa. Type and
quality of Information:- The information used to forecast personnel needs
originates from a multiple of sources. A major issue in personnel planning is the
type of information which should be used in making forecasts. Nature of jobs
being filled:- Personnel planners must consider the nature of jobs being filled in
the organization. Job vacancies arise because of separations, promotions and
expansion strategies. Off-loading the work:- Several organizations off-load part
of their work to outside parties either in the form of sub-contracting or
ancillarisation. Offloading is a regular feature both in the public sector as well as
in the private sector. Most organizations have surplus labour and they do not
want to worsen the problem by hiring more people. Hence, the need for offloading. HRP PROCESS 1. Assessing Human Resources The assessment of HR
begins with environmental analysis, under which the external (PEST) and internal
(objectives, resources and structure) are analyzed to assess the currently
available HR inventory level. After the analysis of external and internal forces of
the organization, it will be easier for HR manager to find out the internal
strengths as well as weakness of the organization in one hand and opportunities
and threats on the other. Moreover, it includes an inventory of the workers and
skills already available within the organization and a comprehensive job analysis.
2. Demand Forecasting: HR forecasting is the process of estimating demand for
and supply of HR in an organization. Demand forecasting is a process of

determining future needs for HR in terms of quantity and quality. It is done to

meet the future personnel requirements of the organization to achieve the
desired level of output. Future human resource need can be estimated with the
help of the organization's current human resource situation and analysis of
organizational plans an procedures. 3. Supply Forecasting: Supply is another side
of human resource assessment. It is concerned with the estimation of supply of
manpower given the analysis of current resource and future availability of human
resource in the organization. It estimates the future sources of HR that are likely
to be available from within an outside the organization. Internal source includes
promotion, transfer, job enlargement and enrichment, whereas external source
includes recruitment of fresh candidates who are capable of performing well in
the organization. 4. Matching Demand And Supply: It is concerned with bringing
the forecast of future demand and supply of HR. The matching process refers to
bring demand and supply in an equilibrium position so that shortages and over
staffing position will be solved. In case of shortages an organization has to hire
more required number of employees. Conversely, in the case of over staffing it
has to reduce the level of existing employment. Hence, it is concluded that this
matching process gives knowledge about requirements and sources of HR. 5.
Action Plan: It is the last phase of human resource planning which is concerned
with surplus and shortages of human resource. Under it, the HR plan is executed
through the designation of different HR activities. The major activities which are
required to execute the HR plan are recruitment, selection, placement, training
and development, socialization etc. Finally, this step is followed by control and
evaluation of performance of HR to check whether the HR planning matches the
HR objectives and policies. This action plan should be updated according to
change in time ans conditions. Techniques for HR Demand Forecasting (a)
Managerial Judgement: Managerial judgement technique is very common
technique of demand forecasting. This approach is applied by small as well as
large scale organisations. This technique involves two types of approaches i.e.
'bottom-up approach' and 'top-down approach'. Under the 'bottom-up approach',
line mangers send their departmental requirement of human resources to top
management. Under the Top-down approach', top management forecasts the
human resource requirement for the entire organisation and various
departments. This information is supplied to various departmental heads for their
review and approval. However, a combination of both the approaches i.e.
'Participative Approach' should be applied for demand forecasting. (b) WorkStudy Technique: This technique is also known as 'work-load analysis'. This
technique is suitable where the estimated work-load is easily measureable.
Under this method, estimated total production and activities for a specific future
period are predicted. This information is translated into number of man-hours
required to produce per units taking int
onsideration the capability of the workforce. Thus, demand of human resources
is forecasted on the basis of estimated total production and contribution of each
employee in producing each unit items. (c) Ratio-Trend Analysis: Demand for
manpower/human resources is also estimated on the basis of ratio of production
level and number of workers available. This ratio will be used to estimate
demand of human resources. The following example will help in clearly
understanding this technique. (d) Econometrics Models: These models are based
on mathematical and statistical techniques for estimating future demand. Under
these models relationship is established between the dependent variable to be

predicted (e.g. manpower/human resources) and the independent variables (e.g.,

sales, total production, work-load, etc.). Using these models, estimated demand
of human resources can be predicted. (e) Delphi Technique: Delphi technique is
also very important technique used for estimating demand of human resources.
This technique takes into consideration human resources requirements given by
a group of experts i.e. mangers. The human resource experts collect the
manpower needs, summarises the various responses and prepare a report. This
process is continued until all experts agree on estimated human resources
requirement. (f) Other Techniques: The other techniques of Human Resources
demand forecasting are specified as under: Organisation-cum-successioncharts Estimation based on techniques of production Estimates based on
historical records Statistical techniques e.g. co-relation and regression analysis.
REQUISITES FOR SUCCESSFUL HRP HRP must be recognized as an integral part
of corporate planning Backing of top management for HRP is absolutely
essential HRP responsibilities should be centralized in order to co-ordinate
consultation between different management levels Personnel records must be
complete, up-to-date and readily available The time horizon of the plan must be
long enough to permit any remedial action The techniques of planning should
be those best suited to the data available and the degree of accuracy required
Plans should be prepared by skill levels rather than by aggregates Data
collection, analysis, techniques of planning and the plans themselves need to be
constantly revised and improved in the light of experience. BARRIERS TO HRP
HR practitioners are perceived as experts in handling personnel matters, but are
not experts in managing business. HR information is incompatible with the
information used in strategy formulation. Conflicts may exist between shortterm and long-term HR needs (Promotion/Transfer - Recruitment). There is
conflict between quantitative and qualitative approaches to HRP. Noninvolvement of operating managers renders HRP ineffective.