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IGNOU MBA MS-23 Solved Assignment 2011

Course Code Course Title Assignment Code Coverage : : : : MS - 23 Human Resource Planning MS-23/SEM - I /2011 All Blocks

Note: Answer all the questions and send them to the Coordinator of the Study Centre you are attached with.

1. Explain the concept and process of human resource planning. Describe the forecasting techniques which are being used in your organization or any organization you are familiar with. Briefly describe the organization you are referring to. Solution : Human resource planning is the process of anticipating and carrying out the movement of people into, within, and out of the organization. Human resources planning is done to achieve the optimum use of human resources and to have the correct number and types of employees needed to meet organizational goals. Thus, it is a double-edged weapon. If used properly, it leads not only to proper utilization, but also reduces excessive labor turnover and high absenteeism, and improves productivity. It can also be defined as the task of assessing and anticipating the skill, knowledge and labor time requirements of the organization, and initiating action to fulfill or source those requirements. Thus, if the organization as a whole or one of its subsystem is not performing to the benchmark, in other words, it is declining, it may need to plan a reduction or redeploys its existing labor force. If you go look back in history, you will come across example of such activities (remember the dot com burst!! And how Hindustan motors had to redeploy its workforce from uttarpada in Calcutta to pithampur in M.P. to avail the strategic advantage and save itself from closing down). On the other hand, if it is growing or diversifying, it might need to find and tap into a source of suitably skilled labor (for example: GE, the pioneers in BPO industry went for a large scale recruitment while setting up office here in India.) That is why; we need to plan in advance even for procuring human resources, which in contrast to a general myth are not abundant!! Thus, in the same line, we propose that organization can achieve its goals effective through effective contingencies of all the HR functions; for example, the structure of an organization and the design of the job within it affect an organizations ability to achieve only through the efforts of people. It is essential therefore, those jobs within the organization be staffed with the personnel

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who are qualified to perform them. Meeting these staffing needs requires effective planning for human resources Lets discuss definitions of HRP as given by different experts. Vetter opines that it is the process by which management determines how the organization should move from its manpower position to its desired manpower position to carry out integrated plan of the organization. According to Geisler, Manpower planning is the process including forecasting, developing and controlling by which a firm ensures that it has The right number of people, The right kind of people, At the right places, At the right time, doing work for which they are economically most useful. Wickstrom very beautifully summarizes the features of HRP, viz., Forecasting future manpower requirements, where we use mathematical projections you might have studied in business economics and quantitative techniques paper, to project trends in the economic environment and development of the industry. Can you remember one such application??? Making an inventory of present manpower resources and assessing the extent to which these resources are employed optimally. Procuring competent personnel requires positive recruitment efforts and the development of a variety of recruitment sources. These sources must consider not only the nature and conditions of the external labor market, but also the presence of qualified personnel who are available to fill vacancies through internal promotions or transfers. Keep in mind the recruitment activities is integrated with diversity and equal employment opportunity initiatives. Staffing needs must be anticipated sufficiently in advance to permit the recruitment and development of fully qualified personnel. Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of requirements to determine their adequacy, both quantitatively and qualitatively; and Planning the necessary programmes of requirement, selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure that future manpower requirements are properly met. 1. Its a systematic approach. Why??? cause it ensures a continuous and proper staffing. It avoids or checks on occupational imbalances (shortage or surplus) occurring in any of the department of the organization. 2. There is a visible continuity in the process. Very true!! See the Wickstrom definition.

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3. There is a certain degree of flexibility. That is, it is subject to modifications according to needs of the organization or the changing circumstances. Manpower plans can be done at micro or the macro levels 3depending upon various environmental factors. Thus, we can summarize that: HRP is a kind of risk management. It involves realistically appraising the present and anticipating the future (as far as possible) in order to get the right people into right jobs at the right time. (Reiterating the view of Geisler).

Planning facilitates preparation of an appropriate manpower budget for each department or division. This, in turn, helps in controlling manpower costs by avoiding shortages/excesses in manpower supply. Assist in productivity bargaining. For example, if a firm is going fully automated, it can negotiate for lesser workers as required for the same amount of the job by using the manpower predictions regarding the same. It can offer higher incentives (VRS) to smoothen the process of voluntary layoffs. Help assess accommodation requirements (?? - You must be wondering how that can be related to HRP? A good HRP can assist in solving many problems of the firm, from day to day ones to very strategic ones, too.) for example: an organization decides to establish its production center in a remote area, an accurate HR plan can help it to decide how many people will be required there, and thus start the process of establishing a township for them in advance. The physical facilities such as canteen, school, medical help, etc., can also be planned in advance. Management decisions. Now!! Lets see how this can happen. Example, suppose the question is to outsource an activity or not? An HR manager knows what is the distribution of workflow, and whether the present available staff can accomplish these. In addition, HRP (as already pointed out) prepares people for future challenges. The stars can be picked, mentored and kept ready for leading positions in future. All MNCs have such policies and programmes (Wipro InfoTech has a leadership development programmes), where a hot list of promising candidate are assessed and assisted continuously for future management positions. This selection is possible only through a thorough HR plan. An organization may incur several intangible costs as a result of inadequate HRP or, for that matter, the lack of HRP. For example, inadequate HRP can cause vacancies to remain unfilled. The resulting loss in efficiency can be costly, particularly when the lead-time is required to train replacements. Situations also may occur in which employees are laid off in one department while applicants are hired for similar jobs in another department. This may cause over hiring and result in the need to lay off those employees to make effective plans for career or personal development. As a result, some of the more competent and ambitious ones may seek other employment where they feel they will have better career opportunities. Reason for current interest and importance in HRP? You all know the challenges the business is facing due to turbulent and hostile environmental forces (e.g. technology, social, economic and political upheaval) impinging on single one of them. Major reasons for the present emphasis on manpower planning include:

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Employment-Unemployment Situation: Though from the above excerpt we can construe that in general the number of educated unemployed is on the rise, there is acute shortage for a variety of skills. This emphasizes the need for more effective recruitment and retaining people. Technological Changes: The myriad changes in production technologies, marketing methods and management techniques have been extensive and rapid (e.g.. introduction of HRIS). Their effect has been profound on job contents and job contexts. These changes cause problems relating to redundancies, retraining and redeployment. All these suggest the need to plan manpower needs intensively and systematically. Organisational Changes: In the turbulent environment marked by cyclical fluctuations and discontinuities, the nature and pace of changes in organizational environment, activities and structures affect manpower requirements and require strategic considerations. Demographic Changes: The changing profile of the work force in terms of age, gender participation, literacy, technical inputs and social background have implications for manpower planning. The workforce is more diverse than ever before. And the trend shows it is going to be on the rise even more!! Skill Shortages: Unemployment does not mean that the labor market is a buyers market. Organizations have in general become complex and thus, in turn require more specialist skills that are rare and scarce. The result is more dependency on the professionals. Thus, problems may arise when such people if they are employees decide to leave or switch to more lucrative employment or if they are freelancers decide to shift their business somewhere else. Please note that these are example of implications of what is most happening in the business world today. Governmental Influences: Government control and changes in legislation with regard to affirmative action for disadvantaged groups, working conditions and hours of work, restrictions on women and child employment, casual and contract labor, etc. have stimulated the organizations to become involved in systematic manpower planning. Legislative Controls: The days of 'hire and fire' policies are gone. Now legislation makes it difficult to reduce the size of an organization quickly and cheaply, especially in the presence of strong politicalised trade union scenario in India. It is easy to increase but difficult to shed the fat in terms of the numbers employed because of recent changes in labor law relating to lay-offs and closures. Those responsible for managing manpower must look far ahead and thus attempt to foresee manpower problems. Impact of Pressure Groups: Pressure groups such as unions, politicians and NGOs displaced, from land by location of giant enterprises have been raising contradictory pressures on enterprise management such as internal recruitment and promotions, preference to employees' children, displaced persons, sons of the soil etc. remember the ASSAM TEA case!!!!! Systems Concept: The spread of systems thinking, the advent of the PCs and the upsurge of people management concept which all emphasize the planning and having common and transparent personnel records. Lead Time: The long lead-time is necessary in the selection process and for training an development of the employee to handle new knowledge and skills successfully.

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Thus, HRP is all the more imperative. One needs to think strategically, to be ahead of others in acquiring human resources. Hence we can now easily come to a conclusion on why HRP is necessary? An attempt to look beyond the present and short-term future, and to prepare for contingencies, is increasingly important. Some manifestations of this are outlined below.

Jobs often require experience and skills that cannot easily be bought in the market place, and the more complex the organisation, the more difficult it will be to supply or replace highly specialized staff quickly. It takes time to train and develop technical or specialist personnel (say, an airline pilot or computer programmer), so there will be a lead-time to fill any vacancy. The need will be have to be anticipated in time to initiate the required development programmes. Employment protection legislation and general expectations of 'social responsibility' in organizations make staff shedding a slow and costly process. The cost must be measured not just in financial terms (redundancy pay and so on) but in loss of reputation as a secure employer and socially responsible organization. This, in turn, may make it more difficult to recruit labor in times or skill areas where it is required - and may even alienate customers and potential customers. Rapid technological change is leading to a requirement for manpower which is both more highly skilled and more adaptable. Labor flexibility is a major issue, and means that the career and retraining potential of staff are at least as important as their actual qualifications and skills. They must be assessed in advance of requirements. (In fact, 'train ability' as a major criterion for selection is one of the most popular innovations of the HRM era of personnel management.) In term of international markets, the scope and variety of markets, competition and labor resources are continually increased by political and economic moves such as the unification of Germany, the opening of Eastern Europe and continuing progress towards European union. Computer technology has made available techniques which facilitate the monitoring and planning of manpower over fairly long time spans: manipulation of manpower statistics, trend analysis, 'modeling' and so on.

Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. Usage can differ between areas of application: for example in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. Risk and uncertainty are central to forecasting and prediction; it is generally considered good practice to indicate the degree of uncertainty attaching to forecasts. The process of climate change and increasing energy prices has led to the usage of Egain Forecasting of buildings. The method uses Forecasting to reduce the energy needed to heat the building, thus reducing the emission of greenhouse gases. Forecasting is used in the practice of Customer Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand

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planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and a consensus process. An important, albeit often ignored aspect of forecasting, is the relationship it holds with planning. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like. There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions (data etc.) Categories of forecasting methods Time series methods Time series methods use historical data as the basis of estimating future outcomes. Rolling forecast is a projection into the future based on past performances, routinely updated on a regular schedule to incorporate data. Moving average weighted moving average Exponential smoothing Autoregressive moving average (ARMA) Autoregressive integrated moving average (ARIMA) e.g. Box-JenkinsExtrapolation Linear prediction Trend estimation Growth curve

Causal / econometric forecasting methods Some forecasting methods use the assumption that it is possible to identify the underlying factors that might influence the variable that is being forecast. For example, including information about weather conditions might improve the ability of a model to predict umbrella sales. Such methods include:

Regression analysis includes a large group of methods that can be used to predict future values of a variable using information about other variables. These methods include both parametric (linear or non-linear) and non-parametric techniques.

Autoregressive moving average with exogenous inputs (ARMAX) Judgmental methods Judgmental forecasting methods incorporate intuitive judgements, opinions and subjective probability estimates.

Composite forecasts Surveys

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Delphi method Scenario building Technology forecasting

Forecast by analogy Artificial intelligence methods

Artificial neural networks Support vector machines

Other methods Simulation Prediction market Probabilistic forecasting and Ensemble forecasting Reference class forecasting

Forecasting accuracy The forecast error is the difference between the actual value and the forecast value for the corresponding period.

where E is the forecast error at period t, Y is the actual value at period t, and F is the forecast for period t. Measures of aggregate error:

Mean Absolute Error (MAE)

Mean Absolute Percentage Error (MAPE)

Percent Mean Absolute Deviation (PMAD)

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Mean squared error (MSE)

Root Mean squared error (RMSE)

Forecast skill (SS)

*****Cite example of an organization known to you to complete this solution. 2) Explain objectives and various methods applied for conducting job evaluation in an organizational situation. Describe with an example from the organization you are working in or familiar with. Briefly describe the organization you are referring to. Solution : Job evaluation is the process of systematically determining a relative internal value of a job in an organization. In all cases the idea is to evaluate the job, not the person doing it. Job evaluation is the process of determining the worth of one job in relation to that of the other jobs in a company so that a fair and equitable wage and salary system can be established.

Evaluation types

Job Ranking is the most simple form. Basically one just orders the jobs according to perceived seniority. This is easy to do in a small organization, but gets more and more difficult as different jobs exist within the company.

Pair Comparison introduces more rigor by comparing jobs in pairs, but really it's a more structured way of building a basic rank order.

Benchmarking or slotting sets up certain jobs that are analyzed in detail. These are then used for comparison to slot jobs against these benchmarks.

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Job Matching allocates benchmarks too, but when a position is matched the elements of the job that differ are re-evaluated. Usually this evaluation will be done with a Point Factor Analysis (PFA) or classification system

Point Factor Analysis

Point Factor Analysis (PFA) is the old-school (but fair) bureaucratic method for determining a score for each job. Jobs are broken down into factors such as knowledge required. A set of closed questions in each factor break down to detail such as level of education. The responses to these questions are given a score, and totaled for each factor. Each factor is given a weight, and this effects the contribution made to the overall total score by that factor.

Factors can be weighted according to their significance to the organization, and this allows the pay scheme to be linked to the organizations strategy.

Job classification Job classification can be at the whole job or factor level. Each factor (or the whole job) is a single question that has very clearly defined levels. Compared to an equivalent PFA scheme classification, it has fewer but more complex questions requiring more job analysis from whoever is answering the questionnaire. The modern trend appears to be away from complex PFA schemes towards factor classification methods. This puts more responsibility in the hands of whoever is doing the analysis. this is also known as the understanding the job rate in order to get the place of the position An Overview of the Job Evaluation Process Job Evaluation is a technique to rank jobs in an organization on the basis of the duties and responsibilities assigned to the job. The job evaluation process results in a job being assigned to a pay grade. The pay grade is associated with a pay range that is defined by a minimum and a maximum pay rate. Job evaluation plans have been in use for approximately 75 years in the public and private sectors. There are many variations to the design a job evaluation plan. However, they all basically follow the same approach, which is to value each job in a defined group of jobs based on a common set of generic factors. The first set of decisions that an organization is required to make when installing a job evaluation plan is to determine which jobs in the organization will be covered by the plan and what factors will be used in the job evaluation process.

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Exhibit 1 lists factors that are frequently used in job evaluation plans. The factors are selected depending upon the type of jobs to be evaluated. The factors are grouped by the four factors defined in the Equal Pay Act of 1963. The second step in the job evaluation process is to collect information about each job to be evaluated. This can be done using a job analysis questionnaire, job descriptions, observation and interviews with employees and supervisors. Step three in the process is to systematically rate each job based on the job evaluation factors selected. The points assigned for each of the factors are totaled for each job. Table 2 illustrates how the factors are subdivided by degrees. The degrees define the extent that the factor is found in the job. The forth step is to select the benchmark jobs from the jobs that have been evaluated. The benchmark jobs are those jobs commonly found in most organizations and are typically included in salary surveys. The benchmark jobs connect the internal pay structure with the external labor market. A technique to visualize the relationship between the internal structure and the market (Exhibit 4) is to plot each of the benchmark jobs using the benchmark's total job evaluation points as the X axis and the average market rate as the Y axis. A line of best fit can be developed from the plot. This line can be used as a guide to determine the number of grades, the midpoints for each pay grade, and which jobs should be grouped in the same grade. Job evaluation as a process is advantageous to a company in many ways: 1. Reduction in inequalities in salary structure - It is found that people and their motivation is dependent upon how well they are being paid. Therefore the main objective of job evaluation is to have external and internal consistency in salary structure so that inequalities in salaries are reduced. 2. Specialization - Because of division of labour and thereby specialization, a large number of enterprises have got hundred jobs and many employees to perform them. Therefore, an attempt should be made to define a job and thereby fix salaries for it. This is possible only through job evaluation. 3. Helps in selection of employees - The job evaluation information can be helpful at the time of selection of candidates. The factors that are determined for job evaluation can be taken into account while selecting the employees. 4. Harmonious relationship between employees and manager - Through job evaluation, harmonious and congenial relations can be maintained between employees and management, so that all kinds of salaries controversies can be minimized. 5. Standardization - The process of determining the salary differentials for different jobs become standardized through job evaluation. This helps in bringing uniformity into salary structure. 6. Relevance of new jobs - Through job evaluation, one can understand the relative value of new jobs in a concern.

*****cite example from the organization known to you.

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3) What are the prevalent recruitment practices & techniques adopted by the corporate sector. What are the probable errors which can be committed in recent process. Briefly explain with the example from the organization you are working for or known to you. Briefly describe the organization you are referring to. Solution : In a growing economy, recruitment is one of the key challenges that Sales HR Professionals face; retention being the most crucial. Average attrition of sales/field force is close to 33%. Sometimes higher! This essentially means industry will always be in need of sales force; sales force that will stay and be productive. Similar qualities will be look for during recruitment. Hence, recruitment becomes an activity as important as running the business itself. So, how is sales recruitment done? Answer is not difficult. Generate a pool of candidates (sourcing), multiple levels of interview (selection) & finally joining formalities (on boarding). Or is it? Each stage i.e. sourcing, selection and on boarding has unique challenges; primarily on account of experience, education, urgency, criticality, geographic spread, demand for particular skill set among others. A broad outline of the recruitment process is given below. Sourcing or generation of a pool of candidates can be qualified by the following: Internal: Employee referral schemes, candidates identified by managers, careers website, job portals, references from new hires. One of the most potent internal sources is Industry Survey Report; more details on ISR in later posts. External: Primarily through recruitment consultants. Recruitment consultants can provide the required quantity in a very short duration. Campuses are other potent grounds for sourcing. Further qualifiers Quality: Here the internal sources will almost always outperform the external sources. Most of the recruitment happens through internal sources where the candidate is known to employees and their managers. Price: Salary range is dictated by approved manpower budget and the relative worth of the territory and the life of business. To source candidates who would fit into the salary range requires thorough under companies with or competing for candidates in the same salary range. Quantity: This aspect is not very difficult to achieve. Using recruitment consultants can be the best way to ensure required quantity. Given enough time, internal sources can generate the required quantity.

Selection Sales force is, usually, distributed across geography. Hence, the selection process has to accommodate the same. Field interviews are the most effective way to shortlist candidates. Front line managers meet candidates in the field and interview them. Interview setting can range from a tea stall to a hotel to the line managers residence to the local stockist or distributor. The objective is to have a face to face interview with the candidate. Content of the interview will vary as per industry. An interview template guides these interviews. Based on the feedback, the second line manager will conduct telephonic/in-person interview. Finally, the HR conducts telephonic interview to finally clear the candidate for joining.

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There are many variations to this process. These may include a final interview with HR in head office. Final interview may be done with business head and HR through video conference. HR is not involved in the final interview at all and business heads may be authorised to roll out the offer letters. Objective is to have multiple checks on the incoming candidate. The elaborate process of selection gives candidate feeling of achievement and exclusivity.

On-boarding Here comes the tricky part. Selection done. Offer rolled out. Candidate now has a promise of employment. Will the candidate join you? Or will the candidate say, Hey, I got an offer from this company. Great. Lets take a shot at another company and see if any thing better comes my way! Offer to joining ratio hovers around 80% for the sales force. To mitigate such drop outs, most companies prefer that candidates join within couple of days. Some companies just show the offer letter and hand out the offer letter on the day of joining. There are companies that give just the salary break up on plain paper. Others prefer to give just the offer, without mentioning salary details. One interesting offer letter was written by hand on a blank paper without any signature or seal. However, such practices may not work for good quality candidates; element of trust is absent. Hence, it is crucial that candidates are kept engaged throughout the period of uncertainty. This engagement right from the time of offer to the actual joining, for all practical purposes, is on-boarding. Personal touch, helping them deal with the anxiety of job change, probably helping them write a good resignation letter and many such activities helps in keeping the candidate engaged with the company. In a geographically spread out work force, it is not feasible to keep offices near each area of operation. Hence, elaborate procedure needs to be set to ensure proper on-boarding. Structured induction program by front line managers needs to be ensured Collection of all documents necessary for records Complete joining kit reaching on time The above is an indicative recruitment process. There may be variation as per business, geography and scale of operations.

**********cite example from any organization known to you 4) Explain the concepts and significance of Human Resource Information System in management of an organization. Describe with an organizational example as to how the information is managed at the macro and micro level of an organization to enhance its effectiveness. Briefly describe the organization you are referring to. Solution : The Human Resource Information System (HRIS) is a software or online solution for the data entry, data tracking, and data information needs of the Human Resources, payroll, management, and accounting functions within a business. Normally packaged as a data base, hundreds of companies sell

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some form of HRIS and every HRIS has different capabilities. Pick your HRIS carefully based on the capabilities you need in your company. Typically, the better The Human Resource Information Systems (HRIS) provide overall:

Management of all employee information. Reporting and analysis of employee information. Company-related documents such as employee handbooks, emergency evacuation procedures, and safety guidelines. Benefits administration including enrollment, status changes, and personal information updating. Complete integration with payroll and other company financial software and accounting systems. Applicant tracking and resume management.

The HRIS that most effectively serves companies tracks:

attendance and PTO use, pay raises and history, pay grades and positions held, performance development plans, training received, disciplinary action received, personal employee information, and occasionally, management and key employee succession plans, high potential employee identification, and applicant tracking, interviewing, and selection.

An effective HRIS provides information on just about anything the company needs to track and analyze about employees, former employees, and applicants. Your company will need to select a Human Resources Information System and customize it to meet your needs. With an appropriate HRIS, Human Resources staff enables employees to do their own benefits updates and address changes, thus freeing HR staff for more strategic functions. Additionally, data necessary for employee management, knowledge development, career growth and development, and equal treatment is facilitated. Finally, managers can access the information they need to legally, ethically, and effectively support the success of their reporting employees. To make a human resource department more effective and efficient new technologies are now being introduced on a regular basis so make things much simpler and more modernized. One of the latest human resource technologies is the introduction of a Human Resources Information System (HRIS); this integrated system is designed to help provide information used in HR decision making such as administration, payroll, recruiting, training, and performance analysis.

Human Resource Information System (HRIS) merges human resource management with information technology to not only simplify the decision making process, but also aid in complex negotiations that fall

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under the human resource umbrella. The basic advantage of a Human Resource Information System (HRIS) is to not only computerize employee records and databases but to maintain an up to date account of the decisions that have been made or that need to be made as part of a human resource management plan.

The four principal areas of HR that are affected by the Human Resource Information System (HRIS) include; payroll, time and labor management, employee benefits and HR management. These four basic HR functionalities are not only made less problematic, but they are ensured a smooth running, without any hitch. A Human Resources Information System (HRIS) thus permits a user to see online a chronological history of an employee from his /her position data, to personal details, payroll records, and benefits information.

The advantage of a Human Resource Information System (HRIS) in payroll is that it automates the entire payroll process by gathering and updating employee payroll data on a regular basis. It also gathers information such as employee attendance, calculating various deductions and taxes on salaries, generating automatic periodic paychecks and handling employee tax reports. With updated information this system makes the job of the human resource department very easy and simple as everything is available on a 24x7 basis, and all the information is just a click away.

In time and labor management a Human Resource Information System (HRIS) is advantageous because it lets human resource personnel apply new technologies to effectively gather and appraise employee time and work information. It lets an employee's information be easily tracked so that it can be assessed on a more scientific level whether an employee is performing to their full potential or not, and if there are any improvements that can be made to make an employee feel more secure.

Employee benefits are very crucial because they help to motivate an employee to work harder. By using a Human Resource Information System (HRIS) in employee benefits, the human resource department is able to keep better track of which benefits are being availed by which employee and how each employee is profiting from the benefits provided.

A Human Resource Information System (HRIS) also has advantages in HR management because it curtails time and cost consuming activities leading to a more efficient HR department. This system reduces the long HR paper trail that is often found in most HR divisions of companies and leads to more productive and conducive department on the whole.

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Components of an HRIS Kovach et al., (1999) presented the three major functional components in any HRIS by giving the model below: Input Data Maintenance Output

The Input function enters personnel information into the HRIS. Data entry in the past had been one way, but today, scanning technology permits scanning and storage of actual image off an original document, including signatures and handwritten notes. The maintenance function updates and adds new data to the database after data have been entered into the information system. Moreover, the most visible function of an HRIS is the output generated. According to Kovach et al., (1999), to generate valuable output for computer users, the HRIS have to process that output, make the necessary calculations, and then format the presentation in a way that could be understood. However, the note of caution is that, while it is easy to think of HR information systems in terms of the hardware and software packages used to implement them and to measure them by the number of workstations, applications or users who log onto the system, the most important elements of HRIS are not the computers, rather, the information. The bottom line of any comprehensive HRIS have to be the information validity, reliability and utility first and the automation of the process second.

Users of HRIS applications HRIS meet the needs of a number of organizational stakeholders. Typically, the people in the firm who interact with the HRIS are segmented into three groups: (1) HR professionals, (2) managers in functional areas (production, marketing, engineering etc.) and (3) employees (Anderson, 1997). HR professionals rely on the HRIS in fulfilling job functions (regulatory reporting and compliance, compensation analysis, payroll, pension, and profit sharing administration, skill inventory, benefits administration etc.). Thus, for the HR professional there is an increasing reliance on the HRIS to fulfill even the most elementary job tasks. As human capital plays a larger role in competitive advantage, functional managers expect the HRIS to provide functionality to meet the units goals and objectives. Moreover, managers rely on the HRISs capabilities to provide superior data collection and analysis, especially for performance appraisal and performance management.

Additionally, it also includes skill testing, assessment and development, rsum processing, recruitment and retention, team and project management, and management development (Fein, 2001). Finally, the individual employees become end users of many HRIS applications. The increased complexity of employee benefit options and the corresponding need to monitor and modify category selections more frequently has increased the awareness of HRIS functionality among employees. Web-based access and

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self-service options have simplified the modification process and enhanced the usability of many benefit options and administration alternative for most employees.

HRIS functions Functional HRIS must create an information system that enables an assimilation of policies and procedures used to manage the firms human capital as well as the procedure necessary to operate the computer hardware and software applications (Hendrickson, 2003). While information technology affects Human Resource (HR) practices (LengickHall et al., 2003)HRIS and HRIS administration comprise a distinct supporting function within HR. Some of the HRIS functions include the following: Integrating the Technologies of HR Is a fact, that developments in Information Technology have dramatically affected traditional HR functions with nearly every HR function (example, compensation, staffing, and training) experiencing some sort of reengineering of its processes. However, this process of change has created significant challenges for HR professionals resulting in the transformation of traditional processes into on-line processes. Increased Efficiency Rapid computing technology has allowed more transactions to occur with fewer fixed resources. Typical examples are payroll, flexible benefits administration, and health benefits processing. Though technologies of early mainframes provided significant efficiencies in these areas, the difference is that the record processing efficiencies that were once only available to large firms are now readily available to any organization size (Ulrich, 2001). Increased Effectiveness Most often, as with processes, computer technology is designed to improve effectiveness either by in terms of the accuracy of information or by using the technology to simplify the process. This is especially the case where large data sets require reconciliation. However, onerous manual reconciliation processes may be executed faster, but also with near perfect accuracy using automated systems. For instance, pension and profit sharingapplications, benefits administration, and employee activities are just to mention but a few. Using computer technology in these processes ensures accurate results and offer substantial simplification and timeliness over manual processing. Consequently, the vast majority of HR functions have had some degree of automation applied in order to gain both efficiency and effectiveness. IT-Enabled Processes While many of the application areas gains are through increased effectiveness and efficiency over manual processing, some are only possible using contemporary technologies. Most notably, computerbased (web-based) training is a growing area of HR practice that was not available until computer

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software was created. Even computerbased training was not as practical as it is today because it was geographically dispersed until the training was upgraded from computer-based to web-accessible training. However, by taking traditional computer-based training programs and making them accessible on the Internet, firms have created a powerful tool to upgrade and assess employee skill sets. Moreover, many other traditional HR functions have evolved Information Technology (IT) -dependent components with the advent of the Internet. Online recruitment centers, along with the ability to conduct virtual interviews, background checks, and personnel tests on-line have dramatically changed those processes, increasing the geographic reach of firms for potential employees.

Cost and benefit of HRIS An HRIS system represents a large investment decision for companies of all sizes. Therefore, a convincing case to persuade decision makers about the HRIS benefits is necessary. The common benefits of HRIS frequently cited in studies included, improved accuracy, the provision of timely and quick access to information, and the saving of costs (Lederer, 1984; Wille and Hammond, 1981). Lederer (1984) discussed why the accuracy and timeliness of HRIS is very important in terms of operating, controlling, and planning activities in HR. In addition, Kovach et al., (2002) listed several administrative and strategic advantages to using HRIS. Similarly, Beckers and Bsat (2002) pointed out at least five reasons why companies should use HRIS. These are: Increase competitiveness by improving HR practices Produce a greater number and variety of HR operations Shift the focus of HR from the processing of transactions to strategic HRM Make employees part of HRIS, and Reengineer the entire HR function In their 2002, HRIS survey, Watson Wyatt found that the top four metrics used in formal business cases supporting HRIS were improved productivity within HR organization, cost reductions, return on investment, and enhanced employee communications. However, companies realize many of these cost reductions and efficiency gains early in the implementation of an HRIS system, so they provide compelling evidence needing to get a project up and running. In fact, the payback period, or the time it takes to recoup the investment, may be as short as one to three years (Lego, 2001). HRIS contribute to cost reductions, quality/customer satisfaction, and innovation (Broderick and Boudreau, 1992). According to Sadri and Chatterjee (2003) computerized HRIS function enable, faster decision making, development, planning, and administration of HR because data is much easier to store, update, classify, and analyze. Moreover, while it may be possible to identify many of the relevant costs (e.g., software and

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hardware), it is more difficult to quantify the intangible benefits to be derived from an HRIS system. Beyond cost reductions and productivity improvements, HRIS potentially and fundamentally affect revenue channels. However, establishing direct and objective benefits measures is more difficult to achieve. On the other hand, there are costs associated with HRIS implementation. Moreover, to capitalize on all HR possibilities, workers need to have personal computers and global Internet connections. Some companies facilitate this by providing employees computer discount programs to encourage home usage. In addition, there is inevitably transition costs associated with moving from traditional HR to an HRIS, including slowdowns, mistakes, and other consequences associated with changing legacy systems to integrated suites (Brown, 2002). Hardware costs for servers and software costs for application programs entail sizeable initial outlays and continuing costs over time as better technology becomes available. While many companies are adopting HRIS systems and extolling their benefits, others are reluctant in embarking on such an expensive and timeconsuming change. Nevertheless, some firms are adopting less complex forms before attempting to transform their HR departments. However, for those who have already adopted HRIS, many are yet to realize its full benefits. A survey by Towers Perrin found that whiles 80 percent of respondents affirmed employee self-service ability to lower FIR costs, only 5 percent fully achieved this objective; another 35 percent had only partially achieved that objective, and only 3 percent was accelerating HR's transformation to a strategic partner (Ibid). 5) Explain the concept and approaches of Human Resource Accounting for effective management at the organizational level. Describe human resource accounting system of any organization you are familiar with. Highlight the advantages of HRA system. Briefly describe the organization you are referring to. Solution : Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. Approaches to Human resource accounting was first developed 1691 the next stage was during 1691-1960 and third phase post-1960. There are two approaches to HRA. Under the cost approach, also called human resource cost accounting method or model, there is a) Aqvisition cost model and b)replacement cost model. Under the value approach there are a) present value of future earnings method, b) discounted future wage model, c) computative bidding model. Benefits Benefits of HRA can be listed thus: 1. The adoption of the system of HRA discloses the value of human resources. This helps in proper interpretation of Return on Capital Employed. Such information would give a long term perspective of the business performance which would be more reliable than the Return on Capital Employed under the conventional system of accounting. 2. The maintenance of detailed record relating to internal human resources(i.e. employees) improves managerial decision-making specially institutions like direct recruitment versus promotions; transfer versus retention retrenchment or relieving versus retention; utility of cost reduction programs in view of its possible impact on human relations and impact of budgetary control on human relations and organizational behavior. Thus, the use of HRA will definitely improve the quality of management.

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3. The adoption of the system of HRA serves social purposes by identification of human resources as a valuable asset which will help prevention of misuse and under use due to thoughtless or rather reckless transfers, demotions, layoffs and day-to-day maltreatment by supervisors and other superiors in the administrative hierarchy; efficient allocation of resources in the economy ;efficiency in the use of human resources; and proper understanding of the evil effects of avoidable labor unrest / disputes on the quality of internal human resources. 4. The system of HRA would no doubt, pave the way for increasingly productivity of human resources, because, the fact that a monetary value is attached to human resources and that human talents devotion and skill considered as valuable assets and allotted a place in the financial statements of the organization, would boost the morale, loyalty and initiative of the employees, creating in their mind a sense of belonging towards the organization and would act as a great incentive, giving rise to increased productivity. HRA in India Under the constraints the financial statements are prepared pursuant to the Company Law in India there is no scope for showing any significant information about human resources in financial statements except the remuneration paid to them and the number of employees getting compensation beyond certain amount per annum. But there is nothing to prohibit the companies to attach information about the worth of human resources and the results of their performance during the accounting period in notes or schedules. The following are the general considerations in the working of the HR concept by organizations. 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. A 12% discount rate is adopted. 5. Employees are classified according to age and pay scales under six categoriesexecutives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 6. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 7. Future number of employees is worked out on the basis of general promotion policy.

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8. Employee considerations include direct and indirect benefits. HRM and HRA is now followed by most of the medium and large scale companies in India as there is awareness of the benefits in terms of Revenue, productivity, flexibility in skill development and so on. What used to be a designation like Personnel Manager is now Human Resources Manager and the manager can grow up to Directors level in some companies. That is the importance bestowed by companies for the Human Resources function. The Approaches in the Human Resource Accounting Human resource accounting (HRA)...Success of every firm depends upon caliber,honesty,quality and character of employee working in it.Employees are the important assets of an organization and the success and the failure depends upon the skill and performance of the employees.Human resources are not properly valued.Companies consider salaries and wages as revenue expenditure.No effort was made to calculate cost of hiring,training and developing of human beings.Western countries treat their human being as capital expenditure.They treat human beings as assets of the organization Historical cost approach This method measures the organizations investment in employees using the five parameters: recruiting, acquisition; formal training and familiarization; informal training, Informal familiarization; experience; and development. The costs were amortized over the expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were written off. Limitations The valuation method is based on false assumption that the dollar is stable. Since the assets cannot be sold there is no independent check of valuation. This method measures only the costs to the organization but ignores completely any measure of the value of the employee to the organization . Replacement Cost approach This approach measures the cost of replacing an employee. Replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff. Limitations Substitution of replacement cost method for historical cost method does little more than update the valuation, at the expense of importing considerably more subjectivity into the measure. This method may also lead to an upwardly biased estimate because an inefficient firm may incur greater cost to replace an employee . Present Value of Future Earnings An economic valuation of employees based on the present value of future earnings, adjusted for the probability of employees death/separation/retirement. This method helps in determining what an employees future contribution is worth today. According to this model, the value of human capital embodied in a person who is y years old, is the present value of his/her future earnings from employment and can be calculated by using the following formula: E(Vy) = Py(t+1) I(T)/(I+R)t-y T=Y Y where E (Vy) = expected value of a y year old persons human capital T = the persons retirement age Py (t) = probability of the person leaving the organisation I(t) = expected earnings of the person in period I r = discount rate Limitations The measure is an objective one because it uses widely based statistics such as census income return and mortality tables.

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The measure assigns more weight to averages than to the value of any specific group or individual (Cascio 4-5). Value to the organization an organization had several divisions seeking the same employee, the employee should be allocated to the highest bidder and the bid price incorporated into that divisions investment base. For example a value of a professional athletes service is often determined by how much money a particular team, acting in an open competitive market is willing to pay him or her. Limitations The soundness of the valuation depends wholly on the information, judgment, and impartiality of the bidder .

Expense model this model focuses on attaching dollar estimates to the behavioral outcomes produced by working in an organization. Criteria such as absenteeism, turnover, and job performance are measured using traditional organizational tools, and then costs are estimated for each criterion. For example, in costing labor turnover, dollar figures are attached to separation costs, replacement costs, and training costs.

Human Resource accounting as an Information system Human Resource Management Systems (HRMS) provide a link between human resource management and information technology. HRMS allow enterprises to automate many aspects of human resource management, with the dual benefits of reducing the workload of the HR department as well as increasing the efficiency of the department by standardising HR processes. The field of human resources is one that is often overlooked in enterprise management. This situation is aided by the fact that an efficient Human Resources department should function without fanfare. For example, when a project team successfully launches a product on time and within budget it is hailed as a great success. When the HR department manages the administration of the enterprise successfully it can go virtually unnoticed after all, the Human Resources department is simply expected to work, only attracting attention when there are problems.

The reality, however, is very different. The HR department plays a vital role in ensuring the smooth running of an enterprise most importantly by tracking and analysing the timekeeping and work patterns of the workforce, allowing management better information on which to form strategies. The importance of human resources has not gone unnoticed by the software industry. There is now a wide range of applications available to aid the HR department in their tasks, making possible the automation of certain tasks and aiding in the organisation of many others. HRM software systems are broadly defined by the four basic responsibilities of the HR department, and as such typically contain standalone modules to address the needs of each responsibility: Payroll Module: The payroll module greatly reduces the workload of the HR department by automating the payroll process, allowing HR to ensure that payroll functions are completed on time and without errors.

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At its most basic level the payroll module is supported by the manual entry of timekeeping and attendance data from paper-based timesheets submitted by the workforce. More advanced systems track employee timekeeping through automatic systems, connected to either a clocking in system or a tracker connected to the desktop computers of the employees. Once attendance data is fed into the system, the payroll module automatically calculates payment amounts and various deductions such as income tax before generating paychecks and employee tax reports. Time and Labour Management Module: The time and labour management module is designed to collate and analyse employee timekeeping information for the purposes of organisational cost accounting. By sourcing data directly from the timekeeping devices and methods used to calculate payroll this module can provide management with valuable data regarding the use of labour resources within the enterprise. Benefit Administration Module: The benefit administration module provides HR personnel with the capacity to monitor and manage employee participation in a range of benefit programs. These programs can range from programs related to the wellbeing of the workforce (such as health insurance and pension schemes) to profit making programs (such as stock option plans and profit sharing). HR Management Module: The HR management module provides a range of HR solutions ranging from analyses of application data through to the basic demographic data of employees. The management module allows HR personnel to effectively manage the Human Capital Pool (HCP) available within the enterprise, in that it keeps track of the training and developemnt of the workforce and the skills and qualifications of each employee. Advanced HR management modules can also automate the process of application for positions by capturing application data and entering it to a relevant database. Benefits of HRMS While these modules each provide benefits to the HR department itself, the applications also aid the enterprise as a whole. HRM systems convert human resources information into a digital format, allowing that information to be added to the knowledge management systems of the enterprise. The result of this is that HR data can be integrated into the larger Enterprise Resource Planning (ERP) systems of the enterprise. In analysing enterprise wide resource usage this data can prove invaluable. Data related to the time usage of the workforce can enhance the decision making abilities of management , allowing the HR department to form an integral aspect of strategy formation for the enterprise as a whole. the organisation I am referring to The organization, I am familiar with is a -a large manufacturer/ marketer of safety products -the products are used as [personal protection safety] [ industrial safety] -the products are distributed through the distributors as well as sold directly -the products are sold to various industries like mining/fireservices/defence/ as well as to various manufacturing companies. -the company employs about 235 people.

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-the company has the following functional departments *marketing *manufacturing *sales *finance/ administration *human resource *customer service *distribution *warehousing/ transportation *TQM IN THIS ORGANIZATION, THE PRACTICE OF HR ACCOUNTING, INCLUDES 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. Employees are classified according to age and pay scales under six categoriesexecutives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 5. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 6. Future number of employees is worked out on the basis of general promotion policy. 7. Employee considerations include direct and indirect benefits. Performance Ratios/Indicators for HRM FTEs - Full time equivalent staff (formulae may aggregate PT, short-term and long-term contract staff). Headcount (H) e.g. total FTEs at month end Revenues (R) - total operating income (total sales) Expenses (E) - operating expenditure excl. tax, interest and extraordinary items Profit - R less E (far too simple, what is the true profit? Who decides what the profit is?) Cash-like rewards (C) - emoluments: salaries, wages, overtime, bonuses, commissions including NI contributions. Benefits (B) - other rewards which may or may not be taxed as "benefit in kind" - cars, pensions, company loans etc

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